Income Taxes (Tables)

12 Months Ended

May 31, 2020

Income Tax Disclosure [Abstract]

Earnings before Income Taxes

Earnings before income taxes for the three fiscal years ended May 31 include the following components:

(in thousands)	2020		2019		2018
U.S. based operations	$	99,493	$	173,200	$	177,088
Non – U.S. based operations		11,293		33,256		31,982
Earnings before income taxes		110,786		206,456		209,070
Less: Net earnings attributable to noncontrolling interests*		5,648		9,818		6,056
Earnings before income taxes attributable to controlling interest	$	105,138	$	196,638	$	203,014

* Net earnings attributable to noncontrolling interests are not taxable to Worthington.

Components of Income Tax Expense (Benefit)

Significant components of income tax expense (benefit) for the fiscal years ended May 31 were as follows:

(in thousands)	2020			2019			2018
Current
Federal	$	20,739		$	15,454		$	33,261
State and local		1,713			2,309			3,292
Foreign		5,199			7,985			9,904
		27,651			25,748			46,457
Deferred
Federal		(2,350	)		18,195			(34,442	)
State and local		732			1,621			388
Foreign		309			(2,381	)		(4,183	)
		(1,309	)		17,435			(38,237	)
	$	26,342		$	43,183		$	8,220

Reconciliation of Federal Statutory Corporate Income Tax Rate to Total Tax Provision

A reconciliation of the federal statutory corporate income tax rate to total tax provision follows:

	2020			2019			2018
Federal statutory corporate income tax rate		21.0	%		21.0	%		29.2	%
State and local income taxes, net of federal tax benefit		2.4			2.1			2.3
Non-U.S. income taxes at other than federal statutory rate		3.1			0.2			(1.4	)
Qualified production activities deduction		-			-			(2.3	)
Impact of tax reform (1)		-			-			(15.4	)
Worthington Aritas write down		-			-			(4.8	)
Excess benefit related to share-based payment awards		(1.2	)		(1.4	)		(2.0	)
Nondeductible executive compensation		1.1			0.6			0.3
AMTROL acquisition		-			-			(1.9	)
Other		(1.3	)		(0.5	)		-
Effective tax rate attributable to controlling interest		25.1	%		22.0	%		4.0	%

(1) Amount reflects the impact of the re-measurement of the Company’s deferred tax balances at the lower federal statutory corporate income tax rate, net of the mandatory deemed repatriation tax on unremitted foreign earnings.

Reconciliation of Unrecognized Tax Benefits

A tabular reconciliation of unrecognized tax benefits follows:

(In thousands)
Balance at May 31, 2019	$	1,621
Decreases - tax positions taken in prior years		(83	)
Increases - tax positions taken in prior years		1,419
Increases - current tax positions		35
Settlements		(1,118	)
Lapse of statutes of limitations		(156	)
Balance at May 31, 2020	$	1,718

Summary of Tax Years Open to Examination by Major Tax Jurisdiction

The following is a summary of the tax years open to examination by major tax jurisdiction:

U.S. Federal –2017 and forward

U.S. State and Local –2015 and forward

Austria – 2016 and forward

Canada –2017 and forward

Mexico – 2014 – and forward

Portugal – 2016 and forward

Deferred Tax Assets and Liabilities

The components of our deferred tax assets and liabilities as of May 31 were as follows:

(in thousands)	2020			2019
Deferred tax assets
Accounts receivable	$	1,246		$	1,516
Inventories		5,554			5,649
Accrued expenses		21,214			21,195
Net operating loss carry forwards		11,732			16,433
Stock-based compensation		6,931			10,989
Derivative contracts		1,920			2,054
Operating lease - ROU liability		7,294			-
Other		3,549			316
Total deferred tax assets		59,440			58,152
Valuation allowance for deferred tax assets		(11,178	)		(14,619	)
Net deferred tax assets		48,262			43,533
Deferred tax liabilities
Property, plant and equipment		(95,553	)		(91,732	)
Investment in affiliated companies, principally due    to undistributed earnings		(15,884	)		(23,035	)
Operating lease - ROU asset		(6,241	)		-
Other		(2,526	)		(2,868	)
Total deferred tax liability		(120,204	)		(117,635	)
Net deferred tax liability	$	(71,942	)	$	(74,102	)