Restructuring and Other Expense (Income), Net

12 Months Ended

May 31, 2021

Restructuring And Related Activities [Abstract]

Restructuring and Other Expense (Income), Net

Note F – Restructuring and Other Expense (Income), Net

We consider restructuring activities to be programs whereby we fundamentally change our operations such as closing and consolidating manufacturing facilities or moving manufacturing of a product to another location.  Restructuring activities may also involve substantial realignment of the management structure of a business unit in response to changing market conditions.

A progression of the liabilities associated with our restructuring activities, combined with a reconciliation to the restructuring and other expense, net financial statement caption in our consolidated statement of earnings for fiscal 2021, is summarized below:

	Beginning										Ending
(in thousands)	Balance		Expense		Payments			Adjustments			Balance
Early retirement and severance	$	6,536	$	1,314	$	(6,980	)	$	(99	)	$	771
Facility exit and other costs		156		1,438		(1,330	)		185			449
	$	6,692		2,752	$	(8,310	)	$	86		$	1,220
Net loss on sale of assets				53,345
Restructuring and other expense, net			$	56,097

During fiscal 2021, the following actions were taken related to the Company’s restructuring activities:

• In October 2020, the Company’s Pressure Cylinders segment completed the sale of its cryogenic and hydrogen trailer business, including the Theodore, Alabama manufacturing site, and the cryo-science and microbulk storage unit business.  In connection with these transactions, the Company realized net cash proceeds of $21,275,000 after working capital adjustments, which generated a pre-tax loss of $7,064,000, primarily related to allocated goodwill.  

• On January 29, 2021, the Company’s Pressure Cylinders segment sold its oil & gas equipment business to an affiliate of Ten Oaks Group for deferred proceeds in the form of contingent consideration that entitles the Company to up to 15% of future sales proceeds upon the exit of the business by the acquirer, subject to limitations and certain adjustments.  Due to then current and forecasted losses of the business combined with uncertain market conditions, the Company did not assign any value to the contingent consideration arrangement. As a result, the Company recognized a loss of $27,671,000 within restructuring and other expense, net during fiscal 2021.  The Company retained the three real property locations (one in each of Breman and Wooster, Ohio, and one in Tulsa, Oklahoma).  In conjunction with the sale, the Company executed operating lease agreements with the buyer for the Breman and Tulsa locations.  These assets are being marketed for sale and have been classified as assets held for sale in our consolidated balance sheet as of May 31, 2021.

• During the third quarter of fiscal 2021, we recognized a $181,000 gain from the auction of certain assets related to the fabricated products facility in Stow, Ohio within restructuring and other expense, net.

• On March 12, 2021, the Company sold its Structural Composites Industries, LLC business located in Pomona, California to Luxfer Holdings PLC. The Company received net proceeds of $19,059,000 resulting in a pre-tax loss of $7,219,000 within restructuring and other expense, net.

• On May 31, 2021, the Company sold its LPG fuel storage business, located in Poland, to Westport Fuel Systems, Inc. The Company received total consideration of approximately $6,000,000, resulting in a pre-tax loss of $11,034,000 within restructuring and other expense, net.

The total liability as of May 31, 2021 is expected to be paid in the immediately following twelve months.

A progression of the liabilities associated with our restructuring activities, combined with a reconciliation to the restructuring and other expense, net financial statement caption in our consolidated statement of earnings for fiscal 2020, is summarized below:

	Beginning										Ending
(in thousands)	Balance		Expense		Payments			Adjustments			Balance
Early retirement and severance	$	774	$	9,096	$	(3,245	)	$	(89	)	$	6,536
Facility exit and other costs		2		829		(730	)		55			156
	$	776		9,925	$	(3,975	)	$	(34	)	$	6,692
Net loss on sale of assets				123
Restructuring and other income, net			$	10,048

During fiscal 2020, the following actions were taken related to the Company’s restructuring activities:

• In July 2019, our Pressure Cylinders segment completed the sale of its cryogenics business in Turkey, the net assets of which had been previously classified as assets held for sale. In connection with the sale, the Company realized net cash proceeds of $8,295,000 and recognized a net loss of $481,000.

• In November 2019, the Company contributed substantially all of the net assets of the Engineered Cabs business to the then newly-formed Cabs joint venture. In connection with the transaction, the Company recognized a net gain of $50,000. In fiscal 2020, final closing adjustments resulted in the recognition of an additional net gain of $208,000.  Subsequent to closing the transaction, the Company sold some assets of the retained fabricated products business in Stow, Ohio for a net gain of $100,000 and recognized facility exit costs of $103,000.

• In February 2020, the Company announced the closure of the Hermosillo, Mexico facility and an office in Sonata, Mexico, both operated by the Company’s consolidated joint venture, TWB within our Steel Processing segment.  In connection with the closures, and a reduction in personnel at Puebla, Mexico, the Company recognized severance expense of $620,000.

• In February 2020, the Company’s WSP joint venture within our Steel Processing segment committed to plans to close and sell the assets of its Canton, Michigan facility. In connection with the sale, the Company recognized severance expense of $450,000.

• In the third quarter of fiscal 2020, the Company announced a plan, within our Pressure Cylinders segment, to consolidate its oil & gas equipment operations in Wooster, Ohio into its existing facility in Bremen, Ohio.  In connection with the consolidation, the Company recognized $2,313,000 in severance expense and $522,000 in facility exit costs.

• In the fourth quarter of fiscal 2020, the Company recognized severance expense of $2,175,000 in our Steel Processing segment, $2,296,000 in our Pressure Cylinders segment and $873,000 in Other in connection with the reduction in workforce related to the impact of COVID-19.

• In the fourth quarter of fiscal 2020, the Company committed to plans to close the packaging solutions business served through the facility in Greensburg, Indiana.  In connection with the closure, the Company recognized $166,000 in severance expenses.

• In connection with other non-significant restructuring activities, the Company recognized severance expense of $203,000 within our Steel Processing segment and facility exit costs of $204,000, of which $151,000 were within our Pressure Cylinders segment and $53,000 within our Steel Processing segment.