Investments in Unconsolidated Affiliates

3 Months Ended

Aug. 31, 2024

Equity Method Investments and Joint Ventures [Abstract]

Investments in Unconsolidated Affiliates

Note C – Investments in Unconsolidated Affiliates

Investments in joint ventures that we do not control, either through majority ownership or otherwise, are unconsolidated and accounted for using the equity method. At August 31, 2024, we held investments in the following unconsolidated joint ventures: ClarkDietrich (25%); Sustainable Energy Solutions (49%); WAVE (50%); and Workhorse (20%).

We received distributions from unconsolidated affiliates totaling $38,945 during the three months ended August 31, 2024. We have received cumulative distributions from WAVE in excess of our investment balance, which resulted in a negative asset balance of $110,522 and $111,905 at August 31, 2024 and May 31, 2024, respectively. In accordance with the applicable accounting guidance, we have reclassified the negative balances to distributions in excess of investment in unconsolidated affiliate within our consolidated balance sheets. We will continue to record our equity in the net income of WAVE as a debit to the investment account, and if it becomes positive, it will again be shown as an asset on our consolidated balance sheets. If it becomes probable that any excess distribution may not be returned (upon joint venture liquidation or otherwise), we will immediately recognize any balance classified as a liability as income.

We use the cumulative earnings approach to determine the cash flow presentation of distributions from our unconsolidated joint ventures. Distributions received are included in our consolidated statements of cash flows as operating activities unless the cumulative distributions exceed our share of the cumulative equity in the net earnings of the joint venture. In such cases, the excess distributions are considered returns of investment and are classified as investing activities in our consolidated statements of cash flows. No distributions exceeded our share in any of our unconsolidated joint ventures during the first quarter of fiscal 2025.

The following tables summarize combined financial information for our unconsolidated affiliates included in continuing operations as of the dates, and for the periods presented:

	August 31,		May 31,
	2024		2024
Cash and cash equivalents	$	43,939	$	36,163
Other current assets		566,270		605,043
Noncurrent assets		368,543		360,261
Total assets	$	978,752	$	1,001,467
Current liabilities		216,817		264,963
Current maturities of long-term debt		6,583		13,450
Long-term debt		356,485		349,431
Other noncurrent liabilities		146,754		146,984
Equity		252,113		226,639
Total liabilities and equity	$	978,752	$	1,001,467

	Three Months Ended
	August 31,
	2024		2023
Net sales	$	515,673	$	568,584
Gross profit		134,335		173,017
Operating income		94,346		131,447
Depreciation and amortization		8,006		7,576
Interest expense		4,758		5,739
Income tax expense		645		909
Net earnings		90,682		125,653