Derivatives

9 Months Ended

Feb. 29, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

13. DERIVATIVES

Derivatives Not Designated as Hedging Instruments

We forecast our net exposure in various receivables and payables to fluctuations in the value of various currencies, and have entered into a number of foreign currency forward contracts each month to mitigate that exposure. These contracts are recorded net at fair value on our condensed consolidated balance sheets, classified as Level 2 in the fair value hierarchy. Gains and losses from these contracts are recognized in other income in our condensed consolidated statements of operations. The notional amount of forward contracts in place was $65,088 and $15,500 as of February 29, 2024 and May 31, 2023, respectively, and consisted of hedges of transactions up to January 2024.



Fair Value of Derivatives Not Designated as Hedging Instruments	Balance Sheet Location	February 29, 2024			May 31, 2023
Foreign currency forward contracts, net	Other (payable) receivable	$	(160	)	$	140

The location and amount of gains (losses) from derivatives not designated as hedging instruments in our condensed consolidated statements of operations were as follows:


		Three Months Ended
Derivatives Not Designated as Hedging Instruments	Location in statements of operations	February 29, 2024		February 28, 2023
Foreign currency forward contracts	Other income (expense)	$	150	$	(1,564	)


		Nine Months Ended
Derivatives Not Designated as Hedging Instruments	Location in statements of operations	February 29, 2024			February 28, 2023
Foreign currency forward contracts	Other expense	$	(391	)	$	(9,812	)

Derivatives Designated as Hedging Instruments

In November 2022, we entered into a receive-variable, pay-fixed interest rate swap agreement with an initial $250,000 notional value, which is designated as a cash flow hedge. This agreement fixed a portion of the variable interest due on our term loan facility, with an effective date of December 2, 2022 and a maturity date of June 30, 2027. Under the terms of the agreement, we pay a fixed interest rate of 4.215%, plus an applicable margin ranging between 150 to 225 basis points and receive a variable rate of interest based on term SOFR from the counterparty, which is reset according to the duration of the SOFR term. The fair value of the interest rate swap as of February 29, 2024 and May 31, 2023 was a net asset (liability) of $928 and ($2,683), respectively. The Company expects to reclassify a $2,091 gain of accumulated other comprehensive income into earnings in the next 12 months.

We record the fair value of our interest rate swaps on a recurring basis using Level 2 observable market inputs for similar assets or liabilities in active markets.


Fair Value of Derivatives Designated as Hedging Instruments	Balance Sheet Location	February 29, 2024			May 31, 2023
Interest rate swap – current	Other current assets	$	2,091		$	2,087
Interest rate swap – non-current	Other non-current liabilities		(1,163	)		(4,770	)

The following table summarizes the other comprehensive income before reclassifications of derivative gains and losses:


	Other Comprehensive Income Before Reclassifications During
	Three Months Ended				Nine Months Ended
Derivatives Designated as Hedging Instruments	February 29, 2024		February 28, 2023		February 29, 2024		February 28, 2023
Interest rate swaps	$	731	$	3,083	$	4,439	$	655

The following table summarizes the reclassification of derivative gains and losses into net (loss) income from accumulated other comprehensive income (loss):


		Gain Reclassified During
		Three Months Ended				Nine Months Ended
Derivatives Designated as Hedging Instruments	Location of Gain Reclassified	February 29, 2024		February 28, 2023		February 29, 2024		February 28, 2023
Interest rate swaps	Interest expense	$	592	$	105	$	1,695	$	105