Derivative Financial Instruments and Hedging Activities

9 Months Ended

Feb. 28, 2026

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments and Hedging Activities

Note 14 – Derivative Financial Instruments and Hedging Activities

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, foreign currency exchange risk, and interest rate 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 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.

Interest Rate Risk Management – The Company is exposed to the impact of interest rate changes. The Company’s objective is to manage the impact of interest rate changes on cash flows and the market value of borrowings. The Company utilizes a mix of debt maturities along with both fixed-rate and variable-rate debt to manage changes in interest rates. In addition, the Company enters into interest rate swaps to further manage exposure to interest rate variations related to borrowings and to lower overall borrowing costs.

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 various methods to protect against exchange rate movements.

•Foreign currency forward contracts – the Company uses these 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.

•Cross-currency swap contract – the Company uses a cross-currency swap to manage the impact of foreign currency exposure related to a portion of the Company’s Euro net investment in certain foreign subsidiaries against changes in Euro/USD exchange rates.

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 15 – 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 the dates presented:

	Fair Value of Assets					Fair Value of Liabilities
	Balance					Balance
	Sheet	February 28,		May 31,		Sheet	February 28,		May 31,
(In millions)	Location	2026		2025		Location	2026		2025
Derivatives designated as hedging instruments:
Cash Flow Hedges
Commodity contracts	Receivables	$	1.3	$	0.2	Accounts payable	$	-	$	1.2
Commodity contracts	Other assets		-		-	Other liabilities		-		-
Subtotal			1.3		0.2			-		1.2
Foreign currency exchange contracts	Receivables		0.5		0.3	Accounts payable		-		-
Foreign currency exchange contracts	Other assets		-		-	Other liabilities		-		-
Subtotal			0.5		0.3			-		-
Net Investment Hedges
Cross-currency swap	Receivables		-		-	Accounts payable		-		-
Cross-currency swap	Other assets		-		-	Other liabilities		2.0		-
Subtotal			-		-			2.0		-
Total		$	1.8	$	0.5		$	2.0	$	1.2
Derivatives not designated as hedging instruments:
Cash Flow Hedges
Commodity contracts	Receivables	$	3.7	$	1.5	Accounts payable	$	1.2	$	2.5
Commodity contracts	Other assets		0.1		-	Other liabilities		0.2		-
Subtotal			3.8		1.5			1.4		2.5
Foreign currency exchange contracts	Receivables		9.1		3.6	Accounts payable		-		-
Foreign currency exchange contracts	Other assets		-		-	Other liabilities		-		-
Subtotal			9.1		3.6			-		-
Total		$	12.9	$	5.1		$	1.4	$	2.5
Total derivative financial instruments		$	14.7	$	5.6		$	3.4	$	3.7

As allowable under GAAP, the Company’s policy is to record derivative financial instruments, with the exception of cross-currency swaps, 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 cross-currency swap is reflected on a gross basis in the consolidated balance sheet as the Company has not entered into any master netting arrangements. 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 and/or where the right of offset exists. Had these amounts been recognized on a gross basis, the impact would have been an increase in receivables with a corresponding increase in accounts payable of $0.7 million and $0.6 million at February 28, 2026 and May 31, 2025, respectively.

The fair value of the Company’s interest rate contracts was less than $0.1 million at February 28, 2026, and there were no interest rate contracts at May 31, 2025. Accordingly, these were not presented in the table above.

Cash Flow Hedges

The Company enters into derivative financial instruments to hedge its exposure to changes in cash flows attributable to interest rate, foreign currency exchange rates, and commodity price fluctuations associated with certain forecasted transactions. Purchases of commodities are hedged for periods of up to 18 months and certain forecasted foreign currency transactions for periods generally up to 12 months. 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 February 28, 2026:

	Notional
(In millions)	Amount		Maturity Date
Commodity contracts	$	22.8	March 2026 – January 2027
Foreign currency exchange contracts	$	5.0	March 2026 – September 2026
Interest rate contracts	$	0.9	May 2026 – September 2026

The following table summarizes the Company’s cash flow hedges outstanding at May 31, 2025:

	Notional
(In millions)	Amount			Maturity Date
Commodity contracts	$	(5.6	)	June 2025 – September 2026
Foreign currency exchange contracts	$	10.3		June 2025 – March 2026

Net Investment Hedge – Cross-Currency Swap

During the second quarter of fiscal 2026, the Company entered into a cross-currency swap to hedge foreign currency risk on a portion of the Company’s Euro net investment in Sitem Group against fluctuations in Euro/U.S. Dollar exchange rates. As part of the hedge contract, the Company receives a fixed rate of U.S. dollar interest on a monthly basis. The Company has elected the spot method for assessing the effectiveness of the contract. The Company excludes from the assessment of hedge effectiveness the portion of the fair value of the cross-currency swap attributable to interest rate differentials. The Company recognizes the initial value of the excluded component in earnings within interest expense, net, using a systematic and rational method over the life of the hedging instrument. The change in fair value of the swap and related income tax is recorded within other comprehensive income, net of tax on the consolidated statements of comprehensive income and as a net investment hedge, as a component within currency translation adjustments of AOCI. Amounts recorded in AOCI include both (i) changes attributable to spot exchange rates and (ii) amounts related to excluded components that are deferred in other comprehensive income. Amounts related to the cross-currency swaps recognized directly in net earnings represent amounts associated with components excluded from the assessment of hedge effectiveness, including the net periodic interest settlements and accruals, which are recognized in interest expense, net. The Company recognized interest income within interest expense, net in the consolidated statements of earnings of $0.2 million during the three months and nine months ended February 28, 2026, respectively. No amounts were recognized in earlier periods.

If the Company recognizes impairment on the hedged net investment, or partially or fully disposes of the hedged net investment, the related amount in AOCI will be reclassified into earnings during the period of change. During the three months ended February 28, 2026, the Company did not have any ineffectiveness related to the net investment hedge, and no portion of the net investment hedge has been de-designated or terminated during the three months ended February 28, 2026. The Company did not reclassify any deferred gains or losses related to the net investment hedge during the three months ended February 28, 2026.

The following table summarizes the Company’s net investment hedge outstanding at February 28, 2026. There were no net investment hedges outstanding at May 31, 2025.

	Pay			Receive
(Notional amount in millions)	Notional		Interest	Notional		Interest	Maturity
Nature of Swap	Amount		Rate	Amount		Rate	Date
Pay Fixed/Receive Fixed
November 2025	€	75.0	0.00%	$	86.4	1.06%	November 2030

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 and net investment 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 February 28, 2026:
Cash Flow Hedges
Commodity contracts	$	1.3		Cost of goods sold	$	0.3
Foreign currency exchange contracts		0.6		Cost of goods sold		0.4
Foreign currency exchange contracts		-		SG&A		0.1
Interest rate contracts		0.1		Interest expense, net		0.2
Total - Cash Flow Hedges		2.0				1.0
Net Investment Hedges
Cross-currency swap		(1.3	)	Miscellaneous income (expense), net		-
Total - Net Investment Hedges		(1.3	)			-
Total	$	0.7			$	1.0
For the three months ended February 28, 2025:
Cash Flow Hedges
Commodity contracts	$	(3.3	)	Cost of goods sold	$	(0.7	)
Foreign currency exchange contracts		-		Cost of goods sold		(0.2	)
Total - Cash Flow Hedges		(3.3	)			(0.9	)
Total	$	(3.3	)		$	(0.9	)
For the nine months ended February 28, 2026:
Cash Flow Hedges
Commodity contracts	$	2.9		Cost of goods sold	$	0.3
Foreign currency exchange contracts		1.4		Cost of goods sold		0.9
Foreign currency exchange contracts		-		SG&A		0.2
Interest rate contracts		0.2		Interest expense, net		0.3
Total - Cash Flow Hedges		4.5				1.7
Net Investment Hedges
Cross-currency swap		(2.0	)	Miscellaneous income (expense), net		-
Total - Net Investment Hedges		(2.0	)			-
Total	$	2.5			$	1.7
For the nine months ended February 28, 2025:
Cash Flow Hedges
Commodity contracts	$	(8.4	)	Cost of goods sold	$	(5.9	)
Foreign currency exchange contracts		(0.2	)	Cost of goods sold		(0.3	)
Total - Cash Flow Hedges		(8.6	)			(6.2	)
Total	$	(8.6	)		$	(6.2	)

As of February 28, 2026, for the net investment hedge, the Company has recognized amounts in net earnings related to excluded components as described above. Refer to “Note 10 – Other Comprehensive Income (Loss)” for additional information regarding the use of derivative financial instruments and the recognized amounts within OCI and AOCI.

For the cash flow hedges, the estimated net amount of the gains recognized in AOCI at February 28, 2026, expected to be reclassified into net earnings within the succeeding twelve months is $1.5 million (net of tax of $0.5 million). This amount was computed using the fair value of the cash flow hedges at February 28, 2026, and will change before actual reclassification from AOCI to net earnings during the fiscal years ending May 31, 2026 and May 31, 2027. Given the maturity of the net investment hedge is greater than twelve months, no amount is estimated to be reclassified into net earnings within the succeeding twelve months.

Economic (Non-designated) Hedges

The Company enters into foreign currency exchange contracts to manage its foreign currency exchange rate exposure related to inter-company and financing transactions that do not meet the requirements for hedge accounting treatment. The Company also 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 earnings.

The following table summarizes the Company’s economic (non-designated) derivative financial instruments outstanding at February 28, 2026:

	Notional
(In millions)	Amount		Maturity Date(s)
Commodity contracts	$	18.9	March 2026 – November 2027
Foreign currency exchange contracts	$	645.7	September 2026

The following table summarizes the Company’s economic (non-designated) derivative financial instruments outstanding at May 31, 2025:

	Notional
(In millions)	Amount			Maturity Date(s)
Commodity contracts	$	16.4		June 2025 – September 2026
Foreign currency exchange contracts	$	(3.6	)	June 2025

The following tables summarize 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)	February 28,		February 28,
(In millions)	Recognized in Earnings	2026		2025
Commodity contracts	Cost of goods sold	$	2.6	$	0.2
Foreign currency exchange contracts	Miscellaneous income (expense), net		10.8		(0.2	)
Total		$	13.4	$	-

		Gain (Loss) Recognized
		in Earnings for the
		Nine Months Ended
	Location of Gain (Loss)	February 28,		February 28,
(In millions)	Recognized in Earnings	2026		2025
Commodity contracts	Cost of goods sold	$	8.1	$	(2.9	)
Foreign currency exchange contracts	Miscellaneous income (expense), net		10.8		(0.2	)
Total		$	18.9	$	(3.1	)

Foreign currency exchange derivative for the Proposed Acquisition of Kloeckner

In January 2026, the Company executed a Euro/U.S. Dollar foreign currency forward contract with a notional amount equal to €550.0 million ($645.7 million as of February 28, 2026) with a maturity date in the second quarter of fiscal 2027. This economic (non-designated) cash flow derivative was entered into to hedge a portion of the expected purchase price of the Proposed Acquisition. The impacts of the transaction are reflected in the disclosures above in this paragraph. As of February 28, 2026, the fair value of this Euro/U.S. Dollar foreign currency forward contract was $9.1 million, which was recorded within receivables in the consolidated balance sheet. The change in the fair value is recorded in miscellaneous income (expense), net, which was equal to $9.1 million during the three months and nine months ended February 28, 2026. For additional information, see “Note 2 – Acquisitions.”