Leases

12 Months Ended

Jul. 31, 2022

Leases [Abstract]

Leases

K.        Leases

Ferrellgas has lease agreements with lease and non-lease components, which are generally accounted for as a single lease component. Variable lease components include lease payments with payment escalation based on the Consumer Price Index, and other variable items, such as common area maintenance and taxes.

Key assumptions include the discount rate, the impact of purchase options and renewal options on Ferrellgas’ lease term, as well as the assessment of residual value guarantees.

Ferrellgas’ transportation equipment leases generally have purchase options. However, in most circumstances Ferrellgas is not certain if it will exercise the purchase option at lease inception. As circumstances dictate, it may instead return the existing equipment to the lessor and sign a new lease. Ferrellgas’ transportation equipment leases often contain residual value guarantees, but they are not reflected in Ferrellgas’ lease liabilities as its lease rates are such that residual value guarantees are not expected to be owed at the end of its leases.

Ferrellgas’ real estate leases will often have an option to extend the lease, but it is typically not reasonably certain of exercising extension options. As customer demand changes over time, Ferrellgas typically maintains the ability to move to more advantageous locations, relocate to other leased and owned locations, or discontinue service from particular locations.

The following table provides the operating and financing ROU assets and lease liabilities as of July 31, 2022 and 2021:

Leases	Classification		July 31, 2022		July 31, 2021
Assets
Operating lease assets	Operating lease right-of-use assets	$	72,888	$	87,611
Financing lease assets	Other assets, net		31,421		34,858
Total leased assets		$	104,309	$	122,469
Liabilities
Current
Operating	Current operating lease liabilities	$	25,824	$	25,363
Financing	Other current liabilities		6,581		7,479
Noncurrent
Operating	Operating lease liabilities		47,231		74,349
Financing	Other liabilities		25,309		28,029
Total leased liabilities		$	104,945	$	135,220

The following table provides the lease expenses for the years ended July 31, 2022, 2021 and 2020:

Leases expense	Classification	2022		2021		2020
Operating lease expense	Operating expense - personnel, vehicle, plant and other	$	6,832	$	7,695	$	7,450
	Operating expense - equipment lease expense		20,291		26,127		30,994
	Cost of sales - propane and other gas liquids sales		1,630		1,911		1,553
	General and administrative expense		1,587		437		1,490
Total operating lease expense			30,340		36,170		41,487
Short-term expense	Operating expense - personnel, vehicle, plant and other		9,231		8,151		7,188
	General and administrative expense		271		576		502
Total short-term expense			9,502		8,727		7,690
Variable lease expense	Operating expense - personnel, vehicle, plant and other		3,096		2,328		2,883
	Operating expense - equipment lease expense		2,162		1,547		1,642
Total variable lease expense			5,258		3,875		4,525
Finance lease expense:
Amortization of leased assets	Depreciation and amortization expense		6,660		8,878		2,613
Interest on lease liabilities	Interest expense		2,905		3,755		1,060
Total finance lease expense			9,565		12,633		3,673
Total lease expense		$	54,665	$	61,405	$	57,375

Minimum annual payments under existing operating and finance lease liabilities as of July 31, 2022 are as follows:

Maturities of lease liabilities		Operating leases		Finance leases		Total
2023	$	28,487	$	8,886	$	37,373
2024		22,399		8,541		30,940
2025		15,668		8,376		24,044
2026		6,035		7,528		13,563
2027		2,551		4,959		7,510
Thereafter		15,322		295		15,617
Total lease payments	$	90,462	$	38,585	$	129,047
Less: Imputed interest		(17,407)		(6,695)		(24,102)
Present value of lease liabilities	$	73,055	$	31,890	$	104,945

The following table represents the weighted-average remaining lease term and discount rate as of July 31, 2022:

	As of July 31, 2022
Lease type	Weighted-average remaining lease term (years)	Weighted-average discount rate
Operating leases	4.9	7.6%
Finance leases	4.3	8.3%

Cash flow information is presented below:

	For the year ended July 31,
	2022		2021		2020
Cash paid for amounts included in the measurement of lease liabilities for operating leases:
Operating cash flows	$	32,699	$	34,895	$	41,636
Cash paid for amounts included in the measurement of lease liabilities for financing leases:
Operating cash flows	$	9,475	$	3,396	$	1,060
Financing cash flows	$	6,545	$	7,188	$	2,116