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Leases

9 Months Ended

Mar. 31, 2024

Note (7) - Leases:

Company as Lessee

As of March 31, 2024, the Company had 32 facilities, consisting of warehouse facilities and administrative offices, financed under operating leases with lease term expirations between 2024 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, 2024. 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)
2024 (remainder of)	$	979
2025		3,367
2026		2,738
2027		1,470
2028		812
Thereafter		1,152
Total minimum lease payments		10,518
Less: amounts representing interest		714
Present value of minimum lease payments		9,804
Less: current portion		3,272
Long-term portion	$	6,532

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,
	2024		2023		2024		2023
Operating lease cost
Operating lease cost (1)	$	3,012	$	2,581	$	976	$	965
Variable lease cost (2)		3,460		156		1,242		12
Total lease cost	$	6,472	$	2,737	$	2,218	$	977

(1)

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

(2)

Certain of the Company’s subsidiaries lease space at locations where (i) they install laundry equipment and customers pay for the use of equipment and (ii) the leased space is paid for as part of a revenue sharing arrangement. The Company did not report this variable lease cost in the three or nine months ended March 31, 2023 and does not believe the omission is material to the Company’s consolidated financial statements. These expenses are classified within cost of sales in the Company’s condensed consolidated statements of operations.

The table below presents lease-related terms and discount rates as of March 31, 2024:

		March 31, 2024
Weighted average remaining lease terms
Operating leases		3.7 years
Weighted average discount rate
Operating leases		3.5 %

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, 2024 and 2023 (in thousands):

	Nine months ended March 31,
	2024		2023
Cash paid for amounts included in the measurement of lease liabilities:	$	3,012	$	2,581
Operating lease right-of-use assets obtained in exchange for operating lease liabilities:	$	2,903	$	2,835

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
2024 (remainder of)	$	1,332	$	859	$	473
2025		4,517		3,003		1,514
2026		3,681		2,286		1,395
2027		2,820		1,602		1,218
2028		1,786		898		888
Thereafter		2,008		941		1,067
					$	6,555	*

* Excludes residual values of $2.9 million.

The total net investments in sales type leases, including stated residual values, as of March 31, 2024 and June 30, 2023 was $9.5 million and $9.0 million, respectively. The current portion of $1.6 million is included in other current assets in the condensed consolidated balance sheets as of both March 31, 2024 and June 30, 2023, and the long term portion of $7.9 million and $7.4 million is included in other assets in the condensed consolidated balance sheets as of March 31, 2024 and June 30, 2023, respectively.