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LEASES | 12 Months Ended
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Sep. 30, 2024
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 warehousing and information technology services arrangements and recognized right of use assets identified in the arrangements as part of Operating Lease Assets on the Consolidated Statements of Financial Position. We elected to exclude certain supply chain contracts that may 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 leases recognized on the Consolidated Statements of Financial Position as of September 30, 2024 and 2023:
(in millions) |  | Line Item |  | 2024 |  | 2023
Assets |  |  |  |  |  |
Operating |  | Operating lease assets |  | $ | 101.9 |  |  | $ | 110.8 |
Finance |  | Property, plant and equipment, net |  | 61.0 |  |  | 66.2 |
Total lease assets |  |  |  | $ | 162.9 |  |  | $ | 177.0 |
Liabilities |  |  |  |  |  |
Current |  |  |  |  |  |
Operating |  | Other current liabilities |  | $ | 31.3 |  |  | $ | 26.9 |
Finance |  | Current portion of long-term debt |  | 9.4 |  |  | 8.6 |
Long-term |  |  |  |  |  |
Operating |  | Long-term operating lease liabilities |  | 87.0 |  |  | 95.6 |
Finance |  | Long-term debt, net of current portion |  | 72.2 |  |  | 77.8 |
Total lease liabilities |  |  |  | $ | 199.9 |  |  | $ | 208.9 |
As of September 30, 2024, there were no significant commitments related to executed leases that has not yet commenced and are unrecognized. During the year ended September 30, 2024, the Company recognized a $5.1 million impairment charge on a right of use operating lease asset for a HPC distribution center having a maturity of February 2025, due to the exit of operations from the facility and the inability to sub-lease to a third-party prior to the maturity, included within Selling, General & Administrative Expense on the Consolidated Statements 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 operations from the facility and the intention to sub-lease to a third-party, included as Selling, General & Administrative Expense on the Consolidated Statements of Income. The impairments were measured using projected discounted cash flow for the facility, including assumed sub-lease tenant, when applicable, at sub-lease rental rates comparable to current market conditions. The components of lease costs recognized in the Consolidated Statements of Income for the year ended September 30, 2024, 2023, and 2022 are as follows:
(in millions) |  | 2024 |  | 2023 |  | 2022
Operating lease cost |  | $ | 34.6 |  |  | $ | 37.0 |  |  | $ | 26.3 |
Finance lease cost |  |  |  |  |  |
Amortization of leased assets |  | 10.3 |  |  | 10.2 |  |  | 10.5 |
Interest on lease liability |  | 4.5 |  |  | 4.8 |  |  | 5.2 |
Variable lease cost |  | 13.0 |  |  | 12.4 |  |  | 10.8 |
Total lease cost |  | $ | 62.4 |  |  | $ | 64.4 |  |  | $ | 52.8 |
During the year ended September 30, 2024, 2023, and 2022 the Company recognized income attributable to leases and sub-leases of $2.4 million, $2.4 million, and $2.7 million, respectively. Income from leases and sub-leases is recognized as Other Non-Operating Income on the Consolidated Statements of Income. The following is a summary of cash paid for amounts included in the measurement of lease liabilities recognized in the Consolidated Statements of Cash Flow, including supplemental non-cash activity related to operating leases, for the year ended September 30, 2024, 2023, and 2022:
(in millions) |  | 2024 |  | 2023 |  | 2022
Operating cash flow from operating leases |  | $ | 35.5 |  |  | $ | 30.3 |  |  | $ | 25.3 |
Operating cash flows from finance leases |  | 4.5 |  |  | 4.8 |  |  | 5.1 |
Financing cash flows from finance leases |  | 10.1 |  |  | 9.5 |  |  | 8.9 |
Supplemental non-cash flow disclosure |  |  |  |  |  |
Acquisition of operating lease asset through lease obligations |  | 25.2 |  |  | 66.9 |  |  | 30.4 |
The following is a summary of weighted-average lease term and discount rate at September 30, 2024 and 2023:
|  | 2024 |  | 2023
Weighted average remaining lease term |  |  |  |
Operating leases |  | 4.0 years |  | 4.6 years
Finance leases |  | 8.0 years |  | 8.7 years
Weighted average discount rate |  |  |  |
Operating leases |  | 6.0 | % |  | 5.5 | %
Finance leases |  | 5.4 | % |  | 5.3 | %
At September 30, 2024, future lease payments under operating and finance leases were as follows:
(in millions) |  | Finance Leases |  | Operating Leases
2025 |  | $ | 13.1 |  |  | $ | 37.3 |
2026 |  | 13.6 |  |  | 32.0 |
2027 |  | 13.4 |  |  | 29.6 |
2028 |  | 13.1 |  |  | 25.1 |
2029 |  | 12.7 |  |  | 7.4 |
Thereafter |  | 33.9 |  |  | 1.8 |
Total lease payments |  | 99.8 |  |  | 133.2 |
Amount representing interest |  | (18.2) |  |  | (14.9) |
Total minimum lease payments |  | $ | 81.6 |  |  | $ | 118.3 |
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 warehousing and information technology services arrangements and recognized right of use assets identified in the arrangements as part of Operating Lease Assets on the Consolidated Statements of Financial Position. We elected to exclude certain supply chain contracts that may 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 leases recognized on the Consolidated Statements of Financial Position as of September 30, 2024 and 2023:
(in millions) |  | Line Item |  | 2024 |  | 2023
Assets |  |  |  |  |  |
Operating |  | Operating lease assets |  | $ | 101.9 |  |  | $ | 110.8 |
Finance |  | Property, plant and equipment, net |  | 61.0 |  |  | 66.2 |
Total lease assets |  |  |  | $ | 162.9 |  |  | $ | 177.0 |
Liabilities |  |  |  |  |  |
Current |  |  |  |  |  |
Operating |  | Other current liabilities |  | $ | 31.3 |  |  | $ | 26.9 |
Finance |  | Current portion of long-term debt |  | 9.4 |  |  | 8.6 |
Long-term |  |  |  |  |  |
Operating |  | Long-term operating lease liabilities |  | 87.0 |  |  | 95.6 |
Finance |  | Long-term debt, net of current portion |  | 72.2 |  |  | 77.8 |
Total lease liabilities |  |  |  | $ | 199.9 |  |  | $ | 208.9 |
As of September 30, 2024, there were no significant commitments related to executed leases that has not yet commenced and are unrecognized. During the year ended September 30, 2024, the Company recognized a $5.1 million impairment charge on a right of use operating lease asset for a HPC distribution center having a maturity of February 2025, due to the exit of operations from the facility and the inability to sub-lease to a third-party prior to the maturity, included within Selling, General & Administrative Expense on the Consolidated Statements 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 operations from the facility and the intention to sub-lease to a third-party, included as Selling, General & Administrative Expense on the Consolidated Statements of Income. The impairments were measured using projected discounted cash flow for the facility, including assumed sub-lease tenant, when applicable, at sub-lease rental rates comparable to current market conditions. The components of lease costs recognized in the Consolidated Statements of Income for the year ended September 30, 2024, 2023, and 2022 are as follows:
(in millions) |  | 2024 |  | 2023 |  | 2022
Operating lease cost |  | $ | 34.6 |  |  | $ | 37.0 |  |  | $ | 26.3 |
Finance lease cost |  |  |  |  |  |
Amortization of leased assets |  | 10.3 |  |  | 10.2 |  |  | 10.5 |
Interest on lease liability |  | 4.5 |  |  | 4.8 |  |  | 5.2 |
Variable lease cost |  | 13.0 |  |  | 12.4 |  |  | 10.8 |
Total lease cost |  | $ | 62.4 |  |  | $ | 64.4 |  |  | $ | 52.8 |
During the year ended September 30, 2024, 2023, and 2022 the Company recognized income attributable to leases and sub-leases of $2.4 million, $2.4 million, and $2.7 million, respectively. Income from leases and sub-leases is recognized as Other Non-Operating Income on the Consolidated Statements of Income. The following is a summary of cash paid for amounts included in the measurement of lease liabilities recognized in the Consolidated Statements of Cash Flow, including supplemental non-cash activity related to operating leases, for the year ended September 30, 2024, 2023, and 2022:
(in millions) |  | 2024 |  | 2023 |  | 2022
Operating cash flow from operating leases |  | $ | 35.5 |  |  | $ | 30.3 |  |  | $ | 25.3 |
Operating cash flows from finance leases |  | 4.5 |  |  | 4.8 |  |  | 5.1 |
Financing cash flows from finance leases |  | 10.1 |  |  | 9.5 |  |  | 8.9 |
Supplemental non-cash flow disclosure |  |  |  |  |  |
Acquisition of operating lease asset through lease obligations |  | 25.2 |  |  | 66.9 |  |  | 30.4 |
The following is a summary of weighted-average lease term and discount rate at September 30, 2024 and 2023:
|  | 2024 |  | 2023
Weighted average remaining lease term |  |  |  |
Operating leases |  | 4.0 years |  | 4.6 years
Finance leases |  | 8.0 years |  | 8.7 years
Weighted average discount rate |  |  |  |
Operating leases |  | 6.0 | % |  | 5.5 | %
Finance leases |  | 5.4 | % |  | 5.3 | %
At September 30, 2024, future lease payments under operating and finance leases were as follows:
(in millions) |  | Finance Leases |  | Operating Leases
2025 |  | $ | 13.1 |  |  | $ | 37.3 |
2026 |  | 13.6 |  |  | 32.0 |
2027 |  | 13.4 |  |  | 29.6 |
2028 |  | 13.1 |  |  | 25.1 |
2029 |  | 12.7 |  |  | 7.4 |
Thereafter |  | 33.9 |  |  | 1.8 |
Total lease payments |  | 99.8 |  |  | 133.2 |
Amount representing interest |  | (18.2) |  |  | (14.9) |
Total minimum lease payments |  | $ | 81.6 |  |  | $ | 118.3 |

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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 + Details
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