UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended May 31, ~~2021~~2022

Commission File Number: 1-9852

CHASE CORPORATION

(Exact name of registrant as specified in its charter)


Massachusetts		11-1797126
(State or other jurisdiction of incorporation of organization)		(I.R.S. Employer Identification No.)

~~295~~375 University Avenue, Westwood, Massachusetts 02090

(Address of Principal Executive Offices) (Zip Code)

(781) 332-0700

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Common stock, $.10 par value

Trading Symbol(s)

CCF

Name of each exchange on which registered

NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. YES ⌧ NO ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES ⌧ NO ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ◻	Accelerated filer ⌧
Non-accelerated filer ◻	Smaller reporting company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ⌧

The number of shares of Common Stock outstanding as of June 30, ~~2021~~2022 was ~~9,449,248.~~9,468,590.

Table of Contents

CHASE CORPORATION

INDEX TO FORM 10-Q

For the Quarter Ended May 31, ~~2021~~2022

Ca
Cautionary Note Concerning Forward-Looking Statements		3

Part I - FINANCIAL INFORMATION

Item 1 – Unaudited Condensed Consolidated Financial Statements

Condensed Consolidated Balance Sheets as of May 31, ~~2021~~2022 (unaudited) and August 31, ~~2020~~2021		4

Condensed Consolidated Statements of Operations for the three and nine months ended May 31, ~~2021~~2022 and ~~2020~~2021 (unaudited)		5

Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended May 31, ~~2021~~2022 and ~~2020~~2021 (unaudited)		6

Condensed Consolidated Statements of Equity for the three and nine months ended May 31, ~~2021~~2022 and ~~2020~~2021 (unaudited)		7

Condensed Consolidated Statements of Cash Flows for the nine months ended May 31, ~~2021~~2022 and ~~2020~~2021 (unaudited)		9

Notes to Unaudited Condensed Consolidated Financial Statements		10

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations		3231

Item 3 – Quantitative and Qualitative Disclosures About Market Risk		4442

Item 4 – Controls and Procedures		4543

Part II – OTHER INFORMATION

Item 1 – Legal Proceedings		4644

Item 1A – Risk Factors		4644

Item 6 – Exhibits		4644

SIGNATURES		4745

Table of Contents

Cautionary Note Concerning Forward-Looking Statements

This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements, including without limitation forward-looking statements made under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” involve risks and uncertainties. Any statements contained in this Quarterly Report that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements include, without limitation, statements as to ~~Chase Corporation’s~~ future operating results; seasonality expectations; plans for the development, utilization or disposal of manufacturing facilities; future economic conditions; ~~its~~our expectations as to legal proceedings; the effect of ~~its~~our market and product development efforts; ~~expectations relating to the renewal of its credit facility;~~ and expectations or plans relating to the implementation or realization of ~~its~~our strategic goals and future growth, including through potential future ~~acquisitions and divestitures.~~acquisitions. Forward-looking statements may also include, among other things, statements relating to future sales, earnings, cash flow, results of operations, use of cash and other measures of financial performance, statements relating to future dividend payments, as well as the expected impact of the coronavirus disease 2019 (COVID-19) pandemic on the Company's businesses. Forward-looking statements may be identified through the use of words such as “believes,” “anticipates,” “may,” “should,” “will,” “plans,” “projects,” “expects,” “expectations,” “estimates,” “predicts,” “targets,” “forecasts,” “strategy,” and other words of similar meaning in connection with the discussion of future operating or financial performance. These statements are based on current expectations, estimates and projections about the industries in which ~~the Company operates,~~we operate, and the beliefs and assumptions made by management. Because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties and changes in circumstances that are difficult to predict. Accordingly, the Company’s actual results may differ materially from those contemplated by the forward-looking statements. Investors, therefore, are cautioned against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Readers should refer to the discussions under “Risk Factors” contained in our Annual Report on Form 10-K for the fiscal year ended August 31, ~~2020~~2021 concerning certain factors that could cause our actual results to differ materially from the results anticipated in such forward-looking statements. These Risk Factors are hereby incorporated by reference into this Quarterly Report.

Table of Contents

Item 1 — Unaudited Condensed Consolidated Financial Statements

CHASE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

In thousands, except share and per share amounts


	May 31,		August 31,		May 31,		August 31,
	2021		2020		2022		2021
ASSETS
Current Assets
Cash and cash equivalents	$	102,947	$	99,068	$	124,683	$	119,429
Accounts receivable, less allowance for doubtful accounts and credit losses of $434 and $438		45,515		36,993
Accounts receivable, less allowances of $537 and $451						51,330		46,212
Inventory		38,395		39,058		58,551		41,217
Prepaid expenses and other current assets		2,616		2,470		3,434		2,851
Prepaid income taxes		5,018		231
Prepaid income taxes and refunds due						3,249		3,255
Total current assets		194,491		177,820		241,247		212,964

Property, plant and equipment, less accumulated depreciation of $52,263 and $52,283		24,685		25,574
Property, plant and equipment, less accumulated depreciation of $52,154 and $50,666						24,531		24,267

Other Assets
Goodwill		98,457		82,402		96,321		97,866
Intangible assets, less accumulated amortization of $88,593 and $78,351		50,617		41,200
Intangible assets, less accumulated amortization of $99,506 and $91,484						36,947		46,954
Cash surrender value of life insurance		4,450		4,450		4,450		4,450
Restricted investments		2,038		1,619		2,312		2,260
Deferred income taxes		4,856		4,929		5,273		5,265
Operating lease right-of-use asset (Note 8)		9,787		8,821
Operating lease right-of-use asset						9,078		9,312
Other assets		853		15		732		821
Total assets	$	390,234	$	346,830	$	420,891	$	404,159

LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	16,419	$	12,525	$	18,375	$	19,575
Accrued payroll and other compensation		6,619		5,751		5,884		7,179
Income taxes payable						159		761
Accrued expenses		4,159		4,867		5,639		5,407
Total current liabilities		27,197		23,143		30,057		32,922

Operating lease long-term liabilities (Note 8)		7,601		6,395
Operating lease long-term liabilities						7,060		7,202
Deferred compensation		2,045		1,629		2,320		2,267
Accumulated pension obligation		9,992		10,930		8,155		9,416
Other liabilities		2,939		—		2,099		2,537
Deferred income taxes		3,327		—		2,822		3,301
Accrued income taxes		1,847		1,941		1,813		2,190

Commitments and contingencies (Note 10)

Equity
First Serial Preferred Stock, $1.00 par value: Authorized 100,000 shares; NaN issued		—		—		—		—
Common stock, $.10 par value: Authorized 20,000,000 shares; 9,449,786 shares at May 31, 2021 and 9,439,082 shares at August 31, 2020 issued and outstanding		946		944
Common stock, $.10 par value: Authorized 20,000,000 shares; 9,468,590 shares at May 31, 2022 and 9,447,905 shares at August 31, 2021 issued and outstanding						948		946
Additional paid-in capital		18,596		16,674		21,375		18,959
Accumulated other comprehensive loss		(9,262)		(13,092)		(16,325)		(11,210)
Retained earnings		325,006		298,266		360,567		335,629
Total equity		335,286		302,792		366,565		344,324
Total liabilities and equity	$	390,234	$	346,830	$	420,891	$	404,159

See accompanying notes to the unaudited condensed consolidated financial statements

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CHASE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

In thousands, except share and per share amounts


	Three Months Ended May 31,				Nine Months Ended May 31,				Three Months Ended May 31,				Nine Months Ended May 31,
	2021		2020		2021		2020		2022		2021		2022		2021

Revenue
Sales	$	78,822	$	64,157	$	212,533	$	194,540	$	87,724	$	78,822	$	235,098	$	212,533
Royalties and commissions		771		714		2,683		2,715		895		771		2,484		2,683
		79,593		64,871		215,216		197,255		88,619		79,593		237,582		215,216
Costs and Expenses
Cost of products and services sold		46,312		39,689		126,832		122,138		54,438		46,312		148,630		126,832
Selling, general and administrative expenses		13,969		11,795		38,560		37,025		13,807		13,969		40,307		38,560
Research and product development costs		957		958		3,034		3,045		1,186		957		3,274		3,034
Operations optimization costs (Note 15)		22		268		120		977		59		22		707		120
Acquisition-related costs (Note 17)		—		20		128		153		—		—		—		128
Gain on sale of real estate (Note 15)		—		(760)		—		(760)
Loss (gain) on contingent consideration (Note 17)		262		—		995		—
(Gain) loss on contingent consideration (Note 17)										(474)		262		(199)		995

Operating income		18,071		12,901		45,547		34,677		19,603		18,071		44,863		45,547

Interest expense		(68)		(67)		(204)		(178)		(89)		(68)		(262)		(204)
Other income (expense)		(260)		(307)		(758)		(1,096)		(166)		(260)		231		(758)

Income before income taxes		17,743		12,527		44,585		33,403		19,348		17,743		44,832		44,585

Income taxes (Note 14)		3,454		2,619		10,288		8,254		3,803		3,454		10,434		10,288

Net income	$	14,289	$	9,908	$	34,297	$	25,149	$	15,545	$	14,289	$	34,398	$	34,297


Net income available to common shareholders, per common and common equivalent share (Note 4)

Basic	$	1.51	$	1.05	$	3.63	$	2.67	$	1.64	$	1.51	$	3.64	$	3.63

Diluted	$	1.50	$	1.04	$	3.61	$	2.64	$	1.64	$	1.50	$	3.62	$	3.61

Weighted average shares outstanding
Basic		9,386,814		9,363,559		9,381,433		9,357,176		9,399,231		9,386,814		9,398,778		9,381,433
Diluted		9,435,335		9,429,263		9,426,879		9,435,897		9,431,259		9,435,335		9,435,369		9,426,879

Annual cash dividends declared per share					$	0.80	$	0.80		—		—	$	1.00	$	0.80

See accompanying notes to the unaudited condensed consolidated financial statements

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CHASE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

In thousands, except share and per share amounts


	Three Months Ended May 31,				Nine Months Ended May 31,				Three Months Ended May 31,				Nine Months Ended May 31,
	2021		2020		2021		2020		2022		2021		2022		2021
Net income	$	14,289	$	9,908	$	34,297	$	25,149	$	15,545	$	14,289	$	34,398	$	34,297

Other comprehensive income (loss):
Net unrealized gain on restricted investments, net of tax		68		7		186		5
Net unrealized (loss) gain on restricted investments, net of tax										(112)		68		(277)		186
Change in funded status of pension plans, net of tax		124		185		371		444		112		124		336		371
Foreign currency translation adjustment		1,386		(1,077)		3,273		318		(3,116)		1,386		(5,174)		3,273
Total other comprehensive income (loss)		1,578		(885)		3,830		767		(3,116)		1,578		(5,115)		3,830

Comprehensive income	$	15,867	$	9,023	$	38,127	$	25,916	$	12,429	$	15,867	$	29,283	$	38,127

See accompanying notes to the unaudited condensed consolidated financial statements

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CHASE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

THREE MONTHS ENDED MAY 31, ~~2021~~2022 AND ~~2020~~2021

(UNAUDITED)

In thousands, except share and per share amounts


				Additional		Accumulated Other				Total					Additional		Accumulated Other				Total
	Common Stock			Paid-In		Comprehensive		Retained		Stockholders'		Common Stock			Paid-In		Comprehensive		Retained		Stockholders'
	Shares	Amount		Capital		Income (Loss)		Earnings		Equity
Balance at February 29, 2020	9,448,620	$	945	$	15,882	$	(14,060)	$	279,350	$	282,117
Restricted stock grants, net of forfeitures	(432)		—		—						—
Amortization of restricted stock grants					606						606
Amortization of stock option grants					231						231
Common stock retained to pay statutory minimum withholding taxes on common stock	(5,790)		—		(484)						(484)
Change in funded status of pension plans, net of tax $65							185				185
Foreign currency translation adjustment							(1,077)				(1,077)
Net unrealized gain (loss) on restricted investments, net of tax $4							7				7
Net income									9,908		9,908
Balance at May 31, 2020	9,442,398	$	945	$	16,235	$	(14,945)	$	289,258	$	291,493
												Shares	Amount		Capital		Income (Loss)		Earnings		Equity
Balance at February 28, 2021	9,448,371	$	946	$	17,721	$	(10,840)	$	310,717	$	318,544	9,448,371	$	946	$	17,721	$	(10,840)	$	310,717	$	318,544
Amortization of restricted stock grants					600						600					600						600
Amortization of stock option grants					195						195					195						195
Exercise of stock options	2,149		—		166						166	2,149		—		166						166
Common stock received for payment of stock option exercises	(689)		—		(80)						(80)	(689)		—		(80)						(80)
Common stock retained to pay statutory minimum withholding taxes on common stock	(45)		—		(6)						(6)	(45)		—		(6)						(6)
Change in funded status of pension plans, net of tax $41							124				124							124				124
Foreign currency translation adjustment							1,386				1,386							1,386				1,386
Net unrealized gain (loss) on restricted investments, net of tax $24							68				68							68				68
Net income									14,289		14,289									14,289		14,289
Balance at May 31, 2021	9,449,786	$	946	$	18,596	$	(9,262)	$	325,006	$	335,286	9,449,786	$	946	$	18,596	$	(9,262)	$	325,006	$	335,286

Balance at February 28, 2022												9,468,888	$	948	$	20,513	$	(13,209)	$	345,022	$	353,274
Restricted stock grants, net of forfeitures												(298)		—								—
Amortization of restricted stock grants																613						613
Amortization of stock option grants																249						249
Change in funded status of pension plans, net of tax $37																		112				112
Foreign currency translation adjustment																		(3,116)				(3,116)
Net unrealized gain (loss) on restricted investments, net of tax ($37)																		(112)				(112)
Net income																				15,545		15,545
Balance at May 31, 2022												9,468,590	$	948	$	21,375	$	(16,325)	$	360,567	$	366,565

See accompanying notes to the unaudited condensed consolidated financial statements

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CHASE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

NINE MONTHS ENDED MAY 31, ~~2021~~2022 AND ~~2020~~2021

(UNAUDITED)

In thousands, except share and per share amounts

Additional

Accumulated Other

Total

Common Stock

Paid-In

Comprehensive

Retained

Stockholders'


Shares

Amount

Capital

Income (Loss)

Earnings

Equity
Balance at August 31, 2019

9,400,748

$
940

$
14,351

$
(14,324)

$
270,260

$
271,227
Restricted stock grants, net of forfeitures

44,879

5

(5)

—
Amortization of restricted stock grants

1,686

1,686
Amortization of stock option grants

687

687
Exercise of stock options

3,618

—

123

123
Common stock received for payment of stock option exercises

(1,057)

—

(123)

(123)
Common stock retained to pay statutory minimum withholding taxes on common stock

(5,790)

—

(484)

(484)
Cash dividend on common stock, $0.80 per share

(7,539)

(7,539)
Change in funded status of pension plans, net of tax $156

444

444
Foreign currency translation adjustment

318

318
Net unrealized gain (loss) on restricted investments, net of tax $3

5

5
Adoption of ASU 2018-02

(1,388)

1,388

—
Net income

25,149

25,149
Balance at May 31, 2020

9,442,398

$
945

$
16,235

$
(14,945)

$
289,258

$
291,493

Balance at August 31, 2020

9,439,082

$
944

$
16,674

$
(13,092)

$
298,266

$
302,792
Restricted stock grants, net of forfeitures

10,693

2

(2)

—
Amortization of restricted stock grants

1,789

1,789
Amortization of stock option grants

420

420
Exercise of stock options

4,681

—

207

207
Common stock received for payment of stock option exercises

(1,075)

—

(121)

(121)
Common stock retained to pay statutory minimum withholding taxes on common stock

(3,595)

—

(371)

(371)
Cash dividend on common stock, $0.80 per share

(7,557)

(7,557)
Change in funded status of pension plans, net of tax $124

371

371
Foreign currency translation adjustment

3,273

3,273
Net unrealized gain (loss) on restricted investments, net of tax $63

186

186
Net income

34,297

34,297
Balance at May 31, 2021

9,449,786

$
946

$
18,596

$
(9,262)

$
325,006

$
335,286


				Additional		Accumulated Other				Total
	Common Stock			Paid-In		Comprehensive		Retained		Stockholders'
	Shares	Amount		Capital		Income (Loss)		Earnings		Equity
Balance at August 31, 2020	9,439,082	$	944	$	16,674	$	(13,092)	$	298,266	$	302,792
Restricted stock grants, net of forfeitures	10,693		2		(2)						—
Amortization of restricted stock grants					1,789						1,789
Amortization of stock option grants					420						420
Exercise of stock options	4,681		—		207						207
Common stock received for payment of stock option exercises	(1,075)		—		(121)						(121)
Common stock retained to pay statutory minimum withholding taxes on common stock	(3,595)		—		(371)						(371)
Cash dividend on common stock, $0.80 per share									(7,557)		(7,557)
Change in funded status of pension plans, net of tax $124							371				371
Foreign currency translation adjustment							3,273				3,273
Net unrealized gain (loss) on restricted investments, net of tax $63							186				186
Net income									34,297		34,297
Balance at May 31, 2021	9,449,786	$	946	$	18,596	$	(9,262)	$	325,006	$	335,286

Balance at August 31, 2021	9,447,905	$	946	$	18,959	$	(11,210)	$	335,629	$	344,324
Restricted stock grants, net of forfeitures	20,685		2		(2)						—
Amortization of restricted stock grants					1,721						1,721
Amortization of stock option grants					697						697
Cash dividend on common stock, $1.00 per share									(9,460)		(9,460)
Change in funded status of pension plans, net of tax $111							336				336
Foreign currency translation adjustment							(5,174)				(5,174)
Net unrealized gain (loss) on restricted investments, net of tax ($92)							(277)				(277)
Net income									34,398		34,398
Balance at May 31, 2022	9,468,590	$	948	$	21,375	$	(16,325)	$	360,567	$	366,565

See accompanying notes to the unaudited condensed consolidated financial statements

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CHASE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

In thousands


	Nine Months Ended May 31,				Nine Months Ended May 31,
	2021		2020		2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	34,297	$	25,149	$	34,398	$	34,297
Adjustments to reconcile net income to net cash provided by operating activities
Gain on sale of real estate		—		(760)
(Gain) Loss on contingent consideration						(199)		995
Depreciation		2,925		2,989		2,654		2,925
Amortization		9,566		8,724		9,092		9,566
Recovery of allowance for doubtful accounts and credit losses		(8)		(307)
Provision for allowance for doubtful accounts						91		(8)
Stock-based compensation		2,209		2,373		2,418		2,209
Realized gain on restricted investments		(54)		(32)		(86)		(54)
Pension curtailment and settlement loss		—		75
Deferred taxes		—		(15)		(187)		—
Increase (decrease) from changes in assets and liabilities
Accounts receivable		(6,946)		3,656		(5,852)		(6,946)
Inventory		2,062		1,835		(17,768)		2,062
Prepaid expenses and other assets		(260)		(154)		(573)		(260)
Accounts payable		3,049		(183)		(936)		3,049
Accrued compensation and other expenses		1,044		(1,263)		(1,765)		49
Accrued income taxes		(4,884)		578		(1,001)		(4,884)
Net cash provided by operating activities		43,000		42,665		20,286		43,000

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment		(1,749)		(1,044)		(3,103)		(1,749)
Payments for acquisitions		(31,238)		—		—		(31,238)
Proceeds from sale of real estate		—		1,810
Changes in restricted investments		(119)		(115)		(340)		(119)
Net cash (used in) provided by investing activities		(33,106)		651
Net cash used in investing activities						(3,443)		(33,106)

CASH FLOWS FROM FINANCING ACTIVITIES
Dividend paid		(7,557)		(7,539)		(9,460)		(7,557)
Proceeds from exercise of common stock options		86		—		—		86
Payments of taxes on stock options and restricted stock		(371)		(484)		—		(371)
Net cash used in financing activities		(7,842)		(8,023)		(9,460)		(7,842)

INCREASE IN CASH & CASH EQUIVALENTS		2,052		35,293		7,383		2,052
Effect of foreign exchange rates on cash		1,827		195		(2,129)		1,827
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		99,068		47,771		119,429		99,068
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	102,947	$	83,259	$	124,683	$	102,947

Non-cash Investing and Financing Activities
Common stock received for payment of stock option exercises	$	121	$	123	$	—	$	121
Property, plant and equipment additions included in accounts payable	$	141	$	236	$	207	$	141

See accompanying notes to the unaudited condensed consolidated financial statements

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CHASE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

In thousands, except share and per share amounts

Note 1 — Basis of Financial Statement Presentation

Description of Business

Chase Corporation (the “Company,” “Chase,” “we,” or “us”), a global specialty chemicals company founded in 1946, is a leading manufacturer of protective materials for high-reliability applications across diverse market sectors. The Company’s strategy is to maximize the performance of its core businesses and brands while seeking future opportunities through strategic acquisitions. Through investments in facilities, systems and organizational consolidation, the Company seeks to improve performance and gain economies of scale.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States of America generally accepted accounting principles (“U.S. GAAP”) for interim financial reporting, and instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Therefore, they do not include all information and footnote disclosures necessary for a complete presentation of Chase Corporation’s financial position, results of operations and cash flows in conformity with generally accepted accounting principles. The year-end condensed balance sheet was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. Chase Corporation filed audited consolidated financial statements which included all information and notes necessary for such a complete presentation for the three years ended August 31, ~~2020~~2021 in conjunction with its ~~2020~~2021 Annual Report on Form 10-K. Certain immaterial reclassifications have been made to the prior year amounts to conform to the current year’s presentation.

The results of operations for the interim period ended May 31, ~~2021~~2022 are not necessarily indicative of the results to be expected for any future period or the entire fiscal year. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended August 31, ~~2020~~2021 which are contained in the Company’s ~~2020~~2021 Annual Report on Form 10-K.

The accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring items) that are, in the opinion of management, necessary for a fair statement of the Company’s financial position as of May 31, ~~2021,~~2022, and the results of its operations, comprehensive income, changes in equity and cash flows for the interim periods ended May 31, ~~2021~~2022 and ~~2020.~~2021.

The financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The Company uses the U.S. dollar as the reporting currency for financial reporting. The financial position and results of operations of the Company’s U.K.-based operations are measured using the British pound as the functional currency. The financial position and results of operations of the Company’s operations based in France ~~(including ABchimie acquired September 1, 2020)~~ are measured using the euro as the functional currency. The financial position and results of the Company’s HumiSeal India Private Limited business are measured using the Indian rupee as the functional currency. The functional currency for all Chase Corporation’s other operations is the U.S. dollar. Foreign currency translation gains and losses are determined using current exchange rates for monetary items and historical exchange rates for other balance sheet items and are recorded as a change in other comprehensive income. Transaction gains and losses generated from the remeasurement of assets and liabilities denominated in currencies other than the functional currency of each applicable operation are included in other income (expense) on the condensed consolidated statements of operations, and were $94 and $431 for the three- and nine-month periods ended May 31, 2022, respectively, and ($241) and ($678) for the three- and nine-month periods ended May 31, 2021, ~~respectively, and $155 and ($451) for the three- and nine-month periods ended May 31, 2020,~~ respectively.

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Other Business Developments

The Company substantially completed the relocation of its Corporate Headquarters to another location within Westwood, MA during the second quarter of the fiscal year. The move, part of the Company’s ongoing consolidation and optimization initiative, capitalizes on the hybrid work model utilized by many of Chase’s corporate and administrative employees and is expected to provide future operational cost savings. The new facility also consolidates and houses research and development operations previously conducted at the previous Westwood, MA and Woburn, MA locations. Operations optimization costs related to the Westwood move of $32 and $232 were expensed in the third quarter and year-to-date fiscal period, respectively. The Company does not anticipate any significant additional operations optimization costs related to the new Corporate Headquarters during the fourth quarter of the fiscal year.

During the third quarter of fiscal 2021, Chase announced to the employees at its Woburn, MA location that its adhesives systems operations, part of the ~~Adhesive,~~Adhesives, Sealants and Additives segment’s electronic and industrial coatings product line, would be consolidating into the Company’s existing O'Hara Township, PA location. This rationalization and consolidation ~~initiative-related announcement~~initiative aligns with the announcement in the second quarter ~~announcement~~of fiscal 2021 of the Company’s plan to move its sealant systems production from Newark, CA to ~~its location in~~ Hickory, NC, described in more detail below. Chase Corporation obtained both the adhesive and sealants systems as part of its fiscal 2017 acquisition of the operations of Resin Designs. ~~No expense was recognized~~The Company expensed $27 and $328 related to ~~this initiative~~the consolidation of the Woburn, MA location during the third quarter and year-to-date fiscal period, respectively, and expects to recognize additional expense during the fourth quarter ~~with~~of the ~~majority of future costs anticipated to occur in the first half of~~ fiscal ~~2022.~~year.

On February 5, 2021, the Company acquired certain assets of Emerging Technologies, Inc. (“ETi”), a superabsorbent polymers solutions provider, located in Greensboro, NC. The business was acquired for a purchase price of $9,997 comprising $8,997 paid on February 5, 2021 and an accrual of $1,000 to be paid out up to eighteen months after purchase, subsequent to final working capital adjustments, and excluding acquisition-related costs. As part of this transaction, Chase acquired substantially all working capital and fixed assets of the business and entered a multi-year lease at ETi’s existing location. The Company expensed $128 of acquisition-related costs during the ~~three-month period ended February 28,~~second quarter of fiscal 2021 associated with this acquisition. The purchase was funded with available cash on hand. ETi is a solutions provider and formulator of absorbent polymers for use in the packaging, recreational, consumer, and sanitation markets. The acquisition broadens the Company’s superabsorbent polymers product offerings and formulation capabilities while expanding its market reach. The Company ~~is currently in the process of finalizing~~finalized purchase accounting ~~regarding a final allocation~~during the first quarter of ~~the purchase price~~fiscal 2022, with no significant change to ~~tangible and identifiable intangible assets assumed, and anticipates completion within fiscal 2021.~~amounts initially recorded. Since the effective date of the acquisition, the financial results of ETi’s acquired operations have been included in the Company’s financial statements within the functional additives product line, contained within the Adhesives, Sealants and Additives operating segment. ~~See Note 17 to the condensed consolidated financial statements for additional information on the acquisition of the assets and operations of ETi.~~

During the second quarter of fiscal 2021, Chase began moving the sealant systems operations, part of the ~~Adhesive,~~Adhesives, Sealants and Additives segment’s electronic and industrial coatings product line, from its Newark, CA location to its Hickory, NC facility. This is in line with the Company’s ongoing initiative to consolidate its manufacturing plants and streamline its existing processes. The sealant systems operations and Newark, CA location came to Chase Corporation as part of the fiscal 2017 acquisition of the operations of Resin Designs, and the Company’s lease there ~~terminates~~terminated in ~~the current~~ fiscal ~~year.~~2021. The Company recognized ~~$22 and $120~~$977 in expense related to the move during the entire prior fiscal year ended August 31, 2021 and $147 of expense in the ~~three-month~~first half of fiscal 2022. This project is now substantially completed and ~~nine-month periods ended May 31, 2021.~~any future costs related to this move are not anticipated to be significant to the condensed consolidated financial statements.

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On September 1, 2020 (the first day of fiscal 2021), the Company acquired all the capital stock of ABchimie for €18,654 (approximately $22,241 at the time of the transaction) net of cash acquired, subsequent to final working capital adjustment, excluding acquisition-related costs totaling $274 recognized in fiscal 2020 ~~(with $20 and $153 recognized in the three and nine months ended May 31, 2020, respectively)~~ and with a potential earn out based on performance potentially worth an additional €7,000 (approximately $8,330 at the time of the transaction). ABchimie is a Corbelin, France headquartered solutions provider for the cleaning and protection of electronic assemblies, with ‎further formulation, production, and research and development capabilities‎. The transaction was funded with cash on hand. ~~The~~Since the effective date of the acquisition, the financial results of the business ~~were~~have been included in the Company's ~~fiscal 2021~~ financial statements within the Adhesives, Sealants and Additives operating segment in the electronic and industrial coatings product line. The Company is currently in the process of finalizing purchase accounting regarding a final allocation of the purchase price to tangible and identifiable intangible assets assumed, including finalizing the recording of deferred taxes, and anticipates completion within fiscal 2021.~~See Note 17 to the condensed consolidated financial statements for additional information on the acquisition of ABchimie.~~

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The Company’s second quarter of fiscal 2020 (prior year) saw the beginning of the global spread of the coronavirus pandemic (COVID-19), which subsequently grew to create significant volatility, uncertainty, and global economic disruption. While the Company remains profitable with sufficient cash on hand to continue to meet its short- and long-term strategic objectives, COVID-19 continues to impact nearly all geographies served by the Company to varying degrees.Given the magnitude of the uncertainty that COVID-19 has broadly placed on global markets, the pandemic’s long-term effects on the Company’s results and the Company’s ability to maintain service levels cannot currently be estimated. The Company will continue to assess the situation and take the appropriate actions to address the impact of COVID-19 on its operations.

During the first quarter of fiscal 2020, the Company commissioned third party led studies regarding the potential upgrading of the Company’s current worldwide ERP system. Chase is currently reviewing the data and recommendations provided by the study and may further utilize third-party engineering, IT and other professional services firms in the future for similar work, as well as work around the facilities rationalization and consolidation initiative. The Company recognized $150 in expense related to these services in the first nine months of fiscal 2020, with nothing recognized in the first nine months of fiscal 2021. Given the ongoing nature of the review, an estimate of future costs, including those that may be capitalized, cannot currently be determined.

During the third quarter of fiscal 2019, Chase began moving the pulling and detection operations from its Granite Falls, NC location to its Hickory, NC facility. This is in line with the Company’s ongoing initiative to consolidate its manufacturing plants and streamline its existing processes. At the time, the pulling and detection operations were the only Chase-owned production operations in Granite Falls, NC, with the remaining portions of the building being either utilized for research and development or leased to a third party. The process of moving, including moving internal research and development capabilities, was substantially completed during the second quarter of fiscal 2020. The Company recognized $559 in expense related to the move in the six-month period ended February 29, 2020, having recognized $526 in expense during the second half of fiscal 2019. This project is now substantively complete, and no costs were recognized in the second half of fiscal 2020 or in the nine months ended May 31, 2021, and any future costs related to this move are not anticipated to be significant to the condensed consolidated financial statements.

Significant Accounting Policies

The Company’s significant accounting policies are detailed in Note 1 — “Summary of Significant Accounting Policies” within Item 8 of the Company’s Annual Report on Form 10-K for the year ended August 31, 2020. Significant changes to these accounting policies as a result of adopting Accounting Standards Update ("ASU") No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” during the first quarter of fiscal 2021 are discussed within2021. See Note 2 ~~— “Recent Accounting Standards” within this Current Quarterly Report on Form 10-Q.~~of the condensed consolidated financial statementsfor a discussion of the effects of recently issued accounting pronouncements.

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Note 2 — Recent Accounting Standards

Recently ~~Adopted~~Issued Accounting Pronouncements

In ~~March 2020,~~November 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. ~~2020-04, “Reference Rate Reform~~2021-10, “Government Assistance (Topic ~~848)~~832): ~~Facilitation of the Effects of Reference Rate Reform on Financial Reporting”. The ASU applies~~Disclosures by Business Entities about Government Assistance”, which requires entities to ~~all entities that have contracts, hedging relationships, and other~~make annual disclosures about transactions ~~that reference LIBOR~~with a government they account for by analogizing to a grant or ~~another reference rate expected to be discontinued because of reference rate reform. The ASU provides optional expedients and exceptions for applying generally accepted~~contribution accounting principles (GAAP) to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The expedients and exceptions provided by the ASU do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022 for which an entity has elected certain optional expedients and that are retained through the end of the hedging relationship.model under ASC 958-605. The ASU is effective for ~~all entities as~~the Company beginning September 1, 2022 (the start of ~~March 12, 2020 through December 31, 2022.~~fiscal 2023). ASU ~~2020-04~~2021-10 has not had, and the Company does not expect it to have in future periods, a material impact on the ~~Company's~~Company’s condensed consolidated financial statements and disclosures.

Recently Adopted Accounting Pronouncements

In ~~June 2016,~~October 2021, the FASB issued ASU No. ~~2016-13, “Financial Instruments - Credit Losses~~2021-08, “Business Combinations (Topic ~~326)~~805): ~~Measurement of Credit Losses on Financial Instruments,”~~Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”, which ~~modifies~~amends the ~~measurement approach~~accounting for ~~credit losses on financial~~contract assets ~~measured on~~and contract liabilities from revenue contracts with customers in a business combination. The amendment requires that an ~~amortized cost basis~~entity acquiring the contract assets and contract liabilities in a business combination be recognized in accordance with ASU 2014-09, “Revenue from ~~an 'incurred loss' method to an 'expected loss' method. In November 2019, the FASB issued~~Contracts with Customers (Topic 606)”. The ASU ~~2019-11, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses.” ASU 2019-11~~ is ~~an accounting pronouncement that amends ASU 2016-13. This amendment provides clarity and improves the codification to ASU 2016-13. The pronouncements are concurrently~~ effective for all public entities for fiscal years beginning after December 15, ~~2019~~2022, and interim periods therein. The Company early adopted ASU ~~2016-13~~2021-08 on ~~September 1, 2020, using the modified retrospective transition method which resulted in no material~~February 28, 2022 and any impact on the condensed consolidated financial ~~statements.~~

~~As a result~~statements will be dependent on the magnitude and nature of the adoption of ASU 2016-13, the Company has updated its critical accounting policy related to trade account receivables and allowances for credit losses effective September 1, 2020 from the critical accounting policies previously disclosed in our audited financial statements for the year ended August 31, 2020 as follows:

All trade account receivables are reported net of allowances for credit losses. The allowances for credit losses represent management’s best estimate of the credit losses expected from our trade account receivables over the life of the underlying assets. Assets with similar risk characteristics are pooled together for determination of their current expected credit losses. The Company regularly performs detailed reviews of our pooled assets to evaluate the collectability of receivables based on a combination of past, current, and future financial and qualitative factors that may affect customers’ ability to pay. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations, a specific reserve is recorded against amounts due to reduce the recognized receivable to the amount reasonably expected to be collected.acquired entities.

Note 3 — Inventory

Inventory consisted of the following as of May 31, ~~2021~~2022 and August 31, ~~2020:~~2021:

May 31,

August 31,



2021

2020
Raw materials

$
21,534

$
18,993
Work in process

6,017

7,761
Finished goods

10,844

12,304
Total Inventory

$
38,395

$
39,058


	May 31,		August 31,
	2022		2021
Raw materials	$	36,192	$	24,055
Work in process		7,835		5,928
Finished goods		14,524		11,234
Total Inventory	$	58,551	$	41,217

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Note 4 — Net Income Per Share

The Company has unvested share-based payment awards with a right to receive nonforfeitable dividends which are considered participating securities under ASC Topic 260, “Earnings Per Share.” The Company allocates earnings to participating securities and computes earnings per share using the two-class method. The determination of earnings per share under the two-class method is as follows:


	Three Months Ended May 31,				Nine Months Ended May 31,				Three Months Ended May 31,				Nine Months Ended May 31,
	2021		2020		2021		2020		2022		2021		2022		2021

Basic Earnings per Share

Net income	$	14,289	$	9,908	$	34,297	$	25,149	$	15,545	$	14,289	$	34,398	$	34,297
Less: Allocated to participating securities		94		86		239		201		104		94		228		239
Net income available to common shareholders	$	14,195	$	9,822	$	34,058	$	24,948	$	15,441	$	14,195	$	34,170	$	34,058

Basic weighted average shares outstanding		9,386,814		9,363,559		9,381,433		9,357,176		9,399,231		9,386,814		9,398,778		9,381,433
Net income per share - Basic	$	1.51	$	1.05	$	3.63	$	2.67	$	1.64	$	1.51	$	3.64	$	3.63

Diluted Earnings per Share

Net income	$	14,289	$	9,908	$	34,297	$	25,149	$	15,545	$	14,289	$	34,398	$	34,297
Less: Allocated to participating securities		94		86		239		201		104		94		228		239
Net income available to common shareholders	$	14,195	$	9,822	$	34,058	$	24,948	$	15,441	$	14,195	$	34,170	$	34,058

Basic weighted average shares outstanding		9,386,814		9,363,559		9,381,433		9,357,176		9,399,231		9,386,814		9,398,778		9,381,433
Additional dilutive common stock equivalents		48,521		65,704		45,446		78,721		32,028		48,521		36,591		45,446
Diluted weighted average shares outstanding		9,435,335		9,429,263		9,426,879		9,435,897		9,431,259		9,435,335		9,435,369		9,426,879
Net income per share - Diluted	$	1.50	$	1.04	$	3.61	$	2.64	$	1.64	$	1.50	$	3.62	$	3.61

Included in the calculation of dilutive common stock equivalents are the unvested portion of restricted stock and stock options. For the ~~three-month~~three- and nine-month periods ended May 31, ~~2021,~~2022, stock options to purchase ~~17,947~~108,392 and ~~59,346~~93,869 shares of common stock, respectively, were outstanding but were not included in the calculation of diluted income per share because their inclusion would be anti-dilutive. For the ~~three-month~~three- and nine-month periods ended May 31, ~~2020,~~2021, stock options to purchase ~~17,913~~17,947 and ~~11,841~~59,346 shares of common stock, respectively, were outstanding but were not included in the calculation of diluted income per share because their inclusion would be anti-dilutive.

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Note 5 — Stock-Based Compensation

In August 2019, the Board of Directors of the Company approved the fiscal year 2020 Long Term Incentive Plan (“2020 LTIP”) for the executive officers and other members of management. The 2020 LTIP is an equity-based plan with a grant date of September 1, 2019 and contains (a) a restricted stock grant of 7,386 shares in the aggregate (of which 3,697 included a performance-based vesting component and were subject to adjustment as discussed below), with a vesting date of August 31, 2022, and (b) options to purchase 13,418 shares of common stock in the aggregate with an exercise price of $100.22 per share, vesting in ~~three~~ ~~equal annual installments ending on August 31, 2022.~~

~~Based on the fiscal year 2020 financial results, 387~~ shares of restricted stock already granted under the 2020 LTIP were forfeited following the end of fiscal year 2020 in accordance with the performance measurement criteria. No further performance-based measurements apply to this award. Compensation expense for the 2020 LTIP awards is recognized on a ratable basis over the vesting period.

In August 2019, the Board of Directors of the Company approved equity retention agreements with certain executive officers. The equity-based retention agreements have a grant date of September 1, 2019 and contain the following equity components: (a) time-based restricted stock grant of 15,945 shares in the aggregate, and having a vesting date of August 31, 2022; and (b) options to purchase 53,642 shares of common stock in the aggregate with an exercise price of $100.22 per share. The options will cliff vest on August 31, 2022 and will expire on August 31, 2029. Compensation expense for both the restricted stock and the stock option components of the equity retention agreements is recognized on a ratable basis over the vesting period.

~~In August~~ 2020, the Board of Directors of the Company approved the fiscal year 2021 Long Term Incentive Plan (“2021 LTIP”) for the executive officers and other members of management. The 2021 LTIP is an equity-based plan with a grant date of September 1, 2020 and ~~initially contained~~contains (a) a restricted stock grant of 8,717 shares in the aggregate (of which 3,798 included a performance-based vesting component and were subject to adjustment as discussed below), with a vesting date of August 31, 2023, and (b) options to purchase 14,845 shares of common stock in the aggregate with an exercise price of $97.57 per share, vesting in 3 equal annual installments ending on August 31, 2023.

Based on the fiscal year 2021 results, 2,633 additional shares of restricted stock were earned and granted subsequent to the end of fiscal year 2021 in accordance with the performance measurement criteria. No further performance-based measurements apply to this award. Compensation expense is being recognized on a ratable basis over the vesting period.

In August 2021, the Board of Directors of the Company approved the fiscal year 2022 Long Term Incentive Plan (“2022 LTIP”) for executive officers and other members of management. The 2022 LTIP is an equity-based plan with a grant date of September 1, 2021 and contains the following equity components:

Restricted Shares — (a) a performance and service-based restricted stock grant of ~~3,798~~3,304 shares in the aggregate, subject to adjustment based on fiscal ~~2021~~2022 results, with a vesting date of August 31, ~~2023.~~2024. Compensation expense is recognized on a ratable basis over the vesting period based on quarterly probability assessments; and (b) a time-based restricted stock grant of ~~4,919~~6,280 shares in the aggregate, with a vesting date of August 31, ~~2023.~~2024. Compensation expense is being recognized on a ratable basis over the vesting period.

Stock ~~options~~Options — options to purchase ~~14,845~~12,942 shares of common stock in the aggregate with an exercise price of ~~$97.57~~$114.50 per share. The options will vest in 3 equal annual installments beginning on August 31, ~~2021~~2022 and ending on August 31, ~~2023. Of the options granted, 5,391~~2024. The options will expire ~~on August 31, 2030, and 9,454 options will expire on September 1, 2030.~~ten years after the grant date. Compensation expense is being recognized over the period of the award consistent with the vesting terms.

~~In the first quarter of 2021, restricted~~Restricted stock from fiscal 2020 grants in the amount of ~~952~~437 and 570 shares ~~related to~~were forfeited in the first and second quarters, respectively, and restricted stock from fiscal 2022 grants of 559 and 298 shares were forfeited in the second ~~quarter of fiscal 2020 grant was forfeited~~and third quarters, respectively, in conjunction with the termination of employment of non-executive members of management of the Company.

In ~~December 2020,~~February 2022, the Board of Directors of the Company approved an equity retention agreement with the Treasurer and Chief Financial Officer. Awards under the equity-based retention agreement have a grant date of February 1, 2022 and contain the following equity components: (a) a time-based restricted stock ~~in the amount~~grant of ~~110~~5,332 shares ~~were granted to certain non-employee members~~with a vesting date of ~~the board of directors in relation to their service on the board. These shares vested during the second fiscal quarter of 2021.~~

In January ~~2021, restricted stock in the amount of 4,409 shares~~31, 2025; and (b) options to purchase ~~18,129~~ ~~shares of common stock were forfeited in conjunction with the termination without cause of a now former executive of the Company. Options to purchase an additional~~ ~~306 shares of common stock were forfeited in April 2021 related to this same termination.~~

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~~In February 2021,a performance and service-based restricted stock grant totaling 521 shares, a time-vesting restricted stock grant in the amount of 261 shares and options to purchase 749~~14,480 shares of common stock with an exercise price of ~~$104.04~~$94.88 per ~~share were granted in conjunction with~~share. The options will vest on January 31, 2025 and will expire on February 1, 2032. Compensation expense for both the ~~appointment of a new executive~~restricted stock and the stock option components of the ~~Company. The restricted shares and stock options vest~~equity retention agreements is being recognized on ~~the same terms as those granted under the 2021 LTIP in September 2020. Compensation expense is recognized~~a ratable basis over the ~~period of the award consistent with the~~ vesting ~~terms.~~period.

In February ~~2021,~~2022, as part of their standard compensation for board service, non-employee members of the Board received a total grant of ~~4,525~~5,000 shares of restricted stock for service for the period from January 31, ~~2021~~2022 through January 31, ~~2022.~~2023. The shares of restricted stock will vest at the conclusion of this service period. Compensation expense for restricted stock is being recognized on a ratable basis over the twelve-month vesting period.

~~In February 2021, restricted stock in the amount~~15

Table of ~~2,306 shares were granted to a consultant of the Company, with a two-year~~Contents

~~vesting term including continued service requirements. Compensation expense is recognized over the period of the award consistent with the vesting terms.~~

Note 6 — Segment Data and Foreign Operations

The Company is organized into 3 reportable operating segments: Adhesives, Sealants and Additives; Industrial Tapes; and Corrosion Protection and Waterproofing. The segments are distinguished by the nature of the products manufactured and how they are delivered to their respective markets.

The Adhesives, Sealants and Additives segment offers innovative and specialized product offerings consisting of both end-use products and intermediates that are used in, or integrated into, another company’s product. Demand for the segment’s product offerings is typically dependent upon general economic conditions. The Adhesives, Sealants and Additives segment leverages the core specialty chemical competencies of the Company and serves diverse markets and applications. The segment sells predominantly into the transportation, appliances, medical, general industrial and environmental market verticals. The segment’s products include moisture protective coatings and cleaners, ~~and~~ customized sealant and adhesive systems for electronics, polymeric microspheres, polyurethane dispersions and superabsorbent polymers. Beginning September 1, 2020, the Adhesives, Sealants and Additives segment includes the acquired operations of ABchimie, within the electronic and industrial coatings product line and beginning February 5, 2021, the acquired operations of ETi, within the functional additives product line.

The Industrial Tapes segment features wire and cable materials, specialty tapes and other laminated and coated products. The segment derives its competitive advantage through its proven chemistries, its diverse specialty offerings and the reliability its supply chain offers to end customers. These products are generally used in the assembly of other manufacturers’ products, with demand typically dependent upon general economic conditions. The Industrial Tapes segment sells mostly to established markets, with some exposure to growth opportunities through further development of existing products. Markets served include wire and cable manufacturing, utilities and telecommunications, and electronics packaging. The segment’s offerings include insulating and conducting materials for wire and cable manufacturers, laminated durable papers, laminates for the packaging and industrial laminate markets, custom manufacturing services, pulling and detection tapes used in the installation, measurement and location of fiber optic cables and water and natural gas lines and cover tapes essential to delivering semiconductor components via tape-and-reel packaging.

The Corrosion Protection and Waterproofing segment is principally composed of project-oriented product offerings that are primarily sold and used as “Chase” branded products. End markets include new and existing infrastructure projects on oil, gas, water and wastewater pipelines, highways and bridge decks, water and wastewater containment systems, and commercial ~~buildings.~~and industrial structures. The segment’s products include protective coatings for pipeline applications, coating and lining systems for waterproofing and liquid storage applications, adhesives and sealants used in architectural and building envelope waterproofing applications, high-performance polymeric asphalt additives, and expansion joint systems for waterproofing applications in transportation and architectural markets. With sales generally dependent on outdoor project work, the segment experiences highly seasonal sales patterns.

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The following tables summarize information about the Company’s reportable segments:


	Three Months Ended May 31,						Nine Months Ended May 31,						Three Months Ended May 31,						Nine Months Ended May 31,
	2021			2020			2021			2020			2022			2021			2022			2021
Revenue
Adhesives, Sealants and Additives	$	33,861		$	22,922		$	95,507		$	73,184		$	36,771		$	33,861		$	99,600		$	95,507
Industrial Tapes		32,249			31,752			87,085			91,931			38,329			32,249			104,420			87,085
Corrosion Protection and Waterproofing		13,483			10,197			32,624			32,140			13,519			13,483			33,562			32,624
Total	$	79,593		$	64,871		$	215,216		$	197,255		$	88,619		$	79,593		$	237,582		$	215,216

Income before income taxes
Adhesives, Sealants and Additives	$	10,982	(a)	$	6,704		$	31,098	(c)	$	20,936		$	12,320	(a)	$	10,982	(c)	$	27,719	(a)	$	31,098	(c)
Industrial Tapes		10,945			9,011			27,273			24,050	(e)		10,985			10,945			30,525			27,273
Corrosion Protection and Waterproofing		5,098			4,149			11,599			12,240			5,353			5,098			12,683			11,599
Total for reportable segments		27,025			19,864			69,970			57,226			28,658			27,025			70,927			69,970
Corporate and common costs		(9,282)			(7,337)	(b)		(25,385)	(d)		(23,823)	(f)		(9,310)	(b)		(9,282)	(c)		(26,095)	(b)		(25,385)	(c)
Total	$	17,743		$	12,527		$	44,585		$	33,403		$	19,348		$	17,743		$	44,832		$	44,585

Includes the following costs by segment:
Adhesives, Sealants and Additives
Interest	$	25		$	26		$	79		$	68		$	36		$	25		$	105		$	79
Depreciation		255			199			744			791			234			255			697			744
Amortization		2,715			2,340			7,931			7,033			2,541			2,715			7,939			7,931

Industrial Tapes
Interest	$	15		$	33		$	57		$	87		$	36		$	15		$	105		$	57
Depreciation		412			428			1,305			1,247			363			412			1,184			1,305
Amortization		387			450			1,160			1,350			383			387			1,150			1,160

Corrosion Protection and Waterproofing
Interest	$	28		$	8		$	68		$	23		$	17		$	28		$	52		$	68
Depreciation		157			144			432			449			138			157			385			432
Amortization		274			108			475			341			1			274			3			475

(a)

IIncludes a $474 gain in the third quarter and a $199 year-to-date gain on the adjustment of the performance-based earn-out contingent consideration associated with the September 2020 acquisition of ABchimie and $27 and $328 in operation optimization costs in the third quarter and year-to-date period related to the move from Woburn, MA to O’Hara Township, PA and $0 and $147 of operations optimization costs in the third and year-to-date period related to the move from Newark, CA to Hickory, NC

(b)

~~ncludes~~Includes $32 and $232 of operations optimization costs in the three- and nine-month period, respectively, related to the Company’s move to the new Corporate Headquarters within Westwood, MA substantially completed in the second quarter of the fiscal year

(c)

Includes $262 inand $995 loss on the upward adjustment of the performance-based earn out contingent consideration associated with the September 2020 acquisition of ABchimie in the third quarter and year-to-date fiscal 2021 periods and $22 and $120 operations optimization in exit costs related to the movement of the sealants system business out of the Newark, CA location and into the Hickory, NC location during the third ~~quarter~~and year-to-date period of fiscal ~~2021~~

~~(b)~~

Includes $760 in gain related to the April 2020 sale of the Company’s Pawtucket, RI location, $183 in severance expense related to the May 2020 reduction in force, $85 in expenses related to the final transition out of the Pawtucket, RI facility, $75 of pension-related settlement costs due to the timing of lump-sum distributions and $202021. Also includes $128 in acquisition-related expense ~~attributable to~~in the ~~September 2020 acquisition of ABchimie~~

~~(c)~~

~~Includes $995~~nine month period in ~~loss on the upward adjustment of the performance-based earn out contingent consideration associated with the September 2020 acquisition of ABchimie~~corporate and ~~$120 in exit~~common costs ~~related to the movement of the sealants system business out of the Newark, CA location and into the Hickory, NC location during the first nine months of fiscal 2021~~

~~(d)~~

~~Includes $128 in acquisition-related expense~~ attributable to the February 2021 acquisition of the operations of ETi

~~(e)~~

Includes $559 in exit costs related to the movement of the pulling and detection business out of the Granite Falls, NC location and into the Hickory, NC location during the first nine months of fiscal 2020

~~(f)~~

Includes $150 of expense related to exploratory IT work performed to assess potential future upgrades to the companywide ERP system, a $760 gain related to the April 2020 sale of the Company’s Pawtucket, RI location, $183 in severance expense related to the May 2020 reduction in force, $85 in expenses related to the final transition out of the Pawtucket, RI facility, $75 of pension-related settlement costs due to the timing of lump-sum distributions and $153 in acquisition-related expense attributable to the September 2020 acquisition of ABchimie

Table of Contents

Total assets for the Company’s reportable segments as of May 31, ~~2021~~2022 and August 31, ~~2020~~2021 were:


	May 31,		August 31,		May 31,		August 31,
	2021		2020		2022		2021
Total Assets
Adhesives, Sealants and Additives	$	166,085	$	129,457	$	156,385	$	161,968
Industrial Tapes		70,036		71,229		85,264		72,301
Corrosion Protection and Waterproofing		30,744		32,642		33,447		31,067
Total for reportable segments		266,865		233,328		275,096		265,336
Corporate and common assets		123,369		113,502		145,795		138,823
Total	$	390,234	$	346,830	$	420,891	$	404,159

The Company’s products are sold worldwide. Revenue for the three- and nine-month periods ended May 31, ~~2021~~2022 and ~~2020~~2021 was attributed to operations located in the following countries:


	Three Months Ended May 31,				Nine Months Ended May 31,				Three Months Ended May 31,				Nine Months Ended May 31,
	2021		2020		2021		2020		2022		2021		2022		2021
Revenue
United States	$	67,264	$	56,177	$	178,635	$	171,774	$	76,140	$	67,264	$	204,009	$	178,635
United Kingdom		6,184		5,070		19,208		14,489		6,604		6,184		17,125		19,208
All other foreign ⁽¹⁾		6,145		3,624		17,373		10,992		5,875		6,145		16,448		17,373
Total	$	79,593	$	64,871	$	215,216	$	197,255	$	88,619	$	79,593	$	237,582	$	215,216

(1)

Comprises sales orders originated from the Company’s French locations, ~~(including ABchimie for fiscal 2021),~~ royalty revenue attributable to its licensed manufacturer in Asia, and Chase foreign manufacturing operations.

As of May 31, ~~2021~~2022 and ~~2020~~August 31, 2021 the Company had long-lived assets (defined as tangible assets providing the Company with a future economic benefit beyond the current year or operating period, including buildings, equipment and leasehold improvements) and goodwill and intangible assets, less accumulated amortization, in the following countries:

May 31,

August 31,

2021

2020

Long-Lived Assets

United States

Property, plant and equipment, net

$
21,199

$
22,427

Goodwill and Intangible assets, less accumulated amortization

118,789

117,930

United Kingdom

Property, plant and equipment, net

2,352

2,320

Goodwill and Intangible assets, less accumulated amortization

4,192

4,403

All other foreign

Property, plant and equipment, net

1,134

827

Goodwill and Intangible assets, less accumulated amortization

26,093

1,269

Total

Property, plant and equipment, net

$
24,685

$
25,574

Goodwill and Intangible assets, less accumulated amortization

$
149,074

$
123,602


	May 31,		August 31,
	2022		2021
Long-Lived Assets
United States
Property, plant and equipment, net	$	21,385	$	20,990
Goodwill and Intangible assets, less accumulated amortization		107,633		115,936

United Kingdom
Property, plant and equipment, net		2,050		2,174
Goodwill and Intangible assets, less accumulated amortization		3,589		3,905

All other foreign
Property, plant and equipment, net		1,096		1,103
Goodwill and Intangible assets, less accumulated amortization		22,046		24,979

Total
Property, plant and equipment, net	$	24,531	$	24,267
Goodwill and Intangible assets, less accumulated amortization	$	133,268	$	144,820

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Note 7 — Goodwill and Other Intangibles

The changes in the carrying value of goodwill were as follows:


	Adhesives, Sealants and Additives		Industrial Tapes		Corrosion Protection and Waterproofing		Consolidated		Adhesives, Sealants and Additives		Industrial Tapes		Corrosion Protection and Waterproofing		Consolidated
Balance at August 31, 2020	$	50,487	$	21,215	$	10,700	$	82,402
Acquisition of ABchimie		13,055		—		—		13,055
Acquisition of Emerging Technologies, Inc.		2,451		—		—		2,451
Balance at August 31, 2021									$	65,945	$	21,215	$	10,706	$	97,866
Foreign currency translation adjustment		536		—		13		549		(1,527)		—		(18)		(1,545)
Balance at May 31, 2021	$	66,529	$	21,215	$	10,713	$	98,457
Balance at May 31, 2022									$	64,418	$	21,215	$	10,688	$	96,321

The Company’s goodwill is allocated to each reporting unit based on the nature of the products manufactured by the respective business combinations that originally created the goodwill. The Company has identified a total of 3 reporting units, corresponding to its 3 operating segments, that are used to evaluate the possible impairment of goodwill. Assessments of possible impairment of goodwill are made when events or changes in circumstances indicate that the carrying value of the asset may not be recoverable through future operations. Additionally, testing for possible impairment of recorded goodwill and certain intangible asset balances is required annually. The amount and timing of any impairment charges based on these assessments require the estimation of future cash flows and the fair market value of the related assets based on management’s best estimates of certain key factors, including future selling prices and volumes; operating, raw material and energy costs; and various other projected operating and economic factors, including the anticipated future impact of the coronavirus disease 2019 (COVID-19) pandemic. When testing, fair values of the reporting units ~~and the related implied fair values of their respective goodwill~~ are established using discounted cash flows. The Company evaluates the possible impairment of goodwill annually during the fourth quarter, and whenever events or circumstances indicate the carrying value of goodwill may not be recoverable.

The Company has adopted ASU No. 2017-04 “Intangibles - Goodwill and Other Topics (Topic 350): Simplifying the Test for Goodwill Impairment.” The Company assesses goodwill for impairment by comparing the fair value of the reporting unit to its carrying amount. If the fair value of a reporting unit is less than its carrying value, an impairment loss, limited to the amount of goodwill allocated to that reporting unit, is recorded.

Intangible assets subject to amortization consisted of the following as of May 31, ~~2021~~2022 and August 31, ~~2020:~~2021:


	Weighted Average		Gross Carrying		Accumulated		Net Carrying		Weighted Average		Gross Carrying		Accumulated		Net Carrying
	Amortization Period		Value		Amortization		Value		Amortization Period		Value		Amortization		Value
May 31, 2021
May 31, 2022
Patents and agreements	14.6	years	$	1,760	$	1,713	$	47	14.6	years	$	1,760	$	1,722	$	38
Formulas and technology	7.9	years		11,042		9,654		1,388	7.8	years		10,844		9,989		855
Trade names	5.9	years		8,871		8,191		680	5.9	years		8,747		8,435		312
Customer lists and relationships	9.2	years		117,537		69,035		48,502	9.1	years		115,102		79,360		35,742
			$	139,210	$	88,593	$	50,617			$	136,453	$	99,506	$	36,947

August 31, 2020
August 31, 2021
Patents and agreements	14.6	years	$	1,760	$	1,705	$	55	14.6	years	$	1,760	$	1,715	$	45
Formulas and technology	7.8	years		10,250		9,121		1,129	7.9	years		10,987		9,769		1,218
Trade names	5.8	years		8,575		7,781		794	5.9	years		8,836		8,285		551
Customer lists and relationships	9.1	years		98,966		59,744		39,222	9.2	years		116,855		71,715		45,140
			$	119,551	$	78,351	$	41,200			$	138,438	$	91,484	$	46,954

Table of Contents

Aggregate amortization expense related to intangible assets for the nine months ended May 31, 2022 and 2021 was $9,092 and ~~2020 was~~ $9,566 ~~and $8,724~~ respectively. Estimated amortization expense for the remainder of fiscal year ~~2021~~2022 and for the next five years is as follows:


Years ending August 31,
2021 (remaining 3 months)	$	3,335
2022		11,862
2022 (remaining 3 months)			$	2,669
2023		8,746		8,612
2024		7,538		7,405
2025		5,939		5,805
2026		5,144		5,007
2027				2,460

Note 8 — Leases

~~Effective September 1, 2019 (the start of fiscal 2020), the~~The Company ~~adopted~~accounts for leases in accordance to ASU 2016-02, ~~Leases~~“Leases (Topic 842), using the modified retrospective approach and utilizing the effective date as its date of initial application. The Company has elected to apply the ‘package of practical expedients’ which allows it to not reassess i) whether existing or expired arrangements contain a lease, ii) the lease classification of existing or expired leases, or iii) whether previous initial direct costs would qualify for capitalization under the new lease standard.

.” At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement. Leases with a term greater than one year are recognized on the balance sheet as right-of-use (ROU) assets and short-term and long-term lease liabilities, as applicable. The Company does not have any financing leases that are material in nature.

Operating lease liabilities and their corresponding right-of-use assets are initially recorded based on the present value of lease payments over the expected remaining lease term. The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rate to discount lease payments, which reflects the fixed rate at which the Company believes it could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment.

The Company has elected not to recognize leases with an original term of one year or less on the balance sheet. The Company typically only includes an initial lease term in its assessment of a lease arrangement. Options to renew a lease are not included in the Company’s assessment unless there is reasonable certainty that the Company will renew.

The following table presents the right-of-use asset and short-term and long-term lease liabilities amounts recorded on the condensed consolidated balance sheet as of May 31, ~~2021~~2022 and August 31, ~~2020:~~2021:


	May 31,		August 31,		May 31,		August 31,
	2021		2020		2022		2021
Assets
Operating lease right-of-use asset	$	9,787	$	8,821	$	9,078	$	9,312

Liabilities
Current (accrued expense)	$	1,584	$	1,865
Current (accrued expenses)					$	1,466	$	1,515
Operating lease long-term liabilities		7,601		6,395		7,060		7,202
Total lease liability	$	9,185	$	8,260	$	8,526	$	8,717

Table of Contents

Lease cost

The components of lease costs for the three and nine months ended May 31, ~~2021~~2022 and ~~2020~~2021 are as follows:


	Three Months Ended May 31,				Nine Months Ended May 31,				Three Months Ended May 31,				Nine Months Ended May 31,
	2021		2020		2021		2020		2022		2021		2022		2021

Operating lease cost ^(a)	$	911	$	952	$	2,833	$	2,802	$	790	$	911	$	2,451	$	2,833

(a)

Includes short-term leases and variable lease costs (e.g. common area maintenance), which are immaterial.

Maturity of lease liability

The maturity of the Company's lease liabilities at May 31, ~~2021~~2022 was as follows:


	Future Operating		Future Operating
Year ending August 31,	Lease Payments		Lease Payments
2021 (remaining 3 months)	$	469
2022		1,718
2022 (remaining 3 months)				427
2023		1,564		1,677
2024		1,487		1,602
2025		1,326		1,444
2026 and thereafter		3,380
2026				1,182
2027 and thereafter				3,002
Less: Interest		(759)		(808)
Present value of lease liabilities	$	9,185	$	8,526

The weighted average remaining lease term and discount rates are as follows:


	May 31,			August 31,			May 31,			August 31,
	2021			2020			2022			2021
Lease Term and Discount Rate
Weighted average remaining lease term (years)
Operating leases		7.0			5.5			6.7			6.8
Weighted average discount rate (percentage)
Operating leases		3.1	%		3.1	%		2.8	%		3.1	%

Other Information

Supplemental cash flow information related to leases is as follows:


	Nine Months Ended May 31,				Nine Months Ended May 31,
	2021		2020		2022		2021

Operating cash outflows from operating leases	$	1,797	$	1,818	$	1,311	$	1,797
Total cash paid for amounts included in the measurement of lease liabilities	$	1,797	$	1,818	$	1,311	$	1,797

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Note 9 — Revenue from Contracts with Customers

The Company accounts for revenue in accordance with ASC 606, “Revenue from Contracts with Customers.” ~~This~~The Company’s revenue is generated from the manufacture of specialty chemical products including coatings, linings, adhesives, sealants, specialty tapes, polymers and laminates. Certain of these manufactured products can incorporate customer-owned materials. The Company also recognizes, to a lesser extent, revenue through royalties and commissions from licensed manufacturers and from providing custom manufacturing-related services. The Company’s revenue recognition policies require the Company to make significant judgments and estimates. In applying the Company’s revenue recognition policy, determinations must be made as to when control of products passes to the Company’s customers, which can be either at a point in time or over time based on contractual terms with customers. Revenue is generally recognized at a point in time when control passes upon either shipment to or receipt by the customer of the Company’s products, while revenue is generally recognized over time when control of the Company’s products transfers to customers during the manufacturing process. The Company analyzes several factors, including but not limited to the nature of the products being sold and contractual terms and conditions in contracts with customers, to help the Company make such judgments about revenue recognition.

Contract Balances

The Company’s contract assets primarily relate to unbilled revenue for products currently in production at the Company’s facilities and which incorporate customer-owned material. Revenue is recognized in advance of billing to the customer in these specific circumstances, whereas billing is typically performed at the time of shipment to or receipt by the customer.

Contract assets are included in prepaid expenses and other current assets on the Company’s condensed consolidated balance sheet. The following table presents contract assets by reportable operating segment as of May 31, ~~2021~~2022 and August 31, ~~2020:~~2021:


	May 31,		August 31,		May 31,		August 31,
	2021		2020		2022		2021
Contract Assets
Adhesives, Sealants and Additives	$	13	$	20	$	27	$	21
Industrial Tapes		46		21		75		82
Corrosion Protection and Waterproofing		86		41		102		25
Total	$	145	$	82	$	204	$	128

The Company did 0t have any contract liabilities as of May 31, ~~2021~~2022 and August 31, ~~2020.~~2021.

Table of Contents

Disaggregated Revenue

The Company disaggregates revenue from customers by geographic region, as it believes this disclosure best depicts how the nature, amount, timing and uncertainty of the Company's revenue and cash flows are affected by economic factors. Disaggregated revenue by geographical region for the three and nine months ended May 31, ~~2021~~2022 and ~~2020~~2021 was as follows:


	Three Months Ended May 31, 2021								Three Months Ended May 31, 2022
	Adhesives, Sealants		Industrial		Corrosion Protection		Consolidated		Adhesives, Sealants		Industrial		Corrosion Protection		Consolidated
	and Additives		Tapes		and Waterproofing		Revenue		and Additives		Tapes		and Waterproofing		Revenue
Revenue
North America	$	20,497	$	28,620	$	11,631	$	60,748	$	24,015	$	34,044	$	11,728	$	69,787
Asia		7,030		2,019		1,023		10,072
Asia\Middle East										6,143		2,103		1,121		9,367
Europe		6,167		1,009		746		7,922		6,362		1,373		654		8,389
All other foreign		167		601		83		851		251		809		16		1,076
Total Revenue	$	33,861	$	32,249	$	13,483	$	79,593	$	36,771	$	38,329	$	13,519	$	88,619

	Nine Months Ended May 31, 2021								Nine Months Ended May 31, 2022
	Adhesives, Sealants		Industrial		Corrosion Protection		Consolidated		Adhesives, Sealants		Industrial		Corrosion Protection		Consolidated
	and Additives		Tapes		and Waterproofing		Revenue		and Additives		Tapes		and Waterproofing		Revenue
Revenue
North America	$	56,606	$	76,429	$	27,062	$	160,097	$	62,992	$	93,321	$	28,932	$	185,245
Asia		21,958		5,855		3,592		31,405
Asia\Middle East										19,292		5,682		2,547		27,521
Europe		16,497		3,061		1,823		21,381		16,733		3,734		2,019		22,486
All other foreign		446		1,740		147		2,333		583		1,683		64		2,330
Total Revenue	$	95,507	$	87,085	$	32,624	$	215,216	$	99,600	$	104,420	$	33,562	$	237,582


	Three Months Ended May 31, 2020								Three Months Ended May 31, 2021
	Adhesives, Sealants		Industrial		Corrosion Protection		Consolidated		Adhesives, Sealants		Industrial		Corrosion Protection		Consolidated
	and Additives		Tapes		and Waterproofing		Revenue		and Additives		Tapes		and Waterproofing		Revenue
Revenue
North America	$	15,094	$	28,137	$	7,635	$	50,866	$	20,497	$	28,620	$	11,631	$	60,748
Asia		4,541		2,239		1,737		8,517
Asia\Middle East										7,030		2,019		1,023		10,072
Europe		3,201		840		750		4,791		6,167		1,009		746		7,922
All other foreign		86		536		75		697		167		601		83		851
Total Revenue	$	22,922	$	31,752	$	10,197	$	64,871	$	33,861	$	32,249	$	13,483	$	79,593

	Nine Months Ended May 31, 2020								Nine Months Ended May 31, 2021
	Adhesives, Sealants		Industrial		Corrosion Protection		Consolidated		Adhesives, Sealants		Industrial		Corrosion Protection		Consolidated
	and Additives		Tapes		and Waterproofing		Revenue		and Additives		Tapes		and Waterproofing		Revenue
Revenue
North America	$	49,135	$	81,811	$	25,323	$	156,269	$	56,606	$	76,429	$	27,062	$	160,097
Asia		13,268		5,642		4,419		23,329
Asia\Middle East										21,958		5,855		3,592		31,405
Europe		10,422		2,386		2,201		15,009		16,497		3,061		1,823		21,381
All other foreign		359		2,092		197		2,648		446		1,740		147		2,333
Total Revenue	$	73,184	$	91,931	$	32,140	$	197,255	$	95,507	$	87,085	$	32,624	$	215,216

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Note 10 — Commitments and Contingencies

The Company is involved from time to time in litigation incidental to the conduct of its business. Although the Company does not expect that the outcome in any of these matters, individually or collectively, will have a material adverse effect on its financial condition, results of operations or cash flows, litigation is inherently unpredictable. Therefore, judgments could be rendered, or settlements agreed to that could adversely affect the Company’s operating results or cash flows in a particular period. The Company routinely assesses all its litigation and threatened litigation as to the probability of ultimately incurring a liability and records its best estimate of the ultimate loss in situations where it assesses the likelihood of loss as probable.

Note 11 — Pensions and Other Postretirement Benefits

The components of net periodic benefit cost for the three and nine months ended May 31, ~~2021~~2022 and ~~2020~~2021 were as follows:


	Three Months Ended May 31,				Nine Months Ended May 31,				Three Months Ended May 31,				Nine Months Ended May 31,
	2021		2020		2021		2020		2022		2021		2022		2021
Components of net periodic benefit cost
Service cost	$	91	$	74	$	274	$	221	$	95	$	91	$	285	$	274
Interest cost		86		112		256		338		96		86		288		256
Expected return on plan assets		(97)		(98)		(293)		(294)		(103)		(97)		(309)		(293)
Amortization of prior service cost		1		1		3		3		1		1		3		3
Amortization of accumulated loss		164		174		492		522		148		164		444		492
Curtailment and settlement loss		—		75		—		75
Net periodic benefit cost	$	245	$	338	$	732	$	865	$	237	$	245	$	711	$	732

When funding is required, the Company’s policy is to contribute amounts that are deductible for federal income tax purposes. The Company has made contributions of $~~1,174~~1,526 in the nine months ended May 31, ~~2021~~2022 to fund its obligations under its pension plans, and plans to make the necessary contributions over the remainder of fiscal ~~2021~~2022 to ensure the qualified plan continues to be adequately funded given the current market conditions, including conditions related to the coronavirus disease 2019 (COVID-19) pandemic. The Company made contributions of ~~$1,170~~$1,174 in the nine months ended May 31, ~~2020.~~2021.

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Note 12 — Fair Value Measurements

The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date. The Company uses a three-tier fair value hierarchy, which classifies the inputs used in measuring fair values. These tiers are: Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The Company utilizes the best available information in measuring fair value. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The financial assets classified as Level 1 and Level 2 as of May 31, ~~2021~~2022 and August 31, ~~2020~~2021 represent investments that are restricted for use in nonqualified retirement savings plans for certain key employees and directors.

The following table sets forth the Company’s financial assets that were accounted for at fair value on a recurring basis as of May 31, ~~2021~~2022 and August 31, ~~2020:~~2021:


				Fair value measurement category									Fair value measurement category
				Quoted prices		Significant other		Significant					Quoted prices		Significant other		Significant
	Fair value			in active markets		observable inputs		unobservable inputs		Fair value			in active markets		observable inputs		unobservable inputs
	measurement date	Total		(Level 1)		(Level 2)		(Level 3)		measurement date	Total		(Level 1)		(Level 2)		(Level 3)
Assets:
Restricted investments	May 31, 2021	$	2,038	$	1,796	$	242	$	—	May 31, 2022	$	2,312	$	2,070	$	242	$	—

Restricted investments	August 31, 2020	$	1,619	$	1,395	$	224	$	—	August 31, 2021	$	2,260	$	2,016	$	244	$	—

The following table presents the fair value of the Company’s liabilities that are accounted for at fair value on a recurring basis as of May 31, ~~2021~~2022 and August 31, ~~2020:~~2021:


				Fair value measurement category									Fair value measurement category
				Quoted prices		Significant other		Significant					Quoted prices		Significant other		Significant
	Fair value			in active markets		observable inputs		unobservable inputs		Fair value			in active markets		observable inputs		unobservable inputs
	measurement date	Total		(Level 1)		(Level 2)		(Level 3)		measurement date	Total		(Level 1)		(Level 2)		(Level 3)
Liabilities:
Long-term debt	May 31, 2021	$	—	$	—	$	—	$	—	May 31, 2022	$	—	$	—	$	—	$	—
Contingent consideration	May 31, 2021	$	1,939	$	—	$	—	$	1,939	May 31, 2022	$	2,099	$	—	$	—	$	2,099

Long-term debt	August 31, 2020	$	—	$	—	$	—	$	—	August 31, 2021	$	—	$	—	$	—	$	—
Contingent consideration	August 31, 2020	$	—	$	—	$	—	$	—	August 31, 2021	$	2,537	$	—	$	—	$	2,537

The long-term debt (including any current portion of long-term debt) had 0 outstanding balance as of May 31, ~~2021~~2022 and August 31, ~~2020.~~2021. The carrying value of the long-term debt approximates its fair value, as the interest rate is set based on the movement of the underlying market rates. See Note 16 to the condensed consolidated financial statements for additional information on long-term debt.

In connection with accounting for the ABchimie acquisition on September 1, 2020, the Company recorded a contingent consideration liability included within Other liabilities on the condensed consolidated balance sheet of ~~€780~~€780 (approximately $928) on the acquisition date, representing the fair value of contingent consideration payable upon the achievement of a performance-based target. The contingent consideration liability was valued using a Monte Carlo simulation model in an option pricing framework based on key inputs that are not all observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The Company assesses the fair value of the contingent consideration liability at each reporting period. Any subsequent changes in the estimated fair value of the liability are reflected in Loss (gain) on contingent consideration on the condensed consolidated statement of operations until the liability is settled. As of May 31, ~~2021,~~2022, the liability ~~increased~~decreased to ~~$1,939~~$2,099 predominantly due to changes in non-market data assumptions as well as a shorter period to the payment date. See Note 17 to the condensed consolidated financial statements for additional information on the acquisition of ABchimie.

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~~Note 13 — Accumulated Other Comprehensive Income~~

~~The changes in accumulated other comprehensive income (loss), net of tax, were as follows:~~

Change in Funded

Foreign Currency

Restricted

Status of

Translation


Investments

Pension Plans

Adjustment

Total

Balance at August 31, 2019

$
154

$
(6,271)

$
(8,207)

$
(14,324)

Other comprehensive gains (losses) before reclassifications (1)

29

—

318

347

Reclassifications to net income of previously deferred (gains) losses (2)

(24)

444

—

420

Other comprehensive income (loss)

5

444

318

767

Adoption of ASU 2018-02

—

(1,388)

—

(1,388)

Balance at May 31, 2020

$
159

$
(7,215)

$
(7,889)

$
(14,945)

Balance at August 31, 2020

$
269

$
(8,317)

$
(5,044)

$
(13,092)

Other comprehensive gains (losses) before reclassifications (3)

226

—

3,273

3,499

Reclassifications to net income of previously deferred (gains) losses (4)

(40)

371

—

331

Other comprehensive income (loss)

186

371

3,273

3,830

Balance at May 31, 2021

$
455

$
(7,946)

$
(1,771)

$
(9,262)

~~(1)~~

~~Net of tax benefit of $11, $0 and $0, respectively.~~

~~(2)~~

~~Net of tax expense of $8, tax benefit of $156 and $0, respectively.~~

~~(3)~~

~~Net of tax benefit of $77, $0 and $0, respectively.~~

~~(4)~~

~~Net of tax expense of $14, tax benefit of $124 and $0, respectively.~~

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Note 13 — Accumulated Other Comprehensive Income

The changes in accumulated other comprehensive income (loss), net of tax, were as follows:


			Change in Funded		Foreign Currency
	Restricted		Status of		Translation
	Investments		Pension Plans		Adjustment		Total
Balance at August 31, 2020	$	269	$	(8,317)	$	(5,044)	$	(13,092)

Other comprehensive gains (losses) before reclassifications (1)		226		—		3,273		3,499
Reclassifications to net income of previously deferred (gains) losses (2)		(40)		371		—		331
Other comprehensive income (loss)		186		371		3,273		3,830

Balance at May 31, 2021	$	455	$	(7,946)	$	(1,771)	$	(9,262)


Balance at August 31, 2021	$	518	$	(7,979)	$	(3,749)	$	(11,210)

Other comprehensive gains (losses) before reclassifications (3)		(213)		—		(5,174)		(5,387)
Reclassifications to net income of previously deferred (gains) losses (4)		(64)		336		—		272
Other comprehensive income (loss)		(277)		336		(5,174)		(5,115)

Balance at May 31, 2022	$	241	$	(7,643)	$	(8,923)	$	(16,325)

(1)

Net of tax benefit of $77, $0 and $0, respectively.

(2)

Net of tax expense of $14, tax benefit of $124 and $0, respectively.

(3)

Net of tax expense of $70, $0 and $0, respectively.

(4)

Net of tax expense of $22, tax benefit of $111 and $0, respectively.

The following table summarizes the reclassifications from accumulated other comprehensive income (loss) to the unaudited condensed consolidated statements of income:



	Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive									Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive
	Income (Loss) into Income									Income (Loss) into Income
	Three Months Ended May 31,				Nine Months Ended May 31,				Location of Gain (Loss) Reclassified from Accumulated	Three Months Ended May 31,				Nine Months Ended May 31,				Location of Gain (Loss) Reclassified from Accumulated
	2021		2020		2021		2020		Other Comprehensive Income (Loss) into Income	2022		2021		2022		2021		Other Comprehensive Income (Loss) into Income
Gains on Restricted Investments:
Realized loss (gain) on sale of restricted investments	$	(5)	$	(4)	$	(54)	$	(32)	Selling, general and administrative expenses	$	(6)	$	(5)	$	(86)	$	(54)	Selling, general and administrative expenses
Tax expense (benefit)		1		1		14		8			1		1		22		14
Gain net of tax	$	(4)	$	(3)	$	(40)	$	(24)		$	(5)	$	(4)	$	(64)	$	(40)

Loss on Funded Pension Plan adjustments:
Amortization of prior pension service costs and unrecognized losses		165		175		495		525	Other income (expense)		149		165		447		495	Other income (expense)
Settlement and curtailment loss		—		75		—		75	Other income (expense)
Tax expense (benefit)		(41)		(65)		(124)		(156)			(37)		(41)		(111)		(124)
Loss net of tax	$	124	$	185	$	371	$	444		$	112	$	124	$	336	$	371

Total net loss reclassified for the period	$	120	$	182	$	331	$	420		$	107	$	120	$	272	$	331

2726

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Note 14 — Income Taxes

For the three and nine months ended May 31, ~~2021,~~2022, the Company’s recognized effective tax rate was ~~19.5%~~19.7% and ~~23.1%~~23.3%, respectively. For the three and nine months ended May 31, ~~2020,~~2021, the Company’s recognized ~~and~~ effective tax rate was ~~20.9%~~19.5% and ~~24.7%~~23.1%, respectively.

The Company has applied the U.S. statutory Federal rate of 21%, enacted as part of the Tax Cuts and Jobs Act (the “Tax Act”) in December 2017, for both the ~~quarters~~third quarter and ~~nine-month~~year-to-date fiscal periods ended May 31, ~~2021~~2022 and ~~2020.~~2021.

~~During the quarter ended November 30, 2018 (the first quarter of fiscal 2019),~~In addition, the Company ~~began recognizing~~also recognizes an additional component of total Federal tax expense, the tax on Global Intangible Low-Taxed Income (“GILTI”) provision of the Tax Act, which became applicable to the Company in fiscal 2019. The Company elected to account for GILTI as a period cost, and therefore included GILTI expense in the effective tax rate calculation. This provision did not have a material effect on the effective tax rate for the ~~quarters~~third quarter and ~~nine-month~~year-to-date fiscal periods ended May 31, ~~2021~~2022 and ~~2020.~~2021. Additionally, the Company concluded that the Base Erosion and Anti Abuse Tax (“BEAT”) provision of the Tax Act, which also became applicable to the Company in fiscal 2019, had no effect on its effective tax rate for the ~~nine-month~~third quarter and year-to-date fiscal periods ended May 31, ~~2021~~2022 and ~~2020.~~2021.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, included a technical correction to the Tax Act which will allow accelerated deductions for qualified improvement property. The Company ~~is currently evaluating~~has evaluated the impact of the CARES Act, ~~but~~and at present does not expect that the qualified improvement property correction or other provisions of the CARES Act will result in a material tax benefit in future periods. The CARES Act had no material effect on the effective tax rate for the ~~first nine months of~~third quarter and year-to-date fiscal ~~2021 or 2020.~~periods ended May 31, 2022 and 2021.

In July 2020, the United States Internal Revenue Service (“IRS”) released final regulations (TD 9901) that ease documentation standards and provide greater flexibility for taxpayers claiming the deduction for Foreign-Derived Intangible Income (“FDII”). During ~~both~~ the ~~three~~third quarter and ~~nine months~~year-to-date fiscal periods ended May 31, ~~2021,~~2022, FDII had a favorable impact on the Company’s effective tax ~~rate included an FDII deduction benefit of $1,696. Also during the three and nine months ended May 31, 2021, the Company favorably resolved multiple uncertain tax positions and established international management fee charges which resulted in~~ ~~$933 of tax benefit and $1,229 of tax expense, respectively.~~rate.

0Note 15 — Operations Optimization Costs

Relocation of Chase Corporate Headquarters

The Company substantially completed the relocation of its Corporate Headquarters to another location within Westwood, MA during the second quarter of the fiscal year 2022. The move, part of the Company’s ongoing consolidation and optimization initiative, capitalizes on the hybrid work model utilized by many of Chase’s corporate and administrative employees and is expected to provide future operational cost savings. The new facility also consolidates and houses research and development operations previously conducted at the previous Westwood, MA and Woburn, MA locations. Operations optimization expenses related to the Westwood move of $32 and $232 were expensed in the third quarter and fiscal year-to-date period of 2022, respectively. The Company does not anticipate any significant additional operations optimization costs related to the new Corporate Headquarters during the fourth quarter of the fiscal year.

Relocation of Adhesives Systems Manufacturing to O'Hara Township, PA

During the third quarter of fiscal 2021, Chase announced to the employees at its Woburn, MA location that its adhesives systems operations, part of the Adhesives, Sealants and Additives segment’s electronic and industrial coatings product line, would be consolidating into the Company’s existing O'Hara Township, PA location. This rationalization and consolidation ~~initiative-related announcement~~initiative aligns with the announcement in the second quarter ~~announcement~~of fiscal 2021 of the Company’s plan to move its sealant systems production from Newark, CA to ~~its location in~~ Hickory, NC, described in more detail below. Chase Corporation obtained both the adhesive and sealants systems as part of its fiscal 2017 acquisition of the operations of Resin Designs. ~~No expense was recognized~~The Company expensed $27 and $328 related to ~~this initiative~~the consolidation of the Woburn, MA location during the third quarter and fiscal 2022 period, respectively, and expects to recognize additional expense during the fourth quarter ~~with~~of the ~~majority of future costs anticipated to occur in the first half of~~ fiscal ~~2022.~~year.

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Relocation of Sealants Systems Manufacturing to Hickory, NC

During the second quarter of fiscal 2021, Chase began moving the sealant systems operations, part of the Adhesives, Sealants and Additives segment’s electronic and industrial coatings product line, from its Newark, CA location to its Hickory, NC facility. This is in line with the Company’s ongoing initiative to consolidate its manufacturing plants and streamline its existing processes. The sealant systems operations and Newark, CA location came to Chase Corporation as part of the fiscal 2017 acquisition of the operations of Resin Designs, and the Company’s lease there ~~terminates~~terminated in ~~the current~~ fiscal ~~year.~~2021. The Company recognized ~~$22 and $120 in~~$977 of expense related to the move induring the ~~three-month~~entire prior fiscal year ended August 31, 2021 and ~~nine-month periods, respectively, ended May 31, 2021.~~

~~Table~~$0 and $147 of ~~Contents~~

~~COVID-19 Related Cost Structure Changes~~

~~During the third fiscal quarter of 2020 (prior year), the Company implemented changes~~expense in its cost structure designed to address market changes brought on, in part, by COVID-19. These changes included a targeted reduction of approximately 4.5% of the Company’s global workforce. This reduction, which was contemplated pre-pandemic but catalyzed by COVID-19, resulted in the recognition of $183 in severance costs during the third quarter ~~of 2020. The reduction in force, which impacted operations in the Blawnox, PA, Hickory, NC, Lenoir, NC, Evanston, IL, Oxford, MA~~ and ~~Westwood, MA facilities, was effective May 7, 2020.~~

~~IT Studies Related to the Upgrade of the Company’s Worldwide ERP System~~

~~During the first quarter of~~year-to-date fiscal 2020, the Company commissioned third party led studies regarding the potential upgrading of the Company’s current worldwide ERP system. Chase is currently reviewing the data and recommendations provided by the study and may further utilize third-party engineering, IT and other professional services firms in the future for similar work, as well as work around its facilities rationalization and consolidation initiative. The Company recognized $150 in expense related to these services in the first nine months of fiscal 2020, with nothing recognized in the first nine months of fiscal 2021. Given the ongoing nature of the review, an estimate of future costs, including those that may be capitalized, cannot currently be determined.

~~Relocation of Pulling and Detection Manufacturing to Hickory, NC~~

During the third quarter of fiscal 2019, Chase began moving the pulling and detection operations from its Granite Falls, NC location to its Hickory, NC facility. This is in line with the Company’s ongoing initiative to consolidate its manufacturing plants and streamline its existing processes. At the time, the pulling and detection operations were the only Chase-owned production operations in Granite Falls, NC, with the remaining portions of the building being either utilized for research and development or leased to a third party. The process of moving, including moving internal research and development capabilities, was substantially completed during the second quarter of fiscal 2020. The Company recognized $559 in expense related to the move in the six-month period ended February 29, 2020, having recognized $526 in expense during the second half of fiscal 2019.2022. This project is now ~~substantively complete, and 0 costs were recognized in the second half of fiscal 2020 or the nine months ended May 31, 2021,~~substantially completed and any future costs related to this move are not anticipated to be significant to the condensed consolidated financial statements.

~~Closure and Sale of Pawtucket, RI Facility~~

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Note 16 — Long-Term Debt

On June 25, 2018, the Company announced to its employees the planned closing of its Pawtucket, RI manufacturing facility effective August 31, 2018. This is in line with the Company’s ongoing efforts to consolidate its manufacturing plants and streamline its existing processes. The manufacture of products previously produced in the Pawtucket, RI facility was substantially moved to Company facilities in Oxford, MA and Lenoir, NC during a two-month transition period. The Company completed the sale of its Pawtucket, RI location to a third-party in April 2020, for net proceeds totaling $1,810. This transaction resulted in a gain of $760 which was recorded during the thirdJuly 27, 2021 (the fourth quarter of fiscal ~~2020. Also,~~2021), the Company entered into the Second Amended and Restated Credit Agreement (the “New Credit Agreement”) by and among the Company and NEPTCO Incorporated (“NEPTCO”), each as borrowers, the guarantor subsidiaries party thereto, the financial institutions party thereto as Lenders, and Bank of America, N.A., as administrative agent, with participation from Wells Fargo Bank, N.A., PNC Bank, N.A. and JPMorgan Chase Bank, N.A. The New Credit Agreement was entered into to amend, restate and extend the Company’s preexisting Amended and Restated Credit Agreement (the “Prior Credit Agreement”), which had a maturity date of December 15, 2021, and to provide for additional liquidity to finance acquisitions, working capital and capital expenditures, and for other general corporate purposes. Under the New Credit Agreement, Chase obtained an increased revolving credit loan (the “New Revolving Facility”), with borrowing capabilities not to exceed $200,000 at any time, with the ability to request an increase in this amount by an additional $100,000 at the individual or collective option of any of the Lenders. The applicable interest rate for the New Revolving Facility and New Term Loan (defined below) is based on the effective London Interbank Offered Rate (LIBOR) plus a range of 1.00% to 1.75%, depending on the consolidated net leverage ratio of Chase and its subsidiaries. At May 31, 2022, there was 0 outstanding principal balance, and as such, 0 applicable interest rate.

The New Credit Agreement has a five-year term with interest payments due at the end of the applicable LIBOR period (but in no event less frequently than the three-month anniversary of the commencement of such LIBOR period) and principal payment due at the expiration of the agreement, July 27, 2026. The New Credit Agreement contains provisions that may replace LIBOR as the benchmark index under certain circumstances. In addition, the Company may elect a base rate option for all or a portion of the New Revolving Facility, in which case interest payments shall be due with respect to such portion of the New Revolving Facility on the last business day of each quarter. Subject to certain conditions set forth in the New Credit Agreement, the Company may elect to convert all or a portion of the outstanding New Revolving Facility into a new term loan twice during the ~~third quarter~~term of ~~fiscal 2020,~~the New Revolving Facility (each, a “New Term Loan”, and collectively with the New Revolving Facility, the “New Credit Facility”), which New Term Loan shall be payable quarterly in equal installments sufficient to amortize the original principal amount of such Term Loan on a ten year amortization schedule.

The outstanding balance on the New Credit Facility is guaranteed by all of Chase’s direct and indirect domestic subsidiaries, which collectively had a carrying value of approximately $302,914 at May 31, 2022. The New Credit Facility is subject to restrictive covenants under the New Credit Agreement, and financial covenants that require Chase and its subsidiaries to maintain certain financial ratios on a consolidated basis, including a consolidated net leverage ratio of 3.25 to 1.00 and a consolidated interest coverage ratio of 3.50 to 1.00 (both defined in the New Credit Agreement). Chase Corporation was in compliance with the debt covenants as of May 31, 2022. The New Credit Agreement also places certain Lender-approval requirements as to the size of permitted acquisitions which may be entered into by the Company ~~recognized $85~~and its subsidiaries, and allows for a temporary step-up in ~~final Pawtucket, RI transition~~the allowed consolidated leverage ratio for the four fiscal quarters ending after certain designated acquisitions. Prepayment is allowed by the New Credit Agreement at any time during the term of the agreement, subject to customary notice requirements and ~~exit costs,~~the payment of customary LIBOR breakage fees.

The Prior Credit Agreement was an all-revolving credit facility with ~~no further costs related~~a borrowing capacity of $150,000, which could be increased by an additional $50,000 at the request of the Company and the individual or collective option of any of the lenders, and with an interest rate based on the effective LIBOR plus an additional amount in the range of 1.00% to ~~this initiative anticipated in future periods.~~1.75%, depending on our consolidated net leverage ratio or, at the Company’s option, at the bank’s base lending rate. It was substantially available at July 27, 2021, the time of its amendment and restatement.

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~~Note 16 — Long-Term Debt~~

On December 15, 2016, the Company entered into an Amended and Restated Credit Agreement (the “Credit Agreement”) with Bank of America, acting as administrative agent, and with participation from Citizens Bank and JPMorgan Chase Bank (collectively with Bank of America, the “Lenders”). The Credit Agreement is an all-revolving credit facility with a borrowing capacity of $150,000, which can be increased by an additional $50,000 at the request of the Company and the individual or collective option of any of the Lenders.The facility matures December 15, 2021 (the second quarter of fiscal 2022). The Credit Agreement contains customary affirmative and negative covenants that, among other things, restrict the Company’s ability to incur additional indebtedness and require lender approval for acquisitions by the Company and its subsidiaries over a certain size. It also requires the Company to maintain certain financial ratios, including a consolidated net leverage ratio (as defined in the facility) of no more than 3.25 to 1.00, and a consolidated fixed charge coverage ratio (as defined in the facility) of at least 1.25 to 1.00. The Company was compliant with its debt covenants as of May 31, 2021. The Credit Agreement is guaranteed by all of Chase’s direct and indirect domestic subsidiaries, which collectively had a carrying value of $271,705 at May 31, 2021. The Company entered into the Credit Agreement both to refinance its previously existing term loan and revolving line of credit, and to provide for additional liquidity to finance potential acquisitions, working capital, capital expenditures, and for other general corporate purposes.

The applicable interest rate for the revolver portion of the Credit Agreement (the “Revolving Facility”) and any Term Loan (defined below) is based on the effective London Interbank Offered Rate (LIBOR) plus an additional amount in the range of 1.00% to 1.75%, depending on the consolidated net leverage ratio of Chase and its subsidiaries. At May 31, 2021, there was 0 outstanding principal balance, and therefore 0 applicable interest rate. The Credit Agreement has a five-year term with interest payments due at the end of the applicable LIBOR period (but in no event less frequently than the three-month anniversary of the commencement of such LIBOR period) and principal payment due at the expiration of the agreement, December 15, 2021. In addition, the Company may elect a base rate option for all or a portion of the Revolving Facility, in which case interest payments shall be due with respect to such portion of the Revolving Facility on the last business day of each quarter.

Subject to certain conditions set forth in the Credit Agreement, the Company may elect to convert all or a portion of the outstanding Revolving Facility into a term loan (each, a “Term Loan”), which shall be payable quarterly in equal installments sufficient to amortize the original principal amount of such Term Loan on a seven year amortization schedule; provided, however, that the final principal repayment installment shall be repaid on December 15, 2021 and in any event shall be in an amount equal to the aggregate principal amount of all Term Loans outstanding on such date. Prepayment is allowed by the Credit Agreement at any time during the term of the agreement, subject to customary notice requirements.

~~The Company expects to renew this facility, or enter into a new facility, prior to its expiration to maintain Chase’s ability to support its strategic initiatives.~~

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Note 17 – Acquisitions

Acquisition of Emerging Technologies, Inc.

On February 5, 2021, the Company acquired certain assets of Emerging Technologies, Inc. (“ETi”), a superabsorbent polymers solutions provider, located in Greensboro, NC. The business was acquired for a purchase price of $9,997, comprising $8,997 paid on February 5, 2021 and an accrual of $1,000 to be paid out up to eighteen months after the purchase, subsequent to final working capital adjustments, and excluding acquisition-related costs. As part of this transaction, Chase acquired substantially all working capital and fixed assets of the business and entered a multi-year lease at ETi’s existing location. The Company expensed $128 of acquisition-related costs during the three-month period ended February 28, 2021 associated with this acquisition. The purchase was funded with available cash on hand. ETi is a solutions provider and formulator of absorbent polymers for use in the packaging, recreational, consumer, and sanitation markets. The acquisition broadens the Company’s superabsorbent polymers product offerings and formulation capabilities while expanding its market reach. The Company ~~is currently in the process of finalizing~~finalized purchase accounting ~~regarding a final allocation~~during the first quarter of ~~the purchase price~~fiscal 2022, with no significant change to ~~tangible and identifiable intangible assets assumed, and anticipates completion within fiscal 2021.~~amounts initially recorded. Since the effective date of the acquisition, the financial results of ETi’s acquired operations have been included in the Company’s financial statements within the functional additives product line, contained within the Adhesives, Sealants and Additives operating segment. The ETi acquisition does not represent a significant business combination so pro forma financial information is not provided.

The excess of the purchase price over the net tangible and intangible assets acquired resulted in ~~preliminary~~ goodwill of $2,451 that is largely attributable to the synergies and economies of scale from combining the operations, technologies and research and development capabilities of ETi and Chase, particularly as they pertain to the expansion of the Company's product and service offerings, the established workforce and marketing efforts. This goodwill is deductible for income tax purposes.

Acquisition of ABchimie

On September 1, 2020 (first day of fiscal 2021), the Company acquired all the capital stock of ABchimie for €18,654 (approximately $22,241 at the time of the transaction) net of cash acquired, ~~subsequent~~subject to final working capital ~~adjustment,~~adjustments, excluding acquisition-related costs totaling $274 recognized in fiscal 2020 ~~(with $20 and $153 recognized in the three- and nine-month periods ended May 31, 2020)~~ and with a performance-based earn out (measured over four years post-acquisition) potentially worth an additional €7,000 (approximately $8,330 at the time of the transaction). The Company had $2,692 accrued ~~$1,939~~ at ~~May 31, 2021~~February 28, 2022 within Other liabilities on the condensed consolidated balance sheet related to its estimate of the current ~~estimate~~fair value of the earn out. Following its initial recording at the acquisition date, ~~a $262 and $995 increase~~changes in the performance-based earn out accrual ~~was~~have been recorded within ~~Loss (gain)~~(Gain) loss on contingent consideration in the condensed consolidated statement of operations ~~for~~(including a $474 gain in the ~~three~~third quarter and ~~nine months ended May 31, 2021, respectively.~~ $199 year-to-date net gain adjustment in fiscal 2022).

ABchimie is a Corbelin, France headquartered solutions provider for the cleaning and protection of electronic assemblies, with ‎further formulation, production, and research and development capabilities‎. The transaction was funded with available cash on hand. The financial results of the business are included in the Company's ~~fiscal 2021~~ financial statements within the Adhesives, Sealants and Additives operating segment in the electronic and industrial coatings product line. The Company ~~is currently in the process of finalizing~~finalized purchase accounting ~~regarding a final allocation~~during the fourth quarter of ~~the purchase price~~fiscal 2021, with no significant change to tangible and identifiable intangible assets assumed, including finalizing the recording of deferred taxes, and anticipates completion within fiscal 2021. The ABchimie acquisition does not represent a significant business combination so pro forma financial information is not provided.amounts initially recorded.

The excess of the purchase price over the net tangible and intangible assets acquired resulted in goodwill ~~preliminarily measured at~~of $13,055 that is largely attributable to the synergies and economies of scale from combining the operations, technologies and research and development capabilities of ABchimie and Chase, particularly as they pertain to the expansion of the Company's product and service offerings, the established workforce and marketing efforts. A portion of this goodwill is deductible in the U.S. for calculation of GILTI period costs but is nondeductible for French income tax purposes.

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Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion provides an analysis of the Company’s financial condition and results of ~~operations and~~operations. It should be read in conjunction with the Condensed Consolidated Financial ~~Statements and notes~~Statements. Notes thereto are included in Item 1 of Part I of this Quarterly Report on Form 10-Q and with the Company’s Annual Report on Form 10-K filed for the fiscal year ended August 31, ~~2020.~~2021.

Overview

General

~~Strong~~The Company’s revenue grew in the third fiscal quarter and ~~nine-month period~~nine months ended May 31, ~~2021 resulted~~2022, with all three of its reportable operating segments surpassing sales achieved in ~~improvements~~the prior year quarter and year-to-date fiscal periods. Despite the ongoing challenges of the global operating environment detailed below, the Company increased its gross margin to 38.6% in ~~operating income~~the third quarter resulting in a 37.4% gross margin for the year-to-date fiscal period.

Despite the Company’s healthy sales growth in both the current quarter and ~~net income~~year-to-date period, and an increase in third quarter gross margin compared to the [second quarter][first half of fiscal 2022], the Company continues to have a less favorable gross margin percentage in the current quarter and year-to-date period compared to the prior year periods. ~~All three of Chase Corporation’s~~Lower operating ~~segments achieved top-line improvement~~costs seen in the current quarter resulted in higher operating income over the ~~COVID-19 affected third~~comparable quarter. Higher operating costs seen in the year-to-date current period resulted in decreased operating income over the comparable year-to-date period. Chase’s relative gross margin in the quarter ~~of fiscal 2020. The~~and year-to-date period continue to be negatively impacted by both: a.) increased input costs caused by continued global raw material inflationary pressures, increased logistics costs and a more competitive labor market; and b.) a less favorable sales mix, with sales increases in its lower margin Industrial Tapes segment outpacing revenue gains seen in its higher margin Adhesives, Sealants and Additives, ~~segment led the improvement by achieving both organic~~ and ~~inorganic growth, with sales into automotive, industrial, medical~~Corrosion Protection and consumer markets, and continued an upward trajectory in international markets. The results of both the Company’s current year acquisitions (the February 2021 acquisition of the operations of Emerging Technologies, Inc. (“ETi”) and the September 2020 acquisition of ABchimie) are reported underWaterproofing segments. Further, the Adhesives, Sealants and Additives segment ~~and combined provided accretive results for both~~also experienced a less favorable sales mix within the ~~quarter and year-to-date period. The Industrial Tapes and Corrosion Protection and Waterproofing segments achieved recovery in sales over the prior year. The Corrosion Protection and Waterproofing~~segment itself due to historically less favorable margin products constituting a comparatively larger part of total segment sales in the ~~third quarter brought the~~quarterly and year-to-date ~~total over the prior year-to-date period~~periods.

The Company continues to work with domestic waterproofing projects work leading the rebound. However, challenges resulting from the global economic disruptions caused by the COVID-19 pandemic during the first nine months of fiscal 2021 resulted in the Industrial Tapes segment unable to surpass prior year sales results on a year-to-date basis. All of Chase Corporation’s segments are subject to current global raw material inflationary pressuresour customers and ~~supply chain challenges, and the Company, in line with customer agreements, is addressing this by instituting customer price adjustments across impacted product lines~~suppliers in an effort to ~~protect gross margins.~~

~~Business Development~~

~~During~~counteract margin compression. However, given the ~~third quarter~~delay experienced due to notification period requirements with certain customers and the continuation of ~~fiscal 2021, Chase announced to~~upward inflationary pressures on input costs, the ~~employees at its Woburn, MA location that its adhesives systems operations would be consolidating into~~current period and year-to-date results reflect a lag in the ~~Company’s existing O'Hara Township, PA location. This rationalization and consolidation initiative-related announcement aligns with the second quarter announcement~~realization of the ~~Company’s plan to move its sealant systems production from Newark, CA to its location in Hickory, NC. Chase Corporation obtained both the adhesive and sealants systems as part~~full benefits of ~~its fiscal 2017 acquisition of the operations of Resin Designs.~~

On February 5, 2021, the Company acquired certain assets of Emerging Technologies, Inc. (“ETi”), a Greensboro, NC-located solutions provider and formulator of absorbent polymers for use in the packaging, recreational, consumer, and sanitation markets. Following its fiscal 2018 acquisition of Zappa Stewart, the acquisition of ETi expands Chase Corporation’s market share in the growing superabsorbent polymers vertical. This second quarter acquisition comes following the September 1, 2020 purchase of ABchimie, a Corbelin, France-headquartered solutions provider for the cleaning and protection of electronic assemblies, with additional formulation, production, and research and development capabilities.Both the fiscal 2021 acquisitions were funded with available cash on hand and broaden the Company’s specialty chemical offerings within the Adhesives, Sealants, and Additives reporting segment with high performance, environmentally-friendly technologies that are complementary to Chase’s existing product offerings.

these efforts.

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Revenue by Segment

Chase Corporation has three reportable operating segments as summarized below:


Segment	Product Lines	Manufacturing Focus and Products
Adhesives, Sealants and Additives	Electronic and Industrial Coatings Functional Additives ~~(1)~~	Protective coatings, including moisture protective coatings and cleaning chemistries, and customized sealant and adhesive systems for electronics; polyurethane dispersions, polymeric microspheres and superabsorbent polymers.
Industrial Tapes	Cable Materials Specialty Products Pulling and Detection Electronic Materials	Protective tape and coating products and services, including insulating and conducting materials for wire and cable manufacturers; laminated durable papers, packaging and industrial laminate products and custom manufacturing services; pulling and detection tapes used in the installation, measurement and location of fiber optic cables and water and natural gas lines; cover tapes essential to delivering semiconductor components via tape-and-reel packaging.
Corrosion Protection and Waterproofing	Coating and Lining Systems Pipeline Coatings Building Envelope Bridge and Highway	Protective coatings and tape products, including coating and lining systems for use in liquid storage and containment applications; protective coatings for pipeline and general construction applications; adhesives and sealants used in architectural and building envelope waterproofing applications; high-performance polymeric asphalt additives and expansion and control joint systems for use in the transportation and architectural markets.

~~(1)~~

~~Formerly referred to as the specialty chemical intermediates product line~~

Revenue ~~from the~~for our Adhesives, Sealants and Additives segment increased for the third quarter and year-to-date ~~period versus~~periods against the comparable prior ~~year. Driven by Asian~~year periods with increased demand for our North American-focused functional additives product line, including year-to-date inorganic growth from our Emerging Technologies, Inc. (“ETi”) business acquired in the last month of the second quarter of fiscal 2021. Partially offsetting this increase in revenue was a quarter to quarter and ~~European markets showing growth and the inorganic boost provided by the acquired operations of ABchimie,~~year-to-date reduction in sales ~~volumes within the~~volume from our worldwide-focused electronic and industrial coatings product line ~~increased. The Company’s North American-focused functional additives product line~~due to reduced demand acutely seen with sales ~~also experienced both organic~~within the automotive industry for the third quarter and ~~inorganic volume growth over both the comparative periods, with the operations of ETi added to the product line following its February 5, 2021 acquisition.~~year-to-date fiscal periods.

~~Sales showed recovery in the~~Revenue for our Industrial Tapes segment ~~for the quarter ended May 31, 2021 over~~surpassed the COVID-19 impacted third quarter ~~of the~~and year-to-date prior year ~~but remained below the prior year~~sales with continued increased demand for ~~the nine-month period ended May 31, 2021, with the~~our North American-focused cable materials, ~~specialty products~~ and pulling and detection product ~~lines driving~~lines. Tempering the ~~top-line remission for the year-to-date period. The cable materials, specialty products and pulling and detection product lines all have~~increase in third quarter revenue was a ~~North American concentration, with~~decrease in third quarter sales from the specialty products ~~sales reductions further impacted in the year-to-date period by the Company’s prior year planned exit from providing low margin transitional toll manufacturing services~~product line due to ~~the purchaser of the structural composites rod and the fiber optical cable components businesses. By contrast, for the third quarter of fiscal 2021~~raw material supply constraints. However, the specialty products ~~pulling and detection and cable materials~~ product ~~lines had~~line continues to experience a year-to-date increase in sales ~~up from~~over the prior ~~year~~year-to-date comparable period. The Company’s electronic materials product line, which sells nearly exclusively to Asian markets, saw a sales volume decrease for the current year third quarter, but remained above the prior year on a year-to-date basis.

~~The~~Revenue for our Corrosion Protection and Waterproofing ~~segment’s sales increased compared to both the third quarter and the first nine months of the prior year. The coating and lining systems and building envelope product lines were favorable to~~segment surpassed the prior year ~~for~~quarter and year-to-date periods with increased demand from our pipeline coatings line benefiting in the current quarter, and our building envelope lines benefitting both in the current quarter and year-to-date ~~period, with the pipeline coatings product line favorable for the third~~periods. Partially offsetting these increases in revenue were current quarter ~~but remaining behind on a~~and year-to-date ~~basis. The~~reductions in net sales volume from our bridge and highway product lines. The coatings and lining systems product line also experienced reduction in net sales ~~were unfavorable~~volume in the current quarter compared to the ~~third~~prior year quarter and ~~the first nine months of~~continues to experience an increase in year-to-date sales compared to the prior ~~year.~~comparable period.

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Balance Sheet and Cash Flow

Chase Corporation’s balance sheet remained strong onas of May 31, ~~2021,~~2022, with cash on hand of ~~$102,947,000,~~$124,683,000, and a current ratio of ~~7.2. Favorable third quarter cash flow generation resulted in higher cash provided by operating activities over the prior year for both the quarter and year-to-date period.~~8.1. The Company’s cash position ~~remains~~remained healthy, ~~with~~as did cash flow from ~~operations more than offsetting the costs to acquire ETi and ABchimie~~operations. Chase continued its strategic inventory build during the ~~nine-month period.~~third quarter, undertaken to help ensure its ability to satisfy our customers’ demands and to address its elevated backlog caused in part by supply chain challenges. In addition, during the second fiscal quarter Chase Corporation paid out its largest ever annual cash dividend of $9,460,000 on December 9, 2021.

The Company held no outstanding balance on its ~~$150,000,000~~$200,000,000 revolving credit facility as of May 31, ~~2021.~~2022. The revolving credit facility, which was amended and restated in July 2021 (fourth quarter of fiscal 2021) to increase its capacity from $150,000,000 to $200,000,000, allows for the Company to pay down debt with excess cash, while retaining access to immediate liquidity to fund future accretive activities, including mergers and acquisitions, as they are identified. ~~Chase’s current credit~~The new facility also gives Chase the ability to request an increase in this amount by an additional $100,000,000 ($300,000,000 in total borrowing capacity) at the individual or collective option of any of the lenders. The facility matures in December 2021. The Company expects to enter a new facility within the current fiscal year, prior to the current facility’s expiration, to maintain its ability to support Chase’s strategic initiatives.

July 2026.

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Results of Operations

Revenue and Income before Income Taxes by Segment were as follows (dollars in thousands):


				% of					% of					% of					% of					% of					% of					% of					% of
	Three Months Ended			Total		Three Months Ended			Total		Nine Months Ended			Total		Nine Months Ended			Total		Three Months Ended			Total		Three Months Ended			Total		Nine Months Ended			Total		Nine Months Ended			Total
	May 31, 2021			Revenue		May 31, 2020			Revenue		May 31, 2021			Revenue		May 31, 2020			Revenue		May 31, 2022			Revenue		May 31, 2021			Revenue		May 31, 2022			Revenue		May 31, 2021			Revenue

Revenue
Adhesives, Sealants and Additives	$	33,861		43	%	$	22,922		35	%	$	95,507		44	%	$	73,184		37	%	$	36,771		41	%	$	33,861		43	%	$	99,600		42	%	$	95,507		44	%
Industrial Tapes		32,249		41	%		31,752		49	%		87,085		40	%		91,931		47	%		38,329		43	%		32,249		41	%		104,420		44	%		87,085		40	%
Corrosion Protection and Waterproofing		13,483		17	%		10,197		16	%		32,624		15	%		32,140		16	%		13,519		15	%		13,483		17	%		33,562		14	%		32,624		15	%
Total	$	79,593				$	64,871				$	215,216				$	197,255				$	88,619				$	79,593				$	237,582				$	215,216

				% of					% of					% of					% of					% of					% of					% of					% of
	Three Months Ended			Segment		Three Months Ended			Segment		Nine Months Ended			Segment		Nine Months Ended			Segment		Three Months Ended			Segment		Three Months Ended			Segment		Nine Months Ended			Segment		Nine Months Ended			Segment
	May 31, 2021			Revenue		May 31, 2020			Revenue		May 31, 2021			Revenue		May 31, 2020			Revenue		May 31, 2022			Revenue		May 31, 2021			Revenue		May 31, 2022			Revenue		May 31, 2021			Revenue
Income before income taxes
Adhesives, Sealants and Additives	$	10,982	(a)	32	%	$	6,704		29	%	$	31,098	(c)	33	%	$	20,936		29	%	$	12,320	(a)	34	%	$	10,982	(c)	32	%	$	27,719	(a)	28	%	$	31,098	(c)	33	%
Industrial Tapes		10,945		34	%		9,011		28	%		27,273		31	%		24,050	(e)	26	%		10,985		29	%		10,945		34	%		30,525		29	%		27,273		31	%
Corrosion Protection and Waterproofing		5,098		38	%		4,149		41	%		11,599		36	%		12,240		38	%		5,353		40	%		5,098		38	%		12,683		38	%		11,599		36	%
Total for reportable segments		27,025		34	%		19,864		31	%		69,970		33	%		57,226		29	%		28,658		32	%		27,025		34	%		70,927		30	%		69,970		33	%
Corporate and Common Costs		(9,282)					(7,337)	(b)				(25,385)	(d)				(23,823)	(f)				(9,310)	(b)				(9,282)	(c)				(26,095)	(b)				(25,385)	(c)
Total	$	17,743		22	%	$	12,527		19	%	$	44,585		21	%	$	33,403		17	%	$	19,348		22	%	$	17,743		22	%	$	44,832		19	%	$	44,585		21	%

Note: Some percentage of total revenue amounts may not sum to 100% due to ~~rounding~~rounding.

(a)

Includes a $474 gain in the third quarter and a $199 year-to-date gain on the adjustment of the performance-based earn-out contingent consideration associated with the September 2020 acquisition of ABchimie and $27 and $328 in operation optimization costs in the third quarter and year-to-date period, respectively, related to the move from Woburn, MA to O’Hara Township, PA and $0 and $147 of operations optimization costs in the third quarter and year-to-date period related to the move from Newark, CA to Hickory, NC

(b)

Includes $32 and $232 of operations optimization costs in the three- and nine-month period, respectively, related to the Company’s move to the new Corporate Headquarters to another location in Westwood, MA substantially completed in the second quarter of the fiscal year

(c)

~~(b)~~

~~(c)~~

~~(d)~~

~~Includes $128 in acquisition-related expense~~ attributable to the February 2021 acquisition of the operations of ETi

~~(e)~~

~~(f)~~

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Total Revenue

Total revenue increased ~~$14,722,000~~$9,026,000, or ~~23%~~11% to ~~$79,593,000~~$88,619,000 for the quarter ended May 31, ~~2021,~~2022, compared to ~~$64,871,000~~$79,593,000 in the same quarter of the prior year. Total revenue increased ~~$17,961,000~~$22,366,000, or 9%10% to ~~$215,216,000~~$237,582,000 in the fiscal year-to-date period compared to ~~$197,255,000~~$215,216,000 in the same period in fiscal ~~2020.~~2021.

Revenue in the Company’s Adhesives, Sealants and Additives segment increased ~~$10,939,000~~$2,910,000, or ~~48%~~9% and ~~$22,323,000~~$4,093,000, or ~~31%~~4% in the current quarter and year-to-date period, ~~respectively. Organic revenue growth accounted~~respectively. Positively impacting sales for $7,229,000 and $15,380,000 of the segment’s overall third quarter and year-to-date period sales increases, respectively. The increases in revenue from the Adhesives, Sealants and Additives segment in fiscal 2021 forboth the current quarter and year-to-date period were demand-driven sales increases of $3,416,000 and $7,804,000, respectively, ~~were primarily due to~~the electronic and industrial coatings product line’s $7,301,000 and $17,963,000 organic and inorganic increases. The operations of ABchimie, acquired September 1, 2020 (first day of fiscal 2021), provided the product line accretive top-line gains, while strong organic gains were seen both domestically and internationally. Also positively impacting the segment’s sales were organic and inorganic increases in revenue from theby our North American-focused functional additives product line, ~~totaling $3,638,000 and $4,360,000~~which includes year-to-date inorganic growth attributable to the ETi business acquired in the last month of the second quarter of fiscal 2021. Negatively impacting the segment’s sales was volume-driven decreases in the current quarter and year-to-date ~~period. The functional additives product line sales totals included the operations of ETi, following its acquisition on February 5, 2021 (second quarter of fiscal 2021).~~

Revenue in the Industrial Tapes segment increased $497,000 or 2% in the current quarter but decreased $4,846,000 or 5% for the year-to-date period. The net changes in revenue for the segment were primarily due to the following: (a) revenue increase of $493,000 for the quarter but a reduction of $261,000 for the year-to-date period for ~~the specialty products product~~its worldwide-focused electronic and industrial coatings line ~~as the Company ended its arrangement to provide low margin transitional toll manufacturing services~~totaling $506,000 and $3,711,000, respectively, with logistics and raw material supply constraints affecting demand in the second quarter of fiscal 2020 (prior year); (b) the pulling and detection tapes product line saw sales growth of $136,000 over the prior year quarter but a reduction of $229,000 for the year-to-date period on lower sales volume; (c) the North American-focused cable materials product line achieved a sales volume and price increase of $94,000 for the quarter but remained $4,529,000 behind for the year-to-date period, with both COVID-19 and certain exposure to oil and gas markets negatively impacting year-to-date results; and (d) the electronic materials product line, which has a nearly exclusive Asian end-market, saw a reduction of $226,000 for the quarter but remained $173,000 above the prior year-to-date period.automotive verticals.

Compared to the prior year ~~third~~ quarter and year-to-date period, revenue ~~from~~in the Company’s Industrial Tapes segment increased $6,080,000, or 19% and $17,335,000, or 20%, respectively. Positively impacting sales for both the current quarter and year-to-date period were sales price and volume-driven increases of $6,351,000 and $17,063,000, respectively due to its wire and cable, pulling and detection, and electronic materials product lines over the COVID-19 impacted prior year periods. Negatively impacting the sales increase for the quarter was its specialty product line totaling a sales decrease of $271,000 due to raw material supply constraints. However, the specialty products line continues to experience a year-to-date sales increase of $272,000 over the comparable year-to-date period.

Revenue in the Company’s Corrosion Protection and Waterproofing segment increased ~~$3,286,000~~$36,000, or ~~32%~~less than 1% for the current quarter and ~~$484,000~~increased $938,000, or ~~2%,~~3% in the year-to-date period, respectively. ~~The~~Positively impacting segment sales for the current quarter was the demand-driven sales price and volume increases in its pipeline coatings and building envelope product lines totaling $728,000 and $299,000, respectively, due to continued recovery in our oil and gas pipeline business attributable to our pipeline coatings product line and increased construction demand attributable to our building envelope product lines. Negatively impacting the segment’s sales ~~increases~~was a decrease in revenue from its bridge and highway product lines totaling $126,000 and $131,000 in the current quarter and year-to-date period, ~~were predominantly driven by: (a)~~respectively, due to delayed project demand. Negatively impacting the ~~coating~~quarter was the coatings and lining ~~systems~~ product ~~line sales increases~~lines totaling a loss of ~~$2,542,000 and $1,652,000, with recovery and growth achieved following~~$566,000 due to the strong prior year quarter activity after the winter weather events which impacted the Houston, TX manufacturing facility and surrounding regions. However, the ~~surrounding region~~coatings and lining product line experienced an increase of $770,000 in the ~~second quarter of~~ fiscal ~~2021; and (b)~~the building envelope product line’s sales increases of $518,000 and $208,000, respectively. While achieving revenue growth of $492,000 over the prior year third quarter, the pipeline coatings product line remained $898,000 behind the prior year to-dateyear-to-date period with the Company’s North American operations effected by a net prolonged decrease in worldwide oil and gas prices, and with the Rye, U.K.-based facility’s Middle East sales prospects and margin also negatively impacted by energy prices during the current year periods. The bridge and highway product line sales saw reductions of $266,000 and $478,000 compared to the prior year ~~third quarter and year-to-date period on lower project demand.~~

comparable period.

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Cost of Products and Services Sold

Cost of products and services sold increased ~~$6,623,000~~$8,126,000, or ~~17%~~18% to ~~$46,312,000~~$54,438,000 for the quarter ended May 31, ~~2021,~~2022, compared to ~~$39,689,000~~$46,312,000 in the prior year quarter. ~~Cost~~Costs of products and services sold increased ~~$4,694,000~~$21,798,000, or 4%17% to ~~$126,832,000~~$148,630,000 in the first nine months of fiscal ~~2021,~~2022, compared to ~~$122,138,000~~$126,832,000 in the comparative year-to-date period.

The following table summarizes the cost of products and services sold as a percentage of revenue for each of Chase Corporation’s reportable operating segments:


	Three Months Ended May 31,				Nine Months Ended May 31,				Three Months Ended May 31,				Nine Months Ended May 31,
Cost of products and services sold	2021		2020		2021		2020		2022		2021		2022		2021
Adhesives, Sealants and Additives	56	%	57	%	55	%	57	%	57	%	56	%	60	%	55	%
Industrial Tapes	62		67		64		68		67		62		67		64
Corrosion Protection and Waterproofing	55		54		57		55		56		55		56		57
Total Company	58	%	61	%	59	%	62	%	61	%	58	%	63	%	59	%

Cost of products and services sold in the Adhesives, Sealants and Additives segment was ~~$18,850,000~~$21,073,000 and ~~$52,461,000~~$59,828,000 in the current quarter and year-to-date period compared to ~~$13,044,000~~$18,850,000 and ~~$41,831,000~~$52,461,000 in the comparable ~~periods in the prior year.~~ ~~Cost of products and services sold in the Industrial Tapes segment was $20,043,000 and $55,853,000 in the current quarter and year-to-date period compared to $21,118,000 and $62,640,000 in the same~~ periods in the prior year. Cost of products and services sold in the Industrial Tapes segment was $25,836,000 and $69,845,000 in the current quarter and year-to-date period compared to $20,043,000 and $55,853,000 in the comparable periods in the prior year. Cost of products sold in the Corrosion Protection and Waterproofing segment was ~~$7,419,000~~$7,529,000 and ~~$18,518,000 for~~$18,957,000 in the current quarter and year-to-date period ~~ended May 31, 2021,~~ compared to ~~$5,527,000~~$7,419,000 and ~~$17,667,000~~$18,518,000 in the comparable periods ofin the prior year.

As a percentage of revenue, cost of products and services ~~sold was reduced~~increased for ~~both~~ the Adhesives, Sealants and Additives and Industrial Tapes ~~segments~~segment in the current quarter and ~~increased~~year-to-date period. As a percentage of revenue, costs of products and services sold for the Corrosion Protection and Waterproofing segment ~~as compared to~~increased in the ~~third~~current quarter and ~~first nine months of~~decreased in the ~~prior year. These changes~~year-to-date period. The decrease in the relative gross margin ~~were primarily due to: (a)more favorable sales mixes in~~for the Adhesives, Sealants and Additives and Industrial Tapes ~~segments, as higher margin products and offerings constituted a comparatively higher portion of total sales; and (b) net production and operational efficiencies realized in theAdhesives, Sealants and Additives and Industrial Tapes segments~~segment for the current quarter and year-to-date period ~~including those gained in part through the facility rationalization and consolidation initiative.All of Chase Corporation’s segments are subject~~was due to ~~current~~continued global raw material inflationary pressures, increased logistics and ~~supply chain challenges,~~freight costs and a more competitive labor market. Additionally, the Company’s overall relative margin was affected by a less favorable sales mix with sales increases in our lower margin Industrial Tapes segment outpacing revenue gains seen in our Adhesive, Sealants and Additives and Corrosion Protection and Waterproofing segments. The Adhesives, Sealants and Additives segment also experienced a less favorable sales mix within the segment itself, with historically less favorable margin products constituting a comparatively larger part of total segment sales. The Company ~~in line with customer agreements, is addressing this by instituting~~has implemented and continues to implement customer price adjustments ~~across affected product lines.~~and continues to work with our customers and suppliers in an effort to counteract margin compression but with a lag reflected in current quarter and year-to-date period results.

With the composition of the Company’s finished goods and the markets it serves, the costs of certain commodities (including petroleum-based solvents, films, yarns, polymers and nonwovens, aluminum and copper foils, specialty papers, and various resins, adhesives and inks) directly and indirectly affect both the purchase price of the raw materials and market demand for its product offerings. ~~The~~In an effort to preserve margins, the Company diligently monitors raw materials and commodities pricing across all its product ~~lines in an effort to preserve margins.~~lines.

Selling, General and Administrative Expenses

Selling, general and administrative expenses ~~increased $2,174,000~~decreased $162,000, or ~~18%~~1% to ~~$13,969,000~~$13,807,000 for the quarter ended May 31, ~~2021~~2022 compared to ~~$11,795,000~~$13,969,000 in the prior year quarter. Selling, general and administrative expenses increased ~~$1,535,000~~$1,747,000, or 4%5% to ~~$38,560,000~~$40,307,000 in the fiscal year-to-date period compared to ~~$37,025,000~~$38,560,000 in the same period in fiscal ~~2020.~~2021. The year-to-date increase in activity is attributed to total increased selling and sales activity costs over the comparable prior year-to-date period. As a percentage of revenue, selling, general and administrative expenses represented ~~18% for both the current year third quarter~~16% and ~~fiscal year-to-date period, compared to 18% and 19%~~17% for the three- and nine-month periods of the fiscal year, respectively, and 18% in the comparable three- and nine-month periods of the prior ~~year, respectively.~~year.

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Research and Product Development Costs

Research and ~~Product Development Costs decreased $1,000~~product development costs increased $229,000, or ~~less than one~~24% percent to ~~$957,000~~$1,186,000 during the third quarter of fiscal ~~2021,~~2022, compared to ~~$958,000~~$957,000 in fiscal ~~2020.~~2021. Research and ~~Product Development Costs decreased $11,000~~product development costs increased $240,000, or ~~less than one~~8% percent to ~~$3,034,000~~$3,274,000 during the first nine months of fiscal ~~2021,~~2022, compared to ~~$3,045,000~~$3,034,000 in the same period of fiscal ~~2020.~~2021. Research and development ~~stayed relatively consistent~~costs increased from fiscal ~~2020~~2021 to ~~2021~~2022 as the Company continued focused development work on strategic product lines.

Operations Optimization Costs

The Company substantially completed the relocation of its Corporate Headquarters to another location within Westwood, MA during the second quarter of the fiscal year. The move, part of the Company’s ongoing consolidation and optimization initiative, capitalizes on the hybrid work model utilized by many of Chase’s corporate and administrative employees and is expected to provide future operational cost savings. The facility will consolidate and house research and development operations previously conducted at the previous Westwood, MA and Woburn, MA locations. Operations optimization costs related to the Westwood move of $32,000 and $232,000 were expensed in the third quarter and year-to-date fiscal period, respectively. The Company does not anticipate any significant additional operations optimization costs related to the new Corporate Headquarters during the fourth quarter of the fiscal year.

During the third quarter of fiscal 2021, Chase announced to the employees at its Woburn, MA location that its adhesives systems operations, part of the Adhesives, Sealants and Additives segment’s electronic and industrial coatings product line, would be consolidating into the Company’s existing O'Hara Township, PA location. This rationalization and consolidation ~~initiative-related announcement~~initiative aligns with the announcement in the second quarter ~~announcement~~of fiscal 2021 of the Company’s plan to move its sealant systems production from Newark, CA to ~~its location in~~ Hickory, NC, described in more detail below. Chase Corporation obtained both the adhesive and sealants systems as part of its fiscal 2017 acquisition of the operations of Resin Designs. ~~No expense was recognized~~The Company expensed $27,000 and $328,000, related to ~~this initiative~~the consolidation of the Woburn, MA location during the third quarter and year-to-date fiscal year, respectively, and expects to recognize additional expense during the fourth quarter ~~with~~of the ~~majority of future costs anticipated to occur in the first half of~~ fiscal ~~2022.~~year.

During the second quarter of fiscal 2021, Chase began moving the sealant systems operations, part of the Adhesives, Sealants and Additives segment’s electronic and industrial coatings product line, from its Newark, CA location to its Hickory, NC facility. This is in line with the Company’s ongoing initiative to consolidate its manufacturing plants and streamline its existing processes. The sealant systems operations and Newark, CA location came to Chase Corporation as part of the fiscal 2017 acquisition of the operations of Resin Designs, and the Company’s lease there ~~will terminate~~terminated in ~~the current~~ fiscal ~~year.~~2021. The Company recognized ~~$22,000 and $120,000~~$977,000 in expense related to the move induring the ~~three-month and nine-month periods~~entire prior fiscal year ended ~~May~~August 31, ~~2021.~~

~~During the first quarter~~2021, of fiscal 2020 (prior year), the Company commissioned third party led studies regarding the potential upgrading of the Company’s current worldwide ERP system. Chase is currently reviewing the data and recommendations provided by the study and may further utilize third-party engineering, IT and other professional services firms in the future for similar work, as well as work around the Company’s facilities rationalization and consolidation initiative. The Companywhich $98,000 was recognized ~~$150,000 in expense related to these services~~ in the first half of ~~fiscal 2020. Given~~ the ~~ongoing nature of the review, an estimate of future costs, including costs that could be capitalized, cannot currently be determined.~~

During the third quarter of fiscal 2019, Chase began moving the pulling and detection operations from its Granite Falls, NC location to its Hickory, NC facility. This is in line with the Company’s ongoing initiative to consolidate its manufacturing plants and streamline its existing processes. At the time, the pulling and detection operations were the only Chase-owned production operations in Granite Falls, NC, with the remaining portions of the building being either utilized for research and development or leased to a third party. The process of moving, including moving internal research and development capabilities, was substantially completed during the second quarter of fiscal 2020 (prior year).year. The Company recognized ~~$559,000 in expense related to the move in the nine-month period ended May 31, 2020, having recognized $526,000~~$147,000 in expense during both the ~~second~~first half of fiscal ~~2019.~~2022. This project is ~~substantively~~now substantially completed ~~and no costs were recorded in the first nine months of fiscal 2021,~~ and any future costs related to this move are not anticipated to be ~~significant to the condensed consolidated financial statements.~~significant.

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~~Acquisition-Related Costs~~

In the second quarter of fiscal 2021, the Company incurred $128,000 of costs related to our February 5, 2021 acquisition of Emerging Technologies, Inc (“ETi”). This acquisition was accounted for as a business combination in accordance with applicable accounting standards, and all related professional service fees (including legal, accounting and actuarial fees) were expensed as incurred within the second fiscal quarter of 2021.

In the three- and nine-month periods ended May 31, 2020, the Company incurred $20,000 and $153,000 of costs related to our September 1, 2020 acquisition of ABchimie, respectively. This acquisition was accounted for as a business combination in accordance with applicable accounting standards, and all related professional service fees (including banking, legal, accounting and actuarial fees) were expensed as incurred within the second, third and fourth quarters of fiscal 2020 (total of $274,000 in acquisition-related expense recognized over the last three quarters of fiscal 2020). The transaction was consummated at the beginning of fiscal 2021.

~~Gain on Sale of Real Estate~~

In April 2020, the Company finalized the sale of its Pawtucket, RI location for net proceeds of $1,810,000. This transaction resulted in a gain of $760,000 which was recorded during the quarter ended May 31, 2020.

~~Loss~~ (Gain) loss on Contingent Consideration

As a component of the September 1, 2020 acquisition of ABchimie, the Company incurred a performance-based earn out liability potentially worth an additional €7,000,000 (approximately $8,330,000 at the time of the transaction) in consideration. Following its initial recording of an accrual for $928,000 at the acquisition date, ~~$262,000 and $995,000~~$1,664,000 in expense related to adjustments to the performance-based earn out accrual ~~were~~was recorded ~~for the three and nine months~~during fiscal year ended ~~May~~August 31, 2021 ~~respectively.~~(with $733,000 of expense recognized in the second quarter and first half of fiscal 2021). The Company recognized a gain of $474,000 in the third quarter and a net $199,000 gain over the fiscal year-to-date period related to the performance-based contingent consideration.

Interest Expense

Interest expense increased ~~$1,000~~$21,000, or 1%31% to ~~$68,000~~$89,000 for the quarter ended May 31, ~~2021~~2022, compared to ~~$67,000~~$68,000 in the prior year ~~third quarter.~~comparable period. Interest expense increased ~~$26,000~~$58,000, or ~~15% to $204,000~~28% for the first nine months of fiscal ~~2021~~2022, compared to ~~$178,000~~$204,000 in the prior ~~year~~comparable period. As the Company had no outstanding balance on its revolving debt facility for both periods, interest expense has remained relatively low.

Other Income (Expense)

Other income (expense) was an expense of ~~$260,000~~$166,000 in the quarter ended May 31, ~~2021,~~2022, compared to an expense of ~~$307,000~~$260,000 in the same period in the prior year, a ~~decrease~~difference of ~~$47,000.~~$94,000. Other income (expense) was income of $231,000 in the first nine months of the fiscal year compared to an expense of $758,000 in the ~~nine months ended May 31, 2021, compared to an expense of $1,096,000 in the~~ comparable period, ~~in the prior year,~~ a ~~decrease~~difference of ~~$338,000.~~$989,000. Other income (expense) primarily includes foreign exchange gains (losses) caused by changes in exchange rates on transactions or balances denominated in currencies other than the functional currency of ~~the Company’s~~our subsidiaries, non-service cost components of periodic pension expense (including pension-related settlement costs due to the timing of lump-sum distributions), interest income, rental income and other ~~receipts that are not classified~~non-trade/non-royalty/non-commission receipts. The change in total other income (expense) in fiscal 2022 compared to fiscal 2021 for both the quarter-to-date and year-to-date periods was largely due to the recognition of net foreign exchange gains in fiscal 2022 as ~~trade, royalties~~compared to a net losses in fiscal 2021.

Income Taxes

For the three and nine months ended May 31, 2022, the Company’s recognized effective tax rate was 19.7% and 23.3%, respectively. For the three and nine months ended May 31, 2021, the Company’s recognized effective tax rate was 19.5% and 23.1%, respectively.

For fiscal 2022 and 2021, the Company is utilizing the 21% Federal tax rate enacted by the Tax Cuts and Jobs Act (the “Tax Act”) passed in December 2017. Please see Note 14 — “Income Taxes” to the Condensed Consolidated Financial Statements for further discussion of the effects of the Tax Act.

Net Income

Net income increased $1,256,000, or ~~commissions.~~9% to $15,545,000 in the quarter ended May 31, 2022 compared to $14,289,000 in the comparable prior year third quarter. Net income increased $101,000, or less than 1% to $34,398,000 in the nine month year-to-date period ended May 31, 2022 compared to $34,297,000 in the comparable nine month year-to-date prior period. The increase in net income in the third quarter and year-to-date period was primarily due to sales increases in its lower margin Industrial Tapes segment outpacing revenue gains seen in its higher margin Adhesives, Sealants and Additives segment and Corrosion Protection and Waterproofing segments.

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~~Income Taxes~~

~~The effective tax rate for the quarter ended May 31, 2021 was 19.5%, compared to 20.9% for the quarter ended May 31, 2020.The effective tax rate for the nine months ended May 31, 2021 was 23.1%, compared to 24.7% for the nine months ended May 31, 2020.~~

~~Net Income~~

Net income increased $4,381,000 or 44% to $14,289,000 in the quarter ended May 31, 2021 compared to $9,908,000 in the prior year third quarter. Net income increased $9,148,000 or 36% to $34,297,000 in the nine months ended May 31, 2021 compared to $25,149,000 in the same period in the prior year. The increase in net income in both the third fiscal quarter and year-to-date period was primarily due to higher sales and an improved relative gross margin.

~~Table of Contents~~

Liquidity and Sources of Capital

The Company’s overall cash and cash equivalents balance increased ~~$3,879,000~~$5,254,000 to ~~$102,947,000~~$124,683,000 at May 31, ~~2021,~~2022, from ~~$99,068,000~~$119,429,000 at August 31, ~~2020.~~2021. The ~~increased~~increase cash balance is primarily attributable tocash provided by operations of ~~$43,000,000, net~~$20,286,000 offset by the $9,460,000 annual dividend in the second quarter of ~~$22,241,000 utilized to acquire ABchimie on September 1, 2020, $8,997,000 in cash utilized to acquire the operations of Emerging Technologies, Inc. (“ETi”) on February 5, 2021~~fiscal 2022 and the ~~$7,557,000 dividend paid in December 2020.~~continued strategic inventory build over the first half and third quarter of fiscal 2022. Of the above-noted ~~balances, $27,023,000~~amounts, $30,402,000 and ~~$42,615,000~~$26,309,000 were held outside the United States by Chase Corporation and its foreign subsidiaries as of May 31, ~~2021~~2022 and August 31, ~~2020,~~2021, respectively. Given the Company’s cash position and borrowing capability in the United States and the potential for increased investment and acquisitions in foreign jurisdictions, ~~(as evidenced by the recent acquisition of ABchimie in France),~~ prior to the second quarter of fiscal 2018 the Company did not have a history of repatriating a significant portion of its foreign cash. With the passage of the Tax Cuts and Jobs Act (the “Tax Act”) in the second fiscal quarter of 2018, significant changes in the Internal Revenue Code were enacted, changing the U.S. taxable nature of previously unrepatriated foreign earnings. Following the passage of the Tax Act, the Company repatriated $10,499,000 in U.K. foreign earnings in fiscal 2018 and $17,230,000 in fiscal 2019. No additional amounts were repatriated in fiscal year 2020, ~~or the first nine months of~~2021 and year-to-date fiscal ~~2021.~~period 2022. Please see Note 14 — “Income Taxes” to the Condensed Consolidated Financial Statements for further discussion of the effects of the Tax Act.

Cash flow provided by operations was ~~$43,000,000~~$20,286,000 in the first nine months of fiscal year ~~2021~~2022 compared to ~~$42,665,000~~$43,000,000 in the same period inof the ~~prior~~comparable year. Cash provided by operations during the current period was primarily related to operating income. Negatively impacting the cash flow from operations ~~was an increase in accounts receivable, on higher sales~~ in the current ~~year third quarter, partially offset~~period was our continued strategic inventory build, undertaken to help ensure our ability to satisfy our customers’ demands and to address our elevated backlog caused in part by ~~a decrease in the volume of inventory on hand and a rise in accounts payable.~~macroeconomic supply chain challenges.

The ratio of current assets to current liabilities was ~~7.2~~8.0 as of May 31, ~~2021~~2022 compared to ~~7.7~~6.5 as of August 31, ~~2020. The ratio decreased over the first nine months of fiscal~~ 2021, primarily due to ~~increases~~the year-to-date increase in cash and inventory balance offset by decreases in accounts payable ~~at May 31, 2021.~~and accrued payroll and other compensation balances.

Cash flow used in investing activities of ~~$33,106,000~~$3,443,000 was largely due to the ~~cash on hand purchases of both ABchimie and ETi and~~ cash spent on capital purchases of machinery and equipment in the first nine months of fiscal ~~2021.~~2022.

Cash ~~flow~~flows used in financing activities of ~~$7,842,000~~$9,460,000 was ~~primarily related~~due to~~payments of our annual dividend in December 2020 and taxes on restricted stock vested in fiscal 2021.~~

~~On November 12, 2020, Chase Corporation announced~~ a cash dividend of ~~$0.80~~$1.00 per ~~share (totaling $7,557,000).~~share. The dividend was paid on December ~~7, 2020 (the second quarter of fiscal 2021)~~9, 2021 to shareholders of record on November ~~27, 2020.~~30, 2021.

On ~~December 15, 2016,~~July 27, 2021 (the fourth quarter of fiscal 2021), the Company entered aninto the Second Amended and Restated Credit Agreement (the ~~“Credit~~“New Credit Agreement”) ~~with~~by and among the Company and NEPTCO Incorporated (“NEPTCO”), each of the borrowers, the subsidiary guarantors party thereto, the financial institutions party thereto as Lenders, and Bank of America, ~~acting~~N.A., as administrative agent, ~~and~~ with participation from ~~Citizens~~Wells Fargo Bank, N.A., PNC Bank, N.A. and JPMorgan Chase Bank, ~~(collectively with Bank of America, the “Lenders”).~~N.A. The New Credit Agreement ~~is an all-revolving~~was entered into to amend, restate and extend the Company’s preexisting credit facility, which had a maturity date of December 15, 2021, to provide for additional liquidity to finance acquisitions, working capital and capital expenditures, and for other general corporate purposes. Under the New Credit Agreement, Chase obtained an increased revolving credit loan (the “New Revolving Facility”), with a borrowing ~~capacity of $150,000,000, which can be increased~~capabilities not to exceed $200,000,000 at any time, with the ability to request an increase in this amount by an additional ~~$50,000,000~~$100,000,000 at ~~the request of the Company and~~ the individual or collective option of any of the Lenders. The facility matures December 15, 2021 (second quarter of fiscal 2022). The Credit Agreement contains customary affirmative and negative covenants that, among other things, restrict the ability to incur additional indebtedness and require lender approval for acquisitions by the Company and its subsidiaries over a certain size. It also requires the Company to maintain certain financial ratios, including a consolidated net leverage ratio (as defined in the facility) of no more than 3.25 to 1.00, and a consolidated fixed charge coverage ratio (as defined in the facility) of at least 1.25 to 1.00. The Company was compliant with the debt covenants as of May 31, 2021. The applicable interest rate for the ~~Credit Agreement~~New Revolving Facility and New Term Loan (defined below) is based on the effective ~~LIBOR~~London Interbank Offered Rate (LIBOR) plus ~~an additional amount in the~~a range of 1.00% to 1.75%, depending on the consolidated net leverage ratio~~or, at the Company’s option, at the bank’s base lending rate.~~ of Chase and its subsidiaries. At May 31, ~~2021,~~2022, there was no outstanding principal balance, and as such, no applicable interest rate.The New Credit Agreement has a five-year term with interest payments due at the end of the applicable LIBOR period (but in no event less frequently than the three-month anniversary of the commencement of such LIBOR period) and principal payment due at the expiration of the agreement, July 27, 2026. The New Credit Agreement contains provisions that may replace LIBOR as the benchmark index under certain circumstances. In addition, the Company ~~expects~~may elect a base rate option for all or a portion of the New Revolving Facility, in which case interest payments shall be due with respect to ~~renew this facility,~~such portion of the New Revolving Facility on the last business day of each quarter. Subject to certain conditions set forth in the New Credit Agreement, the Company may elect to convert all or ~~enter~~a portion of the outstanding New Revolving Facility into a new ~~facility, prior to~~term loan twice during the ~~current facility’s expiration to maintain Chase’s ability to support its strategic initiatives.~~

term of the New Revolving Facility (each, a “New Term Loan”, and collectively with the

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New Revolving Facility, the “New Credit Facility”), which New Term Loan shall be payable quarterly in equal installments sufficient to amortize the original principal amount of such Term Loan on a ten year amortization schedule. The outstanding balance on the New Credit Facility is guaranteed by all of Chase’s direct and indirect domestic subsidiaries. The New Credit Facility is subject to restrictive covenants under the New Credit Agreement, and financial covenants that require Chase and its subsidiaries to maintain certain financial ratios on a consolidated basis, including a consolidated net leverage ratio of 3.25 to 1.00 and a consolidated interest coverage ratio of 3.50 to 1.00 (both defined in the New Credit Agreement). Chase Corporation was in compliance with the debt covenants as of May 31, 2022. The New Credit Agreement also places certain Lender-approval requirements as to the size of permitted acquisitions which may be entered into by the Company and its subsidiaries, and allows for a temporary step-up in the allowed consolidated leverage ratio for the four fiscal quarters ending after certain designated acquisitions. Prepayment is allowed by the New Credit Agreement at any time during the term of the agreement, subject to customary notice requirements and the payment of customary LIBOR breakage fees.

The Company has several ongoing capital projects, as well as its facility rationalization and consolidation initiative, which are important to its long-term strategic goals. Machinery and equipment may be added as needed to increase capacity or enhance operating efficiencies in the Company’s production facilities.

~~The Company~~We may acquire companies or other assets in future periods which are complementary to ~~the existing~~our business. The acquisition of ABchimie included a potential earnout based on performance of up to an additional €7,000,000 (approximately $8,330,000 at the time of the transaction), which the Company expects to pay with cash on hand if the applicable conditions are met. The acquisition of ETi includes a $1,000,000 withholding, which is payable by the Company within eighteen months of the acquisition. The Company believes that its existing resources, including cash on hand and the New Amended and Restated Credit Agreement, together with cash generated from operations and additional bank borrowings, will be sufficient to fund its cash flow requirements through at least the next twelve months. However, there can be no assurance that additional financing, if needed, will be available on favorable terms, if at all.

To the extent that interest rates increase in future periods, ~~the Company~~we will assess the impact of these higher interest rates on the financial and cash flow projections of ~~its~~our potential acquisitions.

~~The Company has~~We have no ~~significant~~material off-balance sheet arrangements.

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Contractual Obligations

Please refer to Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, ~~2020~~2021 for a complete discussion of its contractual obligations.

Recent Accounting Standards

Please see Note 2 — “Recent Accounting Standards” to the Condensed Consolidated Financial Statements for a discussion of the effects of recently issued and recently adopted accounting pronouncements.

Critical Accounting Policies

~~Chase Corporation’s~~Our financial statements are prepared in accordance with accounting principles generally accepted in the United States. To apply these principles, ~~the Company~~we must make estimates and judgments that affect ~~the~~our reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. In many instances, ~~the Company~~we reasonably could have used different accounting estimates and, in other instances, changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ significantly from ~~the Company’s~~our estimates. To the extent that there are material differences between these estimates and actual results, ~~the Company’s~~our financial condition or results of operations will be affected. ~~The Company bases its~~We base our estimates and judgments on historical experience and other assumptions that ~~it believes~~we believe to be reasonable at the time and under the circumstances, and ~~it evaluates~~we evaluate these estimates and judgments on an ongoing basis. ~~The Company refers~~We refer to accounting estimates and judgments of this type as critical accounting policies, judgments, and estimates. Other than changes which came as a result of adopting ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which is discussed within Note 2 — “Recent Accounting Standards” of the Condensed Consolidated Financial Statements contained herein, managementManagement believes ~~that~~ there have been no material changes during the nine months ended May 31, ~~2021~~2022 to the critical accounting policies reported in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended August 31, ~~2020.~~2021.

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Item 3 — Quantitative and Qualitative Disclosures about Market Risk

Chase Corporation limits the amount of credit exposure to any one issuer. At May 31, ~~2021,~~2022, other than the Company’s restricted investments (which are restricted for use in non-qualified retirement savings plans for certain key employees and members of the Board of Directors), all of its funds were either in demand deposit accounts or investment instruments that meet high credit quality standards, such as money market funds, government securities, or commercial paper.

Chase Corporation’s U.S. operations have limited currency exposure since substantially all transactions are denominated in U.S. dollars. However, the Company’s European and Asian operations are subject to currency exchange fluctuations. The Company continues to review its policies and procedures to control this exposure while maintaining the benefit from these operations and sales not denominated in U.S. dollars. The effect of an immediate hypothetical 10% change in the exchange rate between the British pound and the U.S. dollar would not have a material direct effect on the Company’s overall liquidity. As of May 31, ~~2021,~~2022, the Company had cash balances in the following foreign currencies (with USD equivalents, dollars in thousands):


Currency Code	Currency Name	USD Equivalent at May 31, 2021		Currency Name	USD Equivalent at May 31, 2022
GBP	British Pound	$	13,465	British Pound	$	17,383
EUR	Euro	$	6,236	Euro	$	6,518
CAD	Canadian Dollar	$	1,810	Canadian Dollar	$	2,528
CNY	Chinese Yuan	$	666	Chinese Yuan	$	421
INR	Indian Rupee	$	528	Indian Rupee	$	223

The Company will continue to review its current cash balances denominated in foreign currency considering current tax guidelines, including the impact of the Tax Act to the U.S. Internal Revenue Code, working capital requirements, infrastructure improvements and potential acquisitions.

The Company recognized a foreign currency translation ~~gain~~loss for the nine months ended May 31, ~~2021~~2022 in the amount of ~~$3,273,000~~$5,178,000 related to Chase Corporation’s European and Indian operations, which is recorded in other comprehensive income (loss) within its Statement of Equity and Statement of Comprehensive Income. The Company does not have or utilize any derivative financial instruments.

The Company pays interest on its outstanding long-term debt at interest rates that fluctuate based upon changes in various base interest rates. There was no outstanding balance of long-term debt on May 31, ~~2021.~~2022. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Sources of Capital,” together with Note 12 — “Fair Value Measurements” and Note 16 — “Long-Term Debt” to the Condensed Consolidated Financial Statements for additional information regarding the Company’s outstanding long-term debt. AnThe effect of an immediate hypothetical 10% change in variable interest rates would not have a material ~~direct~~ effect on ~~the Company’s Condensed~~our Consolidated Financial Statements.

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Item 4 — Controls and Procedures

Evaluation of disclosure controls and procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in Chase Corporation’s reports under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to its management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

The Company carries out a variety of ongoing procedures under the supervision and with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, to evaluate the effectiveness of the design and operation of its disclosure controls and procedures. Based on the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that its disclosure controls and procedures were effective at a reasonable assurance level as of the end of the period covered by this report.

Changes in internal control over financial reporting

During the quarter ended May 31, 2021, the Company continued the process of implementing financial internal controls on the operations associated with ABchimie, acquired in September 2020, and Emerging Technologies, Inc. (ETi), acquired in February 2021.

~~Other than the foregoing, there~~There have not been any changes in the Company’s internal control over financial reporting during the quarter ended May 31, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

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Part II — OTHER INFORMATION

Item 1 — Legal Proceedings

The Company is involved from time to time in litigation incidental to the conduct of its business. Although the Company does not expect that the outcome in any of these matters, individually or collectively, will have a material adverse effect on its financial condition, results of operations or cash flows, litigation is inherently unpredictable. Therefore, judgments could be rendered, or settlements agreed to, that could adversely affect the Company’s operating results or cash flows in a particular period. The Company routinely assesses all its litigation and threatened litigation as to the probability of ultimately incurring a liability and records its best estimate of the ultimate loss in situations where it assesses the likelihood of loss as probable.

Item 1A — Risk Factors

Please refer to Item 1A in our Annual Report on Form 10-K for the fiscal year ended August 31, ~~2020~~2021 for a complete discussion of the risk factors which could materially affect our business, financial condition or future results.

Item 6 — Exhibits


Exhibit Number		Description

31.1		Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of principal executive officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
32.2		Certification of principal financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
~~10.1~~		Severance Agreement between the Company and Michael J. Bourque, dated January 27, 2021**
~~10.3.3~~		Second Amendment to the Chase Corporation Employees’ Supplemental Savings Plan, dated April 6, 2021**
101		The following materials from this Quarterly Report on Form 10-Q, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statement of Stockholders’ Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Unaudited Condensed Consolidated Financial Statements.
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*Furnished, not filed

**Identifies management plan or compensatory plan or arrangement.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	Chase Corporation


Dated: July ~~12, 2021~~11, 2022	By:	/s/ Adam P. Chase
		Adam P. Chase
		President and Chief Executive Officer


Dated: July ~~12, 2021~~11, 2022	By:	/s/ Michael J. Bourque
		Michael J. Bourque
		Treasurer and Chief Financial Officer

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