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Leases

6 Months Ended

Dec. 31, 2022

Note (7) - Leases:

Company as Lessee

As of December 31, 2022, the Company had 34 facilities, consisting of warehouse facilities and administrative offices, financed under operating leases with lease term expirations between 2023 and 2030. Rent expense consists of monthly rental payments under the terms of the Company’s lease agreements recognized on a straight-line basis.

The following table provides details of the Company’s future minimum lease payments under operating lease liabilities recorded on the Company’s condensed consolidated balance sheet as of December 31, 2022. The table below does not include commitments that are contingent on events or other factors that are currently uncertain or unknown.

Fiscal years ending June 30,	Total Operating Lease Obligations (in thousands)
2023 (remainder of)	$	1,496
2024		2,055
2025		1,446
2026		988
2027		798
Thereafter		1,288
Total minimum lease payments	$	8,071
Less: amounts representing interest		574
Present value of minimum lease payments	$	7,497
Less: current portion		2,446
Long-term portion	$	5,051

The table below presents additional information related to the Company’s operating leases (in thousands):

	Six months ended December 31,				Three months ended December 31,
	2022		2021		2022		2021
Operating lease expense
Operating lease cost	$	1,616	$	1,248	$	843	$	627
Variable lease cost		144		138		126		103
Total operating lease expense (1)	$	1,760	$	1,386	$	969	$	730

(1)

Expenses are classified as selling, general and administrative expenses in the Company’s condensed consolidated statements of operations.

The table below presents lease-related terms and discount rates as of December 31, 2022:

		December 31, 2022
Weighted average remaining lease terms
Operating leases		4.5 years
Weighted average discount rate
Operating leases		3.3 %

The table below presents supplemental cash flow information related to the Company’s long-term operating lease liabilities for the six months ended December 31, 2022 and 2021 (in thousands):

	Six months ended December 31,
	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:	$	1,616	$	1,248
Operating lease right-of-use assets obtained in exchange for operating lease liabilities:	$	524	$	610

Company as Lessor

The Company derives a portion of its revenue from equipment leasing arrangements. Such arrangements provide for monthly payments covering the equipment provided, maintenance, and interest. These arrangements meet the criteria to be accounted for as sales type leases. Accordingly, revenue from the provision of the equipment is recognized upon delivery of the equipment and its acceptance by the customer. Upon the recognition of such revenue, an asset is established for the investment in sales type leases. Maintenance revenue and interest are recognized monthly over the lease term.

The future minimum lease payments receivable for sales type leases are as follows (in thousands):

Fiscal years ending June 30,	Total Minimum Lease Payments Receivable		Amortization of Unearned Income		Net Investment in Sales Type Leases
2023 (remainder of)	$	2,134	$	1,316	$	818
2024		3,398		2,139		1,259
2025		2,595		1,562		1,033
2026		1,988		1,040		948
2027		1,232		586		646
Thereafter		888		394		494
					$	5,198	*

* Excludes residual values of $2.7 million.

The total net investments in sales type leases, including stated residual values, as of December 31, 2022 and June 30, 2022 was $7.9 million and $7.7 million, respectively. The current portion of $1.8 million and $2.0 million is included in other current assets in the consolidated balance sheets as of December 31, 2022 and June 30, 2022, respectively, and the long term portion of $6.1 million and $5.7 million is included in other assets in the consolidated balance sheets as of December 31, 2022 and June 30, 2022, respectively.