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Restructuring Charges (Notes)
 9 Months Ended
May 31, 2023
Restructuring and Related Activities [Abstract]  
Restructuring and Related Activities Disclosure [Text Block]
Note 4. Restructuring Charges
The Company has undertaken or committed to various restructuring initiatives, including workforce reductions, leadership changes, plant consolidations to reduce manufacturing overhead, satellite office closures, the continued movement of production and product sourcing to low-cost alternatives, and the centralization and standardization of certain administrative functions. Liabilities for severance are generally to be paid within twelve months, while future lease payments related to facilities vacated as a result of restructuring are to be paid over the underlying remaining lease terms.
During fiscal 2019, the Company announced a restructuring plan focused on (i) the integration of the Enerpac and Hydratight businesses (IT&S segment), (ii) the strategic exit of certain commodity-type services in our North America Services operations (IT&S segment) and (iii) driving efficiencies within the overall corporate structure. In the third quarter of fiscal 2020, the Company announced the expansion and revision of this plan, which further simplified and flattened the corporate structure through elimination of redundancies between the segment and corporate functions, while enhancing our commercial and marketing processes to become even closer to our customers. Upon assessment of the Company's operating structure by the Company's new President and Chief Executive Officer (hired effective October 2021), the Company recorded $0.6 million and $5.2 million of charges in the three and nine months ended May 31, 2022, respectively, in order to further simplify and streamline the organizational structure. The total cumulative charges for the 2019 plan, which ended in the third quarter of fiscal year 2022, were $18.0 million.
On June 27, 2022, the Company approved a new restructuring plan in connection with the initiatives identified as part of the ASCEND transformation program (see Note 3, “ASCEND Transformation Program”) to drive greater efficiency and productivity in global selling, general and administrative resources. The total costs of this plan were then estimated at $6 to $10 million, constituting predominately severance and other employee-related costs to be incurred as cash expenditures impacting both IT&S and Corporate. On September 23, 2022, the Company approved an updated restructuring plan. The costs of this updated plan (which includes the amounts for the plan approved in June 2022) are estimated at $10 to $15 million. These costs are expected to be incurred over the expected duration of the transformation program, ending in the fourth quarter of fiscal year 2024. For the three and nine months ended May 31, 2023, the Company recorded $2.3 million and $6.2 million, respectively, of restructuring charges associated with the ASCEND transformation program.
The following summarizes restructuring reserve activity (which for the nine months ended May 31, 2023 excludes $0.6 million of charges associated with ASCEND transformation plan, and for the nine months ended May 31, 2022 excludes $0.8 million and $0.5 million of charges associated with the 2019 Plan for IT&S and Corporate, respectively, associated with the accelerated vesting of equity awards which has no impact on the restructuring reserve) for the IT&S segment and Corporate (in thousands):
Nine Months Ended May 31, 2023
2019 PlanASCEND Plan
IT&SCorporateIT&SCorporate
Balance as of August 31, 2022$212 $6 $2,008 $797 
Restructuring charges56 — 4,570 1,038 
Cash payments(87)— (4,646)(1,734)
Other non-cash uses of reserve(84)— — — 
Impact of changes in foreign currency rates3 — 122 2 
Balance as of May 31, 2023$100 $6 $2,054 $103 
Nine Months Ended May 31, 2022
IT&SCorporate
Balance as of August 31, 2021$1,737 $26 
Restructuring charges2,818 1,050 
Cash payments(3,385)(1,069)
Impact of changes in foreign currency rates(79)— 
Balance as of May 31, 2022$1,091 $7 
Total restructuring charges (inclusive of the Other segment) were $2.3 million and $6.2 million in the three and nine months ended May 31, 2023, respectively, and $0.5 million and $5.1 million in the three and nine months ended May 31, 2022, respectively, being reported in "Restructuring charges."
ASCEND Transformation Program
Note 3. ASCEND Transformation Program
In March 2022, the Company announced the launch of ASCEND, a new transformation program focused on driving accelerated earnings growth and efficiency across the business with the goal of delivering an incremental $40 to $50 million of annual operating profit once fully implemented. In March 2023, the Company announced this estimate had been revised to an incremental $50 to $60 million of annual operating profit as a result of additional ASCEND initiatives and high success rate. As part of ASCEND, the Company is focusing on the following key initiatives: (i) accelerating organic growth go-to-market strategies, (ii) improving operational excellence and production efficiency by utilizing a lean approach and (iii) driving greater efficiency and productivity in SG&A by better leveraging resources to create a more efficient and agile organization.
The Company is implementing the program and originally anticipated investing approximately $60 to $65 million and in March 2023 anticipated that this investment would increase to $70 to $75 million (as disclosed in Note 4, "Restructuring Charges" approximately $10 to $15 million of these investments will be in the form of restructuring charges) over the life of the program, which is expected to be finalized as we exit fiscal 2024. Elements of these investments could include such cash costs as capital expenditures, restructuring costs, third-party support, and incentive costs (which incentives are not available for the senior management team). Total program expenses were approximately $8.2 million and $32.9 million for the three and nine months ended May 31, 2023, respectively, and $3.9 million for both the three and nine months ended May 31, 2022. Of the total ASCEND program expenses for fiscal year 2023, $5.5 million and $26.1 million were recorded within SG&A expenses for the three and nine months ended May 31, 2023, respectively, and $0.4 million and $0.6 million recorded within cost of goods sold for the three and nine months ended May 31, 2023, respectively, and $2.3 million and $6.2 million were recorded within restructuring expenses for the three and nine months ended May 31, 2023, respectively (see Note 4, "Restructuring Charges" below).