NOTE 7. LEASES
The following table presents the components of total leased assets and lease liabilities, including their classification in the consolidated balance sheets:
| | | | | | | | | | | | | | | | | | | | |
| (in thousands) | | Classification in Consolidated Balance Sheets | | August 31, 2025 | | August 31, 2024 |
| Assets: | | | | | | |
| Operating assets | | Other noncurrent assets | | $ | 172,374 | | | $ | 178,006 | |
| Finance assets | | Property, plant and equipment, net | | 189,923 | | | 160,361 | |
| Total leased assets | | | | $ | 362,297 | | | $ | 338,367 | |
| | | | | | |
| Liabilities: | | | | | | |
| Operating lease liabilities: | | | | | | |
| Current | | Other accrued expenses and payables | | $ | 37,250 | | | $ | 36,675 | |
| Long-term | | Other noncurrent liabilities | | 136,629 | | | 140,109 | |
| Total operating lease liabilities | | | | 173,879 | | | 176,784 | |
| Finance lease liabilities: | | | | | | |
| Current | | Current maturities of long-term debt and short-term borrowings | | 42,500 | | | 36,985 | |
| Long-term | | Long-term debt | | 116,417 | | | 104,286 | |
| Total finance lease liabilities | | | | 158,917 | | | 141,271 | |
| Total lease liabilities | | | | $ | 332,796 | | | $ | 318,055 | |
The components of lease cost were as follows:
| | | | | | | | | | | | | | | | | | | | |
| | Year Ended August 31, |
| (in thousands) | | 2025 | | 2024 | | 2023 |
| Operating lease expense | | $ | 48,618 | | | $ | 46,515 | | | $ | 40,093 | |
| Finance lease expense: | | | | | | |
| Amortization of assets | | 27,966 | | | 23,825 | | | 16,574 | |
| Interest on lease liabilities | | 7,690 | | | 5,712 | | | 3,642 | |
| Total finance lease expense | | 35,656 | | | 29,537 | | | 20,216 | |
| Variable and short-term lease expense | | 20,901 | | | 19,481 | | | 20,810 | |
| Total lease expense | | $ | 105,175 | | | $ | 95,533 | | | $ | 81,119 | |
The weighted average remaining lease terms and discount rates for operating and finance leases are presented in the following table: | | | | | | | | | | | | | | |
| | August 31, 2025 | | August 31, 2024 |
| Weighted average remaining lease term (years): | | | | |
| Operating leases | | 5.9 | | 6.2 |
| Finance leases | | 3.9 | | 4.1 |
| | | | |
| Weighted average discount rate: | | | | |
| Operating leases | | 5.126 | % | | 4.934 | % |
| Finance leases | | 5.263 | % | | 5.134 | % |
Cash flow and other information related to leases is included in the following table:
| | | | | | | | | | | | | | | | | | | | |
| | Year Ended August 31, |
| (in thousands) | | 2025 | | 2024 | | 2023 |
| Cash paid for amounts included in the measurement of lease liabilities: | | | | | | |
| Operating cash outflows from operating leases | | $ | 48,649 | | | $ | 47,508 | | | $ | 40,645 | |
| Operating cash outflows from finance leases | | 7,690 | | | 5,712 | | | 3,642 | |
| Financing cash outflows from finance leases | | 40,567 | | | 34,508 | | | 22,837 | |
| | | | | | |
| ROU assets obtained in exchange for lease obligations: | | | | | | |
| Operating leases | | $ | 38,263 | | | $ | 57,746 | | | $ | 55,588 | |
| Finance leases | | 59,102 | | | 79,841 | | | 59,499 | |
Future maturities of lease liabilities at August 31, 2025 are presented in the following table:
| | | | | | | | | | | | | | |
| (in thousands) | | Operating Leases | | Finance Leases |
| 2026 | | $ | 44,803 | | | $ | 49,766 | |
| 2027 | | 40,453 | | | 46,380 | |
| 2028 | | 31,523 | | | 39,783 | |
| 2029 | | 22,762 | | | 25,445 | |
| 2030 | | 16,728 | | | 11,036 | |
| Thereafter | | 46,125 | | | 3,690 | |
| Total lease payments | | 202,394 | | | 176,100 | |
| Less imputed interest | | (28,515) | | | (17,183) | |
| Present value of lease liabilities | | $ | 173,879 | | | $ | 158,917 | |
As of August 31, 2025, the Company has additional leases that have not yet commenced, primarily for heavy-duty vehicles, with aggregate fixed payments over their terms of approximately $14 million. Of these, leases with aggregate payments approximately $13 million are expected to commence in 2026 and the remainder are expected to commence in 2027. These leases have noncancellable terms of 4 to 7 years.
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.