| Leases |
8. LEASES
We lease various assets to support our business including warehouses for our Installation branch locations and Specialty Distribution centers, office space for our Branch Support Center in Daytona Beach, Florida and other administrative locations, as well as fleet vehicles and certain equipment. In addition, we lease certain operating facilities from related parties, primarily former owners (and in certain cases, current management personnel) of companies acquired. These related party leases are immaterial to our condensed consolidated statements of operations.
The following table presents lease-related assets and liabilities recognized in our condensed consolidated balance sheet, in thousands:
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As of |
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June 30, |
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December 31, |
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2022 |
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2021 |
Assets |
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Classification |
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Operating |
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Right of use assets |
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$ |
174,361 |
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$ |
177,177 |
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Finance |
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Property and equipment, net |
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7,857 |
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9,743 |
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Total lease assets |
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$ |
182,218 |
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$ |
186,920 |
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Liabilities |
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Current |
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Operating |
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Short-term operating lease liabilities |
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$ |
55,284 |
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$ |
54,591 |
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Finance |
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Short-term finance lease liabilities |
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2,712 |
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2,387 |
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Non-Current |
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Operating |
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Long-term operating lease liabilities |
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124,191 |
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125,339 |
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Finance |
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Long-term finance lease liabilities |
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7,055 |
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7,770 |
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Total lease liabilities |
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$ |
189,242 |
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$ |
190,087 |
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Weighted-average remaining lease term: |
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Operating leases |
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3.9 years |
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4.1 years |
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Finance leases |
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4.0 years |
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4.4 years |
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Weighted-average discount rate: |
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Operating leases |
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3.1 |
% |
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3.1 |
% |
Finance leases |
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2.9 |
% |
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2.9 |
% |
The components of lease expense were as follows and are primarily included in cost of sales on the accompanying unaudited condensed consolidated statement of operations for operating leases and in selling, general and administrative expenses on the accompanying unaudited condensed consolidated statement of operations for finance leases and operating leases on support centers, in thousands:
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2022 |
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2021 |
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2022 |
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2021 |
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Operating lease cost (a) |
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$ |
21,675 |
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$ |
12,636 |
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$ |
42,186 |
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$ |
24,446 |
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Financing lease cost: |
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Amortization of leased assets |
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744 |
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- |
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1,539 |
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- |
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Interest on finance lease obligations |
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66 |
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- |
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136 |
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- |
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Short-term lease cost |
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4,001 |
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3,844 |
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8,341 |
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7,198 |
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Sublease income |
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(155) |
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(215) |
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(373) |
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(421) |
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Net lease cost |
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$ |
26,331 |
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$ |
16,265 |
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$ |
51,829 |
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$ |
31,223 |
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| (a) |
Includes variable cost components of $4,782 and $1,808 in the three months ended June 30, 2022, and 2021, respectively, and $8,461 and $3,505 of variable cost components in the six months ended June 30, 2022, and 2021, respectively.
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Future minimum lease payments under non-cancellable operating leases as of June 30, 2022, were as follows, in thousands:
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Payments due by Period |
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2022 |
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$ |
32,614 |
2023 |
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54,275 |
2024 |
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45,418 |
2025 |
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34,983 |
2026 |
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22,520 |
2027 and Thereafter |
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16,550 |
Total future minimum lease payments |
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206,360 |
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Less: imputed interest |
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(17,118) |
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Lease liability at June 30, 2022 |
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$ |
189,242 |
The amount below is included in the cash flows provided by (used in) operating activities section on the accompanying unaudited condensed consolidated statements of cash flows, in thousands:
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Six Months Ended June 30, |
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2022 |
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2021 |
Cash paid for amounts included in the measurement of lease liabilities: |
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Operating cash flows from finance leases |
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$ |
(136) |
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$ |
- |
Operating cash flows from operating leases |
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(31,959) |
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(21,072) |
Financing cash flows from finance leases |
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(1,130) |
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- |
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