Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Aug. 31, 2023 | Nov. 21, 2023 | Feb. 28, 2022 | |
Document And Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Aug. 31, 2023 | ||
Document Transition Report | false | ||
Entity File Number | 001-14311 | ||
Entity Registrant Name | EACO CORP | ||
Entity Incorporation, State or Country Code | FL | ||
Entity Tax Identification Number | 59-2597349 | ||
Entity Address, Address Line One | 5065 East Hunter Avenue | ||
Entity Address, City or Town | Anaheim | ||
Entity Address, State or Province | CA | ||
Entity Address, Postal Zip Code | 92807 | ||
City Area Code | 714 | ||
Local Phone Number | 876-2490 | ||
Title of 12(g) Security | Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.01 Par Value | ||
Trading Symbol | EACO | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Interactive Data Current | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 4,861,590 | ||
Entity Central Index Key | 0000784539 | ||
Current Fiscal Year End Date | --08-31 | ||
Document Fiscal Year Focus | 2023 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Public Float | $ 5,309,166 | ||
Auditor Name | HASKELL & WHITE LLP | ||
Auditor Firm ID | 200 | ||
Auditor Location | Irvine, California |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Aug. 31, 2023 | Aug. 31, 2022 |
Current Assets: | ||
Cash and cash equivalents | $ 8,558 | $ 17,386 |
Restricted cash | 10 | 10 |
Trade accounts receivable, net | 46,654 | 44,637 |
Inventory, net | 56,270 | 48,808 |
Marketable securities, trading | 27,228 | 3,925 |
Prepaid expenses and other current assets | 3,843 | 5,008 |
Total current assets | 142,563 | 119,774 |
Non-current Assets: | ||
Property, equipment and leasehold improvements, net | 8,041 | 8,479 |
Operating lease right-of-use assets | 9,988 | 10,389 |
Other assets, net | 1,652 | 1,039 |
Total assets | 162,244 | 139,681 |
Current Liabilities: | ||
Trade accounts payable | 22,505 | 21,762 |
Accrued expenses and other current liabilities | 16,375 | 15,020 |
Current portion of operating lease liabilities | 3,950 | 3,375 |
Current portion of long-term debt | 120 | 119 |
Total current liabilities | 42,950 | 40,276 |
Non-current Liabilities: | ||
Long-term debt | 4,348 | 4,465 |
Operating lease liabilities | 6,225 | 7,192 |
Total liabilities | 53,523 | 51,933 |
Commitments and Contingencies Note 8 | ||
Shareholders' Equity: | ||
Convertible preferred stock, $0.01 par value per share; 10,000,000 shares authorized; 36,000 shares outstanding (liquidation value $900) | 1 | 1 |
Common stock, $0.01 par value per share; 8,000,000 shares authorized; 4,861,590 shares outstanding | 49 | 49 |
Additional paid-in capital | 12,378 | 12,378 |
Accumulated other comprehensive income | 38 | 174 |
Retained earnings | 96,255 | 75,146 |
Total shareholders' equity | 108,721 | 87,748 |
Total liabilities and shareholders' equity | $ 162,244 | $ 139,681 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Aug. 31, 2023 | Aug. 31, 2022 |
Consolidated Balance Sheets | ||
Convertible preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Convertible preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Convertible preferred stock, shares outstanding | 36,000 | 36,000 |
Convertible preferred stock, liquidation value (in dollars) | $ 900 | $ 900 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 8,000,000 | 8,000,000 |
Common stock, shares outstanding | 4,861,590 | 4,861,590 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Aug. 31, 2023 | Aug. 31, 2022 | |
Consolidated Statements of Operations | ||
Revenues | $ 319,397,000 | $ 292,562,000 |
Cost of revenues | 226,981,000 | 209,060,000 |
Gross margin | 92,416,000 | 83,502,000 |
Operating expenses: | ||
Selling, general and administrative expenses | 64,936,000 | 53,970,000 |
Income from operations | 27,480,000 | 29,532,000 |
Other income (expense): | ||
Net income (loss) on trading securities | 1,284,000 | (213,000) |
Interest and other expense | (59,000) | (201,000) |
Other income (expense), net | 1,225,000 | (414,000) |
Income before income taxes | 28,705,000 | 29,118,000 |
Provision for income taxes | 7,520,000 | 7,810,000 |
Net income | 21,185,000 | 21,308,000 |
Cumulative preferred stock dividend | (76,000) | (76,000) |
Net income attributable to common shareholders | $ 21,109,000 | $ 21,232,000 |
Basic earnings per share | $ 4.34 | $ 4.37 |
Diluted earnings per share | $ 4.34 | $ 4.37 |
Basic weighted average common shares outstanding | 4,861,590 | 4,861,590 |
Diluted weighted average common shares outstanding | 4,861,590 | 4,861,590 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | |
Aug. 31, 2023 | Aug. 31, 2022 | |
Consolidated Statements of Comprehensive Income | ||
Net income | $ 21,185 | $ 21,308 |
Other comprehensive income, net of tax | ||
Foreign currency translation loss | (136) | (606) |
Total comprehensive income | $ 21,049 | $ 20,702 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands | Convertible Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income | Accumulated Earnings | Total |
Balance at the beginning at Aug. 31, 2021 | $ 1 | $ 49 | $ 12,378 | $ 780 | $ 53,914 | $ 67,122 |
Balance at the beginning (in Shares) at Aug. 31, 2021 | 36,000 | 4,861,590 | ||||
Preferred dividends | (76) | (76) | ||||
Foreign translation loss | (606) | (606) | ||||
Net income | 21,308 | 21,308 | ||||
Balance at the end at Aug. 31, 2022 | $ 1 | $ 49 | 12,378 | 174 | 75,146 | 87,748 |
Balance at the end (in Shares) at Aug. 31, 2022 | 36,000 | 4,861,590 | ||||
Preferred dividends | (76) | (76) | ||||
Foreign translation loss | (136) | (136) | ||||
Net income | 21,185 | 21,185 | ||||
Balance at the end at Aug. 31, 2023 | $ 1 | $ 49 | $ 12,378 | $ 38 | $ 96,255 | $ 108,721 |
Balance at the end (in Shares) at Aug. 31, 2023 | 36,000 | 4,861,590 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Aug. 31, 2023 | Aug. 31, 2022 | |
Operating activities: | ||
Net income | $ 21,185 | $ 21,308 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 1,398 | 1,491 |
Bad debt expense | 614 | 38 |
Unrealized (gain) loss on trading securities | (448) | 351 |
Deferred tax provision | (277) | 333 |
Increase (decrease) in cash from changes in: | ||
Trade accounts receivable | (2,631) | (10,746) |
Inventory | (7,462) | (8,360) |
Prepaid expenses and other assets | 829 | 2,069 |
Operating lease right-of-use assets | 401 | 695 |
Trade accounts payable | (1,150) | 6,390 |
Accrued expenses and other current liabilities | 1,355 | 4,056 |
Operating lease liabilities | (392) | (621) |
Net cash provided by operating activities | 13,422 | 17,004 |
Investing activities: | ||
Additions to property, equipment, and leasehold improvements | (960) | (1,701) |
Purchase of marketable securities, trading | (22,855) | (535) |
Net cash used in investing activities | (23,815) | (2,236) |
Financing activities: | ||
Repayments on long-term debt | (116) | (114) |
Preferred stock dividend | (76) | (76) |
Bank overdraft | 1,893 | (1,041) |
Net cash provided by (used in) financing activities | 1,701 | (1,231) |
Effect of foreign currency exchange rate changes on cash and cash equivalents | (136) | (606) |
Net (decrease) increase in cash, cash equivalents, and restricted cash | (8,828) | 12,931 |
Cash, cash equivalents, and restricted cash - beginning of period | 17,396 | 4,465 |
Cash, cash equivalents, and restricted cash - end of period | 8,568 | 17,396 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 202 | 205 |
Cash paid for income taxes | $ 7,473 | $ 3,222 |
Organization and Basis of Prese
Organization and Basis of Presentation | 12 Months Ended |
Aug. 31, 2023 | |
Organization and Basis of Presentation | |
Organization and Basis of Presentation | Note 1. Organization and Basis of Presentation EACO Corporation (“EACO”), incorporated in Florida in September 1985, is a holding company, primarily comprised of its wholly-owned subsidiary, Bisco Industries, Inc. (“Bisco”) and Bisco’s wholly-owned Canadian subsidiary, Bisco Industries Limited. Substantially all of EACO’s operations are conducted through Bisco and Bisco Industries Limited. Bisco was incorporated in Illinois in 1974 and is a distributor of electronic components and fasteners with 51 sales offices and seven distribution centers located throughout the United States and Canada and one sales office in Asia. Bisco supplies parts used in the manufacture of products in a broad range of industries, including the aerospace, circuit board, communication, computer, fabrication, instrumentation, industrial equipment and marine industries. |
Significant Accounting Policies
Significant Accounting Policies and Significant Recent Accounting Pronouncements | 12 Months Ended |
Aug. 31, 2023 | |
Significant Accounting Policies and Significant Recent Accounting Pronouncements | |
Significant Accounting Policies and Significant Recent Accounting Pronouncements | Note 2. Significant Accounting Policies Principles of Consolidation The consolidated financial statements for all periods presented include the accounts of EACO, Bisco and Bisco Industries Limited (which are collectively referred to herein as the “Company”, “we”, “us” and “our”). All significant intercompany transactions and balances have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. These estimates include allowance for doubtful trade accounts receivable, provisions for slow moving and obsolete inventory, and recoverability of the carrying value and estimated useful lives of long-lived assets. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Trade Accounts Receivable Trade accounts receivable are carried at original invoice amount, less an estimate for an allowance for doubtful accounts. Management determines the allowance for doubtful accounts by identifying probable credit losses in the Company’s accounts receivable and reviewing historical data to estimate the collectability on items not yet specifically identified as problem accounts. Trade accounts receivable are written off when deemed uncollectible. Recoveries of trade accounts receivable previously written off are recorded when received. A trade account receivable is considered past due if any portion of the receivable balance is outstanding past the customer’s credit terms. The Company does not charge interest on past due balances. The allowance for doubtful accounts was approximately $ 245,000 and $164,000 at August 31, 2023 and 2022, respectively. Inventories Inventories consist primarily of electronic fasteners and components, and are stated at the lower of cost or estimated net realizable value. Cost is determined using the average cost method. Inventories are adjusted for slow moving or obsolete items approximating $1,806,000 and $1,697,000 at August 31, 2023 and 2022, respectively. The adjustments to inventory costs are based upon management’s review of inventories on-hand over their expected future utilization and length of time held by the Company. Property, Equipment, and Leasehold Improvements Property, equipment, and leasehold improvements are stated at cost net of accumulated depreciation and amortization. Depreciation and amortization expense is determined using the straight-line method over the estimated useful lives of the assets. The depreciable life for buildings is thirty-five years and five Impairment of Long Lived Assets The Company’s policy is to review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For the purpose of the impairment review, assets are tested on an individual basis. The recoverability of the assets is measured by a comparison of the carrying value of each asset to the future net undiscounted cash flows expected to be generated by such assets. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying value of the assets exceeds their estimated fair value. There was no impairment as of August 31, 2023 and 2022. Marketable Trading Securities The Company invests in marketable trading securities, which include long and short positions in equity securities. Short positions represent securities sold, but not yet purchased. Short sales result in obligations to purchase securities at a later date and are separately presented as a liability in the Company’s consolidated balance sheets. As of August 31, 2023 and 2022, the Company’s total obligation for securities sold, but not yet purchased was approximately zero. Restricted cash to collateralize the Company’s obligations for short sales was zero at August 31, 2023 and 2022. These securities are stated at fair value, which is determined using the quoted closing prices at each reporting date. Realized gains and losses on investment transactions are recognized as incurred in the consolidated statements of operations. Net unrealized gains and losses are reported in the statements of operations and represent the change in the market value of investment holdings during the period. See Note 10. Revenue Recognition We derive our revenue primarily from product sales. We determine revenue recognition through the following steps: (1) identification of the contract with a customer; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when, or as, we satisfy a performance obligation. The Company’s contract with the customer is executed with a customer purchase order and performance obligations consist solely of product shipped to customers. Revenue from product sales is recognized upon transfer of control of promised products to customers at a point in time in an amount that reflects the consideration we expect to receive in exchange for these products as stated on the Company’s invoice to the customer. Revenue is recognized net of returns and any taxes collected from customers. We offer industry standard contractual terms in our terms and conditions stated on our invoices and Company website. Freight revenue associated with product sales are recognized at point of shipment and when the criteria discussed above have been met. Freight revenues have represented less than 1% of total revenues for fiscal 2023 and fiscal 2022. Income Taxes We account for income taxes under the asset and liability method, which requires the recognition of DTAs and DTLs for the expected future tax consequences of events that have been included in the financial statements. Under this method, we determine DTAs and DTLs on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on DTAs and DTLs is recognized in income in the period that includes the enactment date. We recognize DTAs to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations. If we determine that we would not be able to realize our DTAs in the future in excess of their net recorded amount, we would make an adjustment to the DTA through recognizing a valuation allowance, which would increase the provision for income taxes. We record uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. We recognize interest and penalties related to the unrecognised tax benefit (UTB) on the income tax expense line in the accompanying consolidated statement of operations. Accrued interest and penalties are included on the related tax liability line in the consolidated balance sheet. Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing DTAs. On the basis of this evaluation, as of August 31, 2023 no valuation allowance has been recorded. We are subject to taxation in the United States and various states and foreign jurisdictions. With few exceptions, as of August 31, 2023, we are no longer subject to U.S. federal, state, local, Canada examinations by tax authorities for years before 2019. Freight and Shipping/Handling Shipping and handling expenses are included in cost of revenues and were approximately $5,510,000 and $5,225,000 for the years ended August 31, 2023 and 2022, respectively. Advertising Costs Advertising costs are expensed as incurred. For fiscal 2023 and fiscal 2022, the Company spent approximately $431,000 and $427,000 respectively, on advertising. Operating Leases The Company determines if a contractual arrangement contains a lease, for accounting purposes, at contract inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, and the current and non-current portion of operating lease liabilities in the accompanying consolidated balance sheets. The ROU assets represent the Company’s right to control the use of a leased asset for the contractual term, and lease liabilities represent the related obligation to make lease payments arising from the contractual arrangement. Operating lease ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the contractual term. The operating lease ROU assets also include any prepaid lease payments made and exclude lease incentives. Lease expense is recognized on a straight-line basis over the contractual term. Many of the Company’s leases include both lease (such as fixed payment amounts including rent, taxes, and insurance costs) and nonlease components (such as common-area or other maintenance costs) which are accounted for as a single lease component as the Company has elected the practical expedient to group lease and nonlease components for all leases. Many leases include one or more options to renew the contract. Therefore, renewals to extend the lease terms are not included in our ROU assets and lease liabilities as they are not reasonably certain to be exercised. We regularly evaluates the renewal options each reporting period and when they are reasonably certain to be exercised, management will include the lease renewal period in our contractual term when estimating the ROU assets and related liabilities. Since most of the Company’s leases do not provide an implicit rate, as defined by GAAP, we use an incremental borrowing rate based on information available to us at the lease commencement date in order to determine the present value of the lease payments. The Company applies a portfolio approach for determining the incremental borrowing rate. As of August 31, 2023, the Company has right of use assets of approximately $10.0 million and lease liabilities of approximately $10.2 million recorded in the consolidated balance sheet. Earnings Per Common Share Basic earnings per common share for the years ended August 31, 2023 and 2022 were computed based on the weighted average number of common shares outstanding. Diluted earnings per share for those periods have been computed based on the weighted average number of common shares outstanding, giving effect to all potentially dilutive common shares that were outstanding during the respective periods. Potentially dilutive common shares represent 40,000 common shares issuable upon conversion of 36,000 shares of Series A convertible preferred stock, which were outstanding at August 31, 2023 and 2022. Such securities are excluded from the weighted average shares outstanding used to calculate diluted earnings per common share for the years ended August 31, 2023 and 2022 as their inclusion would be anti-dilutive since the conversion price was greater than the average market price of the Company’s common stock during these periods. Foreign Currency Translation and Transactions Assets and liabilities recorded in functional currencies other than the U.S. dollar (Canadian dollars for Bisco’s Canadian subsidiary) are translated into U.S. dollars at the period-end rate of exchange. The exchange rate for Canadian dollars at August 31, 2023 and 2022 was $0.74 and $0.77 , respectively. The resulting balance sheet translation adjustments are charged or credited directly to accumulated other comprehensive income. Revenue and expenses are transacted at the average exchange rates for the years ended August 31, 2023 and 2022. The average exchange rates for the years ended August 31, 2023 and 2022 was as of August 31, 2023 and 2022. All foreign sales, excluding Canadian sales, are denominated in U.S. dollars and, therefore, are not subject to foreign currency risk exposure. Concentrations Financial instruments that subject the Company to credit risk include cash balances in excess of federal depository insurance limits and accounts receivable. Cash accounts maintained by the Company at U.S. and Canadian financial institutions are insured by the Federal Deposit Insurance Corporation and Canadian Deposit Insurance Corporation, respectively. A portion of the Company’s cash was held by its Canadian subsidiary. The Company has not experienced any losses in such accounts. Net sales to customers outside the United States and related trade accounts receivable were approximately 11% and 14%, respectively, at August 31, 2023, and 12% and 13%, respectively at August 31, 2022. No single customer accounted for more than 10% of total revenues for either of the years ended August 31, 2023 or 2022. The following table presents our sales within geographic regions as a percentage of net revenue, which is based on the “bill-to” location of our customers: Years Ended August 31, 2023 2022 U.S. 88.7 % 88.2 % Asia 4.5 % 5.7 % Canada 4.1 % 3.2 % Other 2.7 % 2.9 % Total 100 % 100 % Estimated Fair Value of Financial Instruments and Certain Nonfinancial Assets and Liabilities The Company’s financial instruments other than its marketable securities include cash and cash equivalents, trade accounts receivable, prepaid expenses, security deposits, trade accounts payable, line of credit, accrued expenses and long-term debt. Management believes that the fair value of these financial instruments approximate their carrying amounts based on their relatively short-term nature and current market indicators, such as prevailing interest rates. The Company’s marketable securities are measured at fair value on a recurring basis. See Note 10. During the years ended August 31, 2023 and 2022, the Company did not have any nonfinancial assets or liabilities that were measured at estimated fair value on a recurring or nonrecurring basis. Significant Recent Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses”, which will require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The guidance is effective, as amended, for smaller reporting companies for all periods beginning after December 15, 2022, including interim periods within those fiscal years. Management has evaluated this statement and has determined that it will not have a material impact on its results of operations or financial position. |
Property, Equipment and Leaseho
Property, Equipment and Leasehold Improvements | 12 Months Ended |
Aug. 31, 2023 | |
Property, Equipment and Leasehold Improvements | |
Property, Equipment and Leasehold Improvements | Note 3. Property, Equipment and Leasehold Improvements Property, equipment and leasehold improvements are summarized as follows: August 31, 2023 2022 Held for use: Machinery and equipment $ 11,052,000 $ 10,759,000 Furniture and fixtures 3,204,000 3,016,000 Vehicles 137,000 137,000 Leasehold improvements 7,725,000 7,405,000 Construction in progress 648,000 497,000 Total held for use 22,766,000 21,814,000 Less: accumulated depreciation and amortization (14,725,000) (13,335,000) Total property, equipment, and leasehold improvements held for use, net $ 8,041,000 $ 8,479,000 In September 2019, Bisco entered into Commercial Lease Agreement with the Trust (the “Hunter Lease”), pursuant to which Bisco leased from the Trust approximately 80,000 square feet of office and warehouse space located at 5065 East Hunter Avenue in Anaheim, California (the “Hunter Property”). During fiscal 2019, the Company started construction of leasehold improvements on the Hunter Property to house its corporate headquarters, which was financed by the Construction Loan from the Bank. See Note 4. As of August 31, 2023, construction in progress included solar power roof installation on Hunter Property and other minor leasehold improvements awaiting city permits for completion. On October 23, 2023, The Company closed escrow on purchase of the Hunter Property from the Trust for a purchase price of $31,000,000 . See Note 11. For the years ended August 31, 2023 and 2022, depreciation and amortization expense was $1,398,000 and $1,491,000, respectively. |
Debt
Debt | 12 Months Ended |
Aug. 31, 2023 | |
Debt | |
Debt | Note 4. Debt The Company currently has a $15.0 million line of credit agreement with the Bank, as amended. In addition, the Amendment removed the Company’s interest rate options but provided that in no event would such interest rate be less than 3.0% per annum. On July 5, 2023, the expiration date of the line of credit under the line of credit agreement was extended from November 5, 2022 to July 5 2024 and the Company intends to renew the line of credit beyond maturity. Balances under this line of credit are subject to the bank prime index interest rate. Borrowings are secured by substantially all of the assets of the Company and its subsidiaries. The amounts outstanding under this line of credit as of August 31, 2023 and August 31, 2022 was zero. The Company also entered into the Construction Loan for the primary purpose of financing tenant improvements at the Hunter Property. The Construction Loan was a line of credit evidenced by a Promissory Note in the principal amount of up to $5,000,000 with a maturity date of May 15, 2027. The terms of the Construction Loan provide that the Company may only request advances through July 15, 2020, and thereafter, the Construction Loan would convert to a term loan with a fixed rate of 4.6%, which is entitled to a .25% rate discount if a demand deposit account is held with the Bank. On July 15, 2020, the amount drawn on the Construction Loan and converted to a term loan was $4,807,000. Interest on the Construction Loan is payable monthly (4.35% at August 31, 2023 and August 31, 2022). Concurrent with the execution of this Construction Loan, Bisco entered into a commercial security agreement, dated July 12, 2019, with the Bank, pursuant to which Bisco granted the Bank a security interest in substantially all of Bisco’s personal property to secure Bisco’s obligations under the Construction Loan. The outstanding balance of the Construction Loan at August 31, 2023 and August 31, 2022 was $4,468,000 and $4,584,000, respectively. The Construction loan future principal due until maturity by fiscal year is as follows: Fiscal Year Principal amount due 2024 $ 123,000.00 2025 130,000.00 2026 136,000.00 2027 4,079,000.00 Total $ 4,468,000.00 The Company has also entered into a business loan agreement (and related $100,000 promissory note) with the Bank in order to obtain a $100,000 letter of credit as security for the Company’s worker’s compensation requirements. |
Shareholders' Equity
Shareholders' Equity | 12 Months Ended |
Aug. 31, 2023 | |
Shareholders' Equity | |
Shareholders' Equity | Note 5. Shareholders’ Equity Earnings Per Common Share (“EPS”) The following is a reconciliation of the numerators and denominators used in the basic and diluted computations of earnings per common share: Years Ended August 31, (In thousands, except per share information) 2023 2022 EPS – basic and diluted: Net income $ 21,185 $ 21,308 Less: cumulative preferred stock dividend (76) (76) Net income attributable to common shareholders for basic and diluted EPS computation $ 21,109 $ 21,232 Weighted average common shares outstanding for basic and diluted EPS computation 4,861,590 4,861,590 Earnings per common share – basic and diluted $ 4.34 $ 4.37 For the years ended August 31, 2023 and 2022, 40,000 potential common shares (issuable upon conversion of 36,000 shares of the Company’s Series A cumulative convertible preferred stock) have been excluded from the computation of diluted earnings per share because their inclusion would be anti-dilutive since the conversion price was greater than the average market price of the common stock. Preferred Stock The Company’s Board of Directors is authorized to establish the various rights and preferences for the Company’s preferred stock, including voting, conversion, dividend and liquidation rights and preferences, at the time shares of preferred stock are issued. In September 2004, the Company sold 36,000 shares of its Series A cumulative convertible preferred stock (the “Preferred Stock”) to the Company’s CEO, with an 8.5% dividend rate at a price of $25 per share for a total cash purchase price of $900,000. The holder of the Preferred Stock has the right at any time to convert the Preferred Stock and accrued but unpaid dividends into shares of the Company’s common stock at the conversion price of $22.50 per share. In the event of a liquidation or dissolution of the Company, the holder of the Preferred Stock is entitled to be paid out of the assets of the Company available for distribution to shareholders at $25.00 per share plus all unpaid dividends before any payments are made to the holders of common stock. |
Profit Sharing Plan
Profit Sharing Plan | 12 Months Ended |
Aug. 31, 2023 | |
Profit Sharing Plan | |
Profit Sharing Plan | Note 6. Profit Sharing Plan The Company has a defined contribution 401(k) profit sharing plan (“401(k) plan”) for all eligible employees. Employees are eligible to contribute to the 401(k) plan after six months of employment. Under the 401(k) plan, employees may contribute up to 15% of their compensation. The Company has the discretion to match 50% of the employee contributions up to 6% of employees’ compensation. The Company’s contributions are subject to a five-year vesting period beginning the second year of service. The Company’s contribution expense was approximately $851,000 and $638,000 for the years ended August 31, 2023 and 2022, respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Aug. 31, 2023 | |
Income Taxes | |
Income Taxes | Note 7. Income Taxes The following summarizes the Company’s provision for income taxes on income from operations: Years Ended August 31, 2023 2022 Current: Federal $ 5,620,000 $ 5,547,000 State 2,048,000 1,608,000 Foreign 129,000 322,000 7,797,000 7,477,000 Deferred: Federal — 63,000 State 56,000 270,000 Foreign (333,000) — (277,000) 333,000 Total $ 7,520,000 $ 7,810,000 Income taxes for the years ended August 31, 2023 and 2022 differ from the amounts computed by applying the federal blended and statutory corporate rates of 21% for both 2023 and 2022 to the pre-tax income. The differences are reconciled as follows: Years Ended August 31, 2023 2022 Current: Expected income tax provision at statutory rate 21.0 % 21.0 % Increase (decrease) in taxes due to: State tax, net of federal benefit 5.5 % 4.4 % Permanent differences (0.8) % 0.1 % Other, net 0.5 % 1.3 % Income tax expense 26.2 % 26.8 % The components of deferred taxes at August 31, 2023 and 2022 are summarized below: August 31, Deferred tax assets (liabilities): 2023 2022 Net operating loss $ 57,000 $ 174,000 Accruals and reserves 1,230,000 1,148,000 Income tax credits 1,000 1,000 Capital loss 41,000 40,000 Lease liability 2,689,000 2,789,000 Property and equipment, net (798,000) (958,000) Operating lease, right-of-use assets (2,640,000) (2,742,000) Unrealized gains/losses 204,000 85,000 Total deferred tax assets, net $ 784,000 537,000 Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing DTA. On the basis of this evaluation, as of August 31, 2023, no valuation allowance has been recorded. On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The CARES Act provides tax relief and tax incentives to business, including provisions relating to net operating loss carryback, refundable payroll tax credits, OASDI payroll tax deferral, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property. The Company did not apply for SBA Paycheck Protection Program loan based on the advice of its legal counsel due to stable cash flow and available cash from the Company’s line of credits. The Company has taken advantage of the Employee Retention Credit (ERC), which is a refundable tax credit against certain employment taxes equal to 50% of the qualified wages an eligible employer pays to employees after March 12, 2020, and before January 1, 2023. Eligible employers can get immediate access to the credit by reducing employment tax deposits they are otherwise required to make. The amount of the refundable tax credit for fiscal year 2023 and 2022 is We are subject to taxation in the United States and various states and foreign jurisdictions. With few exceptions, as of August 31, 2023, we are no longer subject to U.S. federal, state, local, Canadian examinations by tax authorities for years before 2018. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Aug. 31, 2023 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 8. Commitments and Contingencies Legal Matters From time to time, we may be subject to legal proceedings and claims that arise in the normal course of our business. Any such matters and disputes could be costly and time consuming, subject us to damages or equitable remedies, and divert our management and key personnel from our business operations. We currently are not a party to any material legal proceedings, the adverse outcome of which, in management’s opinion, individually or in the aggregate, would have a material adverse effect on our consolidated results of operations, financial position or cash flows. Operating Lease Obligations The Company leases its facilities and automobiles under operating lease agreements (two leased facilities are leased from the Trust, which is beneficially owned by the Company’s Chief Executive Officer, Chairman of the Board and majority shareholder – see Note 9), which expire on various dates through September 2029 On October 23, 2023, The Company closed escrow on purchase of the Hunter Property from the Trust for a purchase price of $31,000,000. See Note 11 of the Notes to Consolidated Financial Statements, included in Part II, Item 8 of this Annual Report for further explanation. The lease for the Hunter Property was still in effect as of August 31, 2023 and included in the below table. Minimum future rental payments under operating leases are as follows: Years Ending August 31: 2024 $ 3,527,000 2025 2,325,000 2026 1,589,000 2027 1,293,000 2028 998,000 Thereafter 994,000 Future minimum lease payments $ 10,726,000 Less interest (551,000) Present value of minimum lease payments $ 10,175,000 Operating lease cost under these leases was approximately $3,531,000 and $3,119,000 as of August 31, 2023 and 2022, respectively. Other information related to operating leases is as follows: Year ended August 31, 2023 2022 Weighted average remaining lease term 4.3 years 5.3 years Weighted average discount rate 4.73 % 4.25 % The discount rate used on the operating right-of-use assets represented the Company’s incremental borrowing rate at lease inception. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Aug. 31, 2023 | |
Related Party Transactions | |
Related Party Transactions | Note 9. Related Party Transactions On November 21, 2017, the Company entered into the Chicago Lease with the Trust, which is the grantor trust of Glen Ceiley, our Chief Executive Officer, Chairman of the Board and the Company’s majority shareholder, for the lease of a facility in Glendale Heights, Illinois. The Company relocated its Chicago sales office and distribution center to this facility in December 2017. The Chicago Lease is a ten year triple net lease with an initial monthly rental rate of $22,600, which is subject to annual rent increases of approximately 2.5% as set forth in the Chicago Lease. On July 26, 2019, the Company entered into the Hunter Lease with the Trust, for the lease of the Hunter Property, which houses the Company’s corporate headquarters. The Company completed its move to the current headquarters located at the Hunter Property in March 2020. The Hunter Lease is a ten year triple net lease, which commenced on September 2, 2019 and ends on August 31, 2029 with an initial monthly rental rate of $66,300. On October 23, 2023, the lease was terminated when the Company closed escrow on purchase of the Hunter Property from the Trust for a purchase price of $31,000,000. See Note 11. During fiscal 2023 and fiscal 2022, the Company paid approximately $1,162,000 and $1,134,000, respectively, of rent related to all leases with the Trust. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Aug. 31, 2023 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | Note 10. Fair Value of Financial Instruments Management estimates the fair value of its assets or liabilities measured at fair value based on the three levels of the fair-value hierarchy are described as follows: Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities. For the Company, Level 1 inputs include marketable securities and liabilities for short sales of trading securities that are actively traded. Level 2: Inputs other than Level 1 are observable, either directly or indirectly. The Company does not hold any Level 2 financial instruments. Level 3: Unobservable inputs. The Company does not hold any Level 3 financial instruments. Marketable Trading Securities The following table sets forth by level, within the fair value hierarchy, certain assets at estimated fair value as of August 31, 2023 and 2022: Quoted Prices in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Total August 31, 2023 Marketable securities $ 27,228,000 — — $ 27,228,000 August 31, 2022 Marketable securities $ 3,925,000 — — $ 3,925,000 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Aug. 31, 2023 | |
Subsequent Events | |
Subsequent Events | Note 11. Subsequent Events Management has evaluated events subsequent to August 31, 2023, through the date that these consolidated financial statements are being filed with the Securities and Exchange Commission, for transactions and other events that may require adjustment of and/or disclosure in such financial statements. On October 5, 2023, the Company entered into a Standard, Purchase Agreement and Escrow Instructions for the Hunter Property, which currently houses the Company's corporate headquarters and Anaheim distribution center, for a purchase price of $31,000,000 in cash, which closed on October 23, 2023. The Hunter Property is expected to continue to house the Company's corporate headquarters and Anaheim distribution center for the foreseeable future. The Hunter Property was purchased with cash, funded by the Company's available cash accounts and liquidated securities. The Company agreed to the Property Purchase primarily to utilize its cash position and to reduce its corporate overhead expenses. See note 11. |
Significant Accounting Polici_2
Significant Accounting Policies and Significant Recent Accounting Pronouncements (Policies) | 12 Months Ended |
Aug. 31, 2023 | |
Significant Accounting Policies and Significant Recent Accounting Pronouncements | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements for all periods presented include the accounts of EACO, Bisco and Bisco Industries Limited (which are collectively referred to herein as the “Company”, “we”, “us” and “our”). All significant intercompany transactions and balances have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. These estimates include allowance for doubtful trade accounts receivable, provisions for slow moving and obsolete inventory, and recoverability of the carrying value and estimated useful lives of long-lived assets. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. |
Trade Accounts Receivable | Trade Accounts Receivable Trade accounts receivable are carried at original invoice amount, less an estimate for an allowance for doubtful accounts. Management determines the allowance for doubtful accounts by identifying probable credit losses in the Company’s accounts receivable and reviewing historical data to estimate the collectability on items not yet specifically identified as problem accounts. Trade accounts receivable are written off when deemed uncollectible. Recoveries of trade accounts receivable previously written off are recorded when received. A trade account receivable is considered past due if any portion of the receivable balance is outstanding past the customer’s credit terms. The Company does not charge interest on past due balances. The allowance for doubtful accounts was approximately $ 245,000 and $164,000 at August 31, 2023 and 2022, respectively. |
Inventories | Inventories Inventories consist primarily of electronic fasteners and components, and are stated at the lower of cost or estimated net realizable value. Cost is determined using the average cost method. Inventories are adjusted for slow moving or obsolete items approximating $1,806,000 and $1,697,000 at August 31, 2023 and 2022, respectively. The adjustments to inventory costs are based upon management’s review of inventories on-hand over their expected future utilization and length of time held by the Company. |
Property, Equipment, and Leasehold Improvements | Property, Equipment, and Leasehold Improvements Property, equipment, and leasehold improvements are stated at cost net of accumulated depreciation and amortization. Depreciation and amortization expense is determined using the straight-line method over the estimated useful lives of the assets. The depreciable life for buildings is thirty-five years and five |
Impairment of Long Lived Assets | Impairment of Long Lived Assets The Company’s policy is to review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For the purpose of the impairment review, assets are tested on an individual basis. The recoverability of the assets is measured by a comparison of the carrying value of each asset to the future net undiscounted cash flows expected to be generated by such assets. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying value of the assets exceeds their estimated fair value. There was no impairment as of August 31, 2023 and 2022. |
Marketable Trading Securities | Marketable Trading Securities The Company invests in marketable trading securities, which include long and short positions in equity securities. Short positions represent securities sold, but not yet purchased. Short sales result in obligations to purchase securities at a later date and are separately presented as a liability in the Company’s consolidated balance sheets. As of August 31, 2023 and 2022, the Company’s total obligation for securities sold, but not yet purchased was approximately zero. Restricted cash to collateralize the Company’s obligations for short sales was zero at August 31, 2023 and 2022. These securities are stated at fair value, which is determined using the quoted closing prices at each reporting date. Realized gains and losses on investment transactions are recognized as incurred in the consolidated statements of operations. Net unrealized gains and losses are reported in the statements of operations and represent the change in the market value of investment holdings during the period. See Note 10. |
Revenue Recognition | Revenue Recognition We derive our revenue primarily from product sales. We determine revenue recognition through the following steps: (1) identification of the contract with a customer; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when, or as, we satisfy a performance obligation. The Company’s contract with the customer is executed with a customer purchase order and performance obligations consist solely of product shipped to customers. Revenue from product sales is recognized upon transfer of control of promised products to customers at a point in time in an amount that reflects the consideration we expect to receive in exchange for these products as stated on the Company’s invoice to the customer. Revenue is recognized net of returns and any taxes collected from customers. We offer industry standard contractual terms in our terms and conditions stated on our invoices and Company website. Freight revenue associated with product sales are recognized at point of shipment and when the criteria discussed above have been met. Freight revenues have represented less than 1% of total revenues for fiscal 2023 and fiscal 2022. |
Income Taxes | Income Taxes We account for income taxes under the asset and liability method, which requires the recognition of DTAs and DTLs for the expected future tax consequences of events that have been included in the financial statements. Under this method, we determine DTAs and DTLs on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on DTAs and DTLs is recognized in income in the period that includes the enactment date. We recognize DTAs to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations. If we determine that we would not be able to realize our DTAs in the future in excess of their net recorded amount, we would make an adjustment to the DTA through recognizing a valuation allowance, which would increase the provision for income taxes. We record uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. We recognize interest and penalties related to the unrecognised tax benefit (UTB) on the income tax expense line in the accompanying consolidated statement of operations. Accrued interest and penalties are included on the related tax liability line in the consolidated balance sheet. Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing DTAs. On the basis of this evaluation, as of August 31, 2023 no valuation allowance has been recorded. We are subject to taxation in the United States and various states and foreign jurisdictions. With few exceptions, as of August 31, 2023, we are no longer subject to U.S. federal, state, local, Canada examinations by tax authorities for years before 2019. |
Freight and Shipping/Handling | Freight and Shipping/Handling Shipping and handling expenses are included in cost of revenues and were approximately $5,510,000 and $5,225,000 for the years ended August 31, 2023 and 2022, respectively. |
Advertising Costs | Advertising Costs Advertising costs are expensed as incurred. For fiscal 2023 and fiscal 2022, the Company spent approximately $431,000 and $427,000 respectively, on advertising. |
Operating Leases | Operating Leases The Company determines if a contractual arrangement contains a lease, for accounting purposes, at contract inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, and the current and non-current portion of operating lease liabilities in the accompanying consolidated balance sheets. The ROU assets represent the Company’s right to control the use of a leased asset for the contractual term, and lease liabilities represent the related obligation to make lease payments arising from the contractual arrangement. Operating lease ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the contractual term. The operating lease ROU assets also include any prepaid lease payments made and exclude lease incentives. Lease expense is recognized on a straight-line basis over the contractual term. Many of the Company’s leases include both lease (such as fixed payment amounts including rent, taxes, and insurance costs) and nonlease components (such as common-area or other maintenance costs) which are accounted for as a single lease component as the Company has elected the practical expedient to group lease and nonlease components for all leases. Many leases include one or more options to renew the contract. Therefore, renewals to extend the lease terms are not included in our ROU assets and lease liabilities as they are not reasonably certain to be exercised. We regularly evaluates the renewal options each reporting period and when they are reasonably certain to be exercised, management will include the lease renewal period in our contractual term when estimating the ROU assets and related liabilities. Since most of the Company’s leases do not provide an implicit rate, as defined by GAAP, we use an incremental borrowing rate based on information available to us at the lease commencement date in order to determine the present value of the lease payments. The Company applies a portfolio approach for determining the incremental borrowing rate. As of August 31, 2023, the Company has right of use assets of approximately $10.0 million and lease liabilities of approximately $10.2 million recorded in the consolidated balance sheet. |
Earnings Per Common Share | Earnings Per Common Share Basic earnings per common share for the years ended August 31, 2023 and 2022 were computed based on the weighted average number of common shares outstanding. Diluted earnings per share for those periods have been computed based on the weighted average number of common shares outstanding, giving effect to all potentially dilutive common shares that were outstanding during the respective periods. Potentially dilutive common shares represent 40,000 common shares issuable upon conversion of 36,000 shares of Series A convertible preferred stock, which were outstanding at August 31, 2023 and 2022. Such securities are excluded from the weighted average shares outstanding used to calculate diluted earnings per common share for the years ended August 31, 2023 and 2022 as their inclusion would be anti-dilutive since the conversion price was greater than the average market price of the Company’s common stock during these periods. |
Foreign Currency Translation and Transactions | Foreign Currency Translation and Transactions Assets and liabilities recorded in functional currencies other than the U.S. dollar (Canadian dollars for Bisco’s Canadian subsidiary) are translated into U.S. dollars at the period-end rate of exchange. The exchange rate for Canadian dollars at August 31, 2023 and 2022 was $0.74 and $0.77 , respectively. The resulting balance sheet translation adjustments are charged or credited directly to accumulated other comprehensive income. Revenue and expenses are transacted at the average exchange rates for the years ended August 31, 2023 and 2022. The average exchange rates for the years ended August 31, 2023 and 2022 was as of August 31, 2023 and 2022. All foreign sales, excluding Canadian sales, are denominated in U.S. dollars and, therefore, are not subject to foreign currency risk exposure. |
Concentrations | Concentrations Financial instruments that subject the Company to credit risk include cash balances in excess of federal depository insurance limits and accounts receivable. Cash accounts maintained by the Company at U.S. and Canadian financial institutions are insured by the Federal Deposit Insurance Corporation and Canadian Deposit Insurance Corporation, respectively. A portion of the Company’s cash was held by its Canadian subsidiary. The Company has not experienced any losses in such accounts. Net sales to customers outside the United States and related trade accounts receivable were approximately 11% and 14%, respectively, at August 31, 2023, and 12% and 13%, respectively at August 31, 2022. No single customer accounted for more than 10% of total revenues for either of the years ended August 31, 2023 or 2022. The following table presents our sales within geographic regions as a percentage of net revenue, which is based on the “bill-to” location of our customers: Years Ended August 31, 2023 2022 U.S. 88.7 % 88.2 % Asia 4.5 % 5.7 % Canada 4.1 % 3.2 % Other 2.7 % 2.9 % Total 100 % 100 % |
Estimated Fair Value of Financial Instruments and Certain Nonfinancial Assets and Liabilities | Estimated Fair Value of Financial Instruments and Certain Nonfinancial Assets and Liabilities The Company’s financial instruments other than its marketable securities include cash and cash equivalents, trade accounts receivable, prepaid expenses, security deposits, trade accounts payable, line of credit, accrued expenses and long-term debt. Management believes that the fair value of these financial instruments approximate their carrying amounts based on their relatively short-term nature and current market indicators, such as prevailing interest rates. The Company’s marketable securities are measured at fair value on a recurring basis. See Note 10. During the years ended August 31, 2023 and 2022, the Company did not have any nonfinancial assets or liabilities that were measured at estimated fair value on a recurring or nonrecurring basis. |
Significant Recent Accounting Pronouncements | Significant Recent Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses”, which will require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The guidance is effective, as amended, for smaller reporting companies for all periods beginning after December 15, 2022, including interim periods within those fiscal years. Management has evaluated this statement and has determined that it will not have a material impact on its results of operations or financial position. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 12 Months Ended |
Aug. 31, 2023 | |
Significant Accounting Policies and Significant Recent Accounting Pronouncements | |
Schedule of sales within geographic regions as a percentage of net revenue | The following table presents our sales within geographic regions as a percentage of net revenue, which is based on the “bill-to” location of our customers: Years Ended August 31, 2023 2022 U.S. 88.7 % 88.2 % Asia 4.5 % 5.7 % Canada 4.1 % 3.2 % Other 2.7 % 2.9 % Total 100 % 100 % |
Property, Equipment and Lease_2
Property, Equipment and Leasehold Improvements (Tables) | 12 Months Ended |
Aug. 31, 2023 | |
Property, Equipment and Leasehold Improvements | |
Schedule of property, equipment and leasehold improvements | Property, equipment and leasehold improvements are summarized as follows: August 31, 2023 2022 Held for use: Machinery and equipment $ 11,052,000 $ 10,759,000 Furniture and fixtures 3,204,000 3,016,000 Vehicles 137,000 137,000 Leasehold improvements 7,725,000 7,405,000 Construction in progress 648,000 497,000 Total held for use 22,766,000 21,814,000 Less: accumulated depreciation and amortization (14,725,000) (13,335,000) Total property, equipment, and leasehold improvements held for use, net $ 8,041,000 $ 8,479,000 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Aug. 31, 2023 | |
Construction loan | |
Debt Instrument [Line Items] | |
Schedule of future principal maturity of construction loan | Fiscal Year Principal amount due 2024 $ 123,000.00 2025 130,000.00 2026 136,000.00 2027 4,079,000.00 Total $ 4,468,000.00 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 12 Months Ended |
Aug. 31, 2023 | |
Shareholders' Equity | |
Schedule of reconciliation of the numerators and denominators of the basic and diluted computations for earnings per common share | The following is a reconciliation of the numerators and denominators used in the basic and diluted computations of earnings per common share: Years Ended August 31, (In thousands, except per share information) 2023 2022 EPS – basic and diluted: Net income $ 21,185 $ 21,308 Less: cumulative preferred stock dividend (76) (76) Net income attributable to common shareholders for basic and diluted EPS computation $ 21,109 $ 21,232 Weighted average common shares outstanding for basic and diluted EPS computation 4,861,590 4,861,590 Earnings per common share – basic and diluted $ 4.34 $ 4.37 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Aug. 31, 2023 | |
Income Taxes | |
Schedule of provision for income taxes on income from operations | Years Ended August 31, 2023 2022 Current: Federal $ 5,620,000 $ 5,547,000 State 2,048,000 1,608,000 Foreign 129,000 322,000 7,797,000 7,477,000 Deferred: Federal — 63,000 State 56,000 270,000 Foreign (333,000) — (277,000) 333,000 Total $ 7,520,000 $ 7,810,000 |
Schedule of effective income tax rate reconciliation | Years Ended August 31, 2023 2022 Current: Expected income tax provision at statutory rate 21.0 % 21.0 % Increase (decrease) in taxes due to: State tax, net of federal benefit 5.5 % 4.4 % Permanent differences (0.8) % 0.1 % Other, net 0.5 % 1.3 % Income tax expense 26.2 % 26.8 % |
Schedule of deferred taxes | August 31, Deferred tax assets (liabilities): 2023 2022 Net operating loss $ 57,000 $ 174,000 Accruals and reserves 1,230,000 1,148,000 Income tax credits 1,000 1,000 Capital loss 41,000 40,000 Lease liability 2,689,000 2,789,000 Property and equipment, net (798,000) (958,000) Operating lease, right-of-use assets (2,640,000) (2,742,000) Unrealized gains/losses 204,000 85,000 Total deferred tax assets, net $ 784,000 537,000 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Aug. 31, 2023 | |
Commitments and Contingencies | |
Schedule of minimum future rental payments | Years Ending August 31: 2024 $ 3,527,000 2025 2,325,000 2026 1,589,000 2027 1,293,000 2028 998,000 Thereafter 994,000 Future minimum lease payments $ 10,726,000 Less interest (551,000) Present value of minimum lease payments $ 10,175,000 |
Schedule of other information related to operating lease | Year ended August 31, 2023 2022 Weighted average remaining lease term 4.3 years 5.3 years Weighted average discount rate 4.73 % 4.25 % |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Aug. 31, 2023 | |
Fair Value of Financial Instruments | |
Schedule of Fair Value, Assets Measured on Recurring and Nonrecurring Basis | The following table sets forth by level, within the fair value hierarchy, certain assets at estimated fair value as of August 31, 2023 and 2022: Quoted Prices in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Total August 31, 2023 Marketable securities $ 27,228,000 — — $ 27,228,000 August 31, 2022 Marketable securities $ 3,925,000 — — $ 3,925,000 |
Organization and Basis of Pre_2
Organization and Basis of Presentation (Details) | Aug. 31, 2023 facility |
Organization and Basis of Presentation | |
Sales offices | 51 |
Distribution centers | 7 |
Significant Accounting Polici_4
Significant Accounting Policies and Significant Recent Accounting Pronouncements (Details) - USD ($) | 12 Months Ended | |
Aug. 31, 2023 | Aug. 31, 2022 | |
Significant Accounting Policies and Significant Recent Accounting Pronouncements | ||
Allowance for doubtful accounts | $ 245,000 | $ 164,000 |
Inventories | 1,806,000 | 1,697,000 |
Impairment, Long-Lived Asset, Held-for-Use | 0 | 0 |
Securities sold, but not yet purchased | 0 | 0 |
Restricted Cash | $ 0 | $ 0 |
Maximum percentage of freight revenues | 1% | 1% |
Cost of revenues | $ 226,981,000 | $ 209,060,000 |
Advertising costs | 431,000 | 427,000 |
Right of use assets | 9,988,000 | $ 10,389,000 |
Lease liabilities | $ 10,200,000 | |
Potentially dilutive common shares | 40,000 | 40,000 |
Convertible preferred stock (in shares) | 36,000 | 36,000 |
Exchange rate on foreign currency translation and transactions | $ 0.74 | $ 0.79 |
Long-lived assets, impairments | $ 0 | $ 0 |
Canada | ||
Significant Accounting Policies and Significant Recent Accounting Pronouncements | ||
Exchange rate on foreign currency translation and transactions | $ 0.74 | $ 0.77 |
Percentage of total assets | 3% | 3% |
Shipping and handling expenses | ||
Significant Accounting Policies and Significant Recent Accounting Pronouncements | ||
Cost of revenues | $ 5,510,000 | $ 5,225,000 |
Building | ||
Significant Accounting Policies and Significant Recent Accounting Pronouncements | ||
Estimated useful lives | 35 years | |
Furniture, fixtures and equipment | Minimum | ||
Significant Accounting Policies and Significant Recent Accounting Pronouncements | ||
Estimated useful lives | 5 years | |
Furniture, fixtures and equipment | Maximum | ||
Significant Accounting Policies and Significant Recent Accounting Pronouncements | ||
Estimated useful lives | 7 years |
Significant Accounting Polici_5
Significant Accounting Policies and Significant Recent Accounting Pronouncements - Concentrations (Details) - Sales revenue, net | 12 Months Ended | |
Aug. 31, 2023 | Aug. 31, 2022 | |
Geographic regions | ||
Concentrations | ||
Percentage of concentrations risk | 100% | 100% |
U.S. | Geographic regions | ||
Concentrations | ||
Percentage of concentrations risk | 88.70% | 88.20% |
U.S. | Customer concentration risk | ||
Concentrations | ||
Percentage of concentrations risk | 14% | 13% |
Asia | Geographic regions | ||
Concentrations | ||
Percentage of concentrations risk | 4.50% | 5.70% |
Canada | Geographic regions | ||
Concentrations | ||
Percentage of concentrations risk | 4.10% | 3.20% |
Other | Geographic regions | ||
Concentrations | ||
Percentage of concentrations risk | 2.70% | 2.90% |
Non-US | Customer concentration risk | ||
Concentrations | ||
Percentage of concentrations risk | 11% | 12% |
Property, Equipment and Lease_3
Property, Equipment and Leasehold Improvements (Details) - USD ($) | Aug. 31, 2023 | Aug. 31, 2022 |
Held for use: | ||
Machinery and equipment | $ 11,052,000 | $ 10,759,000 |
Furniture and fixtures | 3,204,000 | 3,016,000 |
Vehicles | 137,000 | 137,000 |
Leasehold improvements | 7,725,000 | 7,405,000 |
Construction in progress | 648,000 | 497,000 |
Total held for use | 22,766,000 | 21,814,000 |
Less: accumulated depreciation and amortization | (14,725,000) | (13,335,000) |
Total property, equipment, and leasehold improvements held for use, net | $ 8,041,000 | $ 8,479,000 |
Property, Equipment and Lease_4
Property, Equipment and Leasehold Improvements - Additional Information (Details) | 12 Months Ended | ||||
Oct. 23, 2023 USD ($) | Oct. 23, 2022 USD ($) | Aug. 31, 2023 USD ($) | Aug. 31, 2022 USD ($) | Sep. 30, 2019 ft² | |
Property, Equipment and Leasehold Improvements | |||||
Area of office and warehouse space | ft² | 80,000 | ||||
Depreciation and amortization expense | $ 1,398,000 | $ 1,491,000 | |||
Hunter Property | |||||
Property, Equipment and Leasehold Improvements | |||||
Purchase price of property in cash | $ 31,000,000 | $ 31,000,000 | |||
Property, equipment and leasehold improvements | |||||
Property, Equipment and Leasehold Improvements | |||||
Depreciation and amortization expense | $ 1,398,000 | $ 1,491,000 |
Debt (Details)
Debt (Details) - USD ($) | 12 Months Ended | |||
Jul. 15, 2020 | Aug. 31, 2023 | Aug. 31, 2022 | Aug. 31, 2021 | |
Debt | ||||
Line of credit facility, current borrowing capacity | $ 15,000,000 | |||
Line of credit facility, maximum borrowing capacity | $ 0 | $ 0 | ||
Interest rate (in percentage) | 3% | |||
Construction loan | $ 4,468,000 | $ 4,584,000 | ||
Construction loan payable | ||||
Debt | ||||
Interest rate | 4.35% | 4.35% | ||
Long-term Debt | 4,468,000 | |||
Term loan | ||||
Debt | ||||
Fixed rate for conversion | 4.60% | |||
Debt discount (as a percent) | 0.25% | |||
Amount drawn and converted | $ 4,807,000 | |||
Community Bank | ||||
Debt | ||||
Line of credit long term outstanding | 100,000 | |||
Line of credit | ||||
Debt | ||||
Construction loan | 5,000,000 | |||
Letter of credit | ||||
Debt | ||||
Notes payable, noncurrent | $ 100,000 |
Debt - Schedule of future princ
Debt - Schedule of future principal maturity of construction loan (Details) - Construction loan | Aug. 31, 2023 USD ($) |
Schedule of future principal maturity | |
2024 | $ 123,000 |
2025 | 130,000 |
2026 | 136,000 |
2027 | 4,079,000 |
Total | $ 4,468,000 |
Shareholders' Equity (Details)
Shareholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Aug. 31, 2023 | Aug. 31, 2022 | |
EPS: | ||
Net income | $ 21,185 | $ 21,308 |
Less: cumulative preferred stock dividend | (76) | (76) |
Net income attributable to common shareholders for basic and diluted EPS computation | $ 21,109 | $ 21,232 |
Weighted average common shares outstanding for basic EPS computation | 4,861,590 | 4,861,590 |
Weighted average common shares outstanding for diluted EPS computation | 4,861,590 | 4,861,590 |
Earnings per common share - basic | $ 4.34 | $ 4.37 |
Earnings per common share - diluted | $ 4.34 | $ 4.37 |
Shareholders' Equity - Addition
Shareholders' Equity - Additional Information (Details) - USD ($) | 12 Months Ended | |
Aug. 31, 2023 | Aug. 31, 2022 | |
Shareholders' Equity | ||
Potentially dilutive common shares | 40,000 | 40,000 |
Convertible preferred stock (in shares) | 36,000 | 36,000 |
Percentage of preferred stock, dividend rate | 8.50% | |
Amount of dividend rate (in dollars per share) | $ 25 | |
Total cash purchase price | $ 900,000 | |
Conversion price | $ 22.50 | |
Final settlement to Holders of preferred stock during dissolution | $25.00 per share plus all unpaid dividends | |
Series A cumulative convertible preferred stock | ||
Shareholders' Equity | ||
Convertible preferred stock (in shares) | 36,000 |
Profit Sharing Plan (Details)
Profit Sharing Plan (Details) - USD ($) | 12 Months Ended | |
Aug. 31, 2023 | Aug. 31, 2022 | |
Profit Sharing Plan | ||
Percentage of employees gross pay | 50% | |
Vesting period | 5 years | |
Contribution expense | $ 851,000 | $ 638,000 |
Employee Contributions | ||
Profit Sharing Plan | ||
Percentage of match, employer matching contribution | 6% | |
Deferred profit sharing | ||
Profit Sharing Plan | ||
Percentage of match, employer matching contribution | 15% |
Income Taxes - Provision for in
Income Taxes - Provision for income taxes (Details) - USD ($) | 12 Months Ended | |
Aug. 31, 2023 | Aug. 31, 2022 | |
Current: | ||
Federal | $ 5,620,000 | $ 5,547,000 |
State | 2,048,000 | 1,608,000 |
Foreign | 129,000 | 322,000 |
Total current income tax expense | 7,797,000 | 7,477,000 |
Deferred: | ||
Federal | 0 | 63,000 |
State | 56,000 | 270,000 |
Foreign | (333,000) | 0 |
Total deferred income tax expense | (277,000) | 333,000 |
Total | $ 7,520,000 | $ 7,810,000 |
Income Taxes - Effective Income
Income Taxes - Effective Income Tax Rate Reconciliation (Details) | 12 Months Ended | |
Aug. 31, 2023 | Aug. 31, 2022 | |
Current: | ||
Expected income tax provision at statutory rate | 21% | 21% |
Increase (decrease) in taxes due to: | ||
State tax, net of federal benefit | 5.50% | 4.40% |
Permanent differences | (0.80%) | 0.10% |
Other, net | 0.50% | 1.30% |
Income tax expense | 26.20% | 26.80% |
Income Taxes - Components of De
Income Taxes - Components of Deferred Taxes (Details) - USD ($) | Aug. 31, 2023 | Aug. 31, 2022 |
Deferred tax assets (liabilities): | ||
Net operating loss | $ 57,000 | $ 174,000 |
Accruals and reserves | 1,230,000 | 1,148,000 |
Income tax credits | 1,000 | 1,000 |
Lease liability | 2,689,000 | 2,789,000 |
Property and equipment, net | (798,000) | (958,000) |
Operating lease, right-of-use assets | 2,640,000 | 2,742,000 |
Capital loss | 41,000 | 40,000 |
Unrealized gains/losses | 204,000 | 85,000 |
Total deferred tax assets, net | $ 784,000 | $ 537,000 |
Income Taxes - Additional infor
Income Taxes - Additional information (Details) - USD ($) $ in Millions | 12 Months Ended | |
Aug. 31, 2023 | Aug. 31, 2022 | |
Income Taxes | ||
Expected income tax provision at statutory rate | 21% | 21% |
Refundable tax credit, percentage | 50% | |
Refundable tax credit, estimated amount | $ 0 | $ 5.3 |
Statutory rate | 21% | 21% |
Commitments and Contingencies_2
Commitments and Contingencies (Details) | Aug. 31, 2023 USD ($) |
Years Ending August 31: | |
Present value of minimum lease payments | $ 10,200,000 |
Operating Lease Agreements | |
Years Ending August 31: | |
2024 | 3,527,000 |
2025 | 2,325,000 |
2026 | 1,589,000 |
2027 | 1,293,000 |
2028 | 998,000 |
Thereafter | 994,000 |
Future minimum lease payments | 10,726,000 |
Less interest | (551,000) |
Present value of minimum lease payments | $ 10,175,000 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of other information related to operating lease (Details) | Aug. 31, 2023 | Aug. 31, 2022 |
Commitments and Contingencies | ||
Weighted average remaining lease term | 4 years 3 months 18 days | 5 years 3 months 18 days |
Weighted average discount rate | 4.73% | 4.25% |
Commitments and Contingencies_3
Commitments and Contingencies - Additional Information (Details) - USD ($) | 12 Months Ended | |||
Oct. 23, 2023 | Oct. 23, 2022 | Aug. 31, 2023 | Aug. 31, 2022 | |
Commitments and Contingencies | ||||
Lease Expiration Date | Sep. 30, 2029 | |||
Operating lease cost | $ 3,531,000 | $ 3,119,000 | ||
Hunter Property | ||||
Commitments and Contingencies | ||||
Purchase price of property in cash | $ 31,000,000 | $ 31,000,000 | ||
Maximum [Member] | ||||
Commitments and Contingencies | ||||
Monthly Operating Lease Rental Payment | 67,000 | |||
Minimum [Member] | ||||
Commitments and Contingencies | ||||
Monthly Operating Lease Rental Payment | $ 1,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 12 Months Ended | |||||
Oct. 23, 2023 | Oct. 23, 2022 | Jul. 26, 2019 | Nov. 21, 2017 | Aug. 31, 2023 | Aug. 31, 2022 | |
Related Party Transactions | ||||||
Rent expense paid | $ 1,162,000 | $ 1,134,000 | ||||
Hunter Property | ||||||
Related Party Transactions | ||||||
Payments To Acquire Property Plant And Equipment, Previously Leased | $ 31,000,000 | $ 31,000,000 | ||||
Chicago Lease | ||||||
Related Party Transactions | ||||||
Lease term | 10 years | |||||
Initial monthly rental | $ 22,600 | |||||
Percentage of annual rent increase | 2.50% | |||||
Hunter Lease | ||||||
Related Party Transactions | ||||||
Lease term | 10 years | |||||
Initial monthly rental | $ 66,300 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) - USD ($) | Aug. 31, 2023 | Aug. 31, 2022 |
Fair Value of Financial Instruments | ||
Marketable securities | $ 27,228,000 | $ 3,925,000 |
Level 1 | ||
Fair Value of Financial Instruments | ||
Marketable securities | 27,228,000 | 3,925,000 |
Level 2 | ||
Fair Value of Financial Instruments | ||
Marketable securities | 0 | 0 |
Level 3 | ||
Fair Value of Financial Instruments | ||
Marketable securities | $ 0 | $ 0 |
Subsequent Events (Details)
Subsequent Events (Details) - Hunter Property - USD ($) | Oct. 23, 2023 | Oct. 23, 2022 |
Subsequent Events | ||
Purchase price of property in cash | $ 31,000,000 | $ 31,000,000 |
Subsequent Events | ||
Subsequent Events | ||
Purchase price of property in cash | $ 31,000,000 |