Segment Operations

3 Months Ended

Aug. 31, 2023

Segment Reporting [Abstract]

Segment Operations

Note N – Segment Operations

We are an industrial manufacturing company focused on value-added steel processing and manufactured consumer, building, and sustainable mobility products. Our operations are managed principally on a products and services basis and organized under four operating segments: Steel Processing, Consumer Products, Building Products, and Sustainable Energy Solutions. As none of our operating segments have been aggregated for segment reporting purposes, they correspond with our reportable segments. Segment information is prepared on the same basis that our CODM reviews financial information for operational decision-making purposes. Factors used to identify operating segments include the nature of the products and services provided by each business, the management reporting structure, the similarity of economic characteristics and certain quantitative measures, as prescribed by authoritative accounting guidance.

We have identified our Chief Executive Officer as the chief operating decision maker (“CODM”), as defined in the accounting literature. Our CODM assesses segment operating performance and allocates resources based on the profitability measure of adjusted EBIT. Adjusted EBIT excludes impairment and restructuring expense (income), but may also exclude other items, as described in the tables below, that management believes are not reflective of, and thus should not be included when evaluating the performance of our ongoing operations. Adjusted EBIT is a non-GAAP financial measure and is used by management to evaluate operating segment performance, engage in financial and operational planning and determine incentive compensation.

Impairment charges are excluded from adjusted EBIT because they do not occur in the ordinary course of our ongoing business operations, are inherently unpredictable in timing and amount, and are non-cash, so their exclusion facilitates the comparison of historical, current and forecasted financial results.

Restructuring activities consist of established programs that are not part of our ongoing operations, such as divestitures, closing or consolidating facilities, employee severance (including rationalizing headcount or other significant changes in personnel), and realignment of existing operations (including changes to management structure in response to underlying performance and/or changing market conditions).

The following table presents summarized financial information for our reportable segments for the periods indicated.

	Three Months Ended August 31, 2023
(In thousands)	Steel Processing		Consumer Products		Building Products		Sustainable Energy Solutions			Other			Consolidated
Net sales	$	881,339	$	149,412	$	133,868	$	28,637		$	-		$	1,193,256
Impairment of long-lived assets		1,401		-		-		-			-			1,401
Separation costs		-		-		-		-			6,035			6,035
Miscellaneous income (expense), net		712		31		57		281			(70	)		1,011
Loss on extinguishment of debt		-		-		-		-			1,534			1,534
Equity income		8,957		-		45,043		-			381			54,381
Adjusted EBIT (1)		78,002		8,991		54,016		(4,722	)		132			136,419

(1)Excludes the following:

•Impairment of long-lived assets resulted from a revision of the estimated fair value, less selling costs of certain production equipment at our consolidated Samuel joint venture that has been classified as held for sale since August 2022;

•Separation costs reflect direct and incremental costs in connection with the anticipated Separation and are held at the corporate level. These costs include fees paid to third-party parties for audit, advisory and legal services to effect the Separation, nonrecurring employee-related costs, such as retention bonuses, and nonrecurring functional costs associated with the separation of shared corporate functions;

•Loss on extinguishment of debt resulted from the redemption of the 2026 Notes, in full, on July 28, 2023, and consisted primarily unamortized debt issuance costs and the remaining loss deferred in AOCI associated with an interest rate swap executed prior to the issuance of the 2026 Notes; and

•Noncontrolling interest portion of impairment of long-lived assets of $517 within Steel Processing.

	Three Months Ended August 31, 2022
(In thousands)	Steel Processing		Consumer Products			Building Products		Sustainable Energy Solutions			Other			Consolidated
Net sales	$	1,038,880	$	188,703		$	150,323	$	30,759		$	-		$	1,408,665
Impairment of long-lived assets		312		-			-		-			-			312
Restructuring and other expense (income), net		78		-			-		-			(1,178	)		(1,100	)
Miscellaneous income, net		184		(35	)		222		(86	)		(5,371	)		(5,086	)
Equity income		1,770		-			43,866		-			(13,924	)		31,712
Adjusted EBIT (2)		34,913		20,934			52,734		(1,393	)		5,145			112,333

(2)Excludes the following:

•Impairment of long-lived assets resulted from the reclassification of the net assets of the Samuel toll processing facility in Cleveland, Ohio, to assets held for sale during August 2022;

•Restructuring and other income, net was driven primarily by a gain on the sale of the remaining real property of our former oil & gas equipment business on June 14, 2022;

•A non-cash settlement charge of $4,774 in miscellaneous income (expense), net within Other related to the pension lift-out transaction associated with the Gerstenslager Company Bargaining Unit Employees’ Pension Plan;

•A loss of $15,759 within equity income related to the August 31, 2022, sale of our 50% noncontrolling interest in ArtiFlex;

•Incremental compensation expense of $525 within Consumer Products related to the Level5 earnout agreement; and

•Noncontrolling interest portion of impairment of long-lived assets of $115 within Steel Processing

Total assets for each of our reportable segments at the dates indicated were as follows:

	August 31,		May 31,
(In thousands)	2023		2023
Total assets
Steel Processing	$	1,786,067	$	1,758,981
Consumer Products		615,223		615,430
Building Products		619,794		635,650
Sustainable Energy Solutions		139,147		129,872
Other		316,461		510,985
Total assets	$	3,476,692	$	3,650,918