Income Taxes

9 Months Ended

Feb. 29, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Note K – Income Taxes

The Company’s effective income tax rate was 22.2% and 13.1% for the third quarter of fiscal 2024 and the third quarter of fiscal 2023, respectively, and 21.9% and 22.0% for the nine months ended February 29, 2024 and February 28, 2023, respectively. The effective tax rates differed from the statutory rate primarily due to income from unconsolidated joint ventures outside the U.S. recognized net of tax, non-deductible executive compensation, and discrete items related to equity compensation and return to provision adjustments.

The provision for income taxes is based on a current estimate of the annual effective income tax rate adjusted to reflect the impact of discrete items and excludes any impact from the inclusion of net earnings attributable to noncontrolling interests in the consolidated and combined statements of earnings. Net earnings attributable to noncontrolling interests are a result of the Company’s consolidated joint ventures. The net earnings attributable to the noncontrolling interests in the U.S. operations of the Company’s consolidated joint ventures and do not generate tax expense to the Company since the investors are taxed directly based on the earnings attributable to the investors. The tax expense of TWB’s wholly owned foreign subsidiaries is reported in the consolidated and combined income tax expense. Management is required to estimate the annual effective income tax rate based upon its forecast of annual pre-tax income for domestic and foreign operations. The Company’s actual effective income tax rate for fiscal 2024 could be materially different from the forecasted rate as of February 29, 2024.