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Leases

6 Months Ended

Dec. 31, 2024

Note (7) - Leases:

Company as Lessee

As of December 31, 2024, the Company had 34 facilities, consisting of warehouse facilities and administrative offices, financed under operating leases with lease term expirations between 2025 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 were not material during the six or three months ended December 31, 2024 or 2023.

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, 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)
2025 (remainder of)	$	1,908
2026		3,452
2027		2,114
2028		1,086
2029		374
Thereafter		778
Total minimum lease payments		9,712
Less: amounts representing interest		642
Present value of minimum lease payments		9,070
Less: current portion		3,426
Long-term portion	$	5,644

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,
	2024		2023		2024		2023
Operating lease cost
Operating lease cost (1)	$	1,897	$	2,036	$	941	$	1,035
Variable lease cost (2)		2,488		2,218		705		1,143
Total lease cost	$	4,385	$	4,254	$	1,646	$	2,178

(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. 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 December 31, 2024:

		December 31, 2024
Weighted average remaining lease terms
Operating leases		3.3 years
Weighted average discount rate
Operating leases		3.65 %

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, 2024 and 2023 (in thousands):

	Six months ended December 31,
	2024		2023
Cash paid for amounts included in the measurement of lease liabilities:	$	1,897	$	2,036
Operating lease right-of-use assets obtained in exchange for operating lease liabilities:	$	1,781	$	3,095

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
2025 (remainder of)	$	2,723	$	1,769	$	954
2026		4,538		2,942		1,596
2027		3,603		2,191		1,412
2028		2,571		1,413		1,158
2029		1,634		789		845
Thereafter		1,811		869		942
					$	6,907	*

* Excludes residual values of $2.8 million.

The total net investments in sales type leases, including stated residual values, was $9.7 million as of both December 31, 2024 and June 30, 2024. The current portion of $1.6 million and $1.7 million is included in other current assets in the condensed consolidated balance sheets as of December 31, 2024 and June 30, 2024, respectively, and the long term portion of $8.1 million and $8.0 million is included in other assets in the condensed consolidated balance sheets as of December 31, 2024 and June 30, 2024, respectively.