Income Taxes (Tables)

12 Months Ended

May 31, 2026

Earnings before income taxes for the prior three fiscal years included the following components:


	2026		2025			2024
U.S. based operations	$	200,396	$	132,160		$	107,643
Non – U.S. based operations		952		(3,351	)		(33,636	)
Earnings before income taxes		201,348		128,809			74,007
Plus: net loss attributable to noncontrolling interests (1)		1,050		1,083			263
Earnings before income taxes attributable to controlling interest	$	202,398	$	129,892		$	74,270

(1)

Net earnings attributable to noncontrolling interests are not taxable to us.

Components of Income Tax Expense (Benefit)

Significant components of income tax expense (benefit) for the three prior fiscal years were as follows:


	2026			2025			2024
Current
Federal	$	34,187		$	44,669		$	32,743
State and local		3,391			5,714			1,576
Foreign		296			1,894			1,666
Subtotal		37,874			52,277			35,985
Deferred
Federal		7,840			(14,775	)		(3,751	)
State and local		609			(2,256	)		3,801
Foreign		(10	)		(1,407	)		2,992
Subtotal		8,439			(18,438	)		3,042
Total	$	46,313		$	33,839		$	39,027

Reconciliation of Federal Statutory Corporate Income Tax Rate to Total Tax Provision upon Adoption of ASU 2023-09

A reconciliation of the federal statutory corporate income tax rate to total tax provision upon adoption of ASU 2023-09 for the three prior fiscal years were as follows:


	2026					2025					2024
Federal statutory corporate income tax rate	$	42,504		21.0	%	$	27,277		21.0	%	$	15,597		21.0	%
State and local income taxes, net of federal tax benefit (1)		4,000		2.0			3,458		2.7			5,377		7.2
Foreign tax effects		86		-			1,044		0.8			347		0.5
Nontaxable or Nondeductible Items
Executive compensation		1,399		0.7			2,021		1.6			3,622		4.9
Excess benefit related to share-based payment awards		(750	)	(0.4	)		(745	)	(0.6	)		(1,643	)	(2.2	)
Spin-off transaction costs		-		-			-		-			5,588		7.5
Tax impact of SES impairment and deconsolidation		-		-			-		-			8,213		11.1
Changes in valuation allowance		1,151		0.6			2,686		2.1			2,346		3.2
Change in Uncertain Tax Benefits		(1,827	)	(0.9	)		(1,547	)	(1.2	)		257		0.3
Other		(250	)	(0.1	)		(355	)	(0.3	)		(677	)	(0.9	)
Effective tax rate attributable to controlling interest	$	46,313		22.9	%	$	33,839		26.1	%	$	39,027		52.6	%

(1)

For the year ended May 31, 2026, state taxes in California, Illinois, and New York make up greater than 50% of the tax effect in this category. For the year ended May 31, 2025, state taxes in California and Illinois make up greater than 50% of the tax effect in this category. For the year ended May 31, 2024, state taxes in California, Wisconsin, New York, and Illinois make up greater than 50% of the tax effect in this category.

The above effective tax rate attributable to controlling interest excludes any impact from the inclusion of net earnings attributable to noncontrolling interests in our consolidated statements of earnings. The effective tax rate upon inclusion of net earnings attributable to noncontrolling interests was 23.0% for fiscal 2026. Net earnings attributable to noncontrolling interests are primarily a result of our acquisition of Halo in fiscal 2024. The earnings attributable to the noncontrolling interests in Halo do not generate tax expense to us since the investors in Halo’s operations are taxed directly based on the earnings attributable to them.

Consolidated Income Taxes Paid (Net of Refunds)

Consolidated income taxes paid (net of refunds) consisted of the following for the years ended May 31:


	2026		2025			2024
Federal	$	43,052	$	32,500		$	65,000
State and local		5,179		4,826			6,793
Foreign
Portugal	*			2,261		*
Other foreign jurisdictions		383		(5	)		9,653
Total	$	48,614	$	39,582		$	81,446

* The amount of income taxes paid during the year does not meet the 5% disaggregation threshold.

Reconciliation of Unrecognized Tax Benefits

A tabular reconciliation of unrecognized tax benefits follows:


Balance at May 31, 2025	$	1,826
Decreases - tax positions taken in prior years		(94	)
Settlements		(61	)
Lapse of statutes of limitations		(1,671	)
Balance at May 31, 2026	$	-

During fiscal 2025, we filed an amended U.S. federal income tax return for fiscal year 2021 to carry back capital losses primarily generated as a result of the deconsolidation of our former Sustainable Energy Solutions operating segment. We have recognized an income tax receivable of $16,741 related to the anticipated refund and interest. Due to the size of the claim, the refund is subject to review by the Internal Revenue Service Joint Committee on Taxation.

Deferred Tax Assets and Liabilities from Continuing Operations

The components of our deferred tax assets and liabilities from continuing operations as of May 31 were as follows:


	2026			2025
Deferred tax assets
Accounts receivable	$	1,016		$	731
Note receivable		3,985			4,026
Inventories		4,315			3,821
Accrued expenses		15,052			14,926
NOL carry forwards		5,054			5,562
Stock-based compensation		3,364			3,694
Derivative contracts		85			1,818
Operating lease - ROU liability		9,000			3,663
Capital loss		1,151			-
Interest expense carry forwards		2,943			137
Other		4,066			5,091
Total deferred tax assets		50,031			43,469
Valuation allowance for deferred tax assets		(10,118	)		(10,477	)
Net deferred tax assets		39,913			32,992
Deferred tax liabilities
Property, plant and equipment		(30,935	)		(27,057	)
Intangibles		(73,870	)		(67,076	)
Investment in affiliated companies, principally due to undistributed earnings		(19,686	)		(17,069	)
Operating lease - ROU asset		(8,760	)		(3,544	)
Other		(2,475	)		(1,146	)
Total deferred tax liability		(135,726	)		(115,892	)
Net deferred tax liability	$	(95,813	)	$	(82,900	)

At May 31, 2026, we had tax benefits for federal NOL carry forwards of $1,636, with no expiration date, and tax benefits for state net NOL carry forwards of $3,418 that expire from fiscal 2027 to fiscal 2046.