Leases
The Company leases warehouses, distribution centers, office space and equipment. The majority of the Company's leases include one or more options to renew, with renewal terms that can extend the lease term for up to ten years. The exercise of lease renewal options is at the Company's sole discretion and such renewal options are included in the lease term if they are reasonably certain to be exercised. Certain leases also include options to purchase the leased asset. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. Most of the Company’s equipment leases are finance leases of assets used to operate its distribution center in Ontario, California.
Significant judgment is required to determine whether commercial contracts contain a lease for purposes of ASC 842, “Leases”. The Company uses its incremental borrowing rate to determine the present value of lease payments.
Supplemental balance sheet information related to leases as of March 31, 2026 and March 31, 2025 is as follows (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Classification | | March 31, 2026 | | March 31, 2025 |
| Assets | | | | | | |
| Operating lease assets | | Other assets | | $ | 61,703 | | | $ | 54,157 | |
| Total leased assets | | | | $ | 61,703 | | | $ | 54,157 | |
| Liabilities | | | | | | |
| Current | | | | | | |
| Operating | | Accrued expenses and other current liabilities | | $ | 7,624 | | | $ | 7,621 | |
| | | | | | |
| Noncurrent | | | | | | |
| Operating | | Long-term operating lease obligations | | 69,928 | | | 48,721 | |
| Total lease liabilities | | | | $ | 77,552 | | | $ | 56,342 | |
For the fiscal years ended March 31, 2026, March 31, 2025 and March 31, 2024, the components of operating and finance lease costs were as follows (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Fiscal year ended March 31, |
| | | Classification | | 2026 | | 2025 | | 2024 |
| Operating lease cost | | Selling, general and administrative (“SG&A”) expenses | | $ | 16,085 | | | $ | 12,752 | | | $ | 7,341 | |
| Amortization of leased assets | | SG&A expenses | | — | | | — | | | 210 | |
| Interest on lease liabilities | | Interest expense, net | | — | | | — | | | 10 | |
| Total lease cost | | | | $ | 16,085 | | | $ | 12,752 | | | $ | 7,561 | |
As of March 31, 2026, the aggregate future minimum lease payments under non-cancellable operating leases presented in accordance with ASC 842 are as follows (in thousands):
| | | | | | | | |
| Year ending March 31, | | |
| 2027 | | $ | 11,490 | |
| 2028 | | 11,541 | |
| 2029 | | 12,809 | |
| 2030 | | 12,103 | |
| 2031 | | 12,627 | |
| Thereafter | | 39,907 | |
| Total lease payments | | 100,477 | |
| Less: Interest | | (22,925) | |
| Present value of operating lease liabilities | | $ | 77,552 | |
As of March 31, 2026 and March 31, 2025, the weighted-average remaining lease term (in years) and discount rate were as follows:
| | | | | | | | | | | | | | |
| | | March 31, 2026 | | March 31, 2025 |
| Weighted-average remaining lease term | | | | |
| Operating leases | | 7.9 years | | 7.9 years |
| | | | |
| Weighted-average discount rate | | | | |
| Operating leases | | 6.3 | % | | 6.0 | % |
| | | | |
Operating cash outflows from operating leases for the fiscal years ended March 31, 2026, March 31, 2025 and March 31, 2024 were $10.3 million, $10.7 million and $6.0 million, respectively. Right-of-use assets obtained in exchange for lease obligations for the fiscal years ended March 31, 2026, March 31, 2025 and March 31, 2024 were $16.8 million, $36.3 million and $18.9 million, respectively.