Leases

6 Months Ended

Mar. 31, 2023

10. LEASES

The Company leases vehicles, machinery, manufacturing facilities, office space, land, and equipment under both operating and finance leases. We sublease excess office real estate to a third-party tenant. The Company determines if an arrangement is a lease at inception. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. As of March 31, 2023 and September 30, 2022, amounts associated with leases are included in Other assets, Accrued expense and other liabilities and Other non-current liabilities in the Company’s Condensed Consolidated Balance Sheet.

For leases with initial terms greater than 12 months, the Company considers these right-of-use assets and records the related asset and obligation at the present value of lease payments over the term. For leases with initial terms equal to or less than 12 months, the Company does not consider them as right-of-use assets and instead considers them short-term lease costs that are recognized on a straight-line basis over the lease term. The Company’s leases may include escalation clauses, renewal options and/or termination options that are factored into the determination of lease term and lease payments when it is reasonably certain the option will be exercised. Renewal options range from 1 year to 20 years.

Lease assets and lease liabilities as of March 31, 2023 and September 30, 2022 were as follows (in thousands):



Leases	Classification on Balance Sheet	March 31, 2023		September 30, 2022
Assets
ROU operating lease assets	Other assets	$	17,532	$	19,724
Finance lease assets	Other assets		73,080		73,541
Total lease assets		$	90,612	$	93,265
Liabilities
Current
Operating	Accrued expenses and other liabilities	$	4,804	$	5,223
Finance	Accrued expenses and other liabilities		2,568		2,366
Non-Current
Operating	Other non-current liabilities		15,365		17,261
Finance	Other non-current liabilities		76,256		75,706
Total lease liabilities		$	98,993	$	100,556

The components of lease expense for the three and six months ended March 31, 2023 and 2022 were as follows:


	Three Months Ended March 31,						Six Months Ended March 31,
(in thousands)	2023			2022			2023			2022
Operating lease expense	$	1,503		$	1,454		$	3,004		$	2,624
Finance lease amortization of assets		1,272			797			2,521			1,514
Finance lease interest on lease liabilities		1,103			868			2,195			1,673
Short term		99			171			201			218
Sublease income		(72	)		(87	)		(143	)		(206	)
Total lease expense	$	3,905		$	3,203		$	7,778		$	5,823

The tables below present supplemental information related to leases as of March 31, 2023 and September 30, 2022:


Weighted-average remaining lease term (years)	March 31, 2023			September 30, 2022
Operating leases		6.8			6.9
Finance leases		25.9			26.5
Weighted-average discount rate
Operating leases		4.3	%		4.1	%
Finance leases		5.8	%		5.9	%

The following table summarizes the maturities of lease liabilities at March 31, 2023:


(in thousands)	Operating Leases			Finance Leases			Total
2023	$	3,021		$	3,453		$	6,474
2024		4,691			6,827			11,518
2025		3,835			6,715			10,550
2026		2,517			6,556			9,073
2027		1,877			6,123			8,000
Thereafter		7,695			122,226			129,921
Total lease payments		23,636			151,900			175,536
Less: interest		(3,467	)		(73,076	)		(76,543	)
Present value of lease liability	$	20,169		$	78,824		$	98,993