Leases

9 Months Ended

May 31, 2024

Leases

Leases

Note 5.     Leases

The Company leases its facilities and automobiles under operating lease agreements (one distribution facility, located in Glendale Heights, IL, is leased from the Trust, which is beneficially owned and controlled by Glen Ceiley, the Company’s Chief Executive Officer, Chairman of the Board and majority shareholder). Our operating lease agreements expire on various dates through September 2027 and require minimum rental payments ranging from $1,000 to $22,600 per month. Certain of the leases contain options for renewal under varying terms.

On October 20, 2023, the Company closed escrow on the purchase of the Hunter Property, which was leased by the Company, from the Trust for a purchase price of $31.0 million. See Note 7 of the Notes to Consolidated Financial Statements of this Report for further explanation.

Minimum future rental payments under operating leases are as follows:

Years Ending :
2024 (remaining three months)	$	718,000
2025		2,105,000
2026		1,317,000
2027		694,000
2028		185,000
Thereafter		32,000
Future minimum lease payments	$	5,051,000
Less interest		(377,000)
Present value of minimum lease payments	$	4,674,000

Operating lease costs under these leases were approximately $2.118 million and $2.588 million for the nine months ended May 31, 2024 and 2023, respectively.

Other information related to operating leases is as follows:

	May 31,		August 31,
	2024		2023
Weighted average remaining lease terms	5.8 years		4.3 years
Incremental borrowing rate	5.9	%	4.73	%

The discount rate used on the operating ROU assets represented the Company’s incremental borrowing rate at lease inception.