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Note 9 - Leases | 12 Months Ended
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Sep. 30, 2024
Notes to Financial Statements |
Lessee, Operating Leases [Text Block] | Note 9. Leases The Company leases an 85,000 square foot facility at 7050 Winnetka Avenue North, Brooklyn Park, Minnesota consisting of corporate offices, manufacturing, and warehouse space. The original lease term was ten years and two months, ending on February 28, 2025, with a renewal option. In April 2024, the Company exercised the renewal option, which extended the lease term three additional years to end on February 29, 2028. The exercise of the renewal option added a right of use asset and corresponding lease liability of $1,337,000 upon lease commencement. The Company indirectly leases an approximately 318,000 square foot manufacturing facility in Tijuana, Mexico that operates as a Maquiladora. In April 2024, the Company terminated the lease for this manufacturing facility and signed a new lease for the same facility. The new lease has a term of seven years, of which five years are mandatory. The lease contains two options to extend the term of the lease for additional periods of five years each. The lease calls for monthly base rental payments of approximately $169,000, increasing 2% annually. The renewal options have not been included within the lease term because it is not reasonably certain that the Company will exercise either option. The termination of the original facility lease resulted in a decreased right of use asset and corresponding lease liability of $5,610,000, offset by the addition of the right of use asset and lease liability of the new facility lease for $8,637,000 upon lease termination and commencement, respectively. The Company leases a 105,000 square foot warehouse and manufacturing facility in Brooklyn Park, Minnesota. The lease term is five years ending on February 28, 2027, with rent payments increasing annually. The lease includes an option to extend the lease for an additional five years. The renewal option has not been included within the lease term because it is not reasonably certain that the Company will exercise the option. Nestor Cables leases an approximately 25,000 square foot manufacturing facility in Oulu, Finland, which is utilized for the operations of Nestor Cables. The original lease term ended on October 31, 2022, but auto renewed and will continue to auto renew indefinitely until terminated with two years written notice. It is not reasonably certain that the Company will not exercise the termination option. The lease calls for monthly rental payments of approximately €40,000. Rent is increased each year on January 1st based upon the cost-of-living index published by the Finnish government. Nestor Cables leases an approximately 49,000 square foot manufacturing facility in Tabasalu, Estonia, which is utilized for the operations of Nestor Cables Baltics. The lease is without a fixed term and requires two years’ written notice to terminate the lease. Additionally, the lease grants to Nestor Cables the option to lease an expansion facility that is to be constructed no later than December 2024. The expansion facility will be constructed on the same premises as the existing facility. Nestor exercised the option to lease the expansion facility, and the lease term of the existing facility will be 10 years commencing December 2024. The lease called for monthly rental payments of approximately €20,400 until April 2024 and calls for monthly rental payments of €25,000 afterwards. Rent is increased each year on May 1st based upon the cost-of-living index published by the Estonian government and is capped at 5%. Right-of-use lease assets and lease liabilities are recognized as of the commencement date based on the present value of the remaining lease payments over the lease term which includes renewal periods we are reasonably certain to exercise. Our leases do not contain any material residual value guarantees or material restrictive covenants. Operating lease expense included within cost of sales and selling, general and administrative expense was as follows:
(In thousands) Operating lease expense under ASC842, Leases, within: |  | Year ended September 30, 2024 |  |  | Year ended September 30, 2023 |  |  | Year ended September 30, 2022 |
Cost of sales |  | $ | 4,231 |  |  | $ | 4,067 |  |  | $ | 2,534 |
Selling, general and administrative |  |  | 323 |  |  |  | 244 |  |  |  | 277 |
Total lease expense |  | $ | 4,554 |  |  | $ | 4,311 |  |  | $ | 2,801 |
Our future lease obligations for leases that have commenced were as follows as of September 30, 2024:
(In thousands) |  | Operating Leases |
FY 2025 |  | $ | 4,321 |
FY 2026 |  |  | 4,382 |
FY 2027 |  |  | 3,451 |
FY 2028 |  |  | 2,867 |
FY 2029 |  |  | 1,566 |
Thereafter |  |  | 2,576 |
Total lease payments |  |  | 19,163 |
Less: Interest |  |  | (3,035 | )
Present value of lease liabilities |  | $ | 16,128 |
As of September 30, 2024, the weighted average term and weighted average discount rate for our leases were 5.20 years and 6.59%, respectively. As of September 30, 2023, the weighted average term and weighted average discount rate for our leases were 5.16 years and 3.59%, respectively. As of September 30, 2022, the weighted average term and weighted average discount rate for our leases were 4.04 years and 3.22%, respectively. For the years ended September 30, 2024, 2023, and 2022, the operating cash outflows from our leases were $4,222,000, $3,954,000, and $2,064,000, respectively.

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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/842-20/tableOfContent + Details
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