Leases

6 Months Ended

Mar. 31, 2024

Note 8. Leases

We have entered into a number of facility and equipment leases which qualify as operating leases under GAAP. We also have a limited number of equipment leases that qualify as finance leases.

The following table presents certain information related to lease term and incremental borrowing rates for leases as of March 31, 2024 and September 30, 2023:


	March 31, 2024			September 30, 2023
Weighted-average remaining lease term (in months):
Operating leases		38.9			37.2
Finance leases		19.0			24.5
Weighted-average discount rate:
Operating leases		5.6	%		5.3	%
Finance leases		4.4	%		4.4	%

The following table presents lease expense for the three and six months ended March 31, 2024 and 2023 (dollars in thousands):


	Three Months Ended March 31,						Six Months Ended March 31,
	2024			2023			2024			2023
Finance lease costs:
Amortization of right of use asset	$	108		$	108		$	216		$	216
Interest on lease liability		6			10			13			20
Operating lease cost		1,581			1,645			3,209			3,331
Variable lease cost		807			808			1,571			1,499
Sublease income		(51	)		(48	)		(111	)		(93	)
Total lease cost	$	2,451		$	2,523		$	4,898		$	4,973

For the three months ended March 31, 2024 and 2023, cash payments related to operating leases were $1.6 million and $3.3 million and $3.4 million for the six months ended March 31, 2024 and 2023, respectively. For the three months ended March 31, 2024 and 2023 cash payments related to finance leases were $0.1 million and $0.2 million, respectively, of which an immaterial amount related to the interest portion of the lease liability. For the six months ended March 31, 2024 and 2023, cash payments related to financing leases were $0.2 million and $0.3 million, respectively, of which an immaterial amount related to the interest portion of the lease liability. For the three months ended March 31, 2024 and 2023, right of use assets obtained in exchange for lease obligations were $0.1 million and $0.4 million, respectively, and $1.6 million and $2.9 million for the six months ended March 31, 2024 and 2023.

The table below reconciles the undiscounted future minimum lease payments under non-cancelable leases to the total lease liabilities recognized on the Condensed Consolidated Balance Sheet as of March 31, 2024 (dollars in thousands):


Year Ending September 30,	Operating Leases			Financing Leases			Total
2024	$	3,163		$	208		$	3,371
2025		4,440			362			4,802
2026		2,302			52			2,354
2027		1,834			—			1,834
2028		955			—			955
Thereafter		745			—			745
Total future minimum lease payments	$	13,439		$	622		$	14,061
Less effects of discounting		(1,241	)		(16	)		(1,257	)
Total lease liabilities	$	12,198		$	606		$	12,804
Reported as of March 31, 2024
Short-term lease liabilities	$	5,188		$	402		$	5,590
Long-term lease liabilities		7,010			204			7,214
Total lease liabilities	$	12,198		$	606		$	12,804