Leases

12 Months Ended

Dec. 31, 2023

We determine whether an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys the right to control the use of an identified fixed asset explicitly or implicitly for a period of time in exchange for consideration. Control of an underlying asset is conveyed if we obtain the rights to direct the use of the asset and to obtain substantially all of the economic benefit from its use. We have operating leases for distribution centers, sales offices and certain warehouse and office equipment. Our operating leases have remaining lease terms of 1 to 10 years, many of which include one or more renewal options. We consider these renewal options in determining the lease term used to establish our right-of-use assets and lease liabilities when it is determined that it is reasonably certain that the renewal option will be exercised. Substantially all of our equipment leases and some of our real estate leases have terms of less than one year. Some of our operating lease agreements include variable lease costs, primarily taxes, insurance, common area maintenance or increases in rental costs related to inflation.

Operating leases are included in the right-of-use lease assets, other current liabilities and long-term lease liabilities on the Consolidated Balance Sheet. Right-of-use assets and lease liabilities are recognized at each lease’s commencement date based on the present values of its lease payments over its respective lease term. When a borrowing rate is not explicitly available for a lease, our incremental borrowing rate is used based on information available at the lease’s commencement date to determine the present value of its lease payments. The incremental borrowing rate is not commonly quoted and is derived through a combination of inputs including our credit rating and the impact of full collateralization. The incremental borrowing rate is based on our collateralized borrowing capabilities over a similar term to the lease payments. We utilized the consolidated group borrowing rate for all leases as we operate a centralized treasury operation. Operating lease payments are recognized on a straight-line basis over the lease term. We had no material finance leases as of December 31, 2023 or December 31, 2022.

Practical Expedients and Accounting Policy Elections

We have made certain accounting policy elections and are using certain practical expedients permitted under GAAP, as follows:

•Include both lease and non-lease components as a single lease component, as non-lease components of contracts have not historically been material.

•Account for leases with terms of one year or less as short-term leases and, as such, are not included in the right-of-use assets or lease liabilities.

As of December 31, 2023 and December 31, 2022 there were no material variable lease costs or sublease income. Cash paid for operating leases was $21.2 million, $16.8 million and $9.2 million during fiscal

2023, fiscal 2022 and fiscal 2021, respectively, which are classified in operating activities on the Consolidated Statements of Cash Flows. The following table summarizes the lease expense:


	For the Year Ended
(in thousands)	December 31, 2023		December 31, 2022		December 25, 2021
Operating lease expense	$	21,747	$	17,340	$	9,549
Short-term lease expense	7,169		5,838		3,172
Total lease expense	$	28,916	$	23,178	$	12,721

Supplemental balance sheet information related to our operating leases is as follows:


(in thousands)	December 31, 2023			December 31, 2022
Operating lease right-of-use assets	$	103,476		$	109,977

Other accrued liabilities	$	16,917		$	15,912
Long-term operating lease liabilities	91,262			98,221
Total operating lease liabilities	$	108,179		$	114,133

Weighted average remaining lease term (years)	6.85			7.76
Weighted average discount rate	4.20		%	3.91		%

The following table summarizes the maturities of our lease liabilities for all operating leases as of December 31, 2023:


(in thousands)	December 31, 2023
2024	$	21,061
2025	19,785
2026	19,659
2027	17,802
2028	11,705
Thereafter	34,003
Total lease payments	124,015
Less: Imputed interest	(15,836)
Present value of lease liabilities	$	108,179