Investments in Unconsolidated Affiliates

9 Months Ended

Feb. 28, 2025

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 February 28, 2025, 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 $112,939 during the nine months ended February 28, 2025. We have received cumulative distributions from WAVE in excess of our investment balance, which resulted in a negative asset balance of $110,402 and $111,905 at February 28, 2025 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 third quarter of fiscal 2025.

The following table presents condensed financial information for our unconsolidated affiliates for the three and nine months ended February 28, 2025 and February 29, 2024.

	Three Months Ended						Nine Months Ended
	February 28,			February 29,			February 28,			February 29,
	2025			2024			2025			2024
WAVE
Net sales	$	118,357		$	117,248		$	358,889		$	353,034
Operating income		54,681			55,998			168,111			164,140
Depreciation and amortization		1,436			853			3,797			3,456
Interest expense, net		4,032			4,228			12,676			12,953
Income tax expense		70			52			267			179
Net earnings		50,531			51,706			155,736			151,202
ClarkDietrich
Net sales	$	271,184		$	316,269		$	863,486		$	985,302
Operating income		36,942			70,167			108,521			190,949
Depreciation and amortization		3,997			3,978			11,804			11,266
Interest expense (income), net		6			151			(100	)		168
Income tax expense		312			489			898			977
Net earnings		37,944			71,164			111,840			193,069
Other (1)
Net sales	$	70,258		$	64,421		$	246,087		$	241,656
Operating income (loss)		(8,129	)		212			(7,945	)		21,693
Depreciation and amortization		1,972			2,105			7,535			7,015
Interest expense, net		243			564			992			2,099
Income tax expense (benefit)		(24	)		8			147			744
Net earnings (loss)		(8,432	)		(2,888	)		(7,665	)		16,477

——————————————————

(1)Includes the summarized financial information of the Sustainable Energy Solutions joint venture and Workhorse.