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LEASES

12 Months Ended

Sep. 30, 2023

Leases [Abstract]

LEASES

LEASES

The Company has leases primarily pertaining to manufacturing facilities, distribution centers, office space, warehouses, automobiles, machinery, computers, and office equipment that expire at various times through June 2035. We have embedded operating leases within certain third-party logistic agreements for certain warehousing and information technology services arrangements and recognized right of use assets identified in the arrangements as part of Operating Lease Assets on the Company’s Consolidated Statement of Financial Position. We elected to exclude certain supply chain contracts that contain embedded leases for manufacturing facilities or dedicated manufacturing lines from our ROU asset and liability calculation based on the insignificant impact to our consolidated financial statements.

The following is a summary of the Company’s leases recognized on the Company’s Consolidated Statement of Financial Position as of September 30, 2023 and 2022:

(in millions)						Line Item						2023						2022
Assets
Operating						Operating lease assets						$	110.8					$	82.5
Finance						Property, plant and equipment, net						66.2						73.4
Total leased assets												$	177.0					$	155.9
Liabilities
Current
Operating						Other current liabilities						$	26.9					$	25.8
Finance						Current portion of long-term debt						8.6						8.3
Long-term
Operating						Long-term operating lease liabilities						95.6						56.0
Finance						Long-term debt, net of current portion						77.8						84.4
Total lease liabilities												$	208.9					$	174.5

As of September 30, 2023, the Company had an additional $19.4 million in commitments related to an operating lease executed that has not yet commenced. The lease is expected to commence during fiscal 2024.

The Company records its operating lease and amortization of finance lease ROU assets within Cost of Goods Sold or Operating Expenses in the Consolidated Statement of Income depending on the nature and use of the underlying asset. The Company records its finance interest cost within interest expense in the Consolidated Statement of Income.

During the year ended September 30, 2023, the Company recognized a $5.2 million impairment charge on a right of use operating lease asset for a GPC warehouse having a maturity date of December 2029, due to the exit of the GPC operations from the facility and the intention to sub-lease to a third-party, included as Selling Expense on the Consolidated Statements of Income for the year ended September 30, 2023. The partial impairment was measured using projected discounted cash flow for the facility, including an assumed sub-lease tenant, yet to be identified, at rental rates that are comparable to current market conditions.

The components of lease costs recognized in the Consolidated Statement of Income for the year ended September 30, 2023, 2022, and 2021 are as follows:

(in millions)						2023						2022						2021
Operating lease cost						$	37.0					$	26.3					$	19.8
Finance lease cost
Amortization of leased assets						10.2						10.5						11.3
Interest on lease liability						4.8						5.2						5.3
Variable lease cost						12.4						10.8						9.8
Total lease cost						$	64.4					$	52.8					$	46.2

During the year ended September 30, 2023, 2022, and 2021 the Company recognized income attributable to leases and sub-leases of $2.4 million, $2.7 million, and $2.3 million, respectively. Income from leases and sub-leases is recognized as Other Non-Operating Income on the Consolidated Statement of Income.

The following is a summary of the Company’s cash paid for amounts included in the measurement of lease liabilities recognized in the Consolidated Statement of Cash Flow, including supplemental non-cash activity related to operating leases, for the year ended September 30, 2023, 2022, and 2021:

(in millions)						2023						2022						2021
Operating cash flow from operating leases						$	30.3					$	25.3					$	20.7
Operating cash flows from finance leases						4.8						5.1						5.4
Financing cash flows from finance leases						9.5						8.9						12.0
Supplemental non-cash flow disclosure
Acquisition of operating lease asset through lease obligations						66.9						30.4						15.3

The following is a summary of weighted-average lease term and discount rate at September 30, 2023 and 2022:

						2023						2022
Weighted average remaining lease term
Operating leases						4.6 years						4.5 years
Finance leases						8.7 years						9.7 years
Weighted average discount rate
Operating leases						5.5		%				3.8		%
Finance leases						5.3		%				5.1		%

At September 30, 2023, future lease payments under operating and finance leases were as follows:

(in millions)						Finance Leases						Operating Leases
2024						$	12.6					$	33.3
2025						12.7						30.5
2026						12.3						26.4
2027						12.3						23.3
2028						12.2						19.3
Thereafter						46.3						7.6
Total lease payments						108.4						140.4
Amount representing interest						(22.0)						(17.9)
Total minimum lease payments						$	86.4					$	122.5

LEASES

LEASES

The Company has leases primarily pertaining to manufacturing facilities, distribution centers, office space, warehouses, automobiles, machinery, computers, and office equipment that expire at various times through June 2035. We have embedded operating leases within certain third-party logistic agreements for certain warehousing and information technology services arrangements and recognized right of use assets identified in the arrangements as part of Operating Lease Assets on the Company’s Consolidated Statement of Financial Position. We elected to exclude certain supply chain contracts that contain embedded leases for manufacturing facilities or dedicated manufacturing lines from our ROU asset and liability calculation based on the insignificant impact to our consolidated financial statements.

The following is a summary of the Company’s leases recognized on the Company’s Consolidated Statement of Financial Position as of September 30, 2023 and 2022:

(in millions)						Line Item						2023						2022
Assets
Operating						Operating lease assets						$	110.8					$	82.5
Finance						Property, plant and equipment, net						66.2						73.4
Total leased assets												$	177.0					$	155.9
Liabilities
Current
Operating						Other current liabilities						$	26.9					$	25.8
Finance						Current portion of long-term debt						8.6						8.3
Long-term
Operating						Long-term operating lease liabilities						95.6						56.0
Finance						Long-term debt, net of current portion						77.8						84.4
Total lease liabilities												$	208.9					$	174.5

As of September 30, 2023, the Company had an additional $19.4 million in commitments related to an operating lease executed that has not yet commenced. The lease is expected to commence during fiscal 2024.

The Company records its operating lease and amortization of finance lease ROU assets within Cost of Goods Sold or Operating Expenses in the Consolidated Statement of Income depending on the nature and use of the underlying asset. The Company records its finance interest cost within interest expense in the Consolidated Statement of Income.

During the year ended September 30, 2023, the Company recognized a $5.2 million impairment charge on a right of use operating lease asset for a GPC warehouse having a maturity date of December 2029, due to the exit of the GPC operations from the facility and the intention to sub-lease to a third-party, included as Selling Expense on the Consolidated Statements of Income for the year ended September 30, 2023. The partial impairment was measured using projected discounted cash flow for the facility, including an assumed sub-lease tenant, yet to be identified, at rental rates that are comparable to current market conditions.

The components of lease costs recognized in the Consolidated Statement of Income for the year ended September 30, 2023, 2022, and 2021 are as follows:

(in millions)						2023						2022						2021
Operating lease cost						$	37.0					$	26.3					$	19.8
Finance lease cost
Amortization of leased assets						10.2						10.5						11.3
Interest on lease liability						4.8						5.2						5.3
Variable lease cost						12.4						10.8						9.8
Total lease cost						$	64.4					$	52.8					$	46.2

During the year ended September 30, 2023, 2022, and 2021 the Company recognized income attributable to leases and sub-leases of $2.4 million, $2.7 million, and $2.3 million, respectively. Income from leases and sub-leases is recognized as Other Non-Operating Income on the Consolidated Statement of Income.

The following is a summary of the Company’s cash paid for amounts included in the measurement of lease liabilities recognized in the Consolidated Statement of Cash Flow, including supplemental non-cash activity related to operating leases, for the year ended September 30, 2023, 2022, and 2021:

(in millions)						2023						2022						2021
Operating cash flow from operating leases						$	30.3					$	25.3					$	20.7
Operating cash flows from finance leases						4.8						5.1						5.4
Financing cash flows from finance leases						9.5						8.9						12.0
Supplemental non-cash flow disclosure
Acquisition of operating lease asset through lease obligations						66.9						30.4						15.3

The following is a summary of weighted-average lease term and discount rate at September 30, 2023 and 2022:

						2023						2022
Weighted average remaining lease term
Operating leases						4.6 years						4.5 years
Finance leases						8.7 years						9.7 years
Weighted average discount rate
Operating leases						5.5		%				3.8		%
Finance leases						5.3		%				5.1		%

At September 30, 2023, future lease payments under operating and finance leases were as follows:

(in millions)						Finance Leases						Operating Leases
2024						$	12.6					$	33.3
2025						12.7						30.5
2026						12.3						26.4
2027						12.3						23.3
2028						12.2						19.3
Thereafter						46.3						7.6
Total lease payments						108.4						140.4
Amount representing interest						(22.0)						(17.9)
Total minimum lease payments						$	86.4					$	122.5

X

- References

No definition available.

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- Definition

The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 842
-SubTopic 20
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//842-20/tableOfContent

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- Definition

The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 842
-SubTopic 20
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//842-20/tableOfContent

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