Leases

12 Months Ended

Aug. 31, 2024

The Company leases real estate for its regional sales offices, a research and development facility, and offices located at its international subsidiaries and branch locations. The Company also leases an automobile fleet in the United States. In addition, the Company has identified warehouse leases within certain third-party distribution center service contracts and a

lease of a blending room within a third-party manufacturing contract. All other leases are insignificant to the Company’s consolidated financial statements.

Right-of-use assets and lease liabilities consisted of the following (in thousands):


	August 31, 2024		August 31, 2023
Assets:
Operating lease right-of-use assets	8,077		7,820
Finance lease right-of-use asset	3,534		—
Total right-of-use assets	$	11,611	$	7,820

Liabilities:
Current operating lease liabilities(1)	2,294		2,144
Long-term operating lease liabilities	5,904		5,832
Total operating lease liabilities	$	8,198	$	7,976

(1)Current operating lease liabilities are classified in accrued liabilities on the Company’s consolidated balance sheets.

The Company’s maturities of its operating lease liabilities, including early termination and renewal options that management is reasonably certain to exercise, are as follows as of August 31, 2024 (in thousands):


	Operating Leases
Fiscal year 2025	2,625
Fiscal year 2026	2,033
Fiscal year 2027	1,508
Fiscal year 2028	845
Fiscal year 2029	601
Thereafter	1,521
Total undiscounted future cash flows	$	9,133
Less: Interest	(935)
Present value of lease liabilities	$	8,198

The Company recorded $2.3 million and $2.1 million in lease expense during the fiscal years ended August 31, 2024 and 2023, respectively. This lease expense was included in selling, general and administrative expenses. The Company recorded $1.0 million and $0.5 million of lease expense classified within cost of products sold for the fiscal years ended August 31, 2024, and 2023, respectively. During the fiscal year ended August 31, 2024 and 2023, the Company paid cash of $2.6 million and $2.4 million, respectively, related to lease liabilities. Variable lease expense under the Company’s lease agreements was not significant for both the fiscal years ended August 31, 2024 and 2023. As of August 31, 2024, the weighted-average remaining lease term was 5.0 years and the weighted-average discount rate was 5.0% for the Company’s operating leases. As of August 31, 2023, the weighted-average remaining lease term was 5.9 years and the weighted-average discount rate was 3.4% for the Company’s operating leases. The Company did not have a significant amount of leases that commenced after August 31, 2024 that created rights and obligations to the Company.

The Company had no significant short-term leases as of August 31, 2024. The Company obtained additional ROU assets of $1.7 million in exchange for lease obligations related to renewals of existing leases during fiscal year 2024. During the fiscal year ended August 31, 2024, the Company entered into a finance lease for a blending facility (the “Finance Lease”). As of August 31, 2023, the Company had $3.8 million of prepaid deposits, which converted to a right-of-use asset at the commencement of the Finance Lease during the fiscal year ended August 31, 2024. Since the Finance Lease was fully prepaid at commencement, no lease liability exists related to it. As of August 31, 2023, finance leases were not significant and all leases recorded on the Company’s consolidated balances sheets were operating leases. Residual value guarantees, restrictions, covenants, sublease income, net gains or losses from sale and leaseback transactions, and transactions with related parties associated with leases were also not significant.