The Company utilizes derivative financial instruments to primarily manage exposure to certain risks related to its ongoing operations. The primary risks managed through the use of derivative financial instruments are commodity price risk and foreign currency exchange risk. While certain of the Company’s derivative financial instruments are designated as hedging instruments, the Company also enters into derivative financial instruments that are designed to hedge a risk, but are not designated as hedging instruments and, therefore, do not qualify for hedge accounting. These derivative financial instruments are adjusted to current fair value through earnings at the end of each period.

Commodity Price Risk Management – The Company is exposed to changes in the price of certain commodities, including steel, zinc and other raw materials, and the Company’s utility requirements. The Company’s objective is to reduce earnings and cash flow volatility associated with forecasted purchases and sales of these commodities to allow management to focus its attention on business operations. Accordingly, the Company enters into derivative financial instruments to manage the associated price risk.

Foreign Currency Exchange Risk Management – The Company conducts business in several major international currencies and is, therefore, subject to risks associated with changing foreign currency exchange rates. The Company uses foreign currency forward contracts to protect against exchange rate movements for forecasted cash flows, primarily operating expenses denominated in currencies other than the functional currency. Such contracts limit exposure to both favorable and unfavorable foreign currency exchange rate fluctuations. The translation of foreign currencies into U.S. dollars also subjects the Company to exposure related to fluctuating foreign currency exchange rates; however, derivative financial instruments are not used to manage this risk.

The Company is exposed to counterparty credit risk on all of its derivative financial instruments. Accordingly, the Company has established and maintains strict counterparty credit guidelines. The Company has credit support agreements in place with certain counterparties to limit the Company’s credit exposure. These agreements require either party to post cash collateral if its cumulative market position exceeds a predefined liability threshold. Amounts posted to the margin accounts accrue interest at market rates and are required to be refunded in the period in which the cumulative market position falls below the required threshold. The Company does not have significant exposure to any one counterparty, and management believes the overall risk of loss is remote and, in any event, would not be material.

Refer to “Note 14 – Fair Value” for additional information regarding the accounting treatment for the Company’s derivative financial instruments, as well as how fair value is determined.

The following table summarizes the fair value of the derivative financial instruments and the respective lines in which they were recorded in the consolidated balance sheet at November 30, 2024:


	Asset Derivatives			Liability Derivatives
	Balance			Balance
	Sheet	Fair		Sheet	Fair
(In millions)	Location	Value		Location	Value
Derivatives designated as hedging instruments:
Commodity contracts	Receivables	$	0.1	Accounts payable	$	2.6
Commodity contracts	Other assets		-	Other liabilities		0.2
Subtotal			0.1			2.8

Foreign currency exchange contracts	Receivables		-	Accounts payable		0.1
Total		$	0.1		$	2.9

Derivatives not designated as hedging instruments:
Commodity contracts	Receivables	$	0.8	Accounts payable	$	1.1
Commodity contracts	Other assets		0.1	Other liabilities		-
Subtotal			0.9			1.1

Foreign currency exchange contracts	Receivables		-	Accounts payable		-
Total		$	0.9		$	1.1

Total derivative financial instruments		$	1.0		$	4.0

GAAP permits an entity to present derivative financial instruments assets and liabilities on a net basis on the balance sheet, provided a right of offset exists and/or when they are subject to a master netting arrangement. The Company’s policy is to record derivative financial instruments on a net basis where the Company has an executed master netting arrangement with counterparties as well as where the right of offset exists. The amounts in the table above reflect the fair value of the derivative financial instruments on a net basis where allowable under master netting arrangements. Had these amounts been recognized on a gross basis, the impact would have been a $0.6 million increase in receivables with a corresponding increase in accounts payable.

The following table summarizes the fair value of the derivative financial instruments and the respective lines in which they were recorded in the consolidated balance sheet at May 31, 2024:


	Asset Derivatives			Liability Derivatives
	Balance			Balance
	Sheet	Fair		Sheet	Fair
(In millions)	Location	Value		Location	Value
Derivatives designated as hedging instruments:
Commodity contracts	Receivables	$	0.2	Accounts payable	$	1.9
Commodity contracts	Other assets		-	Other liabilities		-
Total		$	0.2		$	1.9

Derivatives not designated as hedging instruments:
Commodity contracts	Receivables	$	3.4	Accounts payable	$	2.5
Commodity contracts	Other assets		-	Other liabilities		-
Total		$	3.4		$	2.5

Total derivative financial instruments		$	3.6		$	4.4

The amounts in the table above reflect the fair value of the derivative financial instruments on a net basis where allowable under master netting arrangements. Had these amounts been recognized on a gross basis, the impact would have been a $2.6 million increase in receivables with a corresponding increase in accounts payable.

The Company enters into derivative financial instruments to hedge its exposure to changes in cash flows attributable to commodity price and foreign currency exchange rate fluctuations associated with certain forecasted transactions. These derivative financial instruments are designated and qualify as cash flow hedges. Accordingly, the effective portion of the gain or loss on each of these derivative financial instruments is reported as a component of OCI and reclassified into earnings in the same line associated with the forecasted transaction and in the same period during which the hedged transaction affects earnings. The ineffective portion of the gain or loss on the derivative financial instrument is recognized in earnings immediately.

The following table summarizes the Company’s cash flow hedges outstanding at November 30, 2024:


	Notional
(In millions)	Amount			Maturity Date
Commodity contracts	$	(9.4	)	December 2024 – December 2025
Foreign currency exchange contracts	$	6.3		December 2024 – April 2025

The following table summarizes the Company’s cash flow hedges outstanding at May 31, 2024:

The following table summarizes the gain (loss) recognized in OCI and the gain (loss) reclassified from AOCI into net earnings for derivative financial instruments designated as cash flow hedges for the periods presented:


(In millions)	Gain (Loss) Recognized in OCI			Location of Gain (Loss) Reclassified from AOCI into Net Earnings	Gain (Loss) Reclassified from AOCI into Net Earnings
For the three months ended November 30, 2024:
Commodity contracts	$	(2.7	)	Cost of goods sold	$	(2.6	)
Foreign currency exchange contracts		(0.1	)	Cost of goods sold		(0.1	)
Total	$	(2.8	)		$	(2.7	)

For the three months ended November 30, 2023:
Commodity contracts	$	13.0		Cost of goods sold	$	(0.8	)
Total	$	13.0			$	(0.8	)

For the six months ended November 30, 2024:
Commodity contracts	$	(5.1	)	Cost of goods sold	$	(5.2	)
Foreign currency exchange contracts		(0.2	)	Cost of goods sold		(0.1	)
Total	$	(5.3	)		$	(5.3	)

For the six months ended November 30, 2023:
Commodity contracts	$	11.4		Cost of goods sold	$	7.2
Total	$	11.4			$	7.2

The estimated net amount of the losses recognized in AOCI at November 30, 2024, expected to be reclassified into net earnings within the succeeding 12 months is $2.4 million (net of tax of $0.7 million). This amount was computed using the fair value of the cash flow hedges at November 30, 2024, and will change before actual reclassification from OCI to net earnings during the fiscal years ending May 31, 2025 and May 31, 2026.

The Company enters into certain commodity contracts that do not qualify for hedge accounting treatment. Accordingly, these derivative financial instruments are adjusted to current market value at the end of each period through gain (loss) recognized in earnings.

The following table summarizes the gain (loss) recognized in earnings for economic (non-designated) derivative financial instruments for the periods presented:


		Gain (Loss) Recognized
		In Earnings for the
		Three Months Ended
	Location of Gain (Loss)	November 30,			November 30,
(In millions)	Recognized in Earnings	2024			2023
Commodity contracts	Cost of goods sold	$	(0.3	)	$	0.3
Total		$	(0.3	)	$	0.3


		Gain (Loss) Recognized
		in Earnings for the
		Six Months Ended
	Location of Gain (Loss)	November 30,			November 30,
(In millions)	Recognized in Earnings	2024			2023
Commodity contracts	Cost of goods sold	$	(3.1	)	$	0.8
Total		$	(3.1	)	$	0.8

(In millions)

Maturity Date

Commodity contracts

June 2024 – September 2025