Income Taxes

3 Months Ended

Aug. 31, 2025

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 8 — INCOME TAXES

The effective income tax rate of 23.6% for the three months ended August 31, 2025, compares to the effective income tax rate of 21.3% for the three months ended August 31, 2024.

The effective income tax rates for both periods reflect variances from the 21% statutory rate due to the unfavorable impact of state and local income taxes, non-deductible business expenses, and the net tax on foreign subsidiary income resulting from the global intangible low-taxed income provisions, partially offset by tax benefits related to equity compensation and foreign tax credits.

Additionally, the effective tax rate for the three-month period ended August 31, 2024, also reflects a favorable adjustment for incremental U.S. foreign tax credits associated with a distribution of historic foreign earnings that were previously not considered to be permanently reinvested. The distribution of such earnings was done in conjunction with the execution of global cash redeployment and debt optimization projects.

As of May 31, 2025, we had approximately $164.7 million of unremitted foreign earnings not considered permanently reinvested. As of August 31, 2025, the amount of these earnings has changed to $169.6 million. There is no deferred tax liability associated with these earnings. We have not provided for foreign withholding or income taxes on the remaining foreign subsidiaries’ undistributed earnings because such earnings have been retained and reinvested by the subsidiaries as of August 31, 2025. Accordingly, no provision was made for foreign withholding or income taxes, which may become payable if the remaining undistributed earnings of foreign subsidiaries were remitted to us as dividends.

The Organization for Economic Co-operation and Development (“OECD”) proposed a framework comprised of rules and models, collectively referred to as Pillar Two (“P2”), that are designed to ensure that certain multi-national enterprises pay a minimum tax rate of 15% on reported profits arising in each jurisdiction where they operate. Although the OECD provided a framework for applying the minimum tax, individual countries have and may continue to enact P2 rules that are different than the OECD framework. While we continue to monitor P2 developments in individual countries, there have been no current year enactments to date that we anticipate will have a material impact on our Consolidated Financial Statements.

On July 4, 2025, the One Big Beautiful Bill Act (the “Act”) was enacted in the U.S. The Act includes significant changes to corporate income tax provisions. Certain changes include immediate expensing for most business assets acquired, including nonresidential U.S. real property, and a temporary suspension of the requirement to capitalize and amortize R&D expenditures. The Act also includes certain changes to international tax provisions. We continue to evaluate the impacts of the Act and its impact on our Consolidated Financial Statements.