Quarterly report pursuant to Section 13 or 15(d)

Leases

v3.22.2
Leases
6 Months Ended
Jun. 30, 2022
Leases  
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:

    

As of

June 30, 

December 31, 

2022

2021

Assets

Classification

Operating

Right of use assets

$

174,361

$

177,177

Finance

Property and equipment, net

7,857

9,743

Total lease assets

$

182,218

$

186,920

Liabilities

Current

Operating

Short-term operating lease liabilities

$

55,284

$

54,591

Finance

Short-term finance lease liabilities

2,712

2,387

Non-Current

Operating

Long-term operating lease liabilities

124,191

125,339

Finance

Long-term finance lease liabilities

7,055

7,770

Total lease liabilities

$

189,242

$

190,087

Weighted-average remaining lease term:

Operating leases

3.9 years

4.1 years

Finance leases

4.0 years

4.4 years

Weighted-average discount rate:

Operating leases

3.1

%

3.1

%

Finance leases

2.9

%

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:

    

Three Months Ended June 30, 

Six Months Ended June 30, 

2022

2021

2022

2021

Operating lease cost (a)

$

21,675

$

12,636

$

42,186

$

24,446

Financing lease cost:

Amortization of leased assets

744

-

1,539

-

Interest on finance lease obligations

66

-

136

-

Short-term lease cost

4,001

3,844

8,341

7,198

Sublease income

(155)

(215)

(373)

(421)

Net lease cost

$

26,331

$

16,265

$

51,829

$

31,223

(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.

Future minimum lease payments under non-cancellable operating leases as of June 30, 2022, were as follows, in thousands:

Payments due by Period

    

2022

$

32,614

2023

54,275

2024

45,418

2025

34,983

2026

22,520

2027 and Thereafter

16,550

Total future minimum lease payments

206,360

Less: imputed interest

(17,118)

Lease liability at June 30, 2022

$

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:

    

Six Months Ended June 30, 

2022

2021

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from finance leases

$

(136)

$

-

Operating cash flows from operating leases

(31,959)

(21,072)

Financing cash flows from finance leases

(1,130)

-