Leases

12 Months Ended

Sep. 30, 2022

12. Leases

The Company determines if an arrangement is a lease at the inception of the agreement. The Company determines an arrangement is a lease if it conveys the right to control the use of the asset for a period of time in exchange for consideration.

The Company has operating and finance leases for branch and administrative offices, vehicles, certain machinery and equipment, and furniture. The Company’s leases have remaining lease terms from one month up to 11.3 years with one or more exercisable renewal periods and specified increases in lease payments upon exercise of the renewal options. For purposes of calculating lease liabilities, lease terms include options to extend the lease only when it is reasonably certain that the Company will exercise those options. Some leasing arrangements require variable payments that are dependent on usage, output, or may vary for other reasons, such as insurance, common area maintenance, and tax payments. The variable lease payments are not presented as part of the initial right-of-use asset or lease liability. The Company's lease agreements do not contain any material restrictive covenants or residual value guarantees.

The following table summarizes the lease-related assets and liabilities recorded in the consolidated balance sheet at September 30, 2022 and 2021:


	Fiscal Year Ended
	September 30, 2022		September 30, 2021
Operating leases:
Right-of-use asset	$	81.6	$	69.5
Current portion of lease liabilities		26.8		22.0
Lease liabilities		61.3		54.2
Total operating lease liabilities	$	88.1	$	76.2

Finance leases:
Right-of-use asset(1)	$	41.9	$	32.1
Current portion of lease liabilities(2)		19.3		14.9
Lease liabilities(3)		22.4		12.7
Total finance lease liabilities	$	41.7	$	27.6

(1) Included in “Property and equipment, net” in the consolidated balance sheets.

(2) Included in “Accrued expenses and other liabilities” in the consolidated balance sheets.

(3) Included in “Other liabilities” in the consolidated balance sheets.

As most of the Company’s leases do not specifically state an implicit rate, the Company uses an incremental borrowing rate consistent with the lease term as of the lease commencement date when calculating the present value of remaining lease payments. The incremental borrowing rate reflects the cost to borrow on a securitized basis. The remaining lease term does not reflect all renewal options available to the Company, only those renewal options that the Company has assessed as reasonably certain.

The weighted-average remaining lease terms and incremental borrowing rates as of September 30, 2022 and 2021 were as follows:


	Fiscal Year Ended
	September 30, 2022			September 30, 2021
Operating leases:
Weighted-average remaining lease term (years)		4.6			4.9
Weighted-average incremental borrowing rate		3.3	%		3.3	%

Finance leases:
Weighted-average remaining lease term (years)		2.7			2.7
Weighted-average incremental borrowing rate		2.8	%		3.3	%

The components of lease cost for operating and finance leases for the fiscal year ended September 30, 2022 and 2021 were as follows:


	Fiscal Year Ended
	September 30, 2022			September 30, 2021
Operating lease cost	$	29.2		$	25.3
Finance lease cost:
Amortization of right-of-use asset		20.2			17.1
Interest on lease liabilities		1.0			0.8
Total finance lease cost		21.2			17.9
Short-term lease cost		22.0			18.4
Variable lease costs not included in lease liability		2.9			2.4
Sublease income		(0.6	)		(0.5	)
Total lease cost	$	74.7		$	63.5

Supplemental cash flow information for the fiscal year ended September 30, 2022 and 2021 were as follows:


	Fiscal Year Ended
	September 30, 2022		September 30, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	27.9	$	23.6
Operating cash flows from finance leases		1.0		0.7
Financing cash flows from finance leases		27.0		20.5

Non-cash items:
Right-of-use Assets Obtained In Exchange For New Operating Liabilities	39.6		33.8
Right-of-use Assets Obtained In Exchange For New Finance Liabilities	33.3		22.0

As of September 30, 2022, the Company does not have material operating or financing leases that have not yet commenced.

Maturities of operating and finance lease liabilities as of September 30, 2022 were as follows:


Fiscal Year	Operating Lease			Finance Lease
2023	$	29.2		$	20.3
2024		22.6			12.9
2025		15.1			5.7
2026		11.0			3.7
2027		6.3			1.4
Thereafter		11.7			—
Total net lease payments		95.9			44.0
Less: Amounts representing interest		7.8			2.3
Total lease liabilities		88.1			41.7
Less: Current portion of lease liabilities		(26.8	)		(19.3	)
Non-current lease liabilities	$	61.3		$	22.4