Employee Benefits Plans

12 Months Ended

May 31, 2024

Retirement Benefits [Abstract]

Employee Benefit Plans

Note M – Employee Benefit Plans

Defined Contribution Retirement Plans

We provide retirement benefits to employees mainly through defined contribution retirement plans. Eligible participants make pre-tax contributions based on elected percentages of eligible compensation, subject to annual addition and other limitations imposed by the Code and the various plans’ provisions. Company contributions consist of employer matching contributions, annual or monthly employer contributions and discretionary contributions, based on individual plan provisions.

Defined Benefit Pension Plan

Historically, we sponsored the Gerstenslager Plan, a frozen non-contributory pension plan which covered certain employees based on age and length of service. During August 2022, we purchased an annuity contract from a third-party insurance company to transfer approximately 31% of the total projected benefit obligation. During February 2024, we completed a similar transaction and annuitized the remaining projected benefit obligation. As a result of these transactions: 1) we incurred settlement charges of $4,774 and $8,010 during fiscal 2023 and fiscal 2024, respectively, primarily related to the reclassification of actuarial losses out of AOCI and into miscellaneous income (expense), net in our consolidated statements of earnings; 2) we were relieved of all responsibility for these pension obligations; and 3) the insurance company is now required to pay and administer benefits to the remaining beneficiaries of the Gerstenslager Plan. As of May 31, 2024, there was no remaining projected benefit obligation, plan assets or net unfunded liability.

Discontinued Operations

In conjunction with the Separation, the defined benefit and other postretirement benefit assets and liabilities attributed to our former steel processing business are reported as discontinued operations in our consolidated balance sheet at May 31, 2023 and the net periodic pension costs are reported in the results of discontinued operations in our consolidated statements of earnings for periods prior to the Separation. The tables below exclude information related to our former steel processing business. Refer to “Note B – Discontinued Operations” for additional information.

Net Periodic Pension Costs

The following table summarizes the components of net periodic pension costs for our defined benefit pension plans for the prior three fiscal years:

	2024			2023			2022
Defined benefit plans:
Interest cost	$	899		$	965		$	1,174
Return on plan assets		(885	)		(1,195	)		(2,328	)
Net amortization and deferral costs		265			365			546
Settlement cost		8,010			4,774			1,357
Defined contribution plans		9,678			9,644			9,103
Net periodic benefit cost	$	17,967		$	14,553		$	9,852

Actuarial Assumptions

The following actuarial assumptions were used to determine the unfunded benefit obligation and net periodic benefit cost:

	2024			2023			2022
Benefit obligation:
Discount rate	n/a				4.69	%		4.14	%
Net periodic pension cost:
Discount rate		4.69	%		4.10	%		2.90	%
Expected long-term rate of return		5.00	%		6.00	%		7.00	%

Actuarial developed yield curves are used to determine discount rates. The expected return on plan assets assumption is determined by reviewing the investment returns, as well as longer-term historical returns of an asset mix approximating our asset allocation targets, and periodically comparing these returns to the expectations of investment advisors and actuaries to determine whether long-term future returns are expected to differ significantly from the past.

Funded Status

The following tables provide a reconciliation of the changes in the projected benefit obligation and the fair value of plan assets and the funded status for our defined benefit plans:

	2024			2023
Change in benefit obligation
Benefit obligation, beginning of year	$	19,533		$	31,253
Interest cost		899			965
Actuarial gain		(1,705	)		(2,328	)
Benefits paid		(554	)		(911	)
Settlements		(18,173	)		(9,446	)
Benefits obligation, end of year	$	-		$	19,533
Change in plan assets
Fair value, beginning of year	$	18,041		$	27,210
Return on plan assets		(227	)		(662	)
Company contributions		914			1,850
Benefits paid		(555	)		(911	)
Settlements		(18,173	)		(9,446	)
Fair value, end of year		-			18,041
Funded status	$	-		$	(1,492	)
Amounts recognized in our consolidated balance sheets consist of:
Other liabilities	$	-		$	(1,492	)
AOCI		-			8,867

The following table shows other changes in plan assets and benefit obligations recognized in OCI during the prior two fiscal years:

	2024			2023
Net (gain) loss	$	(592	)	$	(471	)
Amortization of net loss		(265	)		(365	)
Settlement cost		(8,010	)		(4,774	)
Total recognized in OCI	$	(8,867	)	$	(5,610	)
Total recognized in net periodic benefit cost and OCI	$	(578	)	$	(701	)

Fair Value of Plan Assets

There were no plan assets at May 31, 2024.

The following table sets forth, by level within the fair value hierarchy, a summary of the Gerstenslager Plan assets measured on a recurring basis at May 31, 2023.

			Quoted		Significant
			Prices		Other		Significant
			in Active		Observable		Unobservable
	Fair		Markets		Inputs		Inputs
	Value		(Level 1)		(Level 2)		(Level 3)
Investment:
Cash and cash equivalents	$	10,024	$	10,024	$	-	$	-
Fixed-income funds		8,017		8,017		-		-
Total	$	18,041	$	18,041	$	-	$	-

Plan assets for the Gerstenslager Plan consisted of the following at May 31, 2023.

Asset category:
Cash and cash equivalents	56	%
Debt securities and related instruments	44	%
Total	100	%