Leases

12 Months Ended

Feb. 28, 2023

The Company is a lessee under various leases for facilities and equipment. See Note 1 for a description of the Company's accounting policy for leases.

As of February 28, 2023, the Company was the lessee for 153 operating leases with terms of 12 months or more and 14 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 and (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. The Company's short-term lease agreements include expenses incurred hourly, daily, monthly and for other durations of time of one year or less.

The Company’s future lease commitments as of February 28, 2023 do not reflect all of the Company’s short-term lease commitments.

The following table outlines the classification of the Company's right-of-use asset and lease liabilities in the balance sheets for fiscal 2023 and 2022 (in thousands):


	Balance Sheet Classification	As of February 28,
		2023		2022
Assets
Right-of-use assets	Right-of-use assets	$	26,392	$	13,954
Liabilities
Operating lease liabilities ― short-term	Lease liability - short-term	$	6,119	$	3,131
Operating lease liabilities ― long-term	Lease liability - long-term	19,659		10,798
Finance lease liabilities ― short-term	Lease liability - short-term	284		158
Finance lease liabilities ― long-term	Lease liability - long-term	1,045		605

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


	2023			2022
Operating cash flows from operating leases included in lease liabilities	$	5,832		$	3,965
Lease liabilities obtained from new ROU assets - operating	$	3,986		$	491
Weighted-average remaining lease term - operating leases	5.04 years			5.29 years
Weighted-average discount rate - operating leases	4.31		%	4.22		%
Operating and financing cash flows from financing leases included in lease liabilities	$	219		$	104
Lease liabilities obtained from new ROU assets - financing	$	420		$	216
Weighted-average remaining lease term - financing leases	4.61 years			4.87 years
Weighted-average discount rate - financing leases	5.15		%	2.90		%

The following table outlines the classification of lease expense related to operating leases from continuing operations in the statements of income for fiscal 2023, 2022, and 2021 (in thousands):


	Year Ended February 28,
	2023		2022		2021
Cost of sales	$	12,409	$	6,837	$	7,254
Selling, general and administrative	1,858		1,264		1,619
Total lease cost	$	14,267	$	8,101	$	8,873

As of February 28, 2023, 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
2024	$	7,079	$	344	$	7,423
2025	6,267		344		6,611
2026	5,392		300		5,692
2027	4,242		268		4,510
2028	2,201		195		2,396
Thereafter	3,438		43		3,481
Total lease payments	$	28,619	$	1,494	$	30,113
Less imputed interest	(2,841)		(165)		(3,006)
Total	$	25,778	$	1,329	$	27,107

The Company subleases multiple buildings in Columbia, South Carolina to multiple subtenants. The sublease agreements are by and between Precoat Metals and multiple subtenants. Sublease income is recognized over the term of the sublease on a straight-line basis and is reported in the consolidated statement of operations in "Other (income) expense." The Company recognized $0.8 million of income from subleases during fiscal year 2023.