Leases

6 Months Ended

Oct. 31, 2022

LeasesThe Company’s lease portfolio is comprised of operating leases for office space and equipment and finance leases for equipment. Equipment leases are comprised of vehicles and office equipment. The majority of the Company’s leases include

both lease and non-lease components. Non-lease components primarily include maintenance, insurance, taxes and other utilities. The Company combines fixed payments for non-lease components with its lease payments and accounts for them as a single lease component, which increases its ROU assets and lease liabilities. Some of the leases include one or more options to renew or terminate the lease at the Company’s discretion. Generally, the renewal and termination options are not included in the ROU assets and lease liabilities as they are not reasonably certain of exercise. The Company has elected not to recognize a ROU asset or lease liability for leases with an initial term of 12 months or less.

As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of the future minimum lease payments. The Company applies the portfolio approach when determining the incremental borrowing rate since it has a centrally managed treasury function. The Company’s incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments in a similar economic environment.

Operating leases contain both office and equipment leases and have remaining terms that range from less than one year to 10 years, some of which also include options to extend or terminate the lease. Finance leases are comprised of equipment leases and have remaining terms that range from less than one year to six years. Finance lease assets are included in property and equipment, net while finance lease liabilities are included in other accrued liabilities and other liabilities.

On August 1, 2022, the Company acquired ICS and as a result recognized ROU assets of $0.8 million with a corresponding liability of $1.0 million. The ROU asset was adjusted to reflect unfavorable lease terms when compared with current market rates. During the second quarter of fiscal 2022, the Company reduced its real estate footprint and as a result recorded an impairment charge of the ROU assets of $7.4 million recorded in the consolidated statements of income.

The components of lease expense were as follows:


	Three Months Ended October 31,				Six Months Ended October 31,
	2022		2021		2022		2021
	(in thousands)
Finance lease cost
Amortization of ROU assets	$	365	$	257	$	738	$	537
Interest on lease liabilities	46		21		94		45
	411		278		832		582
Operating lease cost	12,203		13,457		24,618		27,275
Short-term lease cost	270		213		433		482
Variable lease cost	1,583		3,431		4,238		5,099
Lease impairment cost	—		7,392		—		7,392
Sublease income	(738)		(228)		(1,245)		(459)
Total lease cost	$	13,729	$	24,543	$	28,876	$	40,371

Supplemental cash flow information related to leases was as follows:


	Six Months Ended October 31,
	2022		2021
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	29,114	$	30,133
Financing cash flows from finance leases	$	814	$	592

ROU assets obtained in exchange for lease obligations:
Operating leases	$	9,589	$	7,208
Finance leases	$	2,497	$	317

Supplemental balance sheet information related to leases was as follows:


	October 31, 2022			April 30, 2022
	(in thousands)
Finance Leases:

Property and equipment, at cost	$	6,900		$	5,770
Accumulated depreciation	(2,757)			(3,085)
Property and equipment, net	$	4,143		$	2,685

Other accrued liabilities	$	1,257		$	1,049
Other liabilities	2,924			1,657
Total finance lease liabilities	$	4,181		$	2,706

Weighted average remaining lease terms:
Operating leases	4.8 years			5.1 years
Finance leases	4.1 years			3.3 years

Weighted average discount rate:
Operating leases	4.5		%	4.3		%
Finance leases	4.4		%	3.2		%

Maturities of lease liabilities were as follows:


Year Ending April 30,	Operating		Financing
	(in thousands)
2023 (excluding the six months ended October 31, 2022)	$	30,737	$	735
2024	46,372		1,249
2025	38,967		1,008
2026	35,918		705
2027	18,705		504
Thereafter	25,654		372
Total lease payments	196,353		4,573
Less: imputed interest	19,428		392
Total	$	176,925	$	4,181