LSI INDUSTRIES INC Leases Disclosure

NOTE 11 — LEASES

 

The Company leases certain manufacturing facilities along with a small office space, several forklifts, several small tooling items, and various items of office equipment. All but two of the Company’s leases are operating leases. Leases have a remaining term of one to seven years some of which have an option to renew. The Company does not assume renewals in determining the lease term unless the renewals are deemed reasonably certain. The lease agreements do not contain any material residual guarantees or material variable lease payments. The number of operating leases increased in fiscal 2024 as a result of the acquisition of EMI mostly which are building leases.

 

 

The Company has periodically entered into short-term operating leases with an initial term of twelve months or less. The Company elected not to record these leases on the balance sheet. The rent expense for these leases was immaterial for fiscal years 2024 and 2023.

 

The Company has certain leases that contain lease and non-lease components and has elected to utilize the practical expedient to account for these components together as a single lease component.

 

Lease expense is recognized on a straight-line basis over the lease term. The Company used its incremental borrowing rate when determining the present value of lease payments.

 

(In thousands)		2024				2023
Operating lease cost		$	6,248			$	3,551
Financing lease cost:
Amortization of right of use assets			291				295
Interest on lease liabilities			53				67
Variable lease cost			87				87
Sublease income			(464	)			(348	)
Total lease cost		$	6,215			$	3,652

 

Supplemental Cash Flow Information
(in thousands)		2024				2023
Cash flows from operating leases
Fixed payments - operating lease cash flows		$	5,996			$	3,704
Liability reduction - operating cash flows		$	4,984			$	3,319
Cash flows from finance leases
Interest - operating cash flows		$	53			$	67
Repayments of principal portion - financing cash flows		$	324			$	281

 

Operating Leases:
Total operating right-of-use assets		$	15,912			$	8,921
Accrued Expenses			5,560				3,566
Long-term operating lease liability			11,267				5,954
Total operating lease liabilities		$	16,827			$	9,520
Weighted Average remaining Lease Term (in years)			3.49				3.31
Weighted Average Discount Rate			5.90	%			5.44	%

 

 

Financing Leases
Buildings under finance leases		$	2,033			$	2,033
Equipment under finance leases			41				34
Accumulated depreciation			(1,232	)			(929	)
Total finance lease assets, net		$	842			$	1,138
Accrued expenses (Current liabilities)		$	324			$	284
Long-term finance lease liability			636				960
Total finance lease liabilities		$	960			$	1,244
Weighted Average remaining Lease Term (in years)			2.83				3.83
Weighted Average Discount Rate			4.86	%			4.86	%

 

Maturities of Lease Liability:
		Operating Lease Liabilities				Finance Lease Liabilities				Operating Subleases				Net Lease Commitments
2025		$	6,330			$	362			$	(31	)		$	6,661
2026			4,927				362				-				5,289
2027			3,991				302				-				4,293
2028			2,348				-				-				2,348
2029			499				-				-				499
Thereafter			686				-				-				686
Total lease payments		$	18,781			$	1,026			$	(31	)		$	19,776
Less: Interest			(1,954	)			(66	)							(2,020	)
Present Value of Lease Liabilities		$	16,827			$	960							$	17,756