Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Feb. 29, 2020 | Apr. 03, 2020 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Feb. 29, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Entity Registrant Name | EACO CORP | |
Entity Central Index Key | 0000784539 | |
Current Fiscal Year End Date | --08-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 4,861,590 | |
Entity Shell Company | false | |
Entity Small Business | true | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Emerging Growth Company | false |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) | 3 Months Ended | 6 Months Ended | ||
Feb. 29, 2020 | Feb. 28, 2019 | Feb. 29, 2020 | Feb. 28, 2019 | |
Condensed Consolidated Statements of Income | ||||
Net sales | $ 56,828,000 | $ 52,559,000 | $ 112,868,000 | $ 103,345,000 |
Cost of sales | 41,029,000 | 38,047,000 | 81,173,000 | 74,724,000 |
Gross margin | 15,799,000 | 14,512,000 | 31,695,000 | 28,621,000 |
Operating expenses: | ||||
Selling, general and administrative expenses | 12,673,000 | 11,720,000 | 25,275,000 | 23,210,000 |
Income from operations | 3,126,000 | 2,792,000 | 6,420,000 | 5,411,000 |
Other income (expense): | ||||
Net gain (loss) on trading securities | 471,000 | (126,000) | 391,000 | 102,000 |
Loss on sale of property | (102,000) | |||
Interest and other (expense) | (65,000) | (125,000) | (184,000) | (202,000) |
Other income(expense), net | 406,000 | (251,000) | 105,000 | (100,000) |
Income before income taxes | 3,532,000 | 2,541,000 | 6,525,000 | 5,311,000 |
Provision for income taxes | 934,000 | 580,000 | 2,010,000 | 1,425,000 |
Net income | 2,598,000 | 1,961,000 | 4,515,000 | 3,886,000 |
Cumulative preferred stock dividend | (19,000) | (19,000) | (38,000) | (38,000) |
Net income attributable to common shareholders | $ 2,579,000 | $ 1,942,000 | $ 4,477,000 | $ 3,848,000 |
Basic and diluted earnings per common share: | $ 0.53 | $ 0.40 | $ 0.92 | $ 0.79 |
Basic and diluted weighted average common shares outstanding | 4,861,590 | 4,861,590 | 4,861,590 | 4,861,590 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Feb. 29, 2020 | Feb. 28, 2019 | Feb. 29, 2020 | Feb. 28, 2019 | |
Condensed Consolidated Statements of Comprehensive Income | ||||
Net income | $ 2,598 | $ 1,961 | $ 4,515 | $ 3,886 |
Other comprehensive (loss) gain, net of tax: | ||||
Foreign translation (loss) gain | (37) | 119 | (249) | 277 |
Total comprehensive income | $ 2,561 | $ 2,080 | $ 4,266 | $ 4,163 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Feb. 29, 2020 | Aug. 31, 2019 | ||
Current Assets: | ||||
Cash and cash equivalents | $ 5,900 | $ 4,692 | [1] | |
Restricted cash | 2,386 | 655 | [1] | |
Trade accounts receivable, net | 30,710 | 31,655 | [1] | |
Inventory, net | 40,043 | 37,259 | [1] | |
Marketable securities, trading | 894 | 1,873 | [1] | |
Prepaid expenses and other current assets | 5,097 | 4,234 | [1] | |
Total current assets | 85,030 | 80,368 | [1] | |
Property, equipment and leasehold improvements: | ||||
Held for use, net | 7,480 | 3,717 | [1] | |
Held for sale, net | [1] | 6,855 | ||
Total property, equipment and leasehold improvements, net | 7,480 | 10,572 | [1] | |
Other assets : | ||||
Operating lease right-of-use assets | 13,003 | |||
Other assets, net | 2,101 | 1,938 | [1] | |
Total assets | 107,614 | 92,878 | [1] | |
Current Liabilities: | ||||
Trade accounts payable | 18,625 | 21,138 | [1] | |
Accrued expenses and other current liabilities | 5,052 | 8,297 | [1] | |
Liability for short sales of trading securities | 2,386 | 655 | [1] | |
Current portion of operating lease liabilities | 2,464 | |||
Current portion of long-term debt | [1] | 5,484 | ||
Total current liabilities | 28,527 | 35,574 | [1] | |
Non-current Liabilities: | ||||
Long-term debt | 13,007 | 6,114 | [1] | |
Operating lease liabilities | 10,662 | |||
Total liabilities | 52,196 | 41,688 | [1] | |
Commitments and Contingencies | [1] | |||
Shareholders' Equity: | ||||
Convertible preferred stock, $0.01 par value per share; 10,000,000 shares authorized; 36,000 shares outstanding (liquidation value $900) | 1 | 1 | [1] | |
Common stock, $0.01 par value per share; 8,000,000 shares authorized; 4,861,590 shares outstanding | 49 | 49 | [1] | |
Additional paid-in capital | 12,378 | 12,378 | [1] | |
Accumulated other comprehensive income | 627 | 876 | [1] | |
Retained earnings | 42,363 | 37,886 | [1] | |
Total shareholders' equity | 55,418 | 51,190 | [1],[2] | |
Total liabilities and shareholders' equity | $ 107,614 | $ 92,878 | [1] | |
[1] | Derived from the Company’s audited financial statements included in its Form 10K for the year ended August 31, 2019 as filed with the U. S. Securities and Exchange Commission on November 27, 2019. | |||
[2] | Derived from the Company’s audited financial statements included in its Form 10K for the years ended August 31, 2018 and 2019 as filed with the U. S. Securities and Exchange Commission on November 28, 2018 and November 27, 2019, respectively. |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Feb. 29, 2020 | Aug. 31, 2019 |
Condensed Consolidated Balance Sheets | ||
Convertible preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Convertible preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Convertible preferred stock, shares outstanding | 36,000 | 36,000 |
Convertible preferred stock, liquidation value (in dollars) | $ 900 | $ 900 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 8,000,000 | 8,000,000 |
Common stock, shares outstanding | 4,861,590 | 4,861,590 |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Shareholders' Equity - USD ($) $ in Thousands | Convertible Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income | Accumulated Earnings | Total | ||
Balance at Aug. 31, 2018 | [1] | $ 1 | $ 49 | $ 12,378 | $ 928 | $ 28,530 | $ 41,886 | |
Balance (in Shares) at Aug. 31, 2018 | [1] | 36,000 | 4,861,590 | |||||
Preferred dividends | (19) | (19) | ||||||
Foreign translation gain (loss) | 158 | 158 | ||||||
Net income | 1,925 | 1,925 | ||||||
Balance at Nov. 30, 2018 | $ 1 | $ 49 | 12,378 | 1,086 | 30,436 | 43,950 | ||
Balance (in Shares) at Nov. 30, 2018 | 36,000 | 4,861,590 | ||||||
Balance at Aug. 31, 2018 | [1] | $ 1 | $ 49 | 12,378 | 928 | 28,530 | 41,886 | |
Balance (in Shares) at Aug. 31, 2018 | [1] | 36,000 | 4,861,590 | |||||
Foreign translation gain (loss) | 277 | |||||||
Net income | 3,886 | |||||||
Balance at Feb. 28, 2019 | $ 1 | $ 49 | 12,378 | 1,205 | 32,378 | 46,011 | ||
Balance (in Shares) at Feb. 28, 2019 | 36,000 | 4,861,590 | ||||||
Balance at Nov. 30, 2018 | $ 1 | $ 49 | 12,378 | 1,086 | 30,436 | 43,950 | ||
Balance (in Shares) at Nov. 30, 2018 | 36,000 | 4,861,590 | ||||||
Preferred dividends | (19) | (19) | ||||||
Foreign translation gain (loss) | 119 | 119 | ||||||
Net income | 1,961 | 1,961 | ||||||
Balance at Feb. 28, 2019 | $ 1 | $ 49 | 12,378 | 1,205 | 32,378 | 46,011 | ||
Balance (in Shares) at Feb. 28, 2019 | 36,000 | 4,861,590 | ||||||
Balance at Aug. 31, 2019 | [1] | $ 1 | $ 49 | 12,378 | 876 | 37,886 | 51,190 | [2] |
Balance (in Shares) at Aug. 31, 2019 | [1] | 36,000 | 4,861,590 | |||||
Preferred dividends | (19) | (19) | ||||||
Foreign translation gain (loss) | (212) | (212) | ||||||
Net income | 1,917 | 1,917 | ||||||
Balance at Nov. 30, 2019 | $ 1 | $ 49 | 12,378 | 664 | 39,784 | 52,876 | ||
Balance (in Shares) at Nov. 30, 2019 | 36,000 | 4,861,590 | ||||||
Balance at Aug. 31, 2019 | [1] | $ 1 | $ 49 | 12,378 | 876 | 37,886 | 51,190 | [2] |
Balance (in Shares) at Aug. 31, 2019 | [1] | 36,000 | 4,861,590 | |||||
Foreign translation gain (loss) | (249) | |||||||
Net income | 4,515 | |||||||
Balance at Feb. 29, 2020 | $ 1 | $ 49 | 12,378 | 627 | 42,363 | 55,418 | ||
Balance (in Shares) at Feb. 29, 2020 | 36,000 | 4,861,590 | ||||||
Balance at Nov. 30, 2019 | $ 1 | $ 49 | 12,378 | 664 | 39,784 | 52,876 | ||
Balance (in Shares) at Nov. 30, 2019 | 36,000 | 4,861,590 | ||||||
Preferred dividends | (19) | (19) | ||||||
Foreign translation gain (loss) | (37) | (37) | ||||||
Net income | 2,598 | 2,598 | ||||||
Balance at Feb. 29, 2020 | $ 1 | $ 49 | $ 12,378 | $ 627 | $ 42,363 | $ 55,418 | ||
Balance (in Shares) at Feb. 29, 2020 | 36,000 | 4,861,590 | ||||||
[1] | Derived from the Company’s audited financial statements included in its Form 10K for the years ended August 31, 2018 and 2019 as filed with the U. S. Securities and Exchange Commission on November 28, 2018 and November 27, 2019, respectively. | |||||||
[2] | Derived from the Company’s audited financial statements included in its Form 10K for the year ended August 31, 2019 as filed with the U. S. Securities and Exchange Commission on November 27, 2019. |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) | 6 Months Ended | |
Feb. 29, 2020 | Feb. 28, 2019 | |
Operating activities: | ||
Net income | $ 4,515,000 | $ 3,886,000 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Depreciation and amortization | 506,000 | 503,000 |
Bad debt expense | 14,000 | 18,000 |
Change in inventory provision | 68,000 | 107,000 |
Loss on sale of real property | 102,000 | |
Net gain on trading securities | (391,000) | (102,000) |
(Increase) decrease in: | ||
Trade accounts receivable | 931,000 | (1,889,000) |
Inventory | (2,852,000) | (5,033,000) |
Prepaid expenses and other assets | (1,026,000) | (524,000) |
Increase (decrease) in: | ||
Trade accounts payable | (2,243,000) | 2,206,000 |
Accrued expenses and other current liabilities | (3,245,000) | (3,853,000) |
Net cash used in operating activities | (3,621,000) | (4,681,000) |
Investing activities: | ||
Purchase of property, equipment, and leasehold improvements | (4,591,000) | (330,000) |
Proceeds from sale of real property | 7,075,000 | |
Net sales of marketable securities, trading | 1,370,000 | 1,071,000 |
Net change in liabilities for short sales of trading securities | 1,731,000 | (115,000) |
Net cash provided by investing activities | 5,585,000 | 626,000 |
Financing activities: | ||
Borrowings on revolving credit facility, net | 3,192,000 | 4,593,000 |
Borrowings on construction loan | 3,342,000 | |
Repayments on long-term debt | (5,125,000) | (72,000) |
Preferred stock dividend | (38,000) | (38,000) |
Bank overdraft | (147,000) | 457,000 |
Net cash provided by financing activities | 1,224,000 | 4,940,000 |
Effect of foreign currency exchange rate changes on cash and cash equivalents | (249,000) | 277,000 |
Net increase in cash, cash equivalents, and restricted cash | 2,939,000 | 1,162,000 |
Cash, cash equivalents, and restricted cash - beginning of period | 5,347,000 | 3,638,000 |
Cash, cash equivalents, and restricted cash - end of period | 8,286,000 | 4,800,000 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 178,000 | 201,000 |
Cash paid for income taxes | $ 3,395,000 | $ 3,059,000 |
Organization and Basis of Prese
Organization and Basis of Presentation | 6 Months Ended |
Feb. 29, 2020 | |
Organization and Basis of Presentation | |
Organization and Basis of Presentation | Note 1. Organization and Basis of Presentation EACO Corporation (“EACO”), incorporated in Florida in September 1985, is a holding company primarily comprised of its wholly-owned subsidiary, Bisco Industries, Inc. (“Bisco”). Bisco was incorporated in Illinois in 1974 and is a distributor of electronic components and fasteners with 49 sales offices and seven distribution centers located throughout the United States and Canada. Bisco supplies parts used in the manufacture of products in a broad range of industries, including the aerospace, circuit board, communication, computer, fabrication, instrumentation, industrial equipment and marine industries. |
Significant Accounting Policies
Significant Accounting Policies and Significant Recent Accounting Pronouncements | 6 Months Ended |
Feb. 29, 2020 | |
Significant Accounting Policies and Significant Recent Accounting Pronouncements | |
Significant Accounting Policies and Significant Recent Accounting Pronouncements | Note 2. Significant Accounting Policies and Significant Recent Accounting Pronouncements Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. These estimates include allowance for doubtful accounts receivable, slow moving and obsolete inventory, recoverability of the carrying value and estimated useful lives of long-lived assets, and the valuation allowance against deferred tax assets, if any. Actual results could differ from those estimates. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in conformity with GAAP for interim financial information and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim reporting. In the opinion of management, all adjustments considered necessary in order to make the financial statements not misleading have been included. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to SEC rules and regulations for presentation of interim financial information. Therefore, the condensed consolidated interim financial statements should be read in conjunction with the Company’s Annual Report on Form 10‑K for the year ended August 31, 2019 (“fiscal 2019”). The condensed consolidated balance sheet as of August 31, 2019 and related disclosures were derived from the Company’s audited consolidated financial statements as of August 31, 2019. Operating results for the three and six months ended February 29, 2020 are not necessarily indicative of the results that may be expected for future quarterly periods or the entire fiscal year. Principles of Consolidation The consolidated financial statements for all periods presented include the accounts of EACO, its wholly-owned subsidiary, Bisco, and Bisco’s wholly-owned Canadian subsidiary, Bisco Industries Limited (all of which are collectively referred to herein as the “Company”, “we”, “us” and “our”). All significant intercompany transactions and balances have been eliminated in consolidation. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Trade Accounts Receivable, Net Trade accounts receivable are carried at original invoice amount, less an estimate for an allowance for doubtful accounts. Management determines the allowance for doubtful accounts by identifying probable credit losses in the Company’s accounts receivable and reviewing historical data to estimate the collectability on items not yet specifically identified as problem accounts. Trade accounts receivable are written off when deemed uncollectible. Recoveries of trade accounts receivable previously written off are recorded when received. A trade account receivable is considered past due if any portion of the receivable balance is outstanding if past due more than 30 days. The Company does not charge interest on past due balances. The allowance for doubtful accounts was $169,000 at February 29, 2020 and August 31, 2019. Inventories, Net Inventory consists primarily of electronic fasteners and components, and is stated at the lower of cost or estimated net realizable value. Cost is determined using the average cost method. Inventories are reduced by a provision for slow moving and obsolete items of $1,595,000 and $1,527,000 at February 29, 2020 and August 31, 2019, respectively. The provision is based upon management’s review of inventories on-hand over their expected future utilization and length of time held by the Company. Short Sales of Trading Securities Securities sold short represent transactions in which the Company sells a security borrowed from the broker, which the Company is obligated to purchase and deliver back to the broker. The initial value of the underlying borrowed security is recorded as a liability, and is adjusted to market value at each reporting period, with unrealized appreciation or depreciation being recorded for the change in value of the open short position. The Company records a realized gain or loss when the short position is closed. By entering into short sales, the Company bears the market risk of an unfavorable increase in the price of the security sold short in excess of the proceeds received. The market value of open short positions is separately presented as a liability in the consolidated balance sheets. The Company is required to establish a margin account with the lending broker equal to the market value of open short positions. As the use of such funds is restricted while the short sale is outstanding, the balance of this account is classified as restricted cash, current in the consolidated balance sheets. The restricted cash related to securities sold short was $2,386,000 and $655,000 at February 29, 2020 and August 31, 2019, respectively. Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of the impairment review, assets are measured by comparing the carrying amount to future net cash flows. If assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds their estimated fair values. Income Taxes Deferred taxes on income result from temporary differences between the reporting of income for financial statement and tax reporting purposes. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some or all of the deferred tax asset will not be realized. In making such determination, the Company considers all available positive and negative evidence, including, but not limited to, scheduled reversals of deferred tax liabilities, projected future taxable income (if any), tax planning strategies and recent financial performance. We provide tax contingencies, if any, for federal, state, local and international exposures relating to audit results, tax planning initiatives and compliance responsibilities. The development of these reserves requires judgments and estimates regarding tax issues, potential outcomes and timing. Actual results could differ from those estimates. Revenue Recognition We derive our revenue primarily from product sales. We determine revenue recognition through the following steps: (1) identification of the contract with a customer; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; (5) recognition of revenue when, or as, we satisfy a performance obligation. The Company’s performance obligations consist solely of product shipped to customers. Revenue from product sales is presented as net sales and recognized upon the transfer of control of promised products to customers in an amount that reflects the consideration we expect to receive in exchange for these products. Revenue is recognized net of expected returns and any taxes collected from customers. We offer industry standard contractual terms in our purchase orders. Earnings Per Common Share Basic earnings per common share for the three and six months ended February 29, 2020 and February 28, 2019 were computed based on the weighted average number of common shares outstanding during each respective period. Diluted earnings per share for those periods have been computed based on the weighted average number of common shares outstanding, giving effect to all potentially dilutive common shares that were outstanding during the respective periods (See Note 4). Foreign Currency Translation and Transactions Assets and liabilities recorded in functional currencies other than the U.S. dollar (Canadian dollars for Bisco’s Canadian subsidiary) are translated into U.S. dollars at the period-end rate of exchange. Revenue and expenses are translated at the weighted-average exchange rates for the three and six months ended February 29, 2020 and February 28, 2019. The resulting translation adjustments are charged or credited directly to accumulated other comprehensive income or loss. The average exchange rate of Canadian dollars to U.S. dollars for the six months ended February 29, 2020 and February 28, 2019 was $0.76 for both periods. Concentrations Net sales to customers outside the United States were approximately 9% of revenues for each of the six months ended February 29, 2020 and February 28, 2019, and related accounts receivable were approximately 12% of total accounts receivable for both February 29, 2020 and August 31, 2019. No single customer accounted for more than 10% of revenues and accounts receivable for the six months ended February 29, 2020 or February 28, 2019. Significant Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)” as modified by subsequently issued ASUs 2015-14, 2016-08, 2016-10, 2016-12 and 2016-20 (collectively “new revenue standard”). The core principle of the new revenue standard, among other changes, is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company adopted the new revenue guidance effective September 1, 2018, using the modified retrospective method with no impact to the opening retained earnings. In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)," which requires lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Classification is based on criteria that are largely similar to those applied in previous lease accounting, but without explicit bright lines. Lessor accounting is similar to the previous model, but updated to align with certain changes to the lessee model and the new revenue recognition standard. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company adopted ASU 2016-02 on September 1, 2019 and applied the package of practical expedients included therein, as well as utilized the transition method included in ASU 2018-11. By applying ASU 2016-02 at the adoption date, as opposed to at the beginning of the earliest period presented, the presentation of financial information for periods prior to September 1, 2019 remained unchanged and in accordance with Leases (Topic 840). As of February 29, 2020, the Company has right of use assets of approximately $13.0 million and lease liabilities of approximately $13.1 million recorded in the consolidated balance sheet. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses”, which will require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The guidance is effective for annual reporting periods beginning after December 15, 2019 and interim periods within those fiscal years. In November 2019, the FASB deferred the effective dates of the new credit losses standard for all entities except SEC filers that are not smaller reporting companies to fiscal year beginning after December 15, 2022, including interim periods within those fiscal years. The Company is currently evaluating this statement and its impact on its results of operations and financial position. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows - Restricted Cash a consensus of the FASB Emerging Issues Task Force.” This standard requires restricted cash and cash equivalents to be included with cash and cash equivalents on the statement of cash flows under a retrospective transition approach. The guidance will become effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years with early adoption permitted. The Company elected to adopt the new cash flow guidance effective September 1, 2018, with an immaterial impact to the statements of cash flows. |
Debt
Debt | 6 Months Ended |
Feb. 29, 2020 | |
Debt | |
Debt | Note 3. Debt The Company currently has a $15,000,000 line of credit agreement with Citizen’s Business Bank (the “Bank”). On December 4, 2019, the Company entered into a Change in Terms Agreement dated November 27, 2019 with the Bank (the “Amendment”), which modified the Company’s $10,000,000 line of credit between the Company and the Bank to increase the maximum amount that may be borrowed thereunder from $10.0 million to $15.0 million. In addition, the interest rate provisions under the line of credit were modified so that in no event would such interest rate be less than 3.5% per annum or the maximum interest rate permitted under law. The expiration date of the line of credit under the line of credit agreement is July 5, 2021. The line of credit has a variable interest rate option that the Company may select (subject to the requirements in the Amendment and provided that the Company is not in default under the line of credit agreement): to (A) The default variable interest index rate, which is Citizens Business Bank Prime Rate of Interest, which is the prime rate (4.75% and 5.25% at February 29, 2020 and August 31, 2019, respectively) less 0.500%; or (B) One Hundred Eighty (180) day Libor Rate plus a margin of 1.550%; and (v) replace the preferred rate of interest with a discounted rate. The amounts outstanding under this line of credit as of February 29, 2020 and August 31, 2019 are currently all under the default variable interest index rate of 4.25% and 4.75%, respectively. Borrowings are secured by substantially all of the assets of the Company and its subsidiaries. The amounts outstanding under this line of credit as of February 29, 2020 and August 31, 2019 were $9,213,000 and $6,114,000, respectively. The line of credit agreement contains certain nonfinancial and financial covenants, including the maintenance of certain financial ratios. As of February 29, 2020 and August 31, 2019, the Company was in compliance with all such covenants. In September 2019, Bisco entered into Commercial Lease Agreement (the “Hunter Lease”) with the Glen F. Ceiley and Barbara A. Ceiley Revocable Trust (the “Trust”), which is the grantor trust of Glen Ceiley, our Chief Executive Officer, Chairman of the Board and the Company’s majority shareholder. Under this Commercial Lease Agreement, Bisco has leased from the Trust approximately 80,000 square feet of office and warehouse space located at 5037 and 5065 East Hunter Avenue, Anaheim, California (the “Hunter Property”), which serves as the Company’s new corporate headquarters, and has a term that expires on August 31, 2029. The Company also entered into a new Loan Agreement with the Bank to borrow up to $5 million (the “Construction Loan”) for the primary purpose of financing tenant improvements at the Hunter Property. The Construction Loan is a line of credit evidenced by a Promissory Note in the principal amount of up to $5,000,000 with a maturity date of May 15, 2027. The terms of the Construction Loan provide that the Company may only request advances through July 15, 2020, and thereafter, the Construction Loan will convert to a term loan. Interest on the Construction Loan is payable monthly, subject to variable interest rate based on the Bank’s internal prime rate (4.75% and 5.25% at February 29, 2020 and August 31, 2019, respectively). Concurrent with the execution of this Construction Loan, Bisco entered into a commercial security agreement, dated July 12, 2019, with the Bank, pursuant to which Bisco granted the Bank a security interest in substantially all of Bisco’s personal property to secure Bisco’s obligations under the Loan Agreement. The outstanding balance of the Construction Loan at February 29, 2020 and August 31, 2019 was $3,794,000 and $342,000, respectively. On May 15, 2017, the Company entered into a $5,400,000 loan agreement with the Bank (the “Lakeview Loan”). The proceeds of the loan were used to purchase the building that houses the Company’s then corporate headquarters and distribution center located in Anaheim, California (the “Lakeview Property”). In September 2019, Bisco entered into a Purchase Agreement to sell the Lakeview Property for a cash sale price of $7,075,000, which closed escrow on November 19, 2019. Upon the closing of escrow, Bisco used the proceeds from the sale to repay all of the outstanding principal and accrued interest on the Lakeview Loan. No amounts were outstanding on the Lakeview Loan at February 29, 2020. The Company leased back the building from the buyer until mid-March, when the Company’s corporate headquarters was moved to the Hunter Property. |
Earnings per Share
Earnings per Share | 6 Months Ended |
Feb. 29, 2020 | |
Earnings per Share | |
Earnings per Share | Note 4. Earnings per Share The following is a reconciliation of the numerators and denominators of the basic and diluted computations for earnings per common share (in thousands, except per share data): Three Months Ended Six Months Ended February 29, February 28, February 29, February 28, 2020 2019 2020 2019 (In thousands, except share and per share amounts) EPS: Net income $ 2,598 $ 1,961 $ 4,515 $ 3,886 Less: accrued preferred stock dividends (19) (19) (38) (38) Net income available for common shareholders $ 2,579 $ 1,942 $ 4,477 $ 3,848 Earnings per common share – basic and diluted $ 0.53 $ 0.40 $ 0.92 $ 0.79 For the three and six months ended February 29, 2020 and February 28, 2019, 40,000 potential common shares (issuable upon conversion of 36,000 shares of the Company’s Series A Cumulative Convertible Preferred Stock) have been included in the computation of diluted earnings per share, which had no effect to basic earnings per share. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Feb. 29, 2020 | |
Related Party Transactions | |
Related Party Transactions | Note 5. Related Party Transactions The Company leases its Chicago area sales office and distribution center located in Glendale Heights, Illinois under an operating lease agreement (the “Glendale Lease”) from the Trust, which is beneficially owned by the Company’s majority shareholder, who is also the Company’s Chairman and CEO. The Glendale Lease is a ten year lease with an initial monthly rental rate of $22,600, which is subject to annual rent increases of approximately 2.5% as set forth in the Glendale Lease. During the three months ended February 29, 2020 and February 28, 2019, the Company incurred expense related to the Glendale Lease of approximately $71,000 and $70,000, respectively. During the six months ended February 29, 2020 and February 28, 2019, the Company incurred expense related to the Glendale Lease of approximately $142,000 and $138,000, respectively. On July 26, 2019, the Company entered into the Hunter Lease with the Trust, for the lease of the Hunter Property, which house the Company’s new corporate headquarters. The Company completed its move to the new headquarters located at the Hunter Property in March 2020. The term of the Lease commenced on September 2, 2019 and ends on August 31, 2029 with an initial monthly rental rate of $66,300, which is subject to annual rent increases of approximately 2.5% as set forth in the Hunter Lease. The foregoing description of the Lease does not purport to be complete and is qualified in the entirety by reference to the lease as filed as Exhibit 10.14 in its Form 10-K for the year ended August 31, 2019 as filed with the SEC on November 27, 2019. During the three months ended February 29, 2020 and February 28, 2019, the Company incurred expense related to the Hunter Lease of approximately $199,000 and none, respectively. During the six months ended February 29, 2020 and February 28, 2019, the Company incurred expense related to the Hunter Lease of approximately $398,000 and none, respectively. |
Income Taxes
Income Taxes | 6 Months Ended |
Feb. 29, 2020 | |
Income Taxes | |
Income Taxes | Note 6. Income Taxes The Tax Cuts and Jobs Act (the “Jobs Act”) was enacted on December 22, 2017. The Jobs Act reduced the US federal corporate tax rate from 35% to 21%, required companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and created new taxes on certain foreign sourced earnings. We previously completed our accounting for the tax effects of enactment of the Jobs Act and have determined no additional tax liability due to offsetting foreign tax credits. The Company is subject to taxation in the US, Canada and various states. We have elected to account for Global Intangible Low-Taxed Income (“GILTI”) in the year the tax is incurred. During the three and six months ended February 29, 2020, the Company recorded an income tax provision of $934,000 and $2,010,000, respectively, resulting in an effective tax rate of 26.4% and 30.8%, respectively. For the three and six months ended February 28, 2019, the Company recorded an income tax provision of $580,000 and $1,425,000, respectively, resulting in an effective tax rate of 22.8% and 26.8%, respectively. The current period effective tax rate differs from the statutory rate of 21% due to state income tax and permanent book to tax basis adjustments related to transfer pricing and meals that were recognized during Q2 2019, which reduced the percent of pre-tax income during that period. Accounting for uncertainty in income taxes prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. For the three and six months ended February 29, 2020, the Company did not have a liability for any unrecognized tax benefit. The Company has elected to classify interest and penalties as a component of its income tax provision. For the three and six months ended February 29, 2020, the Company did not have a liability for penalties or interest. The Company does not expect any changes to its unrecognized tax benefit for the next three months that would materially impact its consolidated financial statements. The Company’s tax years for 2015, 2016, 2017 and 2018 are subject to examination by the taxing authorities. With few exceptions, the Company is no longer subject to U.S. federal, state, local or foreign examinations by taxing authorities for years before 2015. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Feb. 29, 2020 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 7. Commitments and Contingencies From time to time, we may be subject to legal proceedings and claims which arise in the normal course of our business. Any such matters and disputes could be costly and time consuming, subject us to damages or equitable remedies, and divert our management and key personnel from our business operations. We currently are not a party to any legal proceedings, the adverse outcome of which, in management’s opinion, individually or in the aggregate, would have a material adverse effect on our consolidated results of operations, financial position or cash flows. EACO has also entered into a business loan agreement (and related $100,000 promissory note) with the Bank in order to obtain a $100,000 letter of credit as security for the Company's worker's compensation requirements. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Feb. 29, 2020 | |
Subsequent Events | |
Subsequent Events | Note 8. Subsequent Events Management has evaluated events subsequent to February 29, 2020, through the date that these unaudited condensed consolidated financial statements are filed with the SEC, for transactions and other events which may require adjustment of and/or disclosure in such financial statements. With respect to the ongoing and evolving coronavirus (COVID-19) outbreak, which was designated as a pandemic by the World Health Organization on March 11, 2020, the outbreak has caused substantial disruption in international and U.S. economies and markets. The outbreak may have an adverse impact on the industries the Company serves, such as the aerospace, electronic parts, and industrial equipment industry. If repercussions of the outbreak are prolonged, it could have a significant adverse impact to the underlying industries of some of the Company’s customers. To date, the Company has not incurred any significant disruptions to its business activities or supply chain, but has been required to limit the operations of our sales offices. Management cannot, at this point, estimate ultimate losses related to the COVID-19 outbreak, if any, and accordingly no adjustments were reflected in the accompanying financial statements related to this matter. The Company completed its move of the corporate headquarters from the Lakeview Property to the Hunter Property on March 13, 2020, which is la significantly larger facility with approximately 80,000 square feet of office and warehouse space. |
Significant Accounting Polici_2
Significant Accounting Policies and Significant Recent Accounting Pronouncements (Policies) | 6 Months Ended |
Feb. 29, 2020 | |
Significant Accounting Policies and Significant Recent Accounting Pronouncements | |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. These estimates include allowance for doubtful accounts receivable, slow moving and obsolete inventory, recoverability of the carrying value and estimated useful lives of long-lived assets, and the valuation allowance against deferred tax assets, if any. Actual results could differ from those estimates. |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in conformity with GAAP for interim financial information and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim reporting. In the opinion of management, all adjustments considered necessary in order to make the financial statements not misleading have been included. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to SEC rules and regulations for presentation of interim financial information. Therefore, the condensed consolidated interim financial statements should be read in conjunction with the Company’s Annual Report on Form 10‑K for the year ended August 31, 2019 (“fiscal 2019”). The condensed consolidated balance sheet as of August 31, 2019 and related disclosures were derived from the Company’s audited consolidated financial statements as of August 31, 2019. Operating results for the three and six months ended February 29, 2020 are not necessarily indicative of the results that may be expected for future quarterly periods or the entire fiscal year. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements for all periods presented include the accounts of EACO, its wholly-owned subsidiary, Bisco, and Bisco’s wholly-owned Canadian subsidiary, Bisco Industries Limited (all of which are collectively referred to herein as the “Company”, “we”, “us” and “our”). All significant intercompany transactions and balances have been eliminated in consolidation. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. |
Trade Accounts Receivable, Net | Trade Accounts Receivable, Net Trade accounts receivable are carried at original invoice amount, less an estimate for an allowance for doubtful accounts. Management determines the allowance for doubtful accounts by identifying probable credit losses in the Company’s accounts receivable and reviewing historical data to estimate the collectability on items not yet specifically identified as problem accounts. Trade accounts receivable are written off when deemed uncollectible. Recoveries of trade accounts receivable previously written off are recorded when received. A trade account receivable is considered past due if any portion of the receivable balance is outstanding if past due more than 30 days. The Company does not charge interest on past due balances. The allowance for doubtful accounts was $169,000 at February 29, 2020 and August 31, 2019. |
Inventories, Net | Inventories, Net Inventory consists primarily of electronic fasteners and components, and is stated at the lower of cost or estimated net realizable value. Cost is determined using the average cost method. Inventories are reduced by a provision for slow moving and obsolete items of $1,595,000 and $1,527,000 at February 29, 2020 and August 31, 2019, respectively. The provision is based upon management’s review of inventories on-hand over their expected future utilization and length of time held by the Company. |
Short Sales of Trading Securities | Short Sales of Trading Securities Securities sold short represent transactions in which the Company sells a security borrowed from the broker, which the Company is obligated to purchase and deliver back to the broker. The initial value of the underlying borrowed security is recorded as a liability, and is adjusted to market value at each reporting period, with unrealized appreciation or depreciation being recorded for the change in value of the open short position. The Company records a realized gain or loss when the short position is closed. By entering into short sales, the Company bears the market risk of an unfavorable increase in the price of the security sold short in excess of the proceeds received. The market value of open short positions is separately presented as a liability in the consolidated balance sheets. The Company is required to establish a margin account with the lending broker equal to the market value of open short positions. As the use of such funds is restricted while the short sale is outstanding, the balance of this account is classified as restricted cash, current in the consolidated balance sheets. The restricted cash related to securities sold short was $2,386,000 and $655,000 at February 29, 2020 and August 31, 2019, respectively. |
Long-Lived Assets | Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of the impairment review, assets are measured by comparing the carrying amount to future net cash flows. If assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds their estimated fair values. |
Income Taxes | Income Taxes Deferred taxes on income result from temporary differences between the reporting of income for financial statement and tax reporting purposes. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some or all of the deferred tax asset will not be realized. In making such determination, the Company considers all available positive and negative evidence, including, but not limited to, scheduled reversals of deferred tax liabilities, projected future taxable income (if any), tax planning strategies and recent financial performance. We provide tax contingencies, if any, for federal, state, local and international exposures relating to audit results, tax planning initiatives and compliance responsibilities. The development of these reserves requires judgments and estimates regarding tax issues, potential outcomes and timing. Actual results could differ from those estimates. |
Revenue Recognition | Revenue Recognition We derive our revenue primarily from product sales. We determine revenue recognition through the following steps: (1) identification of the contract with a customer; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; (5) recognition of revenue when, or as, we satisfy a performance obligation. The Company’s performance obligations consist solely of product shipped to customers. Revenue from product sales is presented as net sales and recognized upon the transfer of control of promised products to customers in an amount that reflects the consideration we expect to receive in exchange for these products. Revenue is recognized net of expected returns and any taxes collected from customers. We offer industry standard contractual terms in our purchase orders. |
Earnings Per Common Share | Earnings Per Common Share Basic earnings per common share for the three and six months ended February 29, 2020 and February 28, 2019 were computed based on the weighted average number of common shares outstanding during each respective period. Diluted earnings per share for those periods have been computed based on the weighted average number of common shares outstanding, giving effect to all potentially dilutive common shares that were outstanding during the respective periods (See Note 4). |
Foreign Currency Translation and Transactions | Foreign Currency Translation and Transactions Assets and liabilities recorded in functional currencies other than the U.S. dollar (Canadian dollars for Bisco’s Canadian subsidiary) are translated into U.S. dollars at the period-end rate of exchange. Revenue and expenses are translated at the weighted-average exchange rates for the three and six months ended February 29, 2020 and February 28, 2019. The resulting translation adjustments are charged or credited directly to accumulated other comprehensive income or loss. The average exchange rate of Canadian dollars to U.S. dollars for the six months ended February 29, 2020 and February 28, 2019 was $0.76 for both periods. |
Concentrations | Concentrations Net sales to customers outside the United States were approximately 9% of revenues for each of the six months ended February 29, 2020 and February 28, 2019, and related accounts receivable were approximately 12% of total accounts receivable for both February 29, 2020 and August 31, 2019. No single customer accounted for more than 10% of revenues and accounts receivable for the six months ended February 29, 2020 or February 28, 2019. |
Significant Recent Accounting Pronouncements | Significant Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)” as modified by subsequently issued ASUs 2015-14, 2016-08, 2016-10, 2016-12 and 2016-20 (collectively “new revenue standard”). The core principle of the new revenue standard, among other changes, is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company adopted the new revenue guidance effective September 1, 2018, using the modified retrospective method with no impact to the opening retained earnings. In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)," which requires lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Classification is based on criteria that are largely similar to those applied in previous lease accounting, but without explicit bright lines. Lessor accounting is similar to the previous model, but updated to align with certain changes to the lessee model and the new revenue recognition standard. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company adopted ASU 2016-02 on September 1, 2019 and applied the package of practical expedients included therein, as well as utilized the transition method included in ASU 2018-11. By applying ASU 2016-02 at the adoption date, as opposed to at the beginning of the earliest period presented, the presentation of financial information for periods prior to September 1, 2019 remained unchanged and in accordance with Leases (Topic 840). As of February 29, 2020, the Company has right of use assets of approximately $13.0 million and lease liabilities of approximately $13.1 million recorded in the consolidated balance sheet. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses”, which will require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The guidance is effective for annual reporting periods beginning after December 15, 2019 and interim periods within those fiscal years. In November 2019, the FASB deferred the effective dates of the new credit losses standard for all entities except SEC filers that are not smaller reporting companies to fiscal year beginning after December 15, 2022, including interim periods within those fiscal years. The Company is currently evaluating this statement and its impact on its results of operations and financial position. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows - Restricted Cash a consensus of the FASB Emerging Issues Task Force.” This standard requires restricted cash and cash equivalents to be included with cash and cash equivalents on the statement of cash flows under a retrospective transition approach. The guidance will become effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years with early adoption permitted. The Company elected to adopt the new cash flow guidance effective September 1, 2018, with an immaterial impact to the statements of cash flows. |
Earnings per Share (Tables)
Earnings per Share (Tables) | 6 Months Ended |
Feb. 29, 2020 | |
Earnings per Share | |
Schedule of Earnings Per Share | The following is a reconciliation of the numerators and denominators of the basic and diluted computations for earnings per common share (in thousands, except per share data): Three Months Ended Six Months Ended February 29, February 28, February 29, February 28, 2020 2019 2020 2019 (In thousands, except share and per share amounts) EPS: Net income $ 2,598 $ 1,961 $ 4,515 $ 3,886 Less: accrued preferred stock dividends (19) (19) (38) (38) Net income available for common shareholders $ 2,579 $ 1,942 $ 4,477 $ 3,848 Earnings per common share – basic and diluted $ 0.53 $ 0.40 $ 0.92 $ 0.79 |
Organization and Basis of Pre_2
Organization and Basis of Presentation (Details) | Feb. 29, 2020facility |
Organization and Basis of Presentation | |
Sales offices | 49 |
Distribution centers | 7 |
Significant Accounting Polici_3
Significant Accounting Policies and Significant Recent Accounting Pronouncements (Details) - USD ($) | 6 Months Ended | 12 Months Ended | ||
Feb. 29, 2020 | Feb. 28, 2019 | Aug. 31, 2019 | ||
Significant Accounting Policies [Line Items] | ||||
Allowance for Doubtful Accounts Receivable | $ 169,000 | $ 169,000 | ||
Inventory Valuation Reserves | 1,595,000 | 1,527,000 | ||
Restricted Cash and Cash Equivalents, Current | $ 2,386,000 | $ 655,000 | [1] | |
Exchange Rate On Foreign Currency Translation And Transactions | $ 0.76 | $ 0.76 | ||
Percentage of Revenue Per Entity, Maximum | 10.00% | 10.00% | ||
Operating Lease, Right-of-Use Asset | $ 13,003,000 | |||
Accounting Standards Update 2016-02 [Member] | ||||
Significant Accounting Policies [Line Items] | ||||
Operating Lease, Right-of-Use Asset | 13,000,000 | |||
Operating Lease, Liability | $ 13,100,000 | |||
Sales Revenue, Net [Member] | ||||
Significant Accounting Policies [Line Items] | ||||
Concentration Risk, Percentage | 9.00% | 9.00% | ||
Accounts Receivable [Member] | ||||
Significant Accounting Policies [Line Items] | ||||
Concentration Risk, Percentage | 12.00% | 12.00% | ||
[1] | Derived from the Company’s audited financial statements included in its Form 10K for the year ended August 31, 2019 as filed with the U. S. Securities and Exchange Commission on November 27, 2019. |
Debt (Details)
Debt (Details) | May 15, 2017USD ($) | Sep. 30, 2019USD ($)ft² | Feb. 29, 2020USD ($) | Aug. 31, 2019USD ($) |
Line of Credit Facility, Current Borrowing Capacity | $ 15,000,000 | |||
Line of Credit Facility, Remaining Borrowing Capacity | $ 10,000,000 | |||
Line of Credit Facility, Expiration Date | Jul. 5, 2021 | |||
Debt Instrument, Description of Variable Rate Basis | (A) The default variable interest index rate, which is Citizens Business Bank Prime Rate of Interest, which is the prime rate (4.75% and 5.25% at February 29, 2020 and August 31, 2019, respectively) less 0.500% | |||
Default Variable Interest Rate | (B) One Hundred Eighty (180) day Libor Rate plus a margin of 1.550% | |||
Line of Credit Facility, Interest Rate Description | The amounts outstanding under this line of credit as of February 29, 2020 and August 31, 2019 are currently all under the default variable interest index rate of 4.25% and 4.75%, respectively. | |||
Percentage of Default Variable Interest | 4.25% | 4.75% | ||
Long-term Line of Credit | $ 9,213,000 | $ 6,114,000 | ||
Operating Lease Office Space | ft² | 80,000 | |||
Debt Instrument, Maturity Date | May 15, 2027 | |||
Construction Loan | 3,794,000 | $ 342,000 | ||
Proceeds from Sale of Property, Plant, and Equipment | $ 7,075,000 | 7,075,000 | ||
Financial Guarantee [Member] | ||||
Proceeds from Issuance of Long-term Debt | $ 5,400,000 | |||
Construction Loan Payable [Member] | ||||
Line of Credit Facility, Maximum Borrowing Capacity | 5,000,000 | |||
Long-term Line of Credit | $ 5,000,000 | |||
Minimum [Member] | ||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 10,000,000 | |||
Debt Instrument, Basis Spread on Variable Rate | 3.50% | |||
Maximum [Member] | ||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 15,000,000 | |||
Prime Rate [Member] | ||||
Long-term Debt, Percentage Bearing Variable Interest, Percentage Rate | 4.75% | 5.25% | ||
Percentage of Default Variable Interest | 4.75% | 5.25% | ||
One Hundred Eighty Day London Interbank Offered Rate (LIBOR) [Member] | ||||
Long-term Debt, Percentage Bearing Variable Interest, Percentage Rate | 1.55% |
Earnings per Share (Details)
Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Feb. 29, 2020 | Nov. 30, 2019 | Feb. 28, 2019 | Nov. 30, 2018 | Feb. 29, 2020 | Feb. 28, 2019 | |
EPS: | ||||||
Net income | $ 2,598 | $ 1,917 | $ 1,961 | $ 1,925 | $ 4,515 | $ 3,886 |
Less: accrued preferred stock dividends | (19) | (19) | (38) | (38) | ||
Net income attributable to common shareholders | $ 2,579 | $ 1,942 | $ 4,477 | $ 3,848 | ||
Earnings per common share - basic and diluted | $ 0.53 | $ 0.40 | $ 0.92 | $ 0.79 |
Earnings per Share - Additional
Earnings per Share - Additional Information (Details) - shares | 3 Months Ended | 6 Months Ended |
Feb. 29, 2020 | Feb. 28, 2019 | |
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 40,000 | 40,000 |
Series A Cumulative Convertible Preferred Stock [Member] | ||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||
Convertible Preferred Stock, Shares Issued upon Conversion | 36,000 | 36,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | Jul. 26, 2019 | Feb. 29, 2020 | Feb. 28, 2019 | Feb. 29, 2020 | Feb. 28, 2019 |
Related Party Transaction [Line Items] | |||||
Operating Leases Term | 10 years | ||||
Operating Leases, Rent Expense, Minimum Rentals | $ 22,600 | ||||
Operating Leases of Lessee, Contingent Rentals, Basis Spread on Variable Rate | 2.50% | 2.50% | |||
Operating Lease, Expense | $ 199,000 | $ 0 | $ 398,000 | $ 0 | |
Related Party [Member] | |||||
Related Party Transaction [Line Items] | |||||
Operating Leases, Rent Expense | $ 71,000 | $ 70,000 | $ 142,000 | $ 138,000 | |
Initial monthly rental rate | $ 66,300 | ||||
Percentage of annual rent increases | 2.50% |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Feb. 29, 2020 | Feb. 28, 2019 | Feb. 29, 2020 | Feb. 28, 2019 | Aug. 31, 2019 | |
Income Taxes | |||||
Effective Income Tax Rate Reconciliation, Percent | 21.00% | 35.00% | |||
Tax Cuts and Jobs Act, Transition Tax for Accumulated Foreign Earnings, Liability | $ 0 | $ 0 | |||
Income Tax Expense (Benefit) | $ 934,000 | $ 580,000 | $ 2,010,000 | $ 1,425,000 | |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 26.40% | 22.80% | 30.80% | 26.80% |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | Feb. 29, 2020 | Aug. 31, 2019 |
Long-term Line of Credit | $ 9,213,000 | $ 6,114,000 |
Community Bank [Member] | ||
Long-term Line of Credit | 100,000 | |
Letter of Credit [Member] | ||
Notes Payable, Noncurrent | $ 100,000 |
Subsequent Events (Details)
Subsequent Events (Details) | Mar. 13, 2020ft² |
Subsequent Event [Member] | Lakeview Property [Member] | |
Subsequent Event [Line Items] | |
Number of square feet in the Hunter Property | 80,000 |