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Financing Receivables, net | 12 Months Ended
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Sep. 30, 2024
Financing Receivables, net |
Financing Receivables, net | 3. Financing Receivables, net In the TS-US division financing of goods and services is offered to certain customers within the United States. This involves amounts due reflecting sales whose payment terms exceed one year. This financing is separate from agreements with a leasing component, see Note 10 Leases for financing through leases. Determining whether to offer financing involves looking at the customer’s payment history, economic conditions, and capacity to pay. These financing arrangements do not contain collateral. The Company assigns an internal risk rating to each customer at inception, which groups customers into a portfolio based on this risk rating. A risk rating is assigned by analyzing a customer’s financial statements and the latest Fitch rating, if publicly available, as well as recent payment activity. The credit quality of customers is continually monitored by these items. Accounts rated low risk have the equivalent of a Fitch rating of BBB– or higher, while accounts rated moderate risk have the equivalent of BB. The Company does not offer financing for customers where the risk is classified as higher, which would be lower than the equivalent of a BB Fitch rating due to the likelihood of loss being higher. The risk characteristics of each portfolio are consistent with the Fitch rating or equivalent. According to Fitch Ratings, “'’BB' ratings indicate an elevated vulnerability to default risk, particularly in the event of adverse changes in business or economic conditions over time; however, business or financial flexibility exists that supports the servicing of financial commitments.” According to Fitch Ratings, “'BBB' ratings indicate that expectations of default risk are currently low. The capacity for payment of financial commitments is considered adequate, but adverse business or economic conditions are more likely to impair this capacity.” The only significant change in factors that influenced the estimate of expected credit losses as of September 30, 2024 was a significant customer having its Fitch Rating upgraded from BB+ to BBB-. This customer had a balance of $1.9 million, or 25%, of financing receivables, net and $2.5 million, or 22%, as of September 30, 2024 and September 30, 2023, respectively. Financing receivables, net carry an average weighted average interest rate of 8.4%, which reflects the approximate interest rate consistent with a separate financing transaction with the customer at the inception of the agreement. The amount of interest income earned from sales whose payment terms exceed one year for the years ended September 30, 2024 and 2023 was $700 thousand and $810 thousand, respectively. Interest income from these agreements is recorded in Other income (expense), net on the Consolidated Statements of Operations. Amounts disclosed below as of September 30, 2024 reflect adoption of the new CECL standard and the amounts disclosed as of September 30, 2023 reflect superseded guidance. The following table presents the components of the Company’s Financing receivables, net segregated by portfolio (risk rating) for the periods indicated: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | As of September 30, 2024 | ​ | As of September 30, 2023
​ | ​ | Risk Rating | ​ | ​ | ​ | ​ | Risk Rating | ​ | ​ | ​
​ | ​ | ​ | Low | ​ | ​ | Moderate | ​ | ​ | Total | ​ | ​ | Low | ​ | ​ | Moderate | ​ | ​ | Total
​ | ​ | (Amounts in thousands) | ​ | (Amounts in thousands)
Financing receivables, net: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Financing receivables, gross | ​ | $ | 7,153 | ​ | $ | 874 | ​ | $ | 8,027 | ​ | $ | 8,893 | ​ | $ | 3,361 | ​ | $ | 12,254
Unearned interest income | ​ | ​ | (599) | ​ | ​ | (85) | ​ | ​ | (684) | ​ | ​ | (325) | ​ | ​ | (534) | ​ | ​ | (859)
Allowance for credit losses | ​ | ​ | (27) | ​ | ​ | (10) | ​ | ​ | (37) | ​ | ​ | - | ​ | ​ | - | ​ | ​ | -
Financing receivables, net | ​ | $ | 6,527 | ​ | $ | 779 | ​ | $ | 7,306 | ​ | $ | 8,568 | ​ | $ | 2,827 | ​ | $ | 11,395
Short-term | ​ | $ | 4,013 | ​ | $ | 371 | ​ | $ | 4,384 | ​ | $ | 6,281 | ​ | $ | 890 | ​ | $ | 7,171
Long-term | ​ | $ | 2,514 | ​ | $ | 408 | ​ | $ | 2,922 | ​ | $ | 2,287 | ​ | $ | 1,937 | ​ | $ | 4,224
​ Amounts disclosed below for the year ended September 30, 2024 reflect adoption of the new CECL standard and the amounts for the year ended September 30, 2023 reflect superseded guidance. The following table presents the changes in Allowance for credit losses for Financing receivables, net for the periods indicated: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Year ended
​ | ​ | September 30, 2024 | ​ | September 30, 2023
​ | ​ | Risk Rating | ​ | ​ | ​ | ​ | Risk Rating | ​ | ​ | ​
​ |  | Low |  | Moderate |  | Total |  | Low |  | Moderate |  | Total
​ | ​ | (Amounts in thousands) | ​ | (Amounts in thousands)
Allowance for credit losses for financing receivables: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Balances at beginning of the period | ​ | $ | - | ​ | $ | - | ​ | $ | - | ​ | $ | - | ​ | $ | - | ​ | $ | -
Adjustment for adoption of new CECL standard | ​ | ​ | 27 | ​ | ​ | 55 | ​ | ​ | 82 | ​ | ​ | - | ​ | ​ | - | ​ | ​ | -
Recovery charged to Consolidated Statements of Operations | ​ | ​ | - | ​ | ​ | (45) | ​ | ​ | (45) | ​ | ​ | - | ​ | ​ | - | ​ | ​ | -
Balances at end of the period | ​ | $ | 27 | ​ | $ | 10 | ​ | $ | 37 | ​ | $ | - | ​ | $ | - | ​ | $ | -
​ Upon adoption of the new CECL standard as described in Note 1 Basis of Presentation and New Significant Accounting Policy, the Company recognizes an allowance for credit losses for financing receivables in an amount equal to the probable losses net of recoveries. A probability method for calculating credit losses is used based on historical data of defaults of Fitch ratings and length of time. Various factors are also assessed in the allowance for credit losses including internal historical data as well as macroeconomic forecast assumptions and management judgments applicable to and through the expected life of the portfolios. Macroeconomic conditions include the level of gross domestic product (“GDP”) growth and unemployment rates, which directly correlate with our historical credit losses. The expense associated with the allowance for expected credit losses is recognized in Selling, general, and administrative expenses in the Consolidated Statements of Operations. Financing receivables whose payment terms exceed one year are placed on non-accrual status, meaning interest income stops being recorded, when the customer has a past due amount in excess of 30 days or reasonable doubt exists in collecting all interest and principal. A payment due in excess of 30 days is considered delinquent. If a payment is received for a receivable on non-accrual status the payment is first applied to interest and then principal. Recording interest income resumes once no reasonable doubt exists regarding collecting all interest and principal. There were no financing receivables placed on non-accrual status as of September 30, 2024 or September 30, 2023. The following table presents Financing receivables, gross, including accrued interest and excluding any allowance, by credit quality indicator segregated by risk rating and year of origination as of September 30, 2024: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | September 30, 2024
​ | ​ | Fiscal year of origination | ​ | ​ | ​
Risk Rating |  | 2024 |  | 2023 |  | 2022 |  | 2021 |  | Total
​ |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Moderate |  | $ | 531 | ​ | $ | 343 | ​ | $ | — | ​ | $ | — | ​ | $ | 874
Low |  |  | 2,956 | ​ | ​ | 2,637 | ​ | ​ | — | ​ | ​ | 1,560 | ​ | ​ | 7,153
Total |  | $ | 3,487 | ​ | $ | 2,980 | ​ | $ | — | ​ | $ | 1,560 | ​ | $ | 8,027
​ Contractual maturities of outstanding financing receivables are as follows:
​ | ​ | ​ | ​
Fiscal year ending September 30: |  | (Amounts in thousands)
2025 | ​ | $ | 5,119
2026 | ​ | ​ | 2,042
2027 | ​ | ​ | 808
2028 | ​ | ​ | 58
Total payments | ​ | $ | 8,027
Less: unearned interest income | ​ | ​ | (684)
Less: allowance for credit losses | ​ | ​ | (37)
Total, net of unearned interest income and allowance for credit losses | ​ | $ | 7,306
​ ​ ​

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