Restructuring

3 Months Ended

Aug. 31, 2024

Restructuring and Related Activities [Abstract]

NOTE 3 — RESTRUCTURING

We record restructuring charges associated with management-approved restructuring plans to either reorganize one or more of our business segments, or to remove duplicative headcount and infrastructure associated with our businesses. Restructuring charges can include severance costs to eliminate a specified number of associates, infrastructure charges to vacate facilities and consolidate operations, contract cancellation costs and other costs. We record the short-term portion of our restructuring liability in other accrued liabilities and the long-term portion, if any, in other long-term liabilities in our Consolidated Balance Sheets.

In August 2022, we approved and announced our Margin Achievement Plan 2025 (“MAP 2025”), which is a multi-year restructuring plan designed to improve margins by streamlining business processes, reducing working capital, implementing commercial initiatives to drive improved mix, pricing discipline and salesforce effectiveness and improving operating efficiency. Most activities under MAP 2025 are anticipated to be completed by the end of fiscal 2025; however, we expect some costs to extend beyond this date.

The current total expected costs associated with this plan are outlined below and decreased approximately $10.9 million compared to our prior quarter estimate, attributable to decreases in expected facility closure and other related costs of $13.0 million and increases in expected severance and benefit charges of $2.1 million. Throughout our MAP 2025 initiative, we will continue to assess and find areas of improvement and cost savings. As such, the final implementation of the aforementioned phases and total expected costs are subject to change.

USL Restructuring

During the quarter ended August 31, 2023, we recognized a loss on sale of $4.5 million in connection with the divestiture of USL’s Bridgecare services division. The Bridgecare division was a contracting business focused on the installation of joints and waterproofing in the UK. The loss on this sale was included in selling, general and administrative ("SG&A") expenses in our Consolidated Statements of Income and net loss on sales of assets and businesses in our Consolidated Statements of Cash Flows.

Additionally, during the quarter ended August 31, 2023, in connection with MAP 2025, we realigned certain businesses and management structures within our segments. Within our PCG segment, certain businesses of our USL reporting unit were transferred to our Fibergrate, Carboline and Stonhard reporting units. As a result of this change in our market strategy, we performed an interim impairment assessment of the USL indefinite-lived tradename. Calculating the fair value of the USL’s indefinite-lived tradename required the use of various estimates and assumptions. We estimated the fair value of USL’s indefinite-lived tradename by applying a relief-from-royalty calculation, which included discounted future cash flows related to projected revenues impacted by this decision. In applying this methodology, we relied on a number of factors, including actual and forecasted revenues and market data. As the carrying amount of the tradename exceeded its fair value, an impairment loss of $3.3 million was recorded for the three months ended August 31, 2023. This impairment loss was classified as restructuring expense within our PCG segment.

Following is a summary of the charges recorded in connection with MAP 2025 by reportable segment for the three-month periods ending August 31, 2024 and 2023, as well as the total expected costs related to projects identified to date:


	Three Months Ended		Three Months Ended		Cumulative Costs			Total Expected
(In thousands)	August 31, 2024		August 31, 2023		to Date			Costs
Construction Products Group ("CPG") Segment:
Severance and benefit costs	$	890	$	415	$	16,093		$	20,037
Facility closure and other related costs		376		-		984			6,715
Total Charges	$	1,266	$	415	$	17,077		$	26,752

Performance Coatings Group ("PCG") Segment:
Severance and benefit costs	$	150	$	831	$	4,009		$	5,669
Facility closure and other related costs		5		30		177			1,435
Other restructuring costs (a)		-		4,555		7,092			7,092
Total Charges	$	155	$	5,416	$	11,278		$	14,196

Consumer Segment:
Severance and benefit costs	$	3,938	$	-	$	13,711		$	17,826
Facility closure and other related costs		20		14		797			2,726
Total Charges	$	3,958	$	14	$	14,508		$	20,552

Specialty Products Group ("SPG") Segment:
Severance and benefit costs	$	1,481	$	653	$	5,180		$	5,220
Facility closure and other related costs		342		-		877			3,978
Total Charges	$	1,823	$	653	$	6,057		$	9,198

Corporate/Other Segment:
Severance and benefit (credits)	$	-	$	-	$	(50	)	$	(50	)
Total Charges	$	-	$	-	$	(50	)	$	(50	)

Consolidated:
Severance and benefit costs	$	6,459	$	1,899	$	38,943		$	48,702
Facility closure and other related costs		743		44		2,835			14,854
Other restructuring costs		-		4,555		7,092			7,092
Total Charges	$	7,202	$	6,498	$	48,870		$	70,648

(a)

Of the $4.6 million of other restructuring costs incurred for the three-month period ending August 31, 2023, $3.3 million is associated with the impairment of an indefinite-lived tradename as described above.

A summary of the activity in the restructuring reserves related to MAP 2025 is as follows:


(in thousands)	Severance and Benefits Costs			Facility Closure and Other Related Costs			Other Asset Write-Offs		Total
Balance at June 1, 2024	$	17,351		$	18		$	-	$	17,369
Additions charged to expense		6,459			743			-		7,202
Cash payments charged against reserve		(7,443	)		(736	)		-		(8,179	)
Non-cash charges and other adjustments		244			-			-		244
Balance at August 31, 2024	$	16,611		$	25		$	-	$	16,636


(In thousands)	Severance and Benefits Costs			Facility Closure and Other Related Costs			Other Asset Write-Offs			Total
Balance at June 1, 2023	$	2,717		$	-		$	-		$	2,717
Additions charged to expense		1,899			44			4,555			6,498
Cash payments charged against reserve		(2,061	)		(44	)		-			(2,105	)
Non-cash charges and other adjustments		(45	)		-			(4,555	)		(4,600	)
Balance at August 31, 2023	$	2,510		$	-		$	-		$	2,510