Leases

6 Months Ended

Aug. 31, 2022

The Company is a lessee under various leases for facilities and equipment. As of August 31, 2022, the Company was the lessee for 169 operating leases with terms of 12 months or more and 15 finance leases. Many of the operating leases either have renewal options of between one and five years or convert to month-to-month agreements at the end of the specified lease term.

The Company’s operating leases are primarily for (i) operating facilities, (ii) vehicles and equipment used in operations, (iii) facilities used for back-office functions, (iv) equipment used for back-office functions, and (v) temporary storage. The majority of the Company’s long-term lease expenses have both a fixed and variable component.

Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets and the Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company has a significant number of short-term leases, including month-to-month agreements, some of which continue in perpetuity until the lessor or the Company terminates the lease agreement. The Company's short-term lease agreements include expenses incurred hourly, daily, monthly and for other durations for a time period of one year or less.

The Company’s future lease commitments as of August 31, 2022 do not reflect the entirety of the Company’s short-term lease commitments.

The following table outlines, for the Company's continuing operations, the classification of the Company's right-of-use assets and lease liabilities in the consolidated balance sheets as of August 31, 2022 and fiscal year end 2022 (in thousands):


Balance Sheet	Classification	August 31, 2022		February 28, 2022
Assets
Right-of-use assets	Right-of-use assets	$	25,550	$	13,954
Liabilities
Operating lease liabilities ― ST	Lease liability - short-term	5,186		3,131
Operating lease liabilities ― LT	Lease liability - long-term	20,185		10,798
Finance lease liabilities ― ST	Lease liability - short-term	200		158
Finance lease liabilities ― LT	Lease liability - long-term	756		605

Supplemental information related to the Company's portfolio of operating leases was as follows (in thousands):


	Three Months Ended August 31,				Six Months Ended August 31,
	2022		2021		2022		2021
Operating cash flows from operating leases included in lease liabilities	$	2,816	$	2,257	$	5,224	$	4,534
Lease liabilities obtained from new ROU assets - operating	2,638		473		13,753		13,120
Operating and financing cash flows from financing leases included in lease liabilities	60		20		112		38
Lease liabilities obtained from new ROU assets - financing	360		14		398		14


	August 31, 2022		February 28, 2022
Weighted-average remaining lease term - operating leases (years)	7.11		7.90
Weighted-average discount rate - operating leases	4.47	%	4.56	%
Weighted-average remaining lease term - financing leases (years)	4.67		4.73
Weighted-average discount rate - financing leases	4.11	%	2.95	%

The following table outlines the classification of lease expense related to operating leases from continuing operations, in the statements of income (in thousands):


	Three Months Ended August 31,				Six Months Ended August 31,
	2022		2021		2022		2021
Cost of sales	$	3,214	$	1,659	$	5,283	$	3,215
Selling, general and administrative	567		344		941		601

Total lease expense	$	3,781	$	2,003	$	6,224	$	3,816

As of August 31, 2022, maturities of the Company's lease liabilities, excluding lease liabilities associated with our discontinued operations, were as follows (in thousands):


Fiscal year:	Operating Leases		Finance Leases		Total
2023	$	3,106	$	117	$	3,223
2024	5,940		234		6,174
2025	5,368		234		5,602
2026	4,642		188		4,830
2027	3,789		163		3,952
Thereafter	5,626		118		5,744
Total lease payments	28,471		1,054		29,525
Less imputed interest	(3,100)		(98)		(3,198)
Total	$	25,371	$	956	$	26,327