The Company leases office space, warehouses, vehicles, and equipment. Leases have remaining lease terms of 1 year to 17 years, some of which have renewal and termination options. Termination options are exercisable at our option. The lease terms used to recognize ROU

assets and lease liabilities include periods covered by options to extend the lease where we are reasonably certain to exercise that option and periods covered by an option to terminate the lease if we are reasonably certain not to exercise that option. Finance leases are immaterial to the consolidated and combined financial statements.

The Company determines if an arrangement meets the definition of a lease at inception. Operating lease ROU assets include any initial direct costs and prepayments less lease incentives. Lease terms include options to renew or terminate the lease when it is reasonably certain we will exercise such options. As most of our leases do not include an implicit rate, the Company uses its collateralized incremental borrowing rate based on the information available at the lease commencement date, in determining the present value of lease payments. Operating lease expense is recognized on a straight-line basis over the lease term and is included in cost of goods sold or SG&A depending on the underlying nature of the leased assets.

The Company leases certain property and equipment from third parties under non-cancellable operating lease agreements. Certain lease agreements provide for payment of property taxes, maintenance and insurance by us. Under Topic 842, the Company elected the practical expedient to account for lease and non-lease components as a single component for all asset classes. Certain leases include variable lease payments based on usage, an index, or a rate.

The components of lease expense for fiscal 2024 and fiscal 2023 were as follows:


(In millions)	2024		2023
Operating lease expense	$	10.1	$	9.5
Short-term lease expense		2.6		1.8
Variable lease expense		-		0.3
Total lease expense	$	12.7	$	11.6

Other information related to our leases, as of and for the fiscal years ended May 31, 2024 and May 31, 2023, is provided below:


	Operating Leases
(Dollars in millions)	2024			2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows	$	9.3		$	5.7
Financing cash flows	$	-		$	-
ROU assets obtained in exchange for lease liabilities	$	6.7		$	12.1
Weighted-average remaining lease term (in years)		13.53			14.63
Weighted-average discount rate		3.48	%		3.35	%

Future minimum lease payments for non-cancelable operating leases having an initial or remaining term in excess of one year at May 31, 2024, were as follows:


(In millions)	Operating Leases
2025	$	9.9
2026		8.8
2027		7.3
2028		6.9
2029		6.2
Thereafter		55.5
Total		94.6
Less: imputed interest		(18.7	)
Present value of lease liabilities	$	75.9