LEASES
We have operating leases primarily for real estate properties, including corporate headquarters, customer service and sales offices, manufacturing and packaging facilities, warehouses, and research and development facilities, as well as for rail tracks, railcars and office equipment. Our leases for a shared warehouse, office facility, and railcars have options to extend which we are reasonably certain we will exercise and, accordingly, have been considered in the lease term used to recognize our ROU assets and lease liabilities. To determine the present value of the lease liability, we use an incremental borrowing rate, which is defined as the rate of interest that the Company would have to pay to borrow (on a collateralized basis over a similar term) an amount equal to the lease payments in similar economic environments. As provided in ASC 842, we have elected not to apply these measurement and recognition requirements to short-term leases (i.e., leases with a term of 12 months or less). Short-term leases will not be recorded as ROU assets or lease liabilities on our consolidated balance sheet, and the related lease payments will be recognized in net earnings on a straight-line basis over the lease term.
We have no material finance leases, and variable costs for operating leases are immaterial. Operating lease costs are included in Cost of Goods Sold or SG&A expenses based on the nature of the lease. The following table summarizes total lease costs for our operating leases (in thousands):
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| For the Twelve Months Ended July 31, |
| 2025 | | 2024 | | 2023 |
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| Operating lease cost | $ | 5,320 | | | $ | 3,791 | | | $ | 2,640 | |
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Supplemental cash flow information related to leases was as follows (in thousands):
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| For the Twelve Months Ended July 31, |
| 2025 | | 2024 | | 2023 |
| Other Information | | | | | |
| Cash paid for amounts included in the measurement of lease liabilities: | $ | 4,515 | | | $ | 3,112 | | | $ | 2,229 | |
| Right-of-use assets obtained in exchange for new operating lease liabilities | 1 | | | 11,471 | | | 983 | |
Operating lease ROU assets and operating lease liabilities are separately presented on the Consolidated Balance Sheets. Other supplemental balance sheet information related to leases was as follows:
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| For the Twelve Months Ended July 31, |
| 2025 | | 2024 | | 2023 |
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| Weighted-average remaining lease term - operating leases | 4.8 years | | 5.4 years | | 7.7 years |
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| Weighted-average discount rate - operating leases | 5.12% | | 5.10% | | 4.03% |
The following table summarizes scheduled minimum future lease payments due within twelve months for operating leases with terms longer than one year for which cash flows are fixed and determinable as of July 31, 2025 (in thousands):
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| 2026 | $ | 4,740 | | |
| 2027 | 3,758 | | |
| 2028 | 2,949 | | |
| 2029 | 2,356 | | |
| 2030 | 1,130 | | |
| Thereafter | 2,350 | | |
| Total | 17,283 | | |
| Less: imputed interest | (1,916) | | |
| Net lease obligation | $ | 15,367 | | |
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.