The Company accounts for its leases in accordance with ASC 842, Leases. ASC 842 requires lessees to (i) recognize a right-of-use asset (“ROU asset”) and a lease liability that is measured at the present value of the remaining lease payments on the Consolidated Balance Sheets, (ii) recognize a single lease cost, calculated over the lease term on a straight-line basis and (iii) classify lease-related cash payments within operating and financing activities. The Company made an accounting policy election to not recognize short-term leases on the Consolidated Balance Sheets and all non-lease components, such as common area maintenance, were excluded. At any given time during the lease term, the lease liability represents the present value of the remaining lease payments, and the ROU asset is measured as the amount of the lease liability, adjusted for pre-paid rent, unamortized initial direct costs, and the remaining balance of lease incentives received. Both the lease ROU asset and lease liability are reduced to zero at the end of the lease term.

The Company leases distribution centers and warehouses, manufacturing facilities, showrooms, and office space. At the lease inception date, the Company determines if an arrangement is, or contains a lease. Some of the Company’s leases include options to renew at similar terms. The Company assesses these options to determine if the Company is reasonably certain of exercising these options based on relevant economic and financial factors. Options that meet these criteria are included in the lease term at the lease commencement date.

For purposes of measuring the Company’s ROU asset and lease liability, the discount rate utilized by the Company was based on the average interest rates effective for the Company’s line of credit. Some of the Company’s leases contain variable rent payments, including common area maintenance and utilities. Due to the variable nature of these costs, they are not included in the measurement of the ROU asset and lease liability.

The components of the Company’s leases excluding the impact of sublease income reflected on the Company’s Consolidated Statements of Income were as follows:


	Three Months Ended				Six Months Ended
	December 31,				December 31,
(in thousands)	2024		2023		2024		2023
Operating lease expense	$	2,509	$	2,384	$	4,987	$	4,808
Variable lease expense		393		524		912		970
Total lease expense	$	2,902	$	2,908	$	5,899	$	5,778

Other information related to leases and future minimum lease payments under non-cancelable operating leases were as follows:


	Six Months Ended
	December 31,
(in thousands)	2024			2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows paid for operating leases	$	4,918		$	4,663

Cash received from subleasing of operating lease:
Operating cash flows received from subleasing of operating lease	$	594		$	1,119

Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	4,119		$	797

Weighted-average remaining lease term (in years):
Operating leases		7.6			8.6

Weighted-average discount rate:
Operating leases		3.3	%		3.1	%

Future minimum lease payments under non-cancelable operating leases were as follows:


	December 31, 2024
Remaining payments in FY2025	$	4,999
FY2026		10,145
FY2027		10,315
FY2028		10,081
FY2029		9,001
Thereafter		29,601
Total future minimum lease payments	$	74,142
Less imputed interest		8,333
Lease liability	$	65,809