Leases

12 Months Ended

Sep. 30, 2020

The Company leases certain facilities, office space, vehicles and equipment. As of September 30, 2020, operating leases under Topic 842 were included in (i) operating lease right-of use assets, (ii) current portion of operating lease liabilities and (iii) operating lease liabilities, net of current portion on the Company’s Consolidated Balance Sheets in the amounts of $7.4 million, $2.0 million and $5.6 million, respectively. As of September 30, 2020, the Company did not have any lease contracts that had not yet commenced but had created significant rights and obligations. In October 2019, the Company used cash in the amount of $11.5 million to buy out certain operating lease obligations.

The components of lease expense were as follows (in thousands):


	For the Fiscal Year Ended September 30, 2020

Operating lease cost	$	3,498
Short-term lease cost	13,374
Total lease expense	$	16,872

Short-term leases (those with terms of 12 months or less) are not capitalized but are expensed on a straight-line basis over the lease term. The majority of our short-term leases relate to equipment used on construction projects. These leases are entered into at periodic rental rates for an unspecified duration and typically have a termination for convenience provision. Short-term lease cost includes leases with terms of one month or less.

As of September 30, 2020, the weighted-average remaining term of the Company’s leases was 8.8 years, and the weighted-average discount rate was 4.00%. As of September 30, 2020, the lease liability was equal to the present value of the remaining lease payments, discounted using the incremental borrowing rate on the Company’s secured debt using a single maturity discount rate, as such rate is not materially different from the discount rate applied to each of the leases in the portfolio.

The following table summarizes the Company’s undiscounted lease liabilities outstanding as of September 30, 2020 (in thousands):


Fiscal Year	Amount
2021	$	2,301
2022	1,251
2023	838
2024	749
2025	586
Thereafter	3,466
Total future minimum lease payments	$	9,191
Less: imputed interest	1,591
Total	$	7,600

The Company has lease agreements associated with quarry facilities under which the Company makes royalty payments. The payments are generally based on tons sold in a particular period; however, certain agreements have minimum annual payments. Royalty expense recorded in cost of revenue during the fiscal years ended September 30, 2020 and 2019 was $1.3 million and $1.7 million, respectively.