Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Nov. 30, 2021 | Dec. 31, 2021 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Period End Date | Nov. 30, 2021 | |
Entity File Number | 1-9852 | |
Entity Registrant Name | CHASE CORPORATION | |
Entity Incorporation, State or Country Code | MA | |
Entity Tax Identification Number | 11-1797126 | |
Entity Address, Address Line One | 295 University Avenue | |
Entity Address, City or Town | Westwood | |
Entity Address, State or Province | MA | |
Entity Address, Postal Zip Code | 02090 | |
City Area Code | 781 | |
Local Phone Number | 332-0700 | |
Title of 12(b) Security | Common stock, $.10 par value | |
Trading Symbol | CCF | |
Security Exchange Name | NYSEAMER | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 9,459,685 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Central Index Key | 0000830524 | |
Current Fiscal Year End Date | --08-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Nov. 30, 2021 | Aug. 31, 2021 |
Current Assets | ||
Cash and cash equivalents | $ 124,234 | $ 119,429 |
Accounts receivable, less allowances of $410 and $451 | 43,726 | 46,212 |
Inventory | 47,075 | 41,217 |
Prepaid expenses and other current assets | 3,808 | 2,851 |
Prepaid income taxes and refunds due | 2,450 | 3,255 |
Total current assets | 221,293 | 212,964 |
Property, plant and equipment, less accumulated depreciation of $51,227 and $50,666 | 23,752 | 24,267 |
Other Assets | ||
Goodwill | 97,124 | 97,866 |
Intangible assets, less accumulated amortization of $94,179 and $91,484 | 43,359 | 46,954 |
Cash surrender value of life insurance | 4,450 | 4,450 |
Restricted investments | 2,348 | 2,260 |
Deferred income taxes | 5,110 | 5,265 |
Operating lease right-of-use asset (Note 8) | 9,949 | 9,312 |
Other assets | 1,145 | 821 |
Total assets | 408,530 | 404,159 |
Current Liabilities | ||
Accounts payable | 17,427 | 19,575 |
Accrued payroll and other compensation | 5,263 | 7,179 |
Income taxes payable | 348 | 761 |
Accrued expenses | 5,121 | 5,407 |
Dividend payable | 9,460 | |
Total current liabilities | 37,619 | 32,922 |
Operating lease long-term liabilities (Note 8) | 7,841 | 7,202 |
Deferred compensation | 2,355 | 2,267 |
Accumulated pension obligation | 9,114 | 9,416 |
Other liabilities | 2,888 | 2,537 |
Deferred income taxes | 3,325 | 3,301 |
Accrued income taxes | 2,113 | 2,190 |
Commitments and contingencies (Notes 10) | ||
Equity | ||
First Serial Preferred Stock, $1.00 par value: Authorized 100,000 shares; none issued | ||
Common stock, $.10 par value: Authorized 20,000,000 shares; 9,459,685 shares at November 30, 2021 and 9,447,905 shares at August 31, 2021 issued and outstanding | 947 | 946 |
Additional paid-in capital | 19,733 | 18,959 |
Accumulated other comprehensive loss | (13,301) | (11,210) |
Retained earnings | 335,896 | 335,629 |
Total equity | 343,275 | 344,324 |
Total liabilities and equity | $ 408,530 | $ 404,159 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Nov. 30, 2021 | Aug. 31, 2021 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, allowance for doubtful accounts (in dollars) | $ 410 | $ 451 |
Property, plant and equipment, accumulated depreciation (in dollars) | 51,227 | 50,666 |
Intangible assets, accumulated amortization (in dollars) | $ 94,179 | $ 91,484 |
First Serial Preferred Stock, par value (in dollars per share) | $ 1 | $ 1 |
First Serial Preferred Stock, Authorized shares | 100,000 | 100,000 |
First Serial Preferred Stock, issued shares | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Common stock, Authorized shares | 20,000,000 | 20,000,000 |
Common stock, shares issued | 9,459,685 | 9,447,905 |
Common stock, shares outstanding | 9,459,685 | 9,447,905 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | |
Nov. 30, 2021 | Nov. 30, 2020 | |
Revenue | ||
Revenue | $ 75,010 | $ 67,176 |
Costs and Expenses | ||
Cost of products and services sold | 47,281 | 39,605 |
Selling, general and administrative expenses | 13,375 | 12,260 |
Research and product development costs | 993 | 1,051 |
Operations optimization costs (Note 15) | 59 | |
Loss on contingent consideration (Note 17) | 475 | |
Operating income | 12,827 | 14,260 |
Interest expense | (87) | (69) |
Other income (expense) | 377 | (214) |
Income before income taxes | 13,117 | 13,977 |
Income taxes (Note 14) | 3,390 | 3,140 |
Net income | $ 9,727 | $ 10,837 |
Net income available to common shareholders, per common and common equivalent share (Note 4) | ||
Basic | $ 1.03 | $ 1.15 |
Diluted | $ 1.02 | $ 1.14 |
Weighted average shares outstanding | ||
Basic | 9,397,873 | 9,375,819 |
Diluted | 9,438,434 | 9,418,675 |
Annual cash dividends declared per share | $ 1 | $ 0.80 |
Revenues | ||
Revenue | ||
Revenue | $ 74,192 | $ 66,136 |
Royalties and commissions | ||
Revenue | ||
Revenue | $ 818 | $ 1,040 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Nov. 30, 2021 | Nov. 30, 2020 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Net income | $ 9,727 | $ 10,837 |
Other comprehensive income (loss): | ||
Net unrealized gain (loss) on restricted investments, net of tax | (30) | 70 |
Change in funded status of pension plans, net of tax | 112 | 122 |
Foreign currency translation adjustment | (2,173) | 91 |
Total other comprehensive income (loss) | (2,091) | 283 |
Comprehensive income | $ 7,636 | $ 11,120 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (loss) | Retained Earnings | Total |
Balance at Aug. 31, 2020 | $ 944 | $ 16,674 | $ (13,092) | $ 298,266 | $ 302,792 |
Balance (in shares) at Aug. 31, 2020 | 9,439,082 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Restricted stock grants, net of forfeitures | $ 1 | (1) | |||
Restricted stock grants, net of forfeitures (in shares) | 7,378 | ||||
Amortization of restricted stock grants | 569 | 569 | |||
Amortization of stock option grants | 248 | 248 | |||
Exercise of stock options | 40 | 40 | |||
Exercise of stock options (in shares) | 2,532 | ||||
Common stock received for payment of stock option exercises | (40) | (40) | |||
Common stock received for payment of stock option exercises (in shares) | (386) | ||||
Common stock retained to pay statutory minimum withholding taxes on common stock | (226) | (226) | |||
Common stock retained to pay statutory minimum withholding taxes on common stock (in shares) | (2,325) | ||||
Cash dividend declared | (7,557) | (7,557) | |||
Change in funded status of pension plans, net of tax | 122 | 122 | |||
Foreign currency translation adjustment | 91 | 91 | |||
Net unrealized gain (loss) on restricted investments, net of tax | 70 | 70 | |||
Net income | 10,837 | 10,837 | |||
Balance at Nov. 30, 2020 | $ 945 | 17,264 | (12,809) | 301,546 | 306,946 |
Balance (in shares) at Nov. 30, 2020 | 9,446,281 | ||||
Balance at Aug. 31, 2021 | $ 946 | 18,959 | (11,210) | 335,629 | 344,324 |
Balance (in shares) at Aug. 31, 2021 | 9,447,905 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Restricted stock grants, net of forfeitures | $ 1 | (1) | |||
Restricted stock grants, net of forfeitures (in shares) | 11,780 | ||||
Amortization of restricted stock grants | 556 | 556 | |||
Amortization of stock option grants | 219 | 219 | |||
Cash dividend declared | (9,460) | (9,460) | |||
Change in funded status of pension plans, net of tax | 112 | 112 | |||
Foreign currency translation adjustment | (2,173) | (2,173) | |||
Net unrealized gain (loss) on restricted investments, net of tax | (30) | (30) | |||
Net income | 9,727 | 9,727 | |||
Balance at Nov. 30, 2021 | $ 947 | $ 19,733 | $ (13,301) | $ 335,896 | $ 343,275 |
Balance (in shares) at Nov. 30, 2021 | 9,459,685 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Nov. 30, 2021 | Nov. 30, 2020 | |
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY | ||
Cash dividends paid per share (in dollars per share) | $ 1 | $ 0.80 |
Change in funded status of pension plans, tax | $ 37 | $ 43 |
Net unrealized gain (loss) on restricted investments, tax | $ 10 | $ 25 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Nov. 30, 2021 | Nov. 30, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 9,727 | $ 10,837 |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Loss on contingent consideration | 475 | |
Depreciation | 877 | 1,003 |
Amortization | 3,125 | 3,071 |
Provision (recovery) of allowance for doubtful accounts | (40) | 41 |
Stock-based compensation | 775 | 817 |
Realized gain on restricted investments | (7) | (5) |
Deferred taxes | 34 | |
Increase (decrease) from changes in assets and liabilities | ||
Accounts receivable | 2,272 | (1,253) |
Inventory | (6,021) | 3,336 |
Prepaid expenses and other assets | (1,331) | (1,239) |
Accounts payable | (2,024) | (701) |
Accrued compensation and other expenses | (2,254) | (1,285) |
Accrued income taxes | 295 | (570) |
Net cash provided by operating activities | 5,903 | 14,052 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property, plant and equipment | (496) | (660) |
Payments for acquisitions | (22,241) | |
Changes in restricted investments | (121) | (62) |
Net cash used in investing activities | (617) | (22,963) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Payments of taxes on stock options and restricted stock | (226) | |
Net cash used in financing activities | (226) | |
INCREASE IN CASH & CASH EQUIVALENTS | 5,286 | (9,137) |
Effect of foreign exchange rates on cash | (481) | 131 |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 119,429 | 99,068 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 124,234 | 90,062 |
Non-cash Investing and Financing Activities | ||
Common stock received for payment of stock option exercises | 40 | |
Property, plant and equipment additions included in accounts payable | 207 | 159 |
Annual cash dividend declared | $ 9,460 | $ 7,557 |
Basis of Financial Statement Pr
Basis of Financial Statement Presentation | 3 Months Ended |
Nov. 30, 2021 | |
Basis of Financial Statement Presentation | |
Basis of Financial Statement Presentation | Note 1 — Basis of Financial Statement Presentatio n Description of Business Chase Corporation (the “Company,” “Chase,” “we,” or “us”), a global specialty chemicals company founded in 1946, is a leading manufacturer of protective materials for high-reliability applications across diverse market sectors. The Company’s strategy is to maximize the performance of its core businesses and brands while seeking future opportunities through strategic acquisitions. Through investments in facilities, systems and organizational consolidation, the Company seeks to improve performance and gain economies of scale. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States of America generally accepted accounting principles (“U.S. GAAP”) for interim financial reporting, and instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Therefore, they do not include all information and footnote disclosures necessary for a complete presentation of Chase Corporation’s financial position, results of operations and cash flows in conformity with generally accepted accounting principles. The year-end condensed balance sheet was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. Chase Corporation filed audited consolidated financial statements which included all information and notes necessary for such a complete presentation for the three years ended August 31, 2021 in conjunction with its 2021 Annual Report on Form 10-K. Certain immaterial reclassifications have been made to the prior year amounts to conform to the current year’s presentation. The results of operations for the interim period ended November 30, 2021 are not necessarily indicative of the results to be expected for any future period or the entire fiscal year. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended August 31, 2021 which are contained in the Company’s 2021 Annual Report on Form 10-K. The accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring items) that are, in the opinion of management, necessary for a fair statement of the Company’s financial position as of November 30, 2021, and the results of its operations, comprehensive income, changes in equity and cash flows for the interim periods ended November 30, 2021 and 2020. The financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The Company uses the U.S. dollar as the reporting currency for financial reporting. The financial position and results of operations of the Company’s U.K.-based operations are measured using the British pound as the functional currency. The financial position and results of operations of the Company’s operations based in France are measured using the euro as the functional currency. The financial position and results of the Company’s HumiSeal India Private Limited business are measured using the Indian rupee as the functional currency. The functional currency for all Chase Corporation’s other operations is the U.S. dollar. Foreign currency translation gains and losses are determined using current exchange rates for monetary items and historical exchange rates for other balance sheet items and are recorded as a change in other comprehensive income. Transaction gains and losses generated from the remeasurement of assets and liabilities denominated in currencies other than the functional currency of each applicable operation are included in other income (expense) on the condensed consolidated statements of operations, and Other Business Developments During the first quarter of fiscal 2022, Chase took steps to prepare for the future relocation of its Corporate Headquarters to a new location also located within Westwood, MA. The move, part of the Company’s ongoing consolidation and optimization initiative, takes advantage of the new work from home hybrid realities of many of Chase’s corporate employees and is expected to provide future operational cost savings. The facility will also house research and development operations currently performed at the existing Westwood, MA location as well as those currently housed in our Woburn, MA location. Operations optimization costs of $59 related to the planned relocation were expensed in the first quarter. The relocation to the new Corporate Headquarters is anticipated to be completed during the second fiscal quarter of 2022. During the third quarter of fiscal 2021, Chase announced to the employees at its Woburn, MA location that its adhesives systems operations, part of the Adhesives, Sealants and Additives segment’s electronic and industrial coatings product line, would be consolidating into the Company’s existing O'Hara Township, PA location. This rationalization and consolidation initiative aligns with the second quarter of fiscal 2021 announcement of the Company’s plan to move its sealant systems production from Newark, CA to Hickory, NC, described in more detail below. Chase Corporation obtained both the adhesive and sealants systems as part of its fiscal 2017 acquisition of the operations of Resin Designs. No expense was recognized related to the adhesive systems initiative during the first quarter of fiscal 2022, with the majority of future costs now anticipated to occur in the second half of fiscal 2022. On February 5, 2021, the Company acquired certain assets of Emerging Technologies, Inc. (“ETi”), a superabsorbent polymers solutions provider, located in Greensboro, NC. The business was acquired for a purchase price of $9,997 comprising $8,997 paid on February 5, 2021 and an accrual of $1,000 to be paid out up to eighteen months after purchase, subsequent to final working capital adjustments, and excluding acquisition-related costs. As part of this transaction, Chase acquired substantially all working capital and fixed assets of the business and entered a multi-year lease at ETi’s existing location. The Company expensed $128 of acquisition-related costs during fiscal 2021 associated with this acquisition (but with no expense recognized in the first quarter of fiscal 2021). The purchase was funded with available cash on hand. ETi is a solutions provider and formulator of absorbent polymers for use in the packaging, recreational, consumer, and sanitation markets. The acquisition broadens the Company’s superabsorbent polymers product offerings and formulation capabilities while expanding its market reach. The Company finalized purchase accounting during the first quarter of fiscal 2022, with no significant change to amounts initially recorded. Since the effective date of the acquisition, the financial results of ETi’s acquired operations have been included in the Company’s financial statements within the functional additives product line, contained within the Adhesives, Sealants and Additives operating segment. During the second quarter of fiscal 2021, Chase began moving the sealant systems operations, part of the Adhesives, Sealants and Additives segment’s electronic and industrial coatings product line, from its Newark, CA location to its Hickory, NC facility. This is in line with the Company’s ongoing initiative to consolidate its manufacturing plants and streamline its existing processes. The sealant systems operations and Newark, CA location came to Chase Corporation as part of the fiscal 2017 acquisition of the operations of Resin Designs, and the Company’s lease there terminated in fiscal 2021. The Company recognized $977 in expense related to the move during the prior fiscal year ended August 31, 2021 (but with no expense recognized in the first quarter of fiscal 2021). This project is now substantively completed, and no expense was recognized in the first quarter of fiscal 2022. Any future costs related to this move are not anticipated to be significant to the consolidated financial statements. On September 1, 2020 (the first day of fiscal 2021), the Company acquired all the capital stock of ABchimie for €18,654 (approximately $22,241 at the time of the transaction) net of cash acquired, subsequent to final working capital adjustment, excluding acquisition-related costs totaling $274 recognized in fiscal 2020 and with a potential earn out based on performance potentially worth an additional €7,000 (approximately $8,330 at the time of the transaction). ABchimie is a Corbelin, France headquartered solutions provider for the cleaning and protection of electronic assemblies, with further formulation, production, and research and development capabilities. The transaction was funded with cash on hand. Since the effective date of the acquisition, the financial results of the business have been included in the Company's financial statements within the Adhesives, Sealants and Additives operating segment in the electronic and industrial coatings product line. Significant Accounting Policies The Company’s significant accounting policies are detailed in Note 1 |
Recent Accounting Standards
Recent Accounting Standards | 3 Months Ended |
Nov. 30, 2021 | |
Recent Accounting Standards | |
Summary of Significant Accounting Policies | Note 2 — Recent Accounting Standards Recently Adopted Accounting Pronouncements The Company’s significant accounting policies are detailed in Note 1 – “Summary of Significant Accounting Policies” within Item 8 of the Company’s Annual Report on Form 10-K for the year ended August 31, 2021. The Company did not adopt any new accounting pronouncements in the first quarter of fiscal 2022. |
Inventory
Inventory | 3 Months Ended |
Nov. 30, 2021 | |
Inventory | |
Inventory | Note 3 — Inventory Inventory consisted of the following as of November 30, 2021 and August 31, 2021: November 30, August 31, 2021 2021 Raw materials $ 28,080 $ 24,055 Work in process 6,631 5,928 Finished goods 12,364 11,234 Total Inventory $ 47,075 $ 41,217 |
Net Income Per Share
Net Income Per Share | 3 Months Ended |
Nov. 30, 2021 | |
Net Income Per Share | |
Net Income Per Share | Note 4 — Net Income Per Share The Company has unvested share-based payment awards with a right to receive nonforfeitable dividends which are considered participating securities under ASC Topic 260, “Earnings Per Share.” The Company allocates earnings to participating securities and computes earnings per share using the two-class method. The determination of earnings per share under the two-class method is as follows: Three Months Ended November 30, 2021 2020 Basic Earnings per Share Net income $ 9,727 $ 10,837 Less: Allocated to participating securities 64 78 Net income available to common shareholders $ 9,663 $ 10,759 Basic weighted average shares outstanding 9,397,873 9,375,819 Net income per share - Basic $ 1.03 $ 1.15 Diluted Earnings per Share Net income $ 9,727 $ 10,837 Less: Allocated to participating securities 64 78 Net income available to common shareholders $ 9,663 $ 10,759 Basic weighted average shares outstanding 9,397,873 9,375,819 Additional dilutive common stock equivalents 40,561 42,856 Diluted weighted average shares outstanding 9,438,434 9,418,675 Net income per share - Diluted $ 1.02 $ 1.14 Included in the calculation of dilutive common stock equivalents are the unvested portion of restricted stock and stock options. For the three-month periods ended November 30, 2021 and 2020, stock options to purchase |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Nov. 30, 2021 | |
Stock-Based Compensation | |
Stock-Based Compensation | Note 5 — Stock-Based Compensation In August 2020, the Board of Directors of the Company approved the fiscal year 2021 Long Term Incentive Plan (“2021 LTIP”) for the executive officers and other members of management. The 2021 LTIP is an equity-based plan with a grant date of September 1, 2020 and contains (a) a restricted stock grant of Based on the fiscal year 2021 results, 2,633 additional shares of restricted stock were earned and granted subsequent to the end of fiscal year 2021 in accordance with the performance measurement criteria. No further performance-based measurements apply to this award. Compensation expense is being recognized on a ratable basis over the vesting period. In August 2021, the Board of Directors of the Company approved the fiscal year 2022 Long Term Incentive Plan (“2022 LTIP”) for executive officers and other members of management. The 2022 LTIP is an equity-based plan with a grant date of September 1, 2021 and contains the following equity components: Restricted Shares 31, 2024. Compensation expense is recognized on a ratable basis over the vesting period based on quarterly probability assessments; and (b) a time-based restricted stock grant of Stock Options — options to purchase 12,942 shares of common stock in the aggregate with an exercise price of $114.50 per share. The options will vest in three equal annual installments beginning on August 31, 2022 and ending on August 31, 2024. The options will expire ten years after the grant date. Compensation expense is recognized over the period of the award consistent with the vesting terms. In the first quarter of fiscal 2022, restricted stock in the amount of 437 shares related to a second quarter of fiscal 2020 grant was forfeited in conjunction with the termination of employment of a non-executive member of management of the Company. |
Segment Data and Foreign Operat
Segment Data and Foreign Operations | 3 Months Ended |
Nov. 30, 2021 | |
Segment Data and Foreign Operations | |
Segment Data and Foreign Operations | Note 6 — Segment Data and Foreign Operations The Company is organized into three reportable operating segments: Adhesives, Sealants and Additives; Industrial Tapes; and Corrosion Protection and Waterproofing. The segments are distinguished by the nature of the products manufactured and how they are delivered to their respective markets. The Adhesives, Sealants and Additives segment offers innovative and specialized product offerings consisting of both end-use products and intermediates that are used in, or integrated into, another company’s product. Demand for the segment’s product offerings is typically dependent upon general economic conditions. The Adhesives, Sealants and Additives segment leverages the core specialty chemical competencies of the Company and serves diverse markets and applications. The segment sells predominantly into the transportation, appliances, medical, general industrial and environmental market verticals. The segment’s products include moisture protective coatings and cleaners, customized sealant and adhesive systems for electronics, polymeric microspheres, polyurethane dispersions and superabsorbent polymers. Beginning September 1, 2020, the Adhesives, Sealants and Additives segment includes the acquired operations of ABchimie, within the electronic and industrial coatings product line The Industrial Tapes segment features wire and cable materials, specialty tapes and other laminated and coated products. The segment derives its competitive advantage through its proven chemistries, its diverse specialty offerings and the reliability its supply chain offers to end customers. These products are generally used in the assembly of other manufacturers’ products, with demand typically dependent upon general economic conditions. The Industrial Tapes segment sells mostly to established markets, with some exposure to growth opportunities through further development of existing products. Markets served include cable manufacturing, utilities and telecommunications, and electronics packaging. The segment’s offerings include insulating and conducting materials for wire and cable manufacturers, laminated durable papers, laminates for the packaging and industrial laminate markets, custom manufacturing services, pulling and detection tapes used in the installation, measurement and location of fiber optic cables and water and natural gas lines and cover tapes essential to delivering semiconductor components via tape-and-reel packaging. The Corrosion Protection and Waterproofing segment is principally composed of project-oriented product offerings that are primarily sold and used as “Chase” branded products. End markets include new and existing infrastructure projects on oil, gas, water and wastewater pipelines, highways and bridge decks, water and wastewater containment systems, and commercial buildings. The segment’s products include protective coatings for pipeline applications, coating and lining systems for waterproofing and liquid storage applications, adhesives and sealants used in architectural and building envelope waterproofing applications, high-performance polymeric asphalt additives, and expansion joint systems for waterproofing applications in transportation and architectural markets. With sales generally dependent on outdoor project work, the segment experiences highly seasonal sales patterns. The following tables summarize information about the Company’s reportable segments: Three Months Ended November 30, 2021 2020 Revenue Adhesives, Sealants and Additives $ 31,049 $ 30,071 Industrial Tapes 32,761 26,491 Corrosion Protection and Waterproofing 11,200 10,614 Total $ 75,010 $ 67,176 Income before income taxes Adhesives, Sealants and Additives $ 7,597 (a) $ 9,979 Industrial Tapes 9,290 7,868 Corrosion Protection and Waterproofing 4,446 4,086 Total for reportable segments 21,333 21,933 Corporate and common costs (8,216) (b) (7,956) Total $ 13,117 $ 13,977 Includes the following costs by segment: Adhesives, Sealants and Additives Interest $ 35 $ 30 Depreciation 243 242 Amortization 2,740 2,573 Industrial Tapes Interest $ 35 $ 27 Depreciation 410 465 Amortization 384 386 Corrosion Protection and Waterproofing Interest $ 17 $ 12 Depreciation 118 139 Amortization 1 112 (a) Includes $475 in loss on the upward adjustment of the performance-based earn-out contingent consideration associated with the September 2020 acquisition of ABchimie (b) Includes $59 restructuring expense related to the future relocation of the Corporate Headquarters to another location in Westwood, MA Total assets for the Company’s reportable segments as of November 30, 2021 and August 31, 2021 were: November 30, August 31, 2021 2021 Total Assets Adhesives, Sealants and Additives $ 157,926 $ 161,968 Industrial Tapes 73,956 72,301 Corrosion Protection and Waterproofing 31,601 31,067 Total for reportable segments 263,483 265,336 Corporate and common assets 145,047 138,823 Total $ 408,530 $ 404,159 The Company’s products are sold worldwide. Revenue for the three-month periods ended November 30, 2021 and 2020 was attributed to operations located in the following countries: Three Months Ended November 30, 2021 2020 Revenue United States $ 65,053 $ 55,742 United Kingdom 4,594 6,027 All other foreign (1) 5,363 5,407 Total $ 75,010 $ 67,176 (1) Comprises sales originated from the Company’s French locations, royalty revenue attributable to its licensed manufacturer in Asia, and Chase foreign manufacturing operations. As of November 30, 2021 and August 31, 2021 the Company had long-lived assets (defined as tangible assets providing the Company with a future economic benefit beyond the current year or operating period, including buildings, equipment and leasehold improvements) and goodwill and intangible assets, less accumulated amortization, in the following countries: November 30, August 31, 2021 2021 Long-Lived Assets United States Property, plant and equipment, net $ 20,621 $ 20,990 Goodwill and Intangible assets, less accumulated amortization 113,081 115,936 United Kingdom Property, plant and equipment, net 2,037 2,174 Goodwill and Intangible assets, less accumulated amortization 3,781 3,905 All other foreign Property, plant and equipment, net 1,094 1,103 Goodwill and Intangible assets, less accumulated amortization 23,621 24,979 Total Property, plant and equipment, net $ 23,752 $ 24,267 Goodwill and Intangible assets, less accumulated amortization $ 140,483 $ 144,820 |
Goodwill and Other Intangibles
Goodwill and Other Intangibles | 3 Months Ended |
Nov. 30, 2021 | |
Goodwill and Other Intangibles | |
Goodwill and Other Intangibles | Note 7 — Goodwill and Other Intangibles The changes in the carrying value of goodwill were as follows: Adhesives, Sealants and Additives Industrial Tapes Corrosion Protection and Waterproofing Consolidated Balance at August 31, 2021 $ 65,945 $ 21,215 $ 10,706 $ 97,866 Foreign currency translation adjustment (734) — (8) (742) Balance at November 30, 2021 $ 65,211 $ 21,215 $ 10,698 $ 97,124 The Company’s goodwill is allocated to each reporting unit based on the nature of the products manufactured by the respective business combinations that originally created the goodwill. The Company has identified a total of three reporting units, corresponding to its three operating segments, that are used to evaluate the possible impairment of goodwill. Assessments of possible impairment of goodwill are made when events or changes in circumstances indicate that the carrying value of the asset may not be recoverable through future operations. Additionally, testing for possible impairment of recorded goodwill and certain intangible asset balances is required annually. The amount and timing of any impairment charges based on these assessments require the estimation of future cash flows and the fair market value of the related assets based on management’s best estimates of certain key factors, including future selling prices and volumes; operating, raw material and energy costs; and various other projected operating and economic factors, including the anticipated future impact of the The Company has adopted ASU No. 2017-04 “Intangibles - Goodwill and Other Topics (Topic 350): Simplifying the Test for Goodwill Impairment.” The Company assesses goodwill for impairment by comparing the fair value of the reporting unit to its carrying amount. If the fair value of a reporting unit is less than its carrying value, an impairment loss, limited to the amount of goodwill allocated to that reporting unit, is recorded. Intangible assets subject to amortization consisted of the following as of November 30, 2021 and August 31, 2021: Weighted Average Gross Carrying Accumulated Net Carrying Amortization Period Value Amortization Value November 30, 2021 Patents and agreements 14.6 years $ 1,760 $ 1,717 $ 43 Formulas and technology 7.8 years 10,924 9,881 1,043 Trade names 5.9 years 8,799 8,373 426 Customer lists and relationships 9.1 years 116,055 74,208 41,847 $ 137,538 $ 94,179 $ 43,359 August 31, 2021 Patents and agreements 14.6 years $ 1,760 $ 1,715 $ 45 Formulas and technology 7.9 years 10,987 9,769 1,218 Trade names 5.9 years 8,836 8,285 551 Customer lists and relationships 9.2 years 116,855 71,715 45,140 $ 138,438 $ 91,484 $ 46,954 Aggregate amortization expense related to intangible assets for the three months ended November 30, 2021 and 2020 was $3,125 and $3,071 respectively. Estimated amortization expense for the remainder of fiscal year 2022 and for the next five years is as follows: Years ending August 31, 2022 (remaining 9 months) $ 8,658 2023 8,660 2024 7,453 2025 5,853 2026 5,055 2027 2,508 |
Leases
Leases | 3 Months Ended |
Nov. 30, 2021 | |
Leases | |
Leases | Note 8 — Leases The Company accounts for leases in accordance to ASU 2016-02, Leases (Topic 842). At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement. Leases with a term greater than one year are recognized on the balance sheet as right-of-use (ROU) assets and short-term and long-term lease liabilities, as applicable. The Company does not have any financing leases that are material in nature. Operating lease liabilities and their corresponding right-of-use assets are initially recorded based on the present value of lease payments over the expected remaining lease term. The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rate to discount lease payments, which reflects the fixed rate at which the Company believes it could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment. The Company has elected not to recognize leases with an original term of one year or less on the balance sheet. The Company typically only includes an initial lease term in its assessment of a lease arrangement. Options to renew a lease are not included in the Company’s assessment unless there is reasonable certainty that the Company will renew. The following table presents the right-of-use asset and short-term and long-term lease liabilities amounts recorded on the condensed consolidated balance sheet as of November 30, 2021 and August 31, 2021: November 30, August 31, 2021 2021 Assets Operating lease right-of-use asset $ 9,949 $ 9,312 Liabilities Current (accrued expenses) $ 1,520 $ 1,515 Operating lease long-term liabilities 7,841 7,202 Total lease liability $ 9,361 $ 8,717 Lease cost The components of lease costs for the three months ended November 30, 2021 and 2020 are as follows: Three Months Ended November 30, 2021 2020 Operating lease cost (a) $ 828 $ 951 (a) Includes short-term leases and variable lease costs (e.g. common area maintenance), which are immaterial. Maturity of lease liability The maturity of the Company's lease liabilities at November 30, 2021 was as follows: Future Operating Year ending August 31, Lease Payments 2022 (remaining 9 months) 1,361 2023 1,695 2024 1,620 2025 1,462 2026 1,189 2027 and thereafter 2,999 Less: Interest (965) Present value of lease liabilities $ 9,361 The weighted average remaining lease term and discount rates are as follows: November 30, August 31, 2021 2021 Lease Term and Discount Rate Weighted average remaining lease term (years) Operating leases 7.1 6.8 Weighted average discount rate (percentage) Operating leases 2.8 % 3.1 % Other Information Supplemental cash flow information related to leases is as follows: Three Months Ended November 30, 2021 2020 Operating cash outflows from operating leases $ 476 $ 603 Total cash paid for amounts included in the measurement of lease liabilities $ 476 $ 603 |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 3 Months Ended |
Nov. 30, 2021 | |
Revenue from Contracts with Customers | |
Revenue from Contracts with Customers | Note 9 — Revenue from Contracts with Customers The Company accounts for revenue in accordance with ASC 606, “Revenue from Contracts with Customers.” The Company’s revenue is generated from the manufacture of specialty chemical products including coatings, linings, adhesives, sealants, specialty tapes, polymers and laminates. Certain of these manufactured products can incorporate customer-owned materials. The Company also recognizes, to a lesser extent, revenue through royalties and commissions from licensed manufacturers and from providing custom manufacturing-related services. The Company’s revenue recognition policies require the Company to make significant judgments and estimates. In applying the Company’s revenue recognition policy, determinations must be made as to when control of products passes to the Company’s customers, which can be either at a point in time or over time based on contractual terms with customers. Revenue is generally recognized at a point in time when control passes upon either shipment to or receipt by the customer of the Company’s products, while revenue is generally recognized over time when control of the Company’s products transfers to customers during the manufacturing process. Contract Balances The Company’s contract assets primarily relate to unbilled revenue for products currently in production at the Company’s facilities and which incorporate customer-owned material. Revenue is recognized in advance of billing to the customer in these specific circumstances, whereas billing is typically performed at the time of shipment to or receipt by the customer. Contract assets are included in prepaid expenses and other current assets on the Company’s condensed consolidated balance sheet. The following table presents contract assets by reportable operating segment as of November 30, 2021 and August 31, 2021: November 30, August 31, 2021 2021 Contract Assets Adhesives, Sealants and Additives $ 26 $ 21 Industrial Tapes 13 82 Corrosion Protection and Waterproofing 60 25 Total $ 99 $ 128 The Company did not have any contract liabilities as of November 30, 2021 and August 31, 2021. Disaggregated Revenue The Company disaggregates geographical region for the three months ended November 30, 2021 and 2020 was as follows: Three Months Ended November 30, 2021 Adhesives, Sealants Industrial Corrosion Protection Consolidated and Additives Tapes and Waterproofing Revenue Revenue North America $ 20,095 $ 29,634 $ 9,377 $ 59,106 Asia 5,970 1,798 890 8,658 Europe 4,796 912 915 6,623 All other foreign 188 417 18 623 Total Revenue $ 31,049 $ 32,761 $ 11,200 $ 75,010 Three Months Ended November 30, 2020 Adhesives, Sealants Industrial Corrosion Protection Consolidated and Additives Tapes and Waterproofing Revenue Revenue North America $ 18,385 $ 23,305 $ 8,485 $ 50,175 Asia 6,329 1,681 1,450 9,460 Europe 5,206 1,013 647 6,866 All other foreign 151 492 32 675 Total Revenue $ 30,071 $ 26,491 $ 10,614 $ 67,176 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Nov. 30, 2021 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 10 — Commitments and Contingencies The Company is involved from time to time in litigation incidental to the conduct of its business. Although the Company does not expect that the outcome in any of these matters, individually or collectively, will have a material adverse effect on its financial condition, results of operations or cash flows, litigation is inherently unpredictable. Therefore, judgments could be rendered, or settlements agreed to that could adversely affect the Company’s operating results or cash flows in a particular period. The Company routinely assesses all its litigation and threatened litigation as to the probability of ultimately incurring a liability and records its best estimate of the ultimate loss in situations where it assesses the likelihood of loss as probable. |
Pensions and Other Postretireme
Pensions and Other Postretirement Benefits | 3 Months Ended |
Nov. 30, 2021 | |
Pensions and Other Postretirement Benefits | |
Pensions and Other Postretirement Benefits | Note 11 — Pensions and Other Postretirement Benefits The components of net periodic benefit cost for the three months ended November 30, 2021 and 2020 Three Months Ended November 30, 2021 2020 Components of net periodic benefit cost Service cost $ 95 $ 92 Interest cost 96 85 Expected return on plan assets (103) (98) Amortization of prior service cost 1 1 Amortization of accumulated loss 148 164 Net periodic benefit cost $ 237 $ 244 When funding is required, the Company’s policy is to contribute amounts that are deductible for federal income tax purposes. The Company has made contributions of |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Nov. 30, 2021 | |
Fair Value Measurements | |
Fair Value Measurements | Note 12 — Fair Value Measurements The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date. The Company uses a three-tier fair value hierarchy, which classifies the inputs used in measuring fair values. These tiers are: Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. The Company utilizes the best available information in measuring fair value. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The financial assets classified as Level 1 and Level 2 as of November 30, 2021 and August 31, 2021 represent investments that are restricted for use in nonqualified retirement savings plans for certain key employees and directors. The following table sets forth the Company’s financial assets that were accounted for at fair value on a recurring basis as of November 30, 2021 and August 31, 2021: Fair value measurement category Quoted prices Significant other Significant Fair value in active markets observable inputs unobservable inputs measurement date Total (Level 1) (Level 2) (Level 3) Assets: Restricted investments November 30, 2021 $ 2,348 $ 2,120 $ 228 $ — Restricted investments August 31, 2021 $ 2,260 $ 2,016 $ 244 $ — The following table presents the fair value of the Company’s liabilities that are accounted for at fair value on a recurring basis as of November 30, 2021 and August 31, 2021: Fair value measurement category Quoted prices Significant other Significant Fair value in active markets observable inputs unobservable inputs measurement date Total (Level 1) (Level 2) (Level 3) Liabilities: Long-term debt November 30, 2021 $ — $ — $ — $ — Contingent consideration November 30, 2021 $ 2,888 $ — $ — $ 2,888 Long-term debt August 31, 2021 $ — $ — $ — $ — Contingent consideration August 31, 2021 $ 2,537 $ — $ — $ 2,537 The long-term debt (including any current portion of long-term debt) had no outstanding balance as of November 30, 2021 and August 31, 2021. The carrying value of the long-term debt approximates its fair value, as the interest rate is set based on the movement of the underlying market rates. See Note 16 to the condensed consolidated financial statements for additional information on long-term debt. In connection with accounting for the ABchimie acquisition on September 1, 2020, the Company recorded a contingent consideration liability included within Other liabilities on the condensed consolidated balance sheet of €780 (approximately $928) on the acquisition date, representing the fair value of contingent consideration payable upon the achievement of a performance-based target. The contingent consideration liability was valued using a Monte Carlo simulation model in an option pricing framework based on key inputs that are not all observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The Company assesses the fair value of the contingent consideration liability at each reporting period. Any subsequent changes in the estimated fair value of the liability are reflected in Loss (gain) on contingent consideration on the condensed consolidated statement of operations until the liability is settled. As of November 30, 2021, the liability increased to $2,888 predominantly due to changes in non-market data assumptions as well as a shorter period to the payment date. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income | 3 Months Ended |
Nov. 30, 2021 | |
Accumulated Other Comprehensive Income | |
Accumulated Other Comprehensive Income | Note 13 — Accumulated Other Comprehensive Income The changes in accumulated other comprehensive income (loss), net of tax, were as follows: Change in Funded Foreign Currency Restricted Status of Translation Investments Pension Plans Adjustment Total Balance at August 31, 2020 $ 269 $ (8,317) $ (5,044) $ (13,092) Other comprehensive gains (losses) before reclassifications (1) 74 — 91 165 Reclassifications to net income of previously deferred (gains) losses (2) (4) 122 — 118 Other comprehensive income (loss) 70 122 91 283 Balance at November 30, 2020 $ 339 $ (8,195) $ (4,953) $ (12,809) Balance at August 31, 2021 $ 518 $ (7,979) $ (3,749) $ (11,210) Other comprehensive gains (losses) before reclassifications (3) (25) — (2,173) (2,198) Reclassifications to net income of previously deferred (gains) losses (4) (5) 112 — 107 Other comprehensive income (loss) (30) 112 (2,173) (2,091) Balance at November 30, 2021 $ 488 $ (7,867) $ (5,922) $ (13,301) (1) Net of tax benefit of $26 , $0 and $0 , respectively. (2) Net of tax expense of $1 , tax benefit of $43 and $0 , respectively. (3) Net of tax benefit of $12 , $0 and $0 , respectively. (4) Net of tax expense of $2 , tax benefit of $37 and $0 , respectively. The following table summarizes the reclassifications from accumulated other comprehensive income (loss) to the unaudited condensed consolidated statements of income: Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income Three Months Ended November 30, Location of Gain (Loss) Reclassified from Accumulated 2021 2020 Other Comprehensive Income (Loss) into Income Gains on Restricted Investments: Realized loss (gain) on sale of restricted investments $ (7) $ (5) Selling, general and administrative expenses Tax expense (benefit) 2 1 Gain net of tax $ (5) $ (4) Loss on Funded Pension Plan adjustments: Amortization of prior pension service costs and unrecognized losses $ 149 $ 165 Other income (expense) Tax expense (benefit) (37) (43) Loss net of tax $ 112 $ 122 Total net loss reclassified for the period $ 107 $ 118 |
Income Taxes
Income Taxes | 3 Months Ended |
Nov. 30, 2021 | |
Income Taxes | |
Income Taxes | Note 14 — Income Taxes For the three months ended November 30, 2021 and 2020, the Company’s recognized effective tax rate was 25.8% and 22.5%, respectively. The Company has applied the U.S. statutory Federal rate of 21%, enacted as part of the Tax Cuts and Jobs Act (the “Tax Act”) in December 2017, for both the quarters ended November 30, 2021 and 2020 (with the prior year first quarter benefiting from a discrete item that did not repeat in the current fiscal year first quarter). In addition, the Company also recognizes an additional component of total Federal tax expense, the tax on Global Intangible Low-Taxed Income (“GILTI”) provision of the Tax Act, which became applicable to the Company in fiscal 2019. The Company elected to account for GILTI as a period cost, and therefore included GILTI expense in the effective tax rate calculation. This provision did not have a material effect on the effective tax rate for the three-month periods ended November 30, 2021 and 2020. Additionally, the Company concluded that the Base Erosion and Anti Abuse Tax (“BEAT”) provision of the Tax Act, which also became applicable to the Company in fiscal 2019, had no effect on its effective tax rate for the three-month periods ended November 30, 2021 and 2020. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, included a technical correction to the Tax Act which will allow accelerated deductions for qualified improvement property. The Company has evaluated the impact of the CARES Act, and at present does not expect that the qualified improvement property correction or other provisions of the CARES Act will result in a material tax benefit in future periods. The CARES Act had no material effect on the effective tax rate for the three months November 30, 2021. In July 2020, the United States Internal Revenue Service (“IRS”) released final regulations (TD 9901) that ease documentation standards and provide greater flexibility for taxpayers claiming the deduction for Foreign-Derived Intangible Income (“FDII”). During the three months ended November 30, 2021, FDII had a favorable impact on the Company’s effective tax rate. |
Operations Optimization Costs
Operations Optimization Costs | 3 Months Ended |
Nov. 30, 2021 | |
Operations Optimization Costs | |
Operations Optimization Costs | 0 Note 15 — Operations Optimization Costs Relocation of Chase Corporate Headquarters During the first quarter of fiscal 2022, Chase took steps to prepare for the future relocation of its Corporate Headquarters to a new location also located within Westwood, MA. The move, part of the Company’s ongoing consolidation and optimization initiative, takes advantage of the new work from home hybrid realities of many of Chase’s corporate employees and is expected to provide future operational cost savings. The facility will also house research and development operations currently performed at the existing Westwood, MA location as well as those currently housed in our Woburn, MA location. Operations optimization costs of $59 related to the planned relocation were expensed in the first quarter. The relocation to the new Corporate Headquarters is anticipated to be completed during the second fiscal quarter of 2022. Relocation of Adhesives Systems Manufacturing to O'Hara Township, PA During the third quarter of fiscal 2021, Chase announced to the employees at its Woburn, MA location that its adhesives systems operations, part of the Adhesives, Sealants and Additives segment’s electronic and industrial coatings product line, would be consolidating into the Company’s existing O'Hara Township, PA location. This rationalization and consolidation initiative aligns with the second quarter of fiscal 2021 announcement of the Company’s plan to move its sealant systems production from Newark, CA to Hickory, NC, described in more detail below. Chase Corporation obtained both the adhesive and sealants systems as part of its fiscal 2017 acquisition of the operations of Resin Designs. No expense was recognized related to the adhesive systems initiative during the first quarter of fiscal 2022, with the majority of future costs now anticipated to occur in the second half of fiscal 2022. Relocation of Sealants Systems Manufacturing to Hickory, NC During the second quarter of fiscal 2021, Chase began moving the sealant systems operations, part of the Adhesives, Sealants and Additives segment’s electronic and industrial coatings product line, from its Newark, CA location to its Hickory, NC facility. This is in line with the Company’s ongoing initiative to consolidate its manufacturing plants and streamline its existing processes. The sealant systems operations and Newark, CA location came to Chase Corporation as part of the fiscal 2017 acquisition of the operations of Resin Designs, and the Company’s lease there terminated in fiscal 2021. The Company recognized $977 in expense related to the move during the prior fiscal year ended August 31, 2021 (but with no expense recognized in the first quarter of fiscal 2021). This project is now substantively completed, and no expense was recognized during the first quarter of fiscal 2022. Any future costs related to this move are not anticipated to be significant to the consolidated financial statements. |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Nov. 30, 2021 | |
Long-Term Debt | |
Long-Term Debt | Note 16 — Long-Term Debt On July 27, 2021 (the fourth quarter of fiscal 2021), the Company entered into the Second Amended and Restated Credit Agreement (the “New Credit Agreement”) by and among the Company (the “Chase Borrower”), NEPTCO Incorporated (“NEPTCO”), the guarantor subsidiaries party thereto, the financial institutions party thereto as Lenders, and Bank of America, N.A., as administrative agent, with participation from Wells Fargo Bank, N.A., PNC Bank, N.A. and JPMorgan Chase Bank, N.A. The New Credit Agreement was entered into to amend, restate and extend the Company’s preexisting Amended and Restated Credit Agreement (the “Prior Credit Agreement”), which previously had a maturity date of December 15, 2021 and is discussed in more detail below, and to provide for additional liquidity to finance acquisitions, working capital and capital expenditures, and for other general corporate purposes. Under the New Credit Agreement, Chase obtained an increased revolving credit loan (the “New Revolving Facility”), with borrowing capabilities not to exceed $200,000 at any time, with the ability to request an increase in this amount by an additional $100,000 at the individual or collective option of any of the Lenders. The applicable interest rate for the New Revolving Facility and New Term Loan (defined below) is based on the effective London Interbank Offered Rate (LIBOR) plus a range of 1.00% to 1.75%, depending on the consolidated net leverage ratio of Chase and its subsidiaries. At November 30, 2021, there was no outstanding principal balance, and as such, no applicable interest rate. The New Credit Agreement has a five-year term with interest payments due at the end of the applicable LIBOR period (but in no event less frequently than the three-month anniversary of the commencement of such LIBOR period) and principal payment due at the expiration of the agreement, July 27, 2026. The New Credit Agreement contains provisions that may replace LIBOR as the benchmark index under certain circumstances. In addition, the Company may elect a base rate option for all or a portion of the New Revolving Facility, in which case interest payments shall be due with respect to such portion of the New Revolving Facility on the last business day of each quarter. Subject to certain conditions set forth in the New Credit Agreement, the Company may elect to convert all or a portion of the outstanding New Revolving Facility into a new term loan twice during the term of the New Revolving Facility (each, a “New Term Loan”, and collectively with the New Revolving Facility, the “New Credit Facility”), which New Term Loan shall be payable quarterly in equal installments sufficient to amortize the original principal amount of such Term Loan on a ten year amortization schedule. The outstanding balance on the New Credit Facility is guaranteed by all of Chase’s direct and indirect domestic subsidiaries, which collectively had a carrying value of approximately $284,249 at November 30, 2021. The New Credit Facility is subject to restrictive covenants under the New Credit Agreement, and financial covenants that require Chase and its subsidiaries to maintain certain financial ratios on a consolidated basis, including a consolidated net leverage ratio of 3.25 to 1.00 and a consolidated interest coverage ratio of 3.50 to 1.00 (both defined in the New Credit Agreement). Chase Corporation was in compliance with the debt covenants as of November 30, 2021. The New Credit Agreement also places certain Lender-approval requirements as to the size of permitted acquisitions which may be entered into by the Company and its subsidiaries, and allows for a temporary step-up in the allowed consolidated leverage ratio for the four fiscal quarters ending after certain designated acquisitions. Prepayment is allowed by the New Credit Agreement at any time during the term of the agreement, subject to customary notice requirements and the payment of customary LIBOR breakage fees. The Prior Credit Agreement was an all-revolving credit facility with a borrowing capacity of $150,000, which could be increased by an additional $50,000 at the request of the Company and the individual or collective option of any of the lenders, and with an interest rate based on the effective LIBOR plus an additional amount in the range of 1.00% to 1.75%, depending on our consolidated net leverage ratio or, at the Company’s option, at the bank’s base lending rate. It was substantially available at July 27, 2021, the time of its amendment and restatement. |
Acquisitions
Acquisitions | 3 Months Ended |
Nov. 30, 2021 | |
Acquisitions | |
Acquisitions | Note 17 – Acquisitions Acquisition of Emerging Technologies, Inc. On February 5, 2021, the Company acquired certain assets of Emerging Technologies, Inc. (“ETi”), a superabsorbent polymers solutions provider, located in Greensboro, NC. The business was acquired for a purchase price of $9,997 , comprising $8,997 paid on February 5, 2021 and an accrual of $1,000 to be paid out up to eighteen months after the purchase, subsequent to final working capital adjustments, and excluding acquisition-related costs. As part of this transaction, Chase acquired substantially all working capital and fixed assets of the business and entered a multi-year lease at ETi’s existing location. The Company expensed $128 of acquisition-related costs during the three-month period ended February 28, 2021 associated with this acquisition. The purchase was funded with available cash on hand. ETi is a solutions provider and formulator of absorbent polymers for use in the packaging, recreational, consumer, and sanitation markets. The acquisition broadens the Company’s superabsorbent polymers product offerings and formulation capabilities while expanding its market reach. The Company finalized purchase accounting during the first quarter of fiscal 2022, with no significant change to amounts initially recorded. Since the effective date of the acquisition, the financial results of ETi’s acquired operations have been included in the Company’s financial statements within the functional additives product line, contained within the Adhesives, Sealants and Additives operating segment. The ETi acquisition does not represent a significant business combination so pro forma financial information is not provided. The excess of the purchase price over the net tangible and intangible assets acquired resulted in goodwill of $2,451 that is largely attributable to the synergies and economies of scale from combining the operations, technologies and research and development capabilities of ETi and Chase, particularly as they pertain to the expansion of the Company's product and service offerings, the established workforce and marketing efforts. This goodwill is deductible for income tax purposes. Acquisition of ABchimie On September 1, 2020 (first day of fiscal 2021), the Company acquired all the capital stock of ABchimie for €18,654 (approximately $22,241 at the time of the transaction) net of cash acquired, subsequent to final working capital adjustments, excluding acquisition-related costs totaling $274 recognized in fiscal 2020 and with a performance-based earn out (measured over four years post-acquisition) potentially worth an additional €7,000 (approximately $8,330 at the time of the transaction). The Company accrued $2,888 at November 30, 2021 within Other liabilities on the condensed consolidated balance sheet related to its current estimate of the earn out. Following its initial recording at the acquisition date, changes in the performance-based earn out accrual have been recorded within Loss on contingent consideration in the condensed consolidated statement of operations (including $475 recognized in the first quarter of fiscal 2022). ABchimie is a Corbelin, France headquartered solutions provider for the cleaning and protection of electronic assemblies, with further formulation, production, and research and development capabilities. The transaction was funded with available cash on hand. The financial results of the business are included in the Company's financial statements within the Adhesives, Sealants and Additives operating segment in the electronic and industrial coatings product line. The Company finalized purchase accounting during the fourth quarter of fiscal 2021, with no significant change to amounts initially recorded. The ABchimie acquisition does not represent a significant business combination so pro forma financial information is not provided. The excess of the purchase price over the net tangible and intangible assets acquired resulted in goodwill of $13,055 that is largely attributable to the synergies and economies of scale from combining the operations, technologies and research and development capabilities of ABchimie and Chase, particularly as they pertain to the expansion of the Company's product and service offerings, the established workforce and marketing efforts. A portion of this goodwill is deductible in the U.S. for calculation of GILTI period costs but is nondeductible for French income tax purposes. |
Inventory (Tables)
Inventory (Tables) | 3 Months Ended |
Nov. 30, 2021 | |
Inventory | |
Schedule of inventory | November 30, August 31, 2021 2021 Raw materials $ 28,080 $ 24,055 Work in process 6,631 5,928 Finished goods 12,364 11,234 Total Inventory $ 47,075 $ 41,217 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 3 Months Ended |
Nov. 30, 2021 | |
Net Income Per Share | |
Schedule of determination of earnings per share under the two-class method | Three Months Ended November 30, 2021 2020 Basic Earnings per Share Net income $ 9,727 $ 10,837 Less: Allocated to participating securities 64 78 Net income available to common shareholders $ 9,663 $ 10,759 Basic weighted average shares outstanding 9,397,873 9,375,819 Net income per share - Basic $ 1.03 $ 1.15 Diluted Earnings per Share Net income $ 9,727 $ 10,837 Less: Allocated to participating securities 64 78 Net income available to common shareholders $ 9,663 $ 10,759 Basic weighted average shares outstanding 9,397,873 9,375,819 Additional dilutive common stock equivalents 40,561 42,856 Diluted weighted average shares outstanding 9,438,434 9,418,675 Net income per share - Diluted $ 1.02 $ 1.14 |
Segment Data and Foreign Oper_2
Segment Data and Foreign Operations (Tables) | 3 Months Ended |
Nov. 30, 2021 | |
Segment Data and Foreign Operations | |
Summary of information about the Company's reportable segments | Three Months Ended November 30, 2021 2020 Revenue Adhesives, Sealants and Additives $ 31,049 $ 30,071 Industrial Tapes 32,761 26,491 Corrosion Protection and Waterproofing 11,200 10,614 Total $ 75,010 $ 67,176 Income before income taxes Adhesives, Sealants and Additives $ 7,597 (a) $ 9,979 Industrial Tapes 9,290 7,868 Corrosion Protection and Waterproofing 4,446 4,086 Total for reportable segments 21,333 21,933 Corporate and common costs (8,216) (b) (7,956) Total $ 13,117 $ 13,977 Includes the following costs by segment: Adhesives, Sealants and Additives Interest $ 35 $ 30 Depreciation 243 242 Amortization 2,740 2,573 Industrial Tapes Interest $ 35 $ 27 Depreciation 410 465 Amortization 384 386 Corrosion Protection and Waterproofing Interest $ 17 $ 12 Depreciation 118 139 Amortization 1 112 (a) Includes $475 in loss on the upward adjustment of the performance-based earn-out contingent consideration associated with the September 2020 acquisition of ABchimie (b) Includes $59 restructuring expense related to the future relocation of the Corporate Headquarters to another location in Westwood, MA Total assets for the Company’s reportable segments as of November 30, 2021 and August 31, 2021 were: November 30, August 31, 2021 2021 Total Assets Adhesives, Sealants and Additives $ 157,926 $ 161,968 Industrial Tapes 73,956 72,301 Corrosion Protection and Waterproofing 31,601 31,067 Total for reportable segments 263,483 265,336 Corporate and common assets 145,047 138,823 Total $ 408,530 $ 404,159 |
Schedule of revenue by country | Three Months Ended November 30, 2021 2020 Revenue United States $ 65,053 $ 55,742 United Kingdom 4,594 6,027 All other foreign (1) 5,363 5,407 Total $ 75,010 $ 67,176 (1) Comprises sales originated from the Company’s French locations, royalty revenue attributable to its licensed manufacturer in Asia, and Chase foreign manufacturing operations. |
Schedule of total assets for the Company's reportable segments | November 30, August 31, 2021 2021 Long-Lived Assets United States Property, plant and equipment, net $ 20,621 $ 20,990 Goodwill and Intangible assets, less accumulated amortization 113,081 115,936 United Kingdom Property, plant and equipment, net 2,037 2,174 Goodwill and Intangible assets, less accumulated amortization 3,781 3,905 All other foreign Property, plant and equipment, net 1,094 1,103 Goodwill and Intangible assets, less accumulated amortization 23,621 24,979 Total Property, plant and equipment, net $ 23,752 $ 24,267 Goodwill and Intangible assets, less accumulated amortization $ 140,483 $ 144,820 |
Goodwill and Other Intangibles
Goodwill and Other Intangibles (Tables) | 3 Months Ended |
Nov. 30, 2021 | |
Goodwill and Other Intangibles | |
Schedule of changes in the carrying value of goodwill | Adhesives, Sealants and Additives Industrial Tapes Corrosion Protection and Waterproofing Consolidated Balance at August 31, 2021 $ 65,945 $ 21,215 $ 10,706 $ 97,866 Foreign currency translation adjustment (734) — (8) (742) Balance at November 30, 2021 $ 65,211 $ 21,215 $ 10,698 $ 97,124 |
Schedule of intangible assets subject to amortization | Weighted Average Gross Carrying Accumulated Net Carrying Amortization Period Value Amortization Value November 30, 2021 Patents and agreements 14.6 years $ 1,760 $ 1,717 $ 43 Formulas and technology 7.8 years 10,924 9,881 1,043 Trade names 5.9 years 8,799 8,373 426 Customer lists and relationships 9.1 years 116,055 74,208 41,847 $ 137,538 $ 94,179 $ 43,359 August 31, 2021 Patents and agreements 14.6 years $ 1,760 $ 1,715 $ 45 Formulas and technology 7.9 years 10,987 9,769 1,218 Trade names 5.9 years 8,836 8,285 551 Customer lists and relationships 9.2 years 116,855 71,715 45,140 $ 138,438 $ 91,484 $ 46,954 |
Schedule of estimated amortization expense | Years ending August 31, 2022 (remaining 9 months) $ 8,658 2023 8,660 2024 7,453 2025 5,853 2026 5,055 2027 2,508 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Nov. 30, 2021 | |
Leases | |
Schedule of Lessee's balance sheet disclosure | November 30, August 31, 2021 2021 Assets Operating lease right-of-use asset $ 9,949 $ 9,312 Liabilities Current (accrued expenses) $ 1,520 $ 1,515 Operating lease long-term liabilities 7,841 7,202 Total lease liability $ 9,361 $ 8,717 |
Schedule of components of lease costs | Three Months Ended November 30, 2021 2020 Operating lease cost (a) $ 828 $ 951 (a) Includes short-term leases and variable lease costs (e.g. common area maintenance), which are immaterial. |
Schedule of Maturity of lease liability | Future Operating Year ending August 31, Lease Payments 2022 (remaining 9 months) 1,361 2023 1,695 2024 1,620 2025 1,462 2026 1,189 2027 and thereafter 2,999 Less: Interest (965) Present value of lease liabilities $ 9,361 |
Schedule of weighted average remaining lease term and discount rates | November 30, August 31, 2021 2021 Lease Term and Discount Rate Weighted average remaining lease term (years) Operating leases 7.1 6.8 Weighted average discount rate (percentage) Operating leases 2.8 % 3.1 % |
Schedule of supplemental cash flow information | Three Months Ended November 30, 2021 2020 Operating cash outflows from operating leases $ 476 $ 603 Total cash paid for amounts included in the measurement of lease liabilities $ 476 $ 603 |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 3 Months Ended |
Nov. 30, 2021 | |
Revenue from Contracts with Customers | |
Schedule of contract assets by reportable operating segment | November 30, August 31, 2021 2021 Contract Assets Adhesives, Sealants and Additives $ 26 $ 21 Industrial Tapes 13 82 Corrosion Protection and Waterproofing 60 25 Total $ 99 $ 128 |
Schedule of disaggregation of revenue | Three Months Ended November 30, 2021 Adhesives, Sealants Industrial Corrosion Protection Consolidated and Additives Tapes and Waterproofing Revenue Revenue North America $ 20,095 $ 29,634 $ 9,377 $ 59,106 Asia 5,970 1,798 890 8,658 Europe 4,796 912 915 6,623 All other foreign 188 417 18 623 Total Revenue $ 31,049 $ 32,761 $ 11,200 $ 75,010 Three Months Ended November 30, 2020 Adhesives, Sealants Industrial Corrosion Protection Consolidated and Additives Tapes and Waterproofing Revenue Revenue North America $ 18,385 $ 23,305 $ 8,485 $ 50,175 Asia 6,329 1,681 1,450 9,460 Europe 5,206 1,013 647 6,866 All other foreign 151 492 32 675 Total Revenue $ 30,071 $ 26,491 $ 10,614 $ 67,176 |
Pensions and Other Postretire_2
Pensions and Other Postretirement Benefits (Tables) | 3 Months Ended |
Nov. 30, 2021 | |
Pensions and Other Postretirement Benefits | |
Schedule of components of net periodic benefit cost | Three Months Ended November 30, 2021 2020 Components of net periodic benefit cost Service cost $ 95 $ 92 Interest cost 96 85 Expected return on plan assets (103) (98) Amortization of prior service cost 1 1 Amortization of accumulated loss 148 164 Net periodic benefit cost $ 237 $ 244 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Nov. 30, 2021 | |
Fair Value Measurements | |
Schedule of financial assets and liabilities that were accounted for at fair value on a recurring basis | Fair value measurement category Quoted prices Significant other Significant Fair value in active markets observable inputs unobservable inputs measurement date Total (Level 1) (Level 2) (Level 3) Assets: Restricted investments November 30, 2021 $ 2,348 $ 2,120 $ 228 $ — Restricted investments August 31, 2021 $ 2,260 $ 2,016 $ 244 $ — Fair value measurement category Quoted prices Significant other Significant Fair value in active markets observable inputs unobservable inputs measurement date Total (Level 1) (Level 2) (Level 3) Liabilities: Long-term debt November 30, 2021 $ — $ — $ — $ — Contingent consideration November 30, 2021 $ 2,888 $ — $ — $ 2,888 Long-term debt August 31, 2021 $ — $ — $ — $ — Contingent consideration August 31, 2021 $ 2,537 $ — $ — $ 2,537 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Tables) | 3 Months Ended |
Nov. 30, 2021 | |
Accumulated Other Comprehensive Income | |
Schedule of components of accumulated other comprehensive income (loss) | Change in Funded Foreign Currency Restricted Status of Translation Investments Pension Plans Adjustment Total Balance at August 31, 2020 $ 269 $ (8,317) $ (5,044) $ (13,092) Other comprehensive gains (losses) before reclassifications (1) 74 — 91 165 Reclassifications to net income of previously deferred (gains) losses (2) (4) 122 — 118 Other comprehensive income (loss) 70 122 91 283 Balance at November 30, 2020 $ 339 $ (8,195) $ (4,953) $ (12,809) Balance at August 31, 2021 $ 518 $ (7,979) $ (3,749) $ (11,210) Other comprehensive gains (losses) before reclassifications (3) (25) — (2,173) (2,198) Reclassifications to net income of previously deferred (gains) losses (4) (5) 112 — 107 Other comprehensive income (loss) (30) 112 (2,173) (2,091) Balance at November 30, 2021 $ 488 $ (7,867) $ (5,922) $ (13,301) (1) Net of tax benefit of $26 , $0 and $0 , respectively. (2) Net of tax expense of $1 , tax benefit of $43 and $0 , respectively. (3) Net of tax benefit of $12 , $0 and $0 , respectively. (4) Net of tax expense of $2 , tax benefit of $37 and $0 , respectively. |
Summary of the reclassifications from accumulated other comprehensive income (loss) to the condensed consolidated statements of income | Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income Three Months Ended November 30, Location of Gain (Loss) Reclassified from Accumulated 2021 2020 Other Comprehensive Income (Loss) into Income Gains on Restricted Investments: Realized loss (gain) on sale of restricted investments $ (7) $ (5) Selling, general and administrative expenses Tax expense (benefit) 2 1 Gain net of tax $ (5) $ (4) Loss on Funded Pension Plan adjustments: Amortization of prior pension service costs and unrecognized losses $ 149 $ 165 Other income (expense) Tax expense (benefit) (37) (43) Loss net of tax $ 112 $ 122 Total net loss reclassified for the period $ 107 $ 118 |
Basis of Financial Statement _2
Basis of Financial Statement Presentation (Details) € in Thousands, $ in Thousands | Feb. 05, 2021USD ($) | Sep. 01, 2020USD ($) | Sep. 01, 2020EUR (€) | Nov. 30, 2021USD ($) | Feb. 28, 2021USD ($) | Nov. 30, 2020USD ($) | Aug. 31, 2021USD ($) | Aug. 31, 2020USD ($) | Sep. 01, 2020EUR (€) |
Consideration paid in cash | $ 22,241 | ||||||||
Exit costs related to facilities | $ 59 | ||||||||
Adhesives, Sealants and Additives | |||||||||
Restructuring cost | 0 | ||||||||
Newark | |||||||||
Exit costs related to facilities | 0 | 0 | $ 977 | ||||||
Newark | Adhesives, Sealants and Additives | |||||||||
Restructuring cost | 0 | 0 | |||||||
Westwood, MA | |||||||||
Exit costs related to facilities | 59 | ||||||||
Other income/expense | |||||||||
Foreign currency translation gain (loss) | $ 241 | (96) | |||||||
ABchime | |||||||||
Consideration paid in cash | $ 22,241 | € 18,654 | |||||||
Acquisition related expenses | $ 274 | ||||||||
Potential earn out | $ 8,330 | € 7,000 | |||||||
Emerging Technologies | |||||||||
Purchase price | $ 9,997 | ||||||||
Consideration paid in cash | 8,997 | ||||||||
Consideration to be paid | $ 1,000 | ||||||||
Threshold period within which the accrued consideration will be paid | 18 months | ||||||||
Acquisition related expenses | $ 128 | $ 0 | $ 128 |
Inventory (Details)
Inventory (Details) - USD ($) $ in Thousands | Nov. 30, 2021 | Aug. 31, 2021 |
Inventory | ||
Raw materials | $ 28,080 | $ 24,055 |
Work in process | 6,631 | 5,928 |
Finished goods | 12,364 | 11,234 |
Total Inventory | $ 47,075 | $ 41,217 |
Net Income Per Share (Details)
Net Income Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Nov. 30, 2021 | Nov. 30, 2020 | |
Basic Earnings per Share | ||
Net income | $ 9,727 | $ 10,837 |
Less: Allocated to participating securities | 64 | 78 |
Net income available to common shareholders | $ 9,663 | $ 10,759 |
Basic weighted average shares outstanding | 9,397,873 | 9,375,819 |
Net income per share - Basic (in dollars per share) | $ 1.03 | $ 1.15 |
Diluted Earnings per Share | ||
Net income | $ 9,727 | $ 10,837 |
Less: Allocated to participating securities | 64 | 78 |
Net income available to common shareholders | $ 9,663 | $ 10,759 |
Basic weighted average shares outstanding | 9,397,873 | 9,375,819 |
Additional dilutive common stock equivalents (in shares) | 40,561 | 42,856 |
Diluted weighted average shares outstanding | 9,438,434 | 9,418,675 |
Net income per share - Diluted (in dollars per share) | $ 1.02 | $ 1.14 |
Antidilutive securities | ||
Antidilutive stock options excluded from computation of earnings per share amount (in shares) | 72,690 | 91,275 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) | Sep. 01, 2021$ / sharesshares | Sep. 01, 2020item$ / sharesshares | Sep. 30, 2021item | Nov. 30, 2021shares |
Restricted stock | ||||
Stock-Based Compensation | ||||
Shares granted | 2,633 | |||
Restricted stock | Non-executive members of management | ||||
Stock-Based Compensation | ||||
Shares forfeited | 437 | |||
2021 LTIP | Executive officers and other members of management | August 31, 2023 vesting date | ||||
Stock-Based Compensation | ||||
Shares granted | 8,717 | |||
Weighted Average Exercise Price (in dollars per share) | $ / shares | $ 97.57 | |||
Number of equal annual allotments in which awards will vest | item | 3 | |||
2021 LTIP | Performance and service based restricted stock | Executive officers and other members of management | August 31, 2023 vesting date | ||||
Stock-Based Compensation | ||||
Shares granted | 3,798 | |||
2021 LTIP | Options | Executive officers and other members of management | August 31, 2023 vesting date | ||||
Stock-Based Compensation | ||||
Number Options Outstanding (in shares) | 14,845 | |||
2022 LTIP | Performance and service based restricted stock | Executive officers and other members of management | August 31, 2024 vesting date | ||||
Stock-Based Compensation | ||||
Shares granted | 3,304 | |||
2022 LTIP | Time-based restricted stock | Executive officers and other members of management | August 31, 2024 vesting date | ||||
Stock-Based Compensation | ||||
Shares granted | 6,280 | |||
2022 LTIP | Options | Executive officers and other members of management | ||||
Stock-Based Compensation | ||||
Number Options Outstanding (in shares) | 12,942 | |||
Weighted Average Exercise Price (in dollars per share) | $ / shares | $ 114.50 | |||
Number of equal annual allotments in which awards will vest | item | 3 | |||
Expiration term | 10 years |
Segment Data and Foreign Oper_3
Segment Data and Foreign Operations (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Nov. 30, 2021USD ($)segment | Nov. 30, 2020USD ($) | Aug. 31, 2021USD ($) | |
Segment data | |||
Number of operating segments | segment | 3 | ||
Revenue | $ 75,010 | $ 67,176 | |
Income before income taxes | 13,117 | 13,977 | |
Interest | 87 | 69 | |
Depreciation | 877 | 1,003 | |
Amortization | 3,125 | 3,071 | |
Loss on contingent consideration (Note 17) | 475 | ||
Exit costs related to facilities | 59 | ||
Total assets | 408,530 | $ 404,159 | |
ABchime | |||
Segment data | |||
Loss on contingent consideration (Note 17) | 475 | ||
Newark | |||
Segment data | |||
Exit costs related to facilities | 0 | 0 | 977 |
Westwood, MA | |||
Segment data | |||
Exit costs related to facilities | 59 | ||
Adhesives, Sealants and Additives | |||
Segment data | |||
Revenue | 31,049 | 30,071 | |
Total assets | 157,926 | 161,968 | |
Adhesives, Sealants and Additives | ABchime | |||
Segment data | |||
Loss on contingent consideration (Note 17) | 475 | ||
Industrial Tapes | |||
Segment data | |||
Revenue | 32,761 | 26,491 | |
Total assets | 73,956 | 72,301 | |
Corrosion Protection and Waterproofing | |||
Segment data | |||
Revenue | 11,200 | 10,614 | |
Total assets | 31,601 | 31,067 | |
Reportable segments | |||
Segment data | |||
Income before income taxes | 21,333 | 21,933 | |
Total assets | 263,483 | 265,336 | |
Reportable segments | Adhesives, Sealants and Additives | |||
Segment data | |||
Revenue | 31,049 | 30,071 | |
Income before income taxes | 7,597 | 9,979 | |
Interest | 35 | 30 | |
Depreciation | 243 | 242 | |
Amortization | 2,740 | 2,573 | |
Reportable segments | Industrial Tapes | |||
Segment data | |||
Revenue | 32,761 | 26,491 | |
Income before income taxes | 9,290 | 7,868 | |
Interest | 35 | 27 | |
Depreciation | 410 | 465 | |
Amortization | 384 | 386 | |
Reportable segments | Corrosion Protection and Waterproofing | |||
Segment data | |||
Revenue | 11,200 | 10,614 | |
Income before income taxes | 4,446 | 4,086 | |
Interest | 17 | 12 | |
Depreciation | 118 | 139 | |
Amortization | 1 | 112 | |
Corporate and common costs | |||
Segment data | |||
Income before income taxes | (8,216) | $ (7,956) | |
Total assets | 145,047 | $ 138,823 | |
Corporate and common costs | Westwood, MA | |||
Segment data | |||
Exit costs related to facilities | $ 59 |
Segment Data and Foreign Oper_4
Segment Data and Foreign Operations - Revenue and Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Nov. 30, 2021 | Nov. 30, 2020 | Aug. 31, 2021 | |
Concentration risk | |||
Revenue | $ 75,010 | $ 67,176 | |
Property, plant and equipment, net | 23,752 | $ 24,267 | |
Goodwill and Intangible assets, less accumulated amortization | 140,483 | 144,820 | |
United States | |||
Concentration risk | |||
Revenue | 65,053 | 55,742 | |
Property, plant and equipment, net | 20,621 | 20,990 | |
Goodwill and Intangible assets, less accumulated amortization | 113,081 | 115,936 | |
United Kingdom | |||
Concentration risk | |||
Revenue | 4,594 | 6,027 | |
Property, plant and equipment, net | 2,037 | 2,174 | |
Goodwill and Intangible assets, less accumulated amortization | 3,781 | 3,905 | |
All other Foreign | |||
Concentration risk | |||
Revenue | 5,363 | $ 5,407 | |
Property, plant and equipment, net | 1,094 | 1,103 | |
Goodwill and Intangible assets, less accumulated amortization | $ 23,621 | $ 24,979 |
Goodwill and Other Intangible_2
Goodwill and Other Intangibles - Goodwill (Details) $ in Thousands | 3 Months Ended |
Nov. 30, 2021USD ($)segmentitem | |
Changes in the carrying value of goodwill | |
Balance at the beginning of the period | $ 97,866 |
Foreign currency translation adjustment | (742) |
Balance at the end of the period | $ 97,124 |
Number of reporting units | item | 3 |
Number of operating segments | segment | 3 |
Adhesives, Sealants and Additives | |
Changes in the carrying value of goodwill | |
Balance at the beginning of the period | $ 65,945 |
Foreign currency translation adjustment | (734) |
Balance at the end of the period | 65,211 |
Industrial Tapes | |
Changes in the carrying value of goodwill | |
Balance at the beginning of the period | 21,215 |
Balance at the end of the period | 21,215 |
Corrosion Protection and Waterproofing | |
Changes in the carrying value of goodwill | |
Balance at the beginning of the period | 10,706 |
Foreign currency translation adjustment | (8) |
Balance at the end of the period | $ 10,698 |
Goodwill and Other Intangible_3
Goodwill and Other Intangibles - Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Nov. 30, 2021 | Nov. 30, 2020 | Aug. 31, 2021 | |
Goodwill and Other Intangibles | |||
Gross Carrying Value | $ 137,538 | $ 138,438 | |
Accumulated Amortization | 94,179 | 91,484 | |
Net Carrying Value | 43,359 | $ 46,954 | |
Aggregate amortization expense | 3,125 | $ 3,071 | |
Estimated amortization expense | |||
2022 (remaining 9 months) | 8,658 | ||
2023 | 8,660 | ||
2024 | 7,453 | ||
2025 | 5,853 | ||
2026 | 5,055 | ||
2027 | $ 2,508 | ||
Patents and agreements | |||
Goodwill and Other Intangibles | |||
Weighted-Average Amortization Period | 14 years 7 months 6 days | 14 years 7 months 6 days | |
Gross Carrying Value | $ 1,760 | $ 1,760 | |
Accumulated Amortization | 1,717 | 1,715 | |
Net Carrying Value | $ 43 | $ 45 | |
Formulas and technology | |||
Goodwill and Other Intangibles | |||
Weighted-Average Amortization Period | 7 years 9 months 18 days | 7 years 10 months 24 days | |
Gross Carrying Value | $ 10,924 | $ 10,987 | |
Accumulated Amortization | 9,881 | 9,769 | |
Net Carrying Value | $ 1,043 | $ 1,218 | |
Trade names | |||
Goodwill and Other Intangibles | |||
Weighted-Average Amortization Period | 5 years 10 months 24 days | 5 years 10 months 24 days | |
Gross Carrying Value | $ 8,799 | $ 8,836 | |
Accumulated Amortization | 8,373 | 8,285 | |
Net Carrying Value | $ 426 | $ 551 | |
Customer lists and relationships | |||
Goodwill and Other Intangibles | |||
Weighted-Average Amortization Period | 9 years 1 month 6 days | 9 years 2 months 12 days | |
Gross Carrying Value | $ 116,055 | $ 116,855 | |
Accumulated Amortization | 74,208 | 71,715 | |
Net Carrying Value | $ 41,847 | $ 45,140 |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | Nov. 30, 2021 | Aug. 31, 2021 |
Assets | ||
Operating lease right-of-use asset | $ 9,949 | $ 9,312 |
Liabilities | ||
Current (accrued expenses) | $ 1,520 | $ 1,515 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Accrued Liabilities, Current | Accrued Liabilities, Current |
Operating lease long-term liabilities | $ 7,841 | $ 7,202 |
Total lease liability | $ 9,361 | $ 8,717 |
Leases - Components Of Lease Co
Leases - Components Of Lease Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Nov. 30, 2021 | Nov. 30, 2020 | |
Leases | ||
Operating lease cost | $ 828 | $ 951 |
Leases - Maturity Of Lease Liab
Leases - Maturity Of Lease Liability (Details) - USD ($) $ in Thousands | Nov. 30, 2021 | Aug. 31, 2021 |
Maturity of lease liability | ||
2022 (remaining 9 months) | $ 1,361 | |
2023 | 1,695 | |
2024 | 1,620 | |
2025 | 1,462 | |
2026 | 1,189 | |
2027 and thereafter | 2,999 | |
Less: Interest | (965) | |
Lease liabilities | $ 9,361 | $ 8,717 |
Leases - Weighted Average Remai
Leases - Weighted Average Remaining Lease Term (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Nov. 30, 2021 | Nov. 30, 2020 | Aug. 31, 2021 | |
Operating lease | |||
Operating leases, Weighted average remaining lease term (years) | 7 years 1 month 6 days | 6 years 9 months 18 days | |
Operating leases, Weighted average discount rate (percentage) | 2.80% | 3.10% | |
Operating cash outflows from operating leases | $ 476 | $ 603 | |
Total cash paid for amounts included in the measurement of lease liabilities | $ 476 | $ 603 |
Revenue from Contracts with C_3
Revenue from Contracts with Customers - Contract Assets and Contract Liabilities (Details) - USD ($) $ in Thousands | Nov. 30, 2021 | Aug. 31, 2021 |
Contract Assets | ||
Contract assets | $ 99 | $ 128 |
Contract liabilities | 0 | 0 |
Adhesives, Sealants and Additives | ||
Contract Assets | ||
Contract assets | 26 | 21 |
Industrial Tapes | ||
Contract Assets | ||
Contract assets | 13 | 82 |
Corrosion Protection and Waterproofing | ||
Contract Assets | ||
Contract assets | $ 60 | $ 25 |
Revenue from Contracts with C_4
Revenue from Contracts with Customers - Disaggregation of revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Nov. 30, 2021 | Nov. 30, 2020 | |
Revenue from Contracts with Customers | ||
Revenue | $ 75,010 | $ 67,176 |
North America | ||
Revenue from Contracts with Customers | ||
Revenue | 59,106 | 50,175 |
Asia | ||
Revenue from Contracts with Customers | ||
Revenue | 8,658 | 9,460 |
Europe | ||
Revenue from Contracts with Customers | ||
Revenue | 6,623 | 6,866 |
All other foreign | ||
Revenue from Contracts with Customers | ||
Revenue | 623 | 675 |
Adhesives, Sealants and Additives | ||
Revenue from Contracts with Customers | ||
Revenue | 31,049 | 30,071 |
Adhesives, Sealants and Additives | North America | ||
Revenue from Contracts with Customers | ||
Revenue | 20,095 | 18,385 |
Adhesives, Sealants and Additives | Asia | ||
Revenue from Contracts with Customers | ||
Revenue | 5,970 | 6,329 |
Adhesives, Sealants and Additives | Europe | ||
Revenue from Contracts with Customers | ||
Revenue | 4,796 | 5,206 |
Adhesives, Sealants and Additives | All other foreign | ||
Revenue from Contracts with Customers | ||
Revenue | 188 | 151 |
Industrial Tapes | ||
Revenue from Contracts with Customers | ||
Revenue | 32,761 | 26,491 |
Industrial Tapes | North America | ||
Revenue from Contracts with Customers | ||
Revenue | 29,634 | 23,305 |
Industrial Tapes | Asia | ||
Revenue from Contracts with Customers | ||
Revenue | 1,798 | 1,681 |
Industrial Tapes | Europe | ||
Revenue from Contracts with Customers | ||
Revenue | 912 | 1,013 |
Industrial Tapes | All other foreign | ||
Revenue from Contracts with Customers | ||
Revenue | 417 | 492 |
Corrosion Protection and Waterproofing | ||
Revenue from Contracts with Customers | ||
Revenue | 11,200 | 10,614 |
Corrosion Protection and Waterproofing | North America | ||
Revenue from Contracts with Customers | ||
Revenue | 9,377 | 8,485 |
Corrosion Protection and Waterproofing | Asia | ||
Revenue from Contracts with Customers | ||
Revenue | 890 | 1,450 |
Corrosion Protection and Waterproofing | Europe | ||
Revenue from Contracts with Customers | ||
Revenue | 915 | 647 |
Corrosion Protection and Waterproofing | All other foreign | ||
Revenue from Contracts with Customers | ||
Revenue | $ 18 | $ 32 |
Pensions and Other Postretire_3
Pensions and Other Postretirement Benefits (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Nov. 30, 2021 | Nov. 30, 2020 | |
Components of net periodic benefit cost | ||
Service cost | $ 95 | $ 92 |
Interest cost | 96 | 85 |
Expected return on plan assets | (103) | (98) |
Amortization of prior service cost | 1 | 1 |
Amortization of accumulated loss | 148 | 164 |
Net periodic benefit cost | 237 | 244 |
Employer contribution | $ 391 | $ 392 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) € in Thousands, $ in Thousands | Nov. 30, 2021USD ($) | Aug. 31, 2021USD ($) | Sep. 01, 2020USD ($) | Sep. 01, 2020EUR (€) |
Fair value measurements | ||||
Long term debt outstanding | $ 0 | $ 0 | ||
ABchime | ||||
Fair value measurements | ||||
Contingent consideration | 2,888 | $ 928 | € 780 | |
Recurring basis | ||||
Fair value measurements | ||||
Restricted investments | 2,348 | 2,260 | ||
Contingent consideration | 2,888 | 2,537 | ||
Recurring basis | Quoted prices in active markets (Level 1) | ||||
Fair value measurements | ||||
Restricted investments | 2,120 | 2,016 | ||
Recurring basis | Significant other observable inputs (Level 2) | ||||
Fair value measurements | ||||
Restricted investments | 228 | 244 | ||
Recurring basis | Significant unobservable inputs (Level 3) | ||||
Fair value measurements | ||||
Contingent consideration | $ 2,888 | $ 2,537 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Nov. 30, 2021 | Nov. 30, 2020 | |
Accumulated other comprehensive income | ||
Balance | $ 344,324 | $ 302,792 |
Total other comprehensive income (loss) | (2,091) | 283 |
Adoption of ASU 2018-02 | 343,275 | 306,946 |
Balance | 343,275 | 306,946 |
Accumulated Other Comprehensive Income (loss) | ||
Accumulated other comprehensive income | ||
Balance | (11,210) | (13,092) |
Other comprehensive gains (losses) before reclassifications | (2,198) | 165 |
Reclassifications to net income of previously deferred (gains) losses | 107 | 118 |
Total other comprehensive income (loss) | (2,091) | 283 |
Adoption of ASU 2018-02 | (13,301) | (12,809) |
Balance | (13,301) | (12,809) |
Gains on Restricted Investments: | ||
Accumulated other comprehensive income | ||
Balance | 518 | 269 |
Other comprehensive gains (losses) before reclassifications | (25) | 74 |
Reclassifications to net income of previously deferred (gains) losses | (5) | (4) |
Total other comprehensive income (loss) | (30) | 70 |
Adoption of ASU 2018-02 | 488 | 339 |
Balance | 488 | 339 |
Restricted investments, other comprehensive gains (losses) before reclassifications, tax expense | 12 | 26 |
Restricted investments, reclassifications to net income of previously deferred (gains) losses, tax (expense) benefit | 2 | 1 |
Loss on Funded Pension Plan adjustments: | ||
Accumulated other comprehensive income | ||
Balance | (7,979) | (8,317) |
Reclassifications to net income of previously deferred (gains) losses | 112 | 122 |
Total other comprehensive income (loss) | 112 | 122 |
Adoption of ASU 2018-02 | (7,867) | (8,195) |
Balance | (7,867) | (8,195) |
Change in funded status of pension plan, other comprehensive gains (losses) before reclassifications, tax (expense) benefit | 0 | 0 |
Change in funded status of pension plan, reclassifications to net income of previously deferred (gains) losses, tax (expense) benefit | 37 | 43 |
Foreign Currency Translation Adjustment | ||
Accumulated other comprehensive income | ||
Balance | (3,749) | (5,044) |
Other comprehensive gains (losses) before reclassifications | (2,173) | 91 |
Total other comprehensive income (loss) | (2,173) | 91 |
Adoption of ASU 2018-02 | (5,922) | (4,953) |
Balance | (5,922) | (4,953) |
Foreign currency translation adjustment, other comprehensive gains (losses) before reclassifications, tax (expense) benefit | 0 | 0 |
Foreign currency translation adjustment, reclassifications to net income of previously deferred (gains) losses, tax (expense) benefit | $ 0 | $ 0 |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Income - Reclassifications (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Nov. 30, 2021 | Nov. 30, 2020 | |
Accumulated other comprehensive income | ||
Selling, general and administrative expenses | $ (13,375) | $ (12,260) |
Amortization of prior pension service costs and unrecognized losses | 1 | 1 |
Tax expense (benefit) | (3,390) | (3,140) |
Net income (loss) | 9,727 | 10,837 |
Reclassification out of accumulated other comprehensive income (loss) | ||
Accumulated other comprehensive income | ||
Net income (loss) | 107 | 118 |
Gains on Restricted Investments: | Reclassification out of accumulated other comprehensive income (loss) | ||
Accumulated other comprehensive income | ||
Selling, general and administrative expenses | (7) | (5) |
Tax expense (benefit) | 2 | 1 |
Net income (loss) | (5) | (4) |
Loss on Funded Pension Plan adjustments: | Reclassification out of accumulated other comprehensive income (loss) | ||
Accumulated other comprehensive income | ||
Tax expense (benefit) | (37) | (43) |
Net income (loss) | 112 | 122 |
Loss on Funded Pension Plan adjustments: | Reclassification out of accumulated other comprehensive income (loss) | Other income (expense) | ||
Accumulated other comprehensive income | ||
Amortization of prior pension service costs and unrecognized losses | $ 149 | $ 165 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | |
Nov. 30, 2021 | Nov. 30, 2020 | |
Effective income tax rate | ||
Effective income tax rate | 25.80% | 22.50% |
Statutory tax rate (as a percent) | 21.00% | 21.00% |
Operations Optimization Costs (
Operations Optimization Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Nov. 30, 2021 | Nov. 30, 2020 | Aug. 31, 2021 | |
Operations Optimization Costs | |||
Exit costs related to facilities | $ 59 | ||
Newark | |||
Operations Optimization Costs | |||
Exit costs related to facilities | 0 | $ 0 | $ 977 |
Westwood, MA | |||
Operations Optimization Costs | |||
Exit costs related to facilities | 59 | ||
Adhesives, Sealants and Additives | |||
Operations Optimization Costs | |||
Restructuring cost | 0 | ||
Adhesives, Sealants and Additives | Newark | |||
Operations Optimization Costs | |||
Restructuring cost | $ 0 | $ 0 |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) | Jul. 27, 2021 | Dec. 15, 2016 | Nov. 30, 2021 | Aug. 31, 2021 |
Long-term debt | ||||
Long-term Debt. | $ 0 | $ 0 | ||
All-revolving credit facility with a borrowing capacity of $150,000 | ||||
Long-term debt | ||||
Maximum borrowing capacity | $ 150,000 | |||
Additional borrowing capacity | $ 50,000 | |||
All-revolving credit facility with a borrowing capacity of $150,000 | London Interbank Offered Rate (LIBOR) | Minimum | ||||
Long-term debt | ||||
Interest rate margin on variable rate basis (as a percent) | 1.00% | |||
All-revolving credit facility with a borrowing capacity of $150,000 | London Interbank Offered Rate (LIBOR) | Maximum | ||||
Long-term debt | ||||
Interest rate margin on variable rate basis (as a percent) | 1.75% | |||
New Credit Agreement | ||||
Long-term debt | ||||
Maximum borrowing capacity | $ 200,000 | |||
Additional borrowing capacity | $ 100,000 | |||
Net leverage ratio | 3.25 | |||
Consolidated interest coverage ratio | 3.50 | |||
Carrying value of direct and indirect domestic subsidiaries | $ 284,249 | |||
Applicable interest rate (as a percent) | 0.00% | |||
Term of debt | 5 years | |||
Amount drawn remained outstanding | $ 0 | |||
Term of potential debt | 10 years | |||
New Credit Agreement | London Interbank Offered Rate (LIBOR) | ||||
Long-term debt | ||||
Interest payment due | 3 months | |||
New Credit Agreement | London Interbank Offered Rate (LIBOR) | Minimum | ||||
Long-term debt | ||||
Interest rate margin on variable rate basis (as a percent) | 1.00% | |||
New Credit Agreement | London Interbank Offered Rate (LIBOR) | Maximum | ||||
Long-term debt | ||||
Interest rate margin on variable rate basis (as a percent) | 1.75% |
Acquisitions (Details)
Acquisitions (Details) € in Thousands, $ in Thousands | Feb. 05, 2021USD ($) | Sep. 01, 2020USD ($) | Sep. 01, 2020EUR (€) | Nov. 30, 2021USD ($) | Feb. 28, 2021USD ($) | Nov. 30, 2020USD ($) | Aug. 31, 2021USD ($) | Aug. 31, 2020USD ($) | Sep. 01, 2020EUR (€) |
Acquisitions | |||||||||
Consideration paid in cash | $ 22,241 | ||||||||
Goodwill | $ 97,124 | $ 97,866 | |||||||
Loss (gain) on contingent consideration | 475 | ||||||||
Emerging Technologies | |||||||||
Acquisitions | |||||||||
Consideration paid in cash | $ 8,997 | ||||||||
Purchase price | 9,997 | ||||||||
Consideration to be paid | $ 1,000 | ||||||||
Threshold period within which the accrued consideration will be paid | 18 months | ||||||||
Acquisition related expenses | $ 128 | $ 0 | $ 128 | ||||||
Goodwill | $ 2,451 | ||||||||
ABchime | |||||||||
Acquisitions | |||||||||
Consideration paid in cash | $ 22,241 | € 18,654 | |||||||
Acquisition related expenses | $ 274 | ||||||||
Performance-based earn out measurement period | 4 years | 4 years | |||||||
Potential earn out | $ 8,330 | € 7,000 | |||||||
Accrued earn out | 928 | 2,888 | € 780 | ||||||
Goodwill | $ 13,055 | ||||||||
Loss (gain) on contingent consideration | $ 475 |