Sale of Composites Business	12 Months Ended
May 31, 2022
Disposed of by sale \| Composites Business
Sale of Business
Sale of Composites Business	14. Sale of Composites Business On August 31, 2020, we completed the sale of our aerostructures and aerospace products operations located in Clearwater, Florida and Sacramento, California (“Composites”). The Composites business was formerly included in our Expeditionary Services segment. We recognized a loss on the sale of the Composites business of $19.5 million in the first quarter of fiscal 2021. In the fourth quarter of fiscal 2021, the post-closing working capital adjustment was finalized resulting in an additional loss of $0.7 million. The sale also included contingent consideration of up to $6.5 million based on the achievement of sales targets over a three-year period subsequent to the sale. We recognized a charge of $1.3 million in the three-month period ended November 30, 2021 to reflect the fair value of the contingent consideration at zero as it is unlikely the sales targets will be achieved. In conjunction with the August 2020 sale, we retained a performance guarantee to a customer of the Composites business under an existing contract providing flap track fairings on the A220 aircraft (“A220 Contract”). The term of the A220 Contract and our performance guarantee extend for the duration that A220 aircraft are in service and the customer continues to maintain support for the A220 aircraft. The performance guarantee does not contain a financial cap. In March 2022, the buyer of the Composites business filed for bankruptcy and moved to have the bankruptcy court reject the A220 Contract. The buyer’s customer also notified us that they believe the buyer has failed to timely deliver products in accordance with the terms of the A220 Contract and that they have incurred losses, and will incur additional losses, related to the non-compliance that are covered by our performance guarantee. The losses claimed include delay damages, incremental labor costs, legal expenses, and other related costs. While we believe that we have numerous defenses available against this claim that we will vigorously pursue, it is reasonably possible that we will incur a loss from the performance guarantee. Due to the preliminary nature of the claim we are unable, however, to estimate a range of loss on the performance guarantee. There can be no assurance that the performance guarantee will not have a material adverse effect on our operations, financial position and cash flows.

Sale of Composites Business

12 Months Ended

May 31, 2022

Disposed of by sale | Composites Business

14. Sale of Composites Business

On August 31, 2020, we completed the sale of our aerostructures and aerospace products operations located in Clearwater, Florida and Sacramento, California (“Composites”). The Composites business was formerly included in our Expeditionary Services segment.

We recognized a loss on the sale of the Composites business of $19.5 million in the first quarter of fiscal 2021. In the fourth quarter of fiscal 2021, the post-closing working capital adjustment was finalized resulting in an additional loss of $0.7 million. The sale also included contingent consideration of up to $6.5 million based on the achievement of sales targets over a three-year period subsequent to the sale. We recognized a charge of $1.3 million in the three-month period ended November 30, 2021 to reflect the fair value of the contingent consideration at zero as it is unlikely the sales targets will be achieved.

In conjunction with the August 2020 sale, we retained a performance guarantee to a customer of the Composites business under an existing contract providing flap track fairings on the A220 aircraft (“A220 Contract”). The term of the A220 Contract and our performance guarantee extend for the duration that A220 aircraft are in service and the customer continues to maintain support for the A220 aircraft. The performance guarantee does not contain a financial cap.

In March 2022, the buyer of the Composites business filed for bankruptcy and moved to have the bankruptcy court reject the A220 Contract. The buyer’s customer also notified us that they believe the buyer has failed to timely deliver products in accordance with the terms of the A220 Contract and that they have incurred losses, and will incur additional losses, related to the non-compliance that are covered by our performance guarantee. The losses claimed include delay damages, incremental labor costs, legal expenses, and other related costs.

While we believe that we have numerous defenses available against this claim that we will vigorously pursue, it is reasonably possible that we will incur a loss from the performance guarantee. Due to the preliminary nature of the claim we are unable, however, to estimate a range of loss on the performance guarantee. There can be no assurance that the performance guarantee will not have a material adverse effect on our operations, financial position and cash flows.