Note 15 - Related Parties

9 Months Ended

Jun. 29, 2024

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

Note 15 Related Parties

We have related party expenses for distribution and shipping related costs with NFI Industries, Inc. and its affiliated entities (“NFI”). Our director, Sidney R. Brown, is CEO and an owner of NFI Industries, Inc. The Company paid $18.9 million and $49.3 million to NFI in the three and nine months ended June 29, 2024, and paid $13.5 million and $41.1 million through the three and nine months ended June 24, 2023.

Of the amounts paid to NFI, the amount related to transportation management services performed by NFI was $0.3 million and $0.8 million in the three and nine months ended June 29, 2024, respectively, and $0.3 million and $0.6 million in the three and nine months ended June 24, 2023, respectively.

Of the amounts paid to NFI, the amount related to labor management services performed by NFI was $3.2 million and $6.7 million in the three and nine months ended June 29, 2024. No labor management services were performed by NFI in the three and nine months ended June 24, 2023.

In June 2023, the Company began leasing a regional distribution center in Terrell, Texas that was constructed by, and is owned by, a subsidiary of NFI. The distribution center is operated by NFI for the Company, pursuant to a Service Labor Management Agreement. Under the Service Labor Management Agreement, NFI provides logistics and warehouse management services. NFI continues to perform transportation-related management services for the Company as well. At the lease commencement date, $28.7 million was recorded as an operating right-of-use asset, $0.2 million was recorded as a current operating lease liability, and $28.5 million was recorded as a non-current operating lease liability. As of June 29, 2024, $27.7 million was recorded as an operating right-of-use asset, $0.6 million was recorded as a current operating lease liability, and $28.1 million was recorded as a non-current operating lease liability. As of September 30, 2023, $28.4 million was recorded as an operating right-of-use asset, $0.5 million was recorded as a current operating lease liability, and $28.5 million was recorded as a non-current operating lease liability. Of the amounts paid to NFI, the Company made lease payments totaling $0.5 million and $1.4 million during the three- and nine-month periods ended June 29, 2024. No payments on the lease were made to NFI during the three- and nine-month periods ended June 24, 2023.

The remainder of the costs related to amounts that were passed through to the third-party distribution and shipping vendors that are being managed on the Company’s behalf by NFI. As of June 29, 2024 and September 30, 2023, related party trade payables of approximately $0.5 million and $3.4 million, respectively, were recorded as accounts payable.

In October 2023 and February 2024, the Company began leasing regional distribution centers in Woolwich Township, New Jersey, and Glendale, Arizona, respectively. The distribution centers are operated by NFI for the Company, pursuant to the Service Labor Management Agreement noted in the paragraph above.

All agreements with NFI include terms that are consistent with those that we believe would have been negotiated at an arm’s length with an independent party.