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Leases

9 Months Ended

Mar. 31, 2023

Note (7) - Leases:

Company as Lessee

As of March 31, 2023, the Company had 34 facilities, consisting of warehouse facilities and administrative offices, financed under operating leases with lease term expirations between 2023 and 2030. Operating lease cost consists of monthly rental payments under the terms of the Company’s lease agreements recognized on a straight-line basis. Short-term lease costs are not material.

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 March 31, 2023. 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)	$	930
2024		2,814
2025		2,095
2026		1,458
2027		1,019
Thereafter		1,442
Total minimum lease payments		9,758
Less: amounts representing interest		(688	)
Present value of minimum lease payments		9,070
Less: current portion		(2,867	)
Long-term portion	$	6,203

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

	Nine months ended March 31,				Three months ended March 31,
	2023		2022		2023		2022
Operating lease expense
Operating lease cost	$	2,581	$	1,781	$	965	$	671
Variable lease cost		156		320		12		44
Total operating lease expense (1)	$	2,737	$	2,101	$	977	$	715

(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 March 31, 2023:

		March 31, 2023
Weighted average remaining lease terms
Operating leases		4.3 years
Weighted average discount rate
Operating leases		3.4 %

The table below presents supplemental cash flow information related to the Company’s long-term operating lease liabilities for the nine months ended March 31, 2023 and 2022 (in thousands):

	Nine months ended March 31,
	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:	$	2,581	$	1,919
Operating lease right-of-use assets obtained in exchange for operating lease liabilities:	$	2,835	$	2,010

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)	$	1,185	$	726	$	459
2024		3,953		2,524		1,429
2025		3,011		1,898		1,113
2026		2,384		1,335		1,049
2027		1,600		796		804
Thereafter		1,275		572		703
					$	5,557	*

* Excludes residual values of $2.9 million.

The total net investments in sales type leases, including stated residual values, as of March 31, 2023 and June 30, 2022 was $8.5 million and $7.7 million, respectively. The current portion of $1.9 million and $2.0 million is included in other current assets in the consolidated balance sheets as of March 31, 2023 and June 30, 2022, respectively, and the long term portion of $6.6 million and $5.7 million is included in other assets in the consolidated balance sheets as of March 31, 2023 and June 30, 2022, respectively.