Leases

6 Months Ended

Oct. 31, 2019

Leases

Leases

6. Leases

The Company leases office and warehouse facilities, distribution equipment and its fleet of vehicles. The Company’s leases have lease terms ranging from one to eleven years. The Company’s facility leases generally contain renewal options for periods ranging from one to five years. The exercise of lease renewal options is typically at the Company’s sole discretion. The Company does not recognize ROU assets or lease liabilities for renewal options unless it is determined that the Company is reasonably certain of exercising renewal options at lease inception. Certain of the Company’s equipment leases include options to purchase the leased property and certain of the Company’s equipment leases contain residual value guarantees. Any residual value payment deemed probable is included in the Company’s lease liability. The Company’s lease agreements do not contain any material restrictive covenants.

The Company determines if an arrangement is a lease at inception and evaluates whether the lease meets the classification criteria of a finance or operating lease. Operating leases are included in operating lease right-of-use assets, current portion of operating lease liabilities and long-term operating lease liabilities in the Condensed Consolidated Balance Sheet. Finance leases are included in property and equipment, current portion of long-term debt and long-term debt in the Condensed Consolidated Balance Sheet.  

Lease ROU assets and lease liabilities are recognized at the commencement date based on the present value of the future lease payments over the lease term. For leases that do not provide an implicit rate, the Company uses its incremental borrowing rate in determining the present value of future payments. The Company determines its incremental borrowing rate based on the applicable lease terms and the current economic environment. Lease ROU assets also include any lease payments made in advance and excludes lease incentives and initial direct costs incurred. Some of the Company’s lease agreements contain rent escalation clauses (including index-based escalations), rent holidays, capital improvements funding or other lease concessions. Lease expense is recognized on a straight-line basis based on the fixed component over the lease term. Variable lease costs consist primarily of taxes, insurance and common area or other maintenance costs for leased facilities and vehicles and equipment, which are paid based on actual costs incurred.

The components of lease expense were as follows:

	Three Months		Six Months
	Ended		Ended
	October 31, 2019		October 31, 2019
	(in thousands)
Finance lease cost:
Amortization of right-of-use assets	$	6,054	$	12,113
Interest on lease liabilities		3,367		6,789
Operating lease cost		10,289		20,709
Variable lease cost		3,414		6,613
Total lease cost	$	23,124	$	46,224

Operating lease cost, including variable lease cost, is included in selling, general and administrative expenses; amortization of finance ROU assets is included in depreciation and amortization; and interest on finance lease liabilities is included in interest expense in the Condensed Consolidated Statement of Operations and Comprehensive Income.

Supplemental cash flow information related to leases was as follows:

	Six Months
	Ended
	October 31, 2019
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	10,141
Operating cash flows from finance leases		6,789
Financing cash flows from finance leases		12,310
Right-of-use assets obtained in exchange for lease obligations
Operating leases		6,569
Finance leases		22,812

Other information related to leases was as follows:

	October 31, 2019
		(in thousands)
Finance leases included in property and equipment
Property and equipment	$	149,769
Accumulated depreciation		(34,513)
Property and equipment, net	$	115,256
Weighted-average remaining lease term (years)
Operating leases		4.9
Finance leases		3.4
Weighted-average discount rate
Operating leases		5.5	%
Finance leases		5.4	%

Future minimum lease payments under non-cancellable leases as of October 31, 2019 were as follows:

	Finance		Operating
Year Ended April 30,	(in thousands)
2020 (remaining six months)	$	21,178	$	19,376
2021		40,387		32,481
2022		33,600		23,918
2023		24,855		17,591
2024		15,753		13,264
Thereafter		6,471		23,016
Total lease payments	$	142,244	$	129,646
Less imputed interest		25,734		16,572
Total	$	116,510	$	113,074