Leases

12 Months Ended

Aug. 31, 2024

Note 5 - Leases

The Company’s operating leases for real property underlying certain auto parts stores, metals recycling facilities, and administrative offices generally have non-cancellable lease terms of 5 to 10 years, many of which contain multiple renewal options for a further 5 to 20 years. Renewal options which the Company is reasonably certain to exercise are included in the measurement of lease term. The Company’s finance leases and other operating leases involve primarily transportation equipment assets, have non-cancellable lease terms of less than 10 years and usually do not include renewal options.

The Company’s fiscal 2024 total lease cost was $41 million, consisting primarily of operating lease expense of $26 million and short-term lease expense of $11 million. The Company’s fiscal 2023 and fiscal 2022 total lease cost was $38 million and $36 million, respectively, consisting primarily of operating lease expense of $25 million and short-term lease expense of $10 million in both periods. The other components of the Company’s total lease cost for each of fiscal 2024, 2023 and 2022, including finance lease amortization and interest expense, variable lease expense, and sublease income, were not material both individually and in aggregate. The substantial majority of the Company’s total lease cost for each of fiscal 2024, 2023, and 2022 is presented within cost of goods sold in the Consolidated Statements of Operations.

Finance lease assets and liabilities consisted of the following as of August 31 (in thousands):


	Balance Sheet Classification	2024		2023
Assets:
Finance lease right-of-use assets(1)	Property, plant and equipment, net	$	8,377	$	6,340
Liabilities:
Finance lease liabilities - current	Short-term borrowings	$	2,098	$	2,227
Finance lease liabilities - noncurrent	Long-term debt, net of current maturities		6,944		4,973
Total finance lease liabilities		$	9,042	$	7,200

(1)

Presented net of accumulated amortization of $5 million and $6 million as of August 31, 2024 and 2023, respectively.

The weighted average remaining lease terms and weighted average discount rates for the Company’s leases as of August 31:


	2024					2023
	Weighted Average Remaining Lease Term (Years)		Weighted Average Discount Rate			Weighted Average Remaining Lease Term (Years)		Weighted Average Discount Rate
Operating leases		8.5		4.5	%		9.2		3.7	%
Finance leases		4.8		6.0	%		4.3		6.1	%

Maturities of lease liabilities by fiscal year as of August 31, 2024 were as follows (in thousands):


Year Ending August 31,	Finance Leases			Operating Leases
2025	$	2,556		$	24,308
2026		2,106			21,464
2027		1,933			19,654
2028		1,763			17,224
2029		1,262			13,668
Thereafter		701			52,201
Total lease payments		10,321			148,519
Less amounts representing interest		(1,279	)		(25,011	)
Total lease liabilities		9,042			123,508
Less current maturities		(2,098	)		(19,262	)
Lease liabilities, net of current maturities	$	6,944		$	104,246

Supplemental cash flow information and non-cash activity related to leases are as follows (in thousands):


	Year Ended August 31,
	2024		2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	25,684	$	25,414	$	25,351
Operating cash flows for finance leases	$	414	$	393	$	403
Financing cash flows for finance leases	$	2,388	$	2,049	$	1,483
Lease liabilities arising from obtaining right-of-use assets(1):
Operating leases	$	28,538	$	15,279	$	12,000
Finance leases	$	4,362	$	3,596	$	534

(1)

Amounts include new leases and adjustments to lease balances as a result of remeasurement.