Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Feb. 29, 2024 | Apr. 08, 2024 | |
Document And Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Feb. 29, 2024 | |
Document Transition Report | false | |
Entity File Number | 000-14311 | |
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 | Common Stock, $0.01 Par Value | |
Trading Symbol | EACO | |
Entity Interactive Data Current | Yes | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 4,861,590 | |
Entity Central Index Key | 0000784539 | |
Current Fiscal Year End Date | --08-31 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Feb. 29, 2024 | Feb. 28, 2023 | Feb. 29, 2024 | Feb. 28, 2023 | |
Condensed Consolidated Statements of Income (Unaudited) | ||||
Net sales | $ 83,335,000 | $ 76,925,000 | $ 163,590,000 | $ 153,244,000 |
Cost of sales | 58,308,000 | 54,661,000 | 114,991,000 | 109,317,000 |
Gross margin | 25,027,000 | 22,264,000 | 48,599,000 | 43,927,000 |
Operating expenses: | ||||
Selling, general and administrative expenses | 17,598,000 | 15,606,000 | 34,815,000 | 31,291,000 |
Impairment on termination of lease | 3,906,000 | |||
Income from operations | 7,429,000 | 6,658,000 | 9,878,000 | 12,636,000 |
Other income (expense): | ||||
Net gain (loss) on trading securities | 23,000 | 179,000 | (21,000) | 621,000 |
Interest and other income (expense) | (75,000) | 46,000 | (84,000) | (2,000) |
Other income (expense), net | (52,000) | 225,000 | (105,000) | 619,000 |
Income before income taxes | 7,377,000 | 6,883,000 | 9,773,000 | 13,255,000 |
Provision for income taxes | 1,879,000 | 1,783,000 | 2,496,000 | 3,444,000 |
Net income | 5,498,000 | 5,100,000 | 7,277,000 | 9,811,000 |
Cumulative preferred stock dividend | (19,000) | (19,000) | (38,000) | (38,000) |
Net income attributable to common shareholders | $ 5,479,000 | $ 5,081,000 | $ 7,239,000 | $ 9,773,000 |
Basic earnings per share: | $ 1.13 | $ 1.05 | $ 1.49 | $ 2.01 |
Diluted earnings per share: | $ 1.12 | $ 1.04 | $ 1.48 | $ 2 |
Basic weighted average common shares outstanding | 4,861,590 | 4,861,590 | 4,861,590 | 4,861,590 |
Diluted weighted average common shares outstanding | 4,901,590 | 4,901,590 | 4,901,590 | 4,901,590 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Feb. 29, 2024 | Feb. 28, 2023 | Feb. 29, 2024 | Feb. 28, 2023 | |
Condensed Consolidated Statements of Comprehensive Income (Unaudited) | ||||
Net Income (Loss) | $ 5,498 | $ 5,100 | $ 7,277 | $ 9,811 |
Other comprehensive gain (loss), net of tax: | ||||
Foreign translation gain (loss) | 45 | 1 | (86) | (85) |
Total comprehensive income | $ 5,543 | $ 5,101 | $ 7,191 | $ 9,726 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Feb. 29, 2024 | Aug. 31, 2023 | [1] |
Current Assets: | |||
Cash and cash equivalents | $ 3,984 | $ 8,558 | |
Restricted cash | 10 | 10 | |
Trade accounts receivable, net | 46,987 | 46,654 | |
Inventory, net | 63,753 | 56,270 | |
Marketable securities, trading | 1,678 | 27,228 | |
Prepaid expenses and other current assets | 3,170 | 3,843 | |
Total current assets | 119,582 | 142,563 | |
Property, equipment and leasehold improvements, net | 35,537 | 8,041 | |
Operating lease right-of-use assets | 4,692 | 9,988 | |
Other assets, net | 1,534 | 1,652 | |
Total assets | 161,345 | 162,244 | |
Current Liabilities: | |||
Trade accounts payable | 27,986 | 22,505 | |
Accrued expenses and other current liabilities | 8,209 | 16,375 | |
Current portion of operating lease liabilities | 2,245 | 3,950 | |
Current portion of long-term debt | 120 | 120 | |
Total current liabilities | 38,560 | 42,950 | |
Long-term debt | 4,286 | 4,348 | |
Long-term operating lease liabilities | 2,625 | 6,225 | |
Total liabilities | 45,471 | 53,523 | |
Commitments and Contingencies | |||
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 | (48) | 38 | |
Retained earnings | 103,494 | 96,255 | |
Total shareholders' equity | 115,874 | 108,721 | |
Total liabilities and shareholders' equity | $ 161,345 | $ 162,244 | |
[1]Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2023 filed with the U.S. Securities and Exchange Commission on November 22, 2023. |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Feb. 29, 2024 | Aug. 31, 2023 |
Condensed Consolidated Balance Sheets (Unaudited) | ||
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 |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Shareholders' Equity (Unaudited) - 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, 2022 | [1] | $ 1 | $ 49 | $ 12,378 | $ 174 | $ 75,146 | $ 87,748 |
Balance at the beginning (in Shares) at Aug. 31, 2022 | [1] | 36,000 | 4,861,590 | ||||
Preferred dividends | (19) | (19) | |||||
Foreign translation gain (loss) | (86) | (86) | |||||
Net income | 4,711 | 4,711 | |||||
Balance at the end at Nov. 30, 2022 | $ 1 | $ 49 | 12,378 | 88 | 79,838 | 92,354 | |
Balance at the end (in Shares) at Nov. 30, 2022 | 36,000 | 4,861,590 | |||||
Balance at the beginning at Aug. 31, 2022 | [1] | $ 1 | $ 49 | 12,378 | 174 | 75,146 | 87,748 |
Balance at the beginning (in Shares) at Aug. 31, 2022 | [1] | 36,000 | 4,861,590 | ||||
Foreign translation gain (loss) | (85) | ||||||
Net income | 9,811 | ||||||
Balance at the end at Feb. 28, 2023 | $ 1 | $ 49 | 12,378 | 89 | 84,919 | 97,436 | |
Balance at the end (in Shares) at Feb. 28, 2023 | 36,000 | 4,861,590 | |||||
Balance at the beginning at Nov. 30, 2022 | $ 1 | $ 49 | 12,378 | 88 | 79,838 | 92,354 | |
Balance at the beginning (in Shares) at Nov. 30, 2022 | 36,000 | 4,861,590 | |||||
Preferred dividends | (19) | (19) | |||||
Foreign translation gain (loss) | 1 | 1 | |||||
Net income | 5,100 | 5,100 | |||||
Balance at the end at Feb. 28, 2023 | $ 1 | $ 49 | 12,378 | 89 | 84,919 | 97,436 | |
Balance at the end (in Shares) at Feb. 28, 2023 | 36,000 | 4,861,590 | |||||
Balance at the beginning at Aug. 31, 2023 | [1] | $ 1 | $ 49 | 12,378 | 38 | 96,255 | 108,721 |
Balance at the beginning (in Shares) at Aug. 31, 2023 | [1] | 36,000 | 4,861,590 | ||||
Preferred dividends | (19) | (19) | |||||
Foreign translation gain (loss) | (131) | (131) | |||||
Net income | 1,779 | 1,779 | |||||
Balance at the end at Nov. 30, 2023 | $ 1 | $ 49 | 12,378 | (93) | 98,015 | 110,350 | |
Balance at the end (in Shares) at Nov. 30, 2023 | 36,000 | 4,861,590 | |||||
Balance at the beginning at Aug. 31, 2023 | [1] | $ 1 | $ 49 | 12,378 | 38 | 96,255 | 108,721 |
Balance at the beginning (in Shares) at Aug. 31, 2023 | [1] | 36,000 | 4,861,590 | ||||
Foreign translation gain (loss) | (86) | ||||||
Net income | 7,277 | ||||||
Balance at the end at Feb. 29, 2024 | $ 1 | $ 49 | 12,378 | (48) | 103,494 | 115,874 | |
Balance at the end (in Shares) at Feb. 29, 2024 | 36,000 | 4,861,590 | |||||
Balance at the beginning at Nov. 30, 2023 | $ 1 | $ 49 | 12,378 | (93) | 98,015 | 110,350 | |
Balance at the beginning (in Shares) at Nov. 30, 2023 | 36,000 | 4,861,590 | |||||
Preferred dividends | (19) | (19) | |||||
Foreign translation gain (loss) | 45 | 45 | |||||
Net income | 5,498 | 5,498 | |||||
Balance at the end at Feb. 29, 2024 | $ 1 | $ 49 | $ 12,378 | $ (48) | $ 103,494 | $ 115,874 | |
Balance at the end (in Shares) at Feb. 29, 2024 | 36,000 | 4,861,590 | |||||
[1]Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2023 filed with the U.S. Securities and Exchange Commission on November 22, 2023. |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Feb. 29, 2024 | Feb. 28, 2023 | |
Operating activities: | ||
Net income | $ 7,277 | $ 9,811 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 806 | 708 |
Credit loss expense | 135 | 182 |
Net unrealized (gain) loss on trading securities | 267 | (621) |
Deferred tax provision | 40 | |
Impairment on termination of lease | 3,906 | |
Changes in current assets and liabilities: | ||
Trade accounts receivable | (468) | 2,901 |
Inventory | (7,483) | (4,658) |
Prepaid expenses and other assets | 751 | 1,356 |
Operating lease right-of-use assets | 5,296 | (271) |
Trade accounts payable | 3,404 | 1,087 |
Accrued expenses and other current liabilities | (8,166) | (4,842) |
Operating lease liabilities | (5,305) | 285 |
Net cash provided by operating activities | 460 | 5,938 |
Investing activities: | ||
Purchase of property, equipment, and leasehold improvements | (32,208) | (391) |
Sale (purchase) of marketable securities, trading | 25,283 | (17,319) |
Net cash used in investing activities | (6,925) | (17,710) |
Financing activities: | ||
Repayments on long-term debt | (62) | (58) |
Preferred stock dividend | (38) | (38) |
Net change in bank overdraft | 2,077 | (109) |
Net cash provided by (used in) financing activities | 1,977 | (205) |
Effect of foreign currency exchange rate changes on cash and cash equivalents | (86) | (85) |
Net decrease in cash, cash equivalents, and restricted cash | (4,574) | (12,062) |
Cash, cash equivalents, and restricted cash - beginning of period | 8,568 | 17,396 |
Cash, cash equivalents, and restricted cash - end of period | 3,994 | 5,334 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 145 | 102 |
Cash paid for income taxes | $ 8,276 | $ 7,544 |
Organization and Basis of Prese
Organization and Basis of Presentation | 6 Months Ended |
Feb. 29, 2024 | |
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 additional sales office location in the Philippines. 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 | 6 Months Ended |
Feb. 29, 2024 | |
Significant Accounting Policies and Significant Recent Accounting Pronouncements | |
Significant Accounting Policies and Significant Recent Accounting Pronouncements | Note 2. Significant Accounting Policies and Significant Recent Accounting Pronouncements 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 credit losses”, provision for slow moving and obsolete inventory, recoverability of the carrying value and estimated useful lives of long-lived assets, and the valuation allowance against deferred tax assets, if any. Actual results could differ from those estimates. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in conformity with GAAP for interim financial information and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim reporting. In the opinion of management, all adjustments considered necessary in order to make the financial statements not misleading have been included. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to SEC rules and regulations for presentation of interim financial information. Therefore, the condensed consolidated interim financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the Company's fiscal year ended August 31, 2023 (“fiscal 2023”). The condensed consolidated balance sheet as of August 31, 2023 and related disclosures were derived from the Company’s audited consolidated financial statements as of August 31, 2023. Operating results for the three and six months ended February 29, 2024 are not necessarily indicative of the results that may be expected for future quarterly periods or the entire fiscal year. Principles of Consolidation The consolidated financial statements for all periods presented include the accounts of EACO, its wholly-owned subsidiary, Bisco, and Bisco’s wholly-owned Canadian subsidiary, Bisco Industries Limited (all of which are collectively referred to herein as the “Company”, “we”, “us” and “our”). All significant intercompany transactions and balances have been eliminated in consolidation. 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. Allowance for Credit Losses In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments – Credit Losses”, which requires 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 did not have a material impact on the Company’s result of operations or financial position. We maintain an allowance for credit losses for estimated losses on our trade receivable, resulting from the inability of our customers to make payments for products sold to such customers. The allowance for credit losses is based on a variety of factors, including credit reviews, historical experience, length of time since receivables were due, current economic trends and changes in customer payment behavior. We also record specific provisions for individual accounts when we become aware of a customer’s inability to meet its financial obligations to us, such as in the case of bankruptcy filings or deterioration in the customer’s operating results or financial positions. The allowance for credit losses was $259,000 and $245,000 at February 29, 2024 and August 31, 2023, respectively. Inventories, net 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 weighted average cost that approximates the first-in, first-out method. Inventories are adjusted for slow moving or obsolete items, which was approximately $1,885 million and $1,806 million at February 29, 2024 and August 31, 2023, respectively. The adjustments to inventory costs are based upon management’s review of inventories on-hand over the inventory’s expected future utilization and length of time held by the Company. 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. 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 consolidated statements of operations and represent the change in the market value of investment holdings during the period. Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of the impairment review, assets are measured by comparing the carrying amount to future net cash flows. If assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds such asset’s estimated fair values. On October 20, 2023, the Company completed the purchase of its corporate headquarters located at 5065 East Hunter Avenue in Anaheim, California (the “Hunter Property”) from the Glen F. Ceiley and Barbara A. Ceiley Revocable Trust (the “Trust”) for $31.0 million in cash. An appraisal, conducted in September 2023 by an independent third party, valued the Hunter Property at $31.0 million, which was inclusive of tenant improvements previously purchased and recorded by the Company. Upon completion of the Hunter Property purchase and the termination of the Hunter Lease (as defined below) during the three month quarter ended November 30, 2023 (Q1 2024), the Company recorded an asset impairment of $3.9 million, which was the net book carrying value of the tenant improvements at the date the building was acquired. Income Taxes Deferred taxes on income result from temporary differences between the reporting of income for financial statement and tax reporting purposes. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some or all of the deferred tax asset will not be realized. In making such determination, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income (if any), tax planning strategies and recent financial performance. The Company provides for tax contingencies, if any, for federal, state, local and international exposures relating to audit results, tax planning initiatives and compliance responsibilities. The development of these reserves requires judgments about tax issues, potential outcomes and timing. Although the outcome of these tax audits is uncertain, in management’s opinion, adequate provisions for income taxes have been made for potential liabilities emanating from these reviews. If actual outcomes differ materially from these estimates, they could have a material impact on our results of operations. Revenue Recognition The Company derives its revenue primarily from product sales. Revenue recognition is determined 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, performance obligations are satisfied. The Company’s performance obligations consist solely of product shipped to customers. Revenue from product sales is recognized upon transfer of control of promised products upon shipment to customers at a point in time in an amount that reflects the consideration we expect to receive in exchange for these products. Revenue is recognized net of returns and any taxes collected from customers. The Company offers industry standard contractual terms in its purchase orders. 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, the current portion of operating lease liabilities,and the 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 non-lease 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 non-lease 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. The Company regularly evaluates the renewal options during each reporting period and when the renewal options 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 February 29, 2024, the Company has ROU assets of approximately $4.7 million and lease liabilities of approximately $4.9 million recorded in the consolidated balance sheet. As of August 31, 2023, the Company had ROU assets of approximately $10.0 million and lease liabilities of approximately $10.2 million recorded in the consolidated balance sheet. The reduction in ROU assets and lease liabilities is due to the purchase of the Hunter Property in October 2023. Earnings Per Common Share Basic earnings per common share for each of the three and six months ended February 29, 2024 and February 28, 2023 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 each of February 29, 2024 and February 28, 2023. Such securities are excluded from the weighted average shares outstanding used to calculate diluted earnings per common share for the quarters ended February 29, 2024 and February 28, 2023 as the inclusion of such securities 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 (specifically, Canadian dollars used to record the assets and liabilities for Bisco Industries limited) are translated into U.S. dollars at the period-end rate of exchange. The exchange rate for Canadian dollars to U.S. dollars on February 29, 2024 and February 28, 2023 was $0.74 and $0.73, respectively. The resulting balance sheet translation adjustments are charged or credited directly to accumulated other comprehensive income (loss). Revenue and expenses are transacted at the average exchange rates for each of the three and six months ended February 29, 2024 and February 28, 2023. The average exchange rates for the six months ended February 29, 2024 and February 28, 2023 were $0.73 and $0.74, respectively. All foreign sales, excluding Canadian sales, are denominated in U.S. dollars and, therefore, are not subject to foreign currency risk exposure. Concentrations Net sales to customers outside the United States were approximately 10% of revenues for each of the six months ended February 29, 2024 and February 28, 2023, and related accounts receivable were approximately 10% and 11% of total accounts receivable as of February 29, 2024 and February 28, 2023, respectively. Sales to customers in Canada accounted for approximately 28% and 30% of such international sales for the six months ended February 29, 2024 and February 28, 2023, respectively. Sales to customers located within Asia accounted for approximately 37% and 45% of such international sales for the six months ended February 29, 2024 and February 28, 2023, respectively. No single customer accounted for more than 10% of revenues for either of the six months ended February 29, 2024 and February 28, 2023. In addition, no single customer’s receivable balance accounted for more than 10% of the Company’s customer receivables as of either February 29, 2024 or August 31, 2023. |
Accrued Liabilities
Accrued Liabilities | 6 Months Ended |
Feb. 29, 2024 | |
Accrued Liabilities | |
Accrued Liabilities | Note 3. Accrued Liabilities The Company’s accrued liabilities as of February 29, 2024 and August 31, 2023 are summarized as follows (in thousands): February 29, August 31, 2024 2023 Accrued expenses and other current liabilities: Accrued accounts payable $ 1,707 $ 2,090 Accrued compensation and payroll 4,463 6,410 Accrued taxes 2,039 7,875 Total Accrued expenses and other current liabilities $ 8,209 $ 16,375 |
Debt
Debt | 6 Months Ended |
Feb. 29, 2024 | |
Debt | |
Debt | Note 4. Debt The Company has a $15.0 million line of credit agreement with Citizens Business Bank (“the Bank”). During the first quarter of 2023, the Company entered into a Change in Terms Agreement dated November 5, 2022 with the Bank, which extended the maturity date of the line of credit from November 5, 2022 to July 5, 2024. The Company is currently in negotiations with extending the line of credit with the Bank. The line of credit has a variable interest rate set at the bank prime index rate, but provided that in no event would such interest rate be less than 3.5% per annum. Borrowings are secured by substantially all of the assets of the Company and its subsidiaries. The amount outstanding under this line of credit as of each of February 29, 2024 and August 31, 2023 was zero. The line of credit agreement contains certain nonfinancial and financial covenants, including the maintenance of certain financial ratios. As of each of February 29, 2024 and August 31, 2023, the Company was in compliance with all such covenants. The Company also entered into a Loan Agreement with the Bank on July 12, 2019 to borrow up to $5.0 million (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 $5.0 million with a maturity date of May 15, 2027. The terms of the Construction Loan provided that the Company could only request advances through July 15, 2020, and thereafter, the Construction Loan converted to a term loan with a fixed interest rate of 4.6% per annum, which is entitled to a 0.25% rate discount if a demand deposit account is held with the Bank. On July 15, 2020, the amount drawn on the Construction Loan was converted to a term loan in the amount of $4.807 million. Interest on the Construction Loan is payable monthly (4.35% per annum). Concurrent with the execution of the 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 February 29, 2024 and August 31, 2023 was $4.406 million and $4.468 million, respectively. Lastly, the Company entered into a business loan agreement (and related $100,000 promissory note) on June 2, 2023 with the Bank in order to obtain a $100,000 letter of credit as security for the Company’s worker’s compensation requirements. |
Leases
Leases | 6 Months Ended |
Feb. 29, 2024 | |
Leases | |
Leases | Note 5. Leases The Company leases its facilities and automobiles under operating lease agreements ( one distribution facility, located in Glendale Heights, IL, is leased from the Trust, which is beneficially owned and controlled by Glen Ceiley, the Company’s Chief Executive Officer, Chairman of the Board and majority shareholder). Our operating lease agreements expire on various dates through September 2027 and require minimum rental payments ranging from $1,000 to $22,600 per month. Certain of the leases contain options for renewal under varying terms. On October 20, 2023, the Company closed escrow on the purchase of the Hunter Property, which was leased by the Company, from the Trust for a purchase price of $31.0 million. See Note 7 of the Notes to Consolidated Financial Statements of this Report for further explanation. Minimum future rental payments under operating leases are as follows: Years Ending : 2024 (remaining six months) $ 1,602,000 2025 1,946,000 2026 1,133,000 2027 619,000 2028 167,000 Thereafter 21,000 Future minimum lease payments $ 5,488,000 Less interest (618,000) Present value of minimum lease payments $ 4,870,000 Operating lease costs under these leases were approximately $1.373 million and $1.686 million for the six months ended February 29, 2024and February 28, 2023, respectively. Other information related to operating leases is as follows: February 29, August 31, 2024 2023 Weighted average remaining lease terms 2.9 years 4.3 years Incremental borrowing rate 5.71 % 4.73 % The discount rate used on the operating ROU assets represented the Company’s incremental borrowing rate at lease inception. |
Earnings per Share
Earnings per Share | 6 Months Ended |
Feb. 29, 2024 | |
Earnings per Share | |
Earnings per Share | Note 6. Earnings per Share The following is a reconciliation of the numerators and denominators of the basic and diluted computations for earnings per common share (in thousands, except per share data): Three Months Ended Six Months Ended February 29, February 28, February 29, February 28, 2024 2023 2024 2023 (In thousands, except share and per share amounts) EPS: Net income $ 5,498 $ 5,100 $ 7,277 $ 9,811 Less: accrued preferred stock dividends (19) (19) (38) (38) Net income available for common shareholders $ 5,479 $ 5,081 $ 7,239 $ 9,773 Earnings per common share – basic $ 1.13 $ 1.05 $ 1.49 $ 2.01 Earnings per common share – diluted $ 1.12 $ 1.04 $ 1.48 $ 2.00 For each of the three and six months ended February 29, 2024 and February 28, 2023, 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 of such shares would be anti-dilutive since the conversion price was greater than the average market price of the common stock. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Feb. 29, 2024 | |
Related Party Transactions | |
Related Party Transactions | Note 7. Related Party Transactions The Company leases its Chicago area sales office and distribution center located in Glendale Heights, Illinois under an operating lease agreement (the “Glendale Lease”) from the Trust, which is the grantor trust of Glen Ceiley, the Company’s Chief Executive Officer, Chairman of the Board, and majority shareholder. The Glendale Lease is a ten-year 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 Glendale Lease. During the six months ended February 29, 2024 and February 28, 2023, the Company incurred expense related to the Glendale Lease of approximately $156,000 and $152,000, respectively. On July 26, 2019, the Company entered into a Commercial Lease Agreement with the Trust (the “Hunter Lease”), for the lease of the Hunter Property, which houses the Company’s corporate headquarters. The Company completed its move to the headquarters located at the Hunter Property in March 2020. The term of the Hunter Lease commenced on September 2, 2019 and ended on October 20, 2023, and had an initial monthly rental rate of $66,300, which was subject to annual rent increases of approximately 2.5% as was set forth in the Hunter Lease. During the six months ended February 29, 2024 and February 28, 2023, the Company incurred expense related to the Hunter Lease of approximately $123,000 and $428,000, respectively. On October 5, 2023, the Company entered into a Standard, Purchase Agreement and Escrow Instructions (the “Purchase Agreement”) to purchase the Hunter Property for a purchase price of $31.0 million in cash, which closed on October 20, 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. |
Income Taxes
Income Taxes | 6 Months Ended |
Feb. 29, 2024 | |
Income Taxes | |
Income Taxes | Note 8. Income Taxes During the six months ended February 29, 2024 and February 28, 2023, the Company recorded an income tax provision of $2,496,000 and $3.444 million, respectively, resulting in an effective tax rate of 25.5% and 26.0%, respectively. The provision for income taxes decreased by $948,000 in the six months period ended February 29, 2024 over the prior year period due to lower pre-tax income in the current period over the prior year period. The current period effective tax rate differs from the statutory rate of 21% primarily due to the state tax rates and permanent book tax differences. Accounting for uncertainty in income taxes prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. For each of the three and six months ended February 29, 2024 and February 28, 2023, the Company did not have a liability for any unrecognized tax benefit. The Company has elected to classify interest and penalties as a component of its income tax provision. For each of the three and six months ended February 29, 2024 and February 28, 2023, the Company did not have a liability for penalties or interest. The Company does not expect any changes to its unrecognized tax benefit for the next six months that would materially impact its consolidated financial statements. The Company’s tax years for 2020 to 2023 are subject to examination by the taxing authorities. With few exceptions, the Company is no longer subject to U.S. federal, state, local or foreign examinations by taxing authorities for years before 2019. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Feb. 29, 2024 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 9. Commitments and Contingencies From time to time, the Company may be subject to legal proceedings and claims which arise in the normal course of our business. Any such matters and disputes could be costly and time consuming, subject the Company to damages or equitable remedies, and divert management and key personnel from core business operations. The Company is not currently a party to any 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. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Feb. 29, 2024 | |
Subsequent Events | |
Subsequent Events | Note 10. Subsequent Events Management has evaluated events subsequent to February 29, 2024, through the date that these unaudited condensed consolidated financial statements are filed with the SEC, for transactions and other events which may require adjustment of and/or disclosure in such financial statements. |
Significant Accounting Polici_2
Significant Accounting Policies and Significant Recent Accounting Pronouncements (Policies) | 6 Months Ended |
Feb. 29, 2024 | |
Significant Accounting Policies and Significant Recent Accounting Pronouncements | |
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 credit losses”, provision for slow moving and obsolete inventory, recoverability of the carrying value and estimated useful lives of long-lived assets, and the valuation allowance against deferred tax assets, if any. Actual results could differ from those estimates. |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in conformity with GAAP for interim financial information and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim reporting. In the opinion of management, all adjustments considered necessary in order to make the financial statements not misleading have been included. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to SEC rules and regulations for presentation of interim financial information. Therefore, the condensed consolidated interim financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the Company's fiscal year ended August 31, 2023 (“fiscal 2023”). The condensed consolidated balance sheet as of August 31, 2023 and related disclosures were derived from the Company’s audited consolidated financial statements as of August 31, 2023. Operating results for the three and six months ended February 29, 2024 are not necessarily indicative of the results that may be expected for future quarterly periods or the entire fiscal year. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements for all periods presented include the accounts of EACO, its wholly-owned subsidiary, Bisco, and Bisco’s wholly-owned Canadian subsidiary, Bisco Industries Limited (all of which are collectively referred to herein as the “Company”, “we”, “us” and “our”). All significant intercompany transactions and balances have been eliminated in consolidation. |
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. |
Allowance for Credit Losses | Allowance for Credit Losses In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments – Credit Losses”, which requires 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 did not have a material impact on the Company’s result of operations or financial position. We maintain an allowance for credit losses for estimated losses on our trade receivable, resulting from the inability of our customers to make payments for products sold to such customers. The allowance for credit losses is based on a variety of factors, including credit reviews, historical experience, length of time since receivables were due, current economic trends and changes in customer payment behavior. We also record specific provisions for individual accounts when we become aware of a customer’s inability to meet its financial obligations to us, such as in the case of bankruptcy filings or deterioration in the customer’s operating results or financial positions. The allowance for credit losses was $259,000 and $245,000 at February 29, 2024 and August 31, 2023, respectively. |
Inventories, net | Inventories, net 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 weighted average cost that approximates the first-in, first-out method. Inventories are adjusted for slow moving or obsolete items, which was approximately $1,885 million and $1,806 million at February 29, 2024 and August 31, 2023, respectively. The adjustments to inventory costs are based upon management’s review of inventories on-hand over the inventory’s expected future utilization and length of time held by the Company. |
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. 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 consolidated statements of operations and represent the change in the market value of investment holdings during the period. |
Long-Lived Assets | Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of the impairment review, assets are measured by comparing the carrying amount to future net cash flows. If assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds such asset’s estimated fair values. On October 20, 2023, the Company completed the purchase of its corporate headquarters located at 5065 East Hunter Avenue in Anaheim, California (the “Hunter Property”) from the Glen F. Ceiley and Barbara A. Ceiley Revocable Trust (the “Trust”) for $31.0 million in cash. An appraisal, conducted in September 2023 by an independent third party, valued the Hunter Property at $31.0 million, which was inclusive of tenant improvements previously purchased and recorded by the Company. Upon completion of the Hunter Property purchase and the termination of the Hunter Lease (as defined below) during the three month quarter ended November 30, 2023 (Q1 2024), the Company recorded an asset impairment of $3.9 million, which was the net book carrying value of the tenant improvements at the date the building was acquired. |
Income Taxes | Income Taxes Deferred taxes on income result from temporary differences between the reporting of income for financial statement and tax reporting purposes. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some or all of the deferred tax asset will not be realized. In making such determination, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income (if any), tax planning strategies and recent financial performance. The Company provides for tax contingencies, if any, for federal, state, local and international exposures relating to audit results, tax planning initiatives and compliance responsibilities. The development of these reserves requires judgments about tax issues, potential outcomes and timing. Although the outcome of these tax audits is uncertain, in management’s opinion, adequate provisions for income taxes have been made for potential liabilities emanating from these reviews. If actual outcomes differ materially from these estimates, they could have a material impact on our results of operations. |
Revenue Recognition | Revenue Recognition The Company derives its revenue primarily from product sales. Revenue recognition is determined 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, performance obligations are satisfied. The Company’s performance obligations consist solely of product shipped to customers. Revenue from product sales is recognized upon transfer of control of promised products upon shipment to customers at a point in time in an amount that reflects the consideration we expect to receive in exchange for these products. Revenue is recognized net of returns and any taxes collected from customers. The Company offers industry standard contractual terms in its purchase orders. |
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, the current portion of operating lease liabilities,and the 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 non-lease 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 non-lease 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. The Company regularly evaluates the renewal options during each reporting period and when the renewal options 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 February 29, 2024, the Company has ROU assets of approximately $4.7 million and lease liabilities of approximately $4.9 million recorded in the consolidated balance sheet. As of August 31, 2023, the Company had ROU assets of approximately $10.0 million and lease liabilities of approximately $10.2 million recorded in the consolidated balance sheet. The reduction in ROU assets and lease liabilities is due to the purchase of the Hunter Property in October 2023. |
Earnings Per Common Share | Earnings Per Common Share Basic earnings per common share for each of the three and six months ended February 29, 2024 and February 28, 2023 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 each of February 29, 2024 and February 28, 2023. Such securities are excluded from the weighted average shares outstanding used to calculate diluted earnings per common share for the quarters ended February 29, 2024 and February 28, 2023 as the inclusion of such securities 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 (specifically, Canadian dollars used to record the assets and liabilities for Bisco Industries limited) are translated into U.S. dollars at the period-end rate of exchange. The exchange rate for Canadian dollars to U.S. dollars on February 29, 2024 and February 28, 2023 was $0.74 and $0.73, respectively. The resulting balance sheet translation adjustments are charged or credited directly to accumulated other comprehensive income (loss). Revenue and expenses are transacted at the average exchange rates for each of the three and six months ended February 29, 2024 and February 28, 2023. The average exchange rates for the six months ended February 29, 2024 and February 28, 2023 were $0.73 and $0.74, respectively. All foreign sales, excluding Canadian sales, are denominated in U.S. dollars and, therefore, are not subject to foreign currency risk exposure. |
Concentrations | Concentrations Net sales to customers outside the United States were approximately 10% of revenues for each of the six months ended February 29, 2024 and February 28, 2023, and related accounts receivable were approximately 10% and 11% of total accounts receivable as of February 29, 2024 and February 28, 2023, respectively. Sales to customers in Canada accounted for approximately 28% and 30% of such international sales for the six months ended February 29, 2024 and February 28, 2023, respectively. Sales to customers located within Asia accounted for approximately 37% and 45% of such international sales for the six months ended February 29, 2024 and February 28, 2023, respectively. |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 6 Months Ended |
Feb. 29, 2024 | |
Accrued Liabilities | |
Schedule of accrued liabilities | The Company’s accrued liabilities as of February 29, 2024 and August 31, 2023 are summarized as follows (in thousands): February 29, August 31, 2024 2023 Accrued expenses and other current liabilities: Accrued accounts payable $ 1,707 $ 2,090 Accrued compensation and payroll 4,463 6,410 Accrued taxes 2,039 7,875 Total Accrued expenses and other current liabilities $ 8,209 $ 16,375 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Feb. 29, 2024 | |
Leases | |
Schedule of minimum future rental payments | Years Ending : 2024 (remaining six months) $ 1,602,000 2025 1,946,000 2026 1,133,000 2027 619,000 2028 167,000 Thereafter 21,000 Future minimum lease payments $ 5,488,000 Less interest (618,000) Present value of minimum lease payments $ 4,870,000 |
Schedule of other information related to operating lease | February 29, August 31, 2024 2023 Weighted average remaining lease terms 2.9 years 4.3 years Incremental borrowing rate 5.71 % 4.73 % |
Earnings per Share (Tables)
Earnings per Share (Tables) | 6 Months Ended |
Feb. 29, 2024 | |
Earnings per Share | |
Schedule of reconciliation of the numerators and denominators of the basic and diluted computations for earnings per common share | Three Months Ended Six Months Ended February 29, February 28, February 29, February 28, 2024 2023 2024 2023 (In thousands, except share and per share amounts) EPS: Net income $ 5,498 $ 5,100 $ 7,277 $ 9,811 Less: accrued preferred stock dividends (19) (19) (38) (38) Net income available for common shareholders $ 5,479 $ 5,081 $ 7,239 $ 9,773 Earnings per common share – basic $ 1.13 $ 1.05 $ 1.49 $ 2.01 Earnings per common share – diluted $ 1.12 $ 1.04 $ 1.48 $ 2.00 |
Organization and Basis of Pre_2
Organization and Basis of Presentation (Details) | Feb. 29, 2024 facility |
Organization and Basis of Presentation | |
Sales offices | 51 |
Distribution centers | 7 |
Significant Accounting Polici_3
Significant Accounting Policies and Significant Recent Accounting Pronouncements (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Oct. 20, 2023 | Nov. 30, 2023 | Feb. 29, 2024 | Feb. 28, 2023 | Aug. 31, 2023 | ||
Significant Accounting Policies and Significant Recent Accounting Pronouncements | ||||||
Allowance for credit losses | $ 259,000 | $ 245,000 | ||||
Inventories | 1,885,000,000 | 1,806,000,000 | ||||
Impairment recorded | 3,906,000 | |||||
Right of use assets | 4,692,000 | 9,988,000 | [1] | |||
Lease liabilities | $ 4,870,000 | $ 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 | $ 0.73 | $ 0.74 | ||||
Hunter Property | ||||||
Significant Accounting Policies and Significant Recent Accounting Pronouncements | ||||||
Purchase of Hunter Property | $ 31,000,000 | |||||
Value of property | $ 31,000,000 | |||||
Impairment recorded | $ 3,900,000 | |||||
Canada | ||||||
Significant Accounting Policies and Significant Recent Accounting Pronouncements | ||||||
Exchange rate on foreign currency translation and transactions | $ 0.74 | $ 0.73 | ||||
Sales revenue, net | Customer concentration risk | Non-US | ||||||
Significant Accounting Policies and Significant Recent Accounting Pronouncements | ||||||
Percentage of concentrations risk | 10% | 10% | ||||
Sales revenue, net | Customer concentration risk | Canada | ||||||
Significant Accounting Policies and Significant Recent Accounting Pronouncements | ||||||
Percentage of concentrations risk | 28% | 30% | ||||
Sales revenue, net | Customer concentration risk | Asia | ||||||
Significant Accounting Policies and Significant Recent Accounting Pronouncements | ||||||
Percentage of concentrations risk | 37% | 45% | ||||
Accounts receivable | Customer concentration risk | Non-US | ||||||
Significant Accounting Policies and Significant Recent Accounting Pronouncements | ||||||
Percentage of concentrations risk | 10% | 11% | ||||
[1]Derived from the Company’s audited financial statements included in its Form 10-K for the year ended August 31, 2023 filed with the U.S. Securities and Exchange Commission on November 22, 2023. |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Feb. 29, 2024 | Aug. 31, 2023 |
Accrued expenses and other current liabilities: | ||
Accrued accounts payable | $ 1,707 | $ 2,090 |
Accrued compensation and payroll | 4,463 | 6,410 |
Accrued taxes | 2,039 | 7,875 |
Total Accrued expenses and other current liabilities | $ 8,209 | $ 16,375 |
Debt (Details)
Debt (Details) - USD ($) | 6 Months Ended | |||
Jul. 15, 2020 | Feb. 29, 2024 | Aug. 31, 2023 | Jun. 02, 2023 | |
Debt | ||||
Line of credit facility, current borrowing capacity | $ 15,000,000 | |||
Line of credit facility, maximum borrowing capacity | 0 | $ 0 | ||
Construction loan | $ 4,406,000 | $ 4,468,000 | ||
Prime Rate | ||||
Debt | ||||
Interest rate (in percentage) | 3.50% | |||
Construction loan payable | ||||
Debt | ||||
Proceeds from issuance of long term debt | $ 5,000,000 | |||
Line of credit long term outstanding | $ 5,000,000 | |||
Debt Instrument maturity date | May 15, 2027 | |||
Interest rate | 4.35% | |||
Construction loan payable | Prime Rate | ||||
Debt | ||||
Fixed rate for conversion | 4.60% | |||
Debt discount (as a percent) | 0.25% | |||
Term loan | ||||
Debt | ||||
Amount drawn and converted | $ 4,807,000 | |||
Community Bank | ||||
Debt | ||||
Line of credit long term outstanding | $ 100,000 | |||
Letter of credit | ||||
Debt | ||||
Notes payable, noncurrent | $ 100,000 |
Leases - Minimum Future Rental
Leases - Minimum Future Rental Payments (Details) - USD ($) | Feb. 29, 2024 | Aug. 31, 2023 |
Leases | ||
2024 (remaining six months) | $ 1,602,000 | |
2025 | 1,946,000 | |
2026 | 1,133,000 | |
2027 | 619,000 | |
2028 | 167,000 | |
Thereafter | 21,000 | |
Future minimum lease payments | 5,488,000 | |
Less interest | (618,000) | |
Present value of minimum lease payments | $ 4,870,000 | $ 10,200,000 |
Leases - Other Information Rela
Leases - Other Information Relating to Operating Lease (Details) | Feb. 29, 2024 | Aug. 31, 2023 |
Leases | ||
Weighted average remaining lease term | 2 years 10 months 24 days | 4 years 3 months 18 days |
Weighted average discount rate | 5.71% | 4.73% |
Leases - Additional Information
Leases - Additional Information (Details) | 6 Months Ended | ||
Oct. 20, 2023 USD ($) | Feb. 29, 2024 USD ($) lease | Feb. 28, 2023 USD ($) | |
Leases | |||
Operating lease cost | $ 1,373,000 | $ 1,686,000 | |
Glendale Lease | |||
Leases | |||
Number of facilities leased | lease | 1 | ||
Rental payment | $ 22,600 | ||
Glendale Lease | Minimum | |||
Leases | |||
Rental payment | 1,000 | ||
Glendale Lease | Maximum | |||
Leases | |||
Rental payment | $ 22,600 | ||
Hunter Property | |||
Leases | |||
Payment to acquire building | $ 31,000,000 | ||
Hunter Property | Purchase Agreement and Escrow Instructions (the "Purchase Agreement") | |||
Leases | |||
Payment to acquire building | $ 31,000,000 |
Earnings per Share (Details)
Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Feb. 29, 2024 | Nov. 30, 2023 | Feb. 28, 2023 | Nov. 30, 2022 | Feb. 29, 2024 | Feb. 28, 2023 | |
EPS: | ||||||
Net Income (Loss) | $ 5,498 | $ 1,779 | $ 5,100 | $ 4,711 | $ 7,277 | $ 9,811 |
Less: accrued preferred stock dividends | (19) | (19) | (38) | (38) | ||
Net income attributable to common shareholders | $ 5,479 | $ 5,081 | $ 7,239 | $ 9,773 | ||
Earnings per common share - basic | $ 1.13 | $ 1.05 | $ 1.49 | $ 2.01 | ||
Earnings per common share - diluted | $ 1.12 | $ 1.04 | $ 1.48 | $ 2 |
Earnings per Share - Additional
Earnings per Share - Additional information (Details) - shares | 6 Months Ended | |
Feb. 29, 2024 | Feb. 28, 2023 | |
Earnings per Share | ||
Antidilutive potential common shares | 40,000 | 40,000 |
Convertible preferred stock (in shares) | 36,000 | 36,000 |
Series A cumulative convertible preferred stock | ||
Earnings per Share | ||
Convertible preferred stock (in shares) | 36,000 | 36,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 6 Months Ended | |||
Oct. 05, 2023 | Jul. 26, 2019 | Feb. 29, 2024 | Feb. 28, 2023 | |
Hunter Property | ||||
Related Party Transactions | ||||
Purchase price of property in cash | $ 31,000,000 | |||
Glendale Lease | ||||
Related Party Transactions | ||||
Lease term | 10 years | |||
Initial monthly rental rate | $ 22,600 | |||
Percentage of annual rent increase | 2.50% | |||
Hunter Lease | ||||
Related Party Transactions | ||||
Initial monthly rental rate | $ 66,300 | |||
Percentage of annual rent increase | 2.50% | |||
Operating lease expense | $ 123,000 | $ 428,000 | ||
Related party | Glendale Lease | ||||
Related Party Transactions | ||||
Operating lease expense | $ 156,000 | $ 152,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Feb. 29, 2024 | Feb. 28, 2023 | Feb. 29, 2024 | Feb. 28, 2023 | |
Income Taxes | ||||
Income tax provision | $ 1,879,000 | $ 1,783,000 | $ 2,496,000 | $ 3,444,000 |
Effective tax rate | 25.50% | 26% | ||
Statutory rate | 21% | |||
Decrease in provision for income tax | $ 948,000 | |||
Unrecognized tax benefit | $ 0 | $ 0 | $ 0 | $ 0 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Feb. 29, 2024 | Nov. 30, 2023 | Feb. 28, 2023 | Nov. 30, 2022 | Feb. 29, 2024 | Feb. 28, 2023 | |
Pay vs Performance Disclosure | ||||||
Net Income (Loss) | $ 5,498 | $ 1,779 | $ 5,100 | $ 4,711 | $ 7,277 | $ 9,811 |
Insider Trading Arrangements
Insider Trading Arrangements | 6 Months Ended |
Feb. 29, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |