Leases

6 Months Ended

Sep. 30, 2024

9. Leases

The Company leases various facilities in North America and Asia under operating leases expiring through August 2033. The Company has material nonfunctional currency leases that could have a material impact on the Company’s condensed consolidated statements of operations. As required for other monetary liabilities, lessees remeasure foreign currency-denominated lease liabilities using the exchange rate at each reporting date, but the lease assets are nonmonetary assets measured at historical rates and are not affected by subsequent changes in the exchange rates. In connection with the remeasurement of these leases, the Company recorded a loss of $3,978,000 and $1,948,000 during the three months ended September 30, 2024 and 2023, respectively. In connection with the remeasurement of these leases, the Company recorded a loss of $9,687,000 and a gain of $1,822,000 during the six months ended September 30, 2024 and 2023, respectively. These amounts are included in foreign exchange impact of lease liabilities and forward contracts in the condensed consolidated statements of operations.

During the six months ended September 30, 2024, the Company ceased manufacturing operations at its Torrance, California facility as a part of its on-going strategy to utilize its global footprint to enhance its operating efficiencies. This represented a significant change to the use of this right-of-use asset, which required a reassessment of the Company’s asset groups. The Company concluded that this right-of-use asset was no longer part of the Hard Parts asset group. The Company performed a test for recoverability (using Level 3 inputs) which resulted in no impairment at September 30, 2024. Any future changes to the assumptions and estimates from those anticipated may affect the carrying value of right-of-use assets and could result in impairment charges.

Balance sheet information for leases is as follows:

Leases	Classification	September 30, 2024		March 31, 2024
Assets:
Operating	Operating lease assets	$	71,792,000	$	83,973,000
Finance	Plant and equipment		3,634,000		4,611,000
Total leased assets		$	75,426,000	$	88,584,000

Liabilities:
Current
Operating	Operating lease liabilities	$	9,272,000	$	8,319,000
Finance	Other current liabilities		1,331,000		1,585,000
Long-term
Operating	Long-term operating lease liabilities		69,419,000		72,240,000
Finance	Other liabilities		1,451,000		1,893,000
Total lease liabilities		$	81,473,000	$	84,037,000

Lease cost recognized in the condensed consolidated statements of operations is as follows:

	Three Months Ended				Six Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Lease cost
Operating lease cost	$	3,523,000	$	3,761,000	$	7,282,000	$	7,503,000
Short-term lease cost		381,000		350,000		693,000		643,000
Variable lease cost		91,000		146,000		255,000		332,000
Finance lease cost:
Amortization of finance lease assets		295,000		391,000		653,000		794,000
Interest on finance lease liabilities		45,000		57,000		96,000		119,000
Total lease cost	$	4,335,000	$	4,705,000	$	8,979,000	$	9,391,000

Maturities of lease commitments at September 30, 2024 by fiscal year were as follows:

Maturity of lease liabilities	Operating Leases			Finance Leases			Total
2025 - remaining six months	$	6,753,000		$	819,000		$	7,572,000
2026		13,575,000			1,055,000			14,630,000
2027		11,711,000			564,000			12,275,000
2028		11,147,000			401,000			11,548,000
2029		11,142,000			203,000			11,345,000
Thereafter		43,524,000			17,000			43,541,000
Total lease payments		97,852,000			3,059,000			100,911,000
Less amount representing interest		(19,161,000	)		(277,000	)		(19,438,000	)
Present value of lease liabilities	$	78,691,000		$	2,782,000		$	81,473,000

Other information about leases is as follows:

	September 30, 2024			March 31, 2024
Lease term and discount rate
Weighted-average remaining lease term (years):
Finance leases		2.8			2.8
Operating leases		7.7			8.3
Weighted-average discount rate:
Finance leases		6.6	%		6.4	%
Operating leases		5.8	%		5.8	%