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Note 7 - Stock-based Compensation | 6 Months Ended
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Mar. 31, 2025
Notes to Financial Statements |
Share-Based Payment Arrangement [Text Block] | Note 7. Stock-Based Compensation The Company recorded $1,288,000 and $2,427,000 of compensation expense related to current and past restricted stock grants, non-qualified stock options, performance stock units, and the Company’s Employee Stock Purchase Plan (“ESPP”) for the three and six months ended March 31, 2025, respectively. For the three months ended March 31, 2025, $1,225,000 of this expense is included in selling, general and administrative expense, and $63,000 is included in cost of sales. For the six months ended March 31, 2025, $2,318,000 of this expense is included in selling, general and administrative expense, and $109,000 is included in cost of sales. As of March 31, 2025, $8,002,000 of total unrecognized compensation expense related to non-vested restricted stock awards and stock options is expected to be recognized over a period of approximately 2.6 years. The Company recorded $1,012,000 and $2,284,000 of compensation expense related to current and past restricted stock grants, non-qualified stock options, performance stock units, and the ESPP for the three and six months ended March 31, 2024. For the three months ended March 31, 2024, $952,000 of this expense is included in selling, general and administrative expense, and $60,000 is included in cost of sales. For the six months ended March 31, 2024, $2,180,000 of this expense is included in selling, general and administrative expense, and $104,000 is included in cost of sales. Stock Options The Company uses the Black-Scholes option pricing model to determine the fair value of stock options granted. During the six months ended March 31, 2025, the Company granted employees non-qualified stock options to purchase an aggregate of 38,198 shares of common stock with a weighted average contractual term of five years, a weighted average vesting term of approximately three years, and a weighted average exercise price of $30.90 per share. During the six months ended March 31, 2024, the Company granted employees non-qualified stock options to purchase an aggregate of 111,299 shares of common stock with a weighted average contractual term of five years, a weighted average three-year vesting term, and a weighted average exercise price of $26.18 per share. The fair value of stock option awards during the six months ended March 31, 2025, was estimated as of the respective grant dates using the assumptions listed below:
|  | Six months ended March 31, 2025 |
Dividend yield |  |  | 0.00 | %
Expected volatility |  |  | 58.07 | %
Risk-free interest rate |  |  | 4.20 | %
Expected life |  | 3.5 years |
Vesting period |  | 3 years |
The expected stock price volatility is based on the historical volatility of the Company’s stock for a period approximating the expected life. The expected life represents the period of time that options are expected to be outstanding after their grant date. The risk-free interest rate reflects the interest rate as of the grant date on zero-coupon U.S. governmental bonds with a remaining life similar to the expected option term. Options are granted with exercise prices at fair market values determined on the date of grant and vesting normally occurs over a three to five-year period. Shares issued upon exercise of a stock option are issued from the Company’s authorized but unissued shares. The following is a summary of stock option activity during the six months ended March 31, 2025:
|  | Number of options |  |  | Weighted average exercise price |
Outstanding as of September 30, 2024 |  |  | 366,984 |  |  | $ | 33.83 |
Granted |  |  | 38,198 |  |  |  | 30.90 |
Exercised |  |  | (4,021 | ) |  |  | 24.19 |
Forfeited or expired |  |  | (895 | ) |  |  | 34.65 |
Outstanding as of March 31, 2025 |  |  | 400,266 |  |  | $ | 33.64 |
The intrinsic value of an option is the amount by which the fair value of the underlying stock exceeds its exercise price. As of March 31, 2025, the weighted average remaining contractual term for all outstanding and exercisable stock options was 2.27 years and their aggregate intrinsic value was $6,298,486. Restricted Stock During the six months ended March 31, 2025, the Company granted employees restricted stock awards totaling 104,691 shares of common stock, with a vesting term of approximately three years and a fair value of $30.90 per share based on the stock price on the grant date. During the six months ended March 31, 2024, the Company granted employees restricted stock awards totaling 136,157 shares of common stock, with a vesting term of approximately three years and a fair value of $29.63 per share based on the stock price on the grant date. During the six months ended March 31, 2025, the Company granted the non-employee directors restricted stock awards totaling 17,886 shares of common stock, with a vesting term of approximately one year and a fair value of $32.42 per share. Restricted stock transactions during the six months ended March 31, 2025, are summarized as follows:
|  | Number of shares |  |  | Weighted average grant date fair value |
Unvested shares as of September 30, 2024 |  |  | 162,207 |  |  | $ | 34.91 |
Granted |  |  | 122,577 |  |  |  | 31.12 |
Vested |  |  | (71,691 | ) |  |  | 57.35 |
Forfeited |  |  | (3,530 | ) |  |  | 26.46 |
Unvested as of March 31, 2025 |  |  | 209,563 |  |  | $ | 27.83 |
Performance Stock Units During the six months ended March 31, 2025, the Company granted 50,747 performance stock units which entitle the participant to receive one share of the Company’s common stock for each performance stock unit awarded, subject to the achievement of fiscal year 2025 performance goals. Achievement of the goals can result in 50%, 100%, or 150% of the shares being awarded, which have a vesting term of 3 years. The Company has determined the fair value per underlying share of the performance stock unit awards to be $30.90 as of the grant date. Compensation expense for the performance stock units is measured using the fair value of our common stock at the grant date. As of March 31, 2025, the Company believes it is probable that 100% of these performance stock unit awards will vest based on achievement of established performance goals and has recognized compensation cost accordingly. During the six months ended March 31, 2024, the Company granted 47,745 performance stock units which entitled the participant to receive one share of the Company’s common stock for each performance stock unit awarded, upon achievement of a fiscal year 2024 performance goal. The Company determined the fair value per underlying share of the performance stock unit awards to be $26.18 as of the grant date. The 2024 fiscal year performance goal was not met, and the shares were forfeited during the six months ended March 31, 2025. The following is a summary of performance stock unit activity during the six months ended March 31, 2025:
|  | Number of shares |  |  | Weighted average grant date fair value |
Unvested shares as of September 30, 2024 |  |  | 47,745 |  |  | $ | 26.18 |
Granted |  |  | 50,747 |  |  |  | 30.90 |
Vested |  |  | - |  |  |  | - |
Forfeited |  |  | (47,745 | ) |  |  | 26.18 |
Unvested as of March 31, 2025 |  |  | 50,747 |  |  | $ | 30.90 |
Employee Stock Purchase Plan The Company’s ESPP allows participating employees to purchase shares of the Company’s common stock at a discount through payroll deductions. The ESPP is available to all employees subject to certain eligibility requirements. Terms of the ESPP provide those participating employees the ability to purchase the Company’s common stock on a voluntary after-tax basis. Employees may purchase the Company’s common stock at a price that is no less than the lower of 85% of the fair market value of one share of common stock at the beginning or end of each stock purchase period or phase. The ESPP is carried out in six-month phases, with phases beginning on January 1 and July 1 of each calendar year. For the phase that ended on December 31, 2024, employees purchased 11,415 shares at a price of $26.35 per share. After the employee purchase on December 31, 2024, 133,134 shares of common stock were available for future purchase under the ESPP.

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