Leases

12 Months Ended

Nov. 30, 2022

Leases [Abstract]

Leases

LEASESOur lease portfolio primarily consists of (i) certain real estate, including those related to a number of administrative, distribution and manufacturing locations; (ii) certain machinery and equipment, including forklifts; and (iii) automobiles, delivery trucks and other vehicles, including an airplane. A limited number of our lease agreements include rental payments that are adjusted periodically based on a market rate or index. Our lease agreements

generally do not contain residual value guarantees or material restrictive covenants, with the exception of the non-cancellable synthetic lease discussed below.

The following presents the components of our lease expense for the years ended November 30 (in millions):

	2022		2021		2020
Operating lease cost	$	47.0	$	45.0	$	41.2
Finance lease cost:
Amortization of ROU assets	9.0		9.0		9.0
Interest on lease liabilities	4.1		4.3		4.5
Net lease cost	$	60.1	$	58.3	$	54.7
(1) Net lease cost does not include short-term leases, variable lease costs or sublease income, all of which are immaterial.

Supplemental balance sheet information related to leases as of November 30 were as follows (in millions):

Leases	Classification	2022		2021
Assets:
Operating lease ROU assets	Other long-term assets	$	218.9	$	136.8
Finance lease ROU assets	Property, plant and equipment, net	103.0		112.1
Total leased assets		$	321.9	$	248.9
Liabilities:
Current
Operating	Other accrued liabilities	$	54.4	$	34.3
Finance	Current portion of long-term debt	7.8		7.5
Non-current
Operating	Other long-term liabilities	176.1		106.1
Finance	Long-term debt	110.5		118.2
Total lease liabilities		$	348.8	$	266.1

In October 2020, we entered into a non-cancellable synthetic lease to consolidate as well as expand our distribution footprint in the mid-Atlantic region. We began to utilize this facility in September 2022. The five-year lease term will expire in November 2027. As of November 30, 2022, the total ROU asset associated with this building was $78.9 million with a related lease obligation of $83.4 million, of which $18.7 million was included in the other accrued liabilities and $64.7 million was included in other long-term liabilities. Rental payments include both a fixed and a variable component. The variable component is based on SOFR plus a margin, based on our credit rating. During the year ended November 30, 2022, we recognized rent expense of $5.2 million related to the leased asset. The lease contains options to negotiate a renewal of the lease or to purchase or request the lessor to sell the facility at the end of the lease term. The lease arrangement contains a residual value guarantee of 76.5% of the lessor’s total construction cost, which approximated $310 million. We do not believe it is probable that any material amounts will be owed under these guarantees. Therefore, no material amounts related to the residual value guarantees are included in the lease payments used to measure the right-of-use assets and lease liabilities. The lease also contains covenants that are consistent with our revolving credit facilities, as disclosed in note 6.

Our Corporate functions, Americas' leadership, and U.S. staff operate out of our Hunt Valley, Maryland headquarters office building. The 15-year lease for that building began in April 2019 and is recognized as a finance lease. During each of the years ended November 30, 2022, 2021 and 2020, we recognized amortization expense of $8.7 million related to the leased asset. As of November 30, 2022, the total lease obligation associated with this building was $116.4 million, of which $7.6 million was included in the current portion of long-term debt and $108.8 million was included in long-term debt. As of November 30, 2021, the total lease obligation was $123.8 million, of which $7.3 million was included in the current portion of long-term debt and $116.5 million was included in long-term debt.

Information regarding our lease terms and discount rates as of November 30 were as follows:

	2022			2021
	Weighted-average remaining lease term (years)	Weighted-average discount rate		Weighted-average remaining lease term (years)	Weighted-average discount rate
Operating leases	5.8	3.7	%	6.8	1.9	%
Finance leases	11.9	3.3	%	12.9	3.3	%

The future maturity of our lease liabilities as of November 30, 2022 were as follows (in millions):

	Operating leases		Finance leases		Total
2023	$	58.3	$	11.3	$	69.6
2024	50.9		11.5		62.4
2025	43.3		11.7		55.0
2026	39.0		11.9		50.9
2027	34.1		12.2		46.3
Thereafter	31.8		89.9		121.7
Total lease payments	257.4		148.5		405.9
Less: Imputed interest	26.9		30.2		57.1
Total lease liabilities	$	230.5	$	118.3	$	348.8

Supplemental cash flow and other information related to leases for the years ended November 30 were as follows (in millions):

	2022		2021
Cash paid for amounts included in the measurements of lease liabilities:
Operating cash flows used for operating leases	$	41.4	$	45.4
Operating cash flows used for finance leases	4.1		4.3
Financing cash flows used for finance leases	7.3		7.1
ROU assets obtained in exchange for lease liabilities
Operating leases	$	133.8	$	47.8

Leases

LEASESOur lease portfolio primarily consists of (i) certain real estate, including those related to a number of administrative, distribution and manufacturing locations; (ii) certain machinery and equipment, including forklifts; and (iii) automobiles, delivery trucks and other vehicles, including an airplane. A limited number of our lease agreements include rental payments that are adjusted periodically based on a market rate or index. Our lease agreements

generally do not contain residual value guarantees or material restrictive covenants, with the exception of the non-cancellable synthetic lease discussed below.

The following presents the components of our lease expense for the years ended November 30 (in millions):

	2022		2021		2020
Operating lease cost	$	47.0	$	45.0	$	41.2
Finance lease cost:
Amortization of ROU assets	9.0		9.0		9.0
Interest on lease liabilities	4.1		4.3		4.5
Net lease cost	$	60.1	$	58.3	$	54.7
(1) Net lease cost does not include short-term leases, variable lease costs or sublease income, all of which are immaterial.

Supplemental balance sheet information related to leases as of November 30 were as follows (in millions):

Leases	Classification	2022		2021
Assets:
Operating lease ROU assets	Other long-term assets	$	218.9	$	136.8
Finance lease ROU assets	Property, plant and equipment, net	103.0		112.1
Total leased assets		$	321.9	$	248.9
Liabilities:
Current
Operating	Other accrued liabilities	$	54.4	$	34.3
Finance	Current portion of long-term debt	7.8		7.5
Non-current
Operating	Other long-term liabilities	176.1		106.1
Finance	Long-term debt	110.5		118.2
Total lease liabilities		$	348.8	$	266.1

In October 2020, we entered into a non-cancellable synthetic lease to consolidate as well as expand our distribution footprint in the mid-Atlantic region. We began to utilize this facility in September 2022. The five-year lease term will expire in November 2027. As of November 30, 2022, the total ROU asset associated with this building was $78.9 million with a related lease obligation of $83.4 million, of which $18.7 million was included in the other accrued liabilities and $64.7 million was included in other long-term liabilities. Rental payments include both a fixed and a variable component. The variable component is based on SOFR plus a margin, based on our credit rating. During the year ended November 30, 2022, we recognized rent expense of $5.2 million related to the leased asset. The lease contains options to negotiate a renewal of the lease or to purchase or request the lessor to sell the facility at the end of the lease term. The lease arrangement contains a residual value guarantee of 76.5% of the lessor’s total construction cost, which approximated $310 million. We do not believe it is probable that any material amounts will be owed under these guarantees. Therefore, no material amounts related to the residual value guarantees are included in the lease payments used to measure the right-of-use assets and lease liabilities. The lease also contains covenants that are consistent with our revolving credit facilities, as disclosed in note 6.

Our Corporate functions, Americas' leadership, and U.S. staff operate out of our Hunt Valley, Maryland headquarters office building. The 15-year lease for that building began in April 2019 and is recognized as a finance lease. During each of the years ended November 30, 2022, 2021 and 2020, we recognized amortization expense of $8.7 million related to the leased asset. As of November 30, 2022, the total lease obligation associated with this building was $116.4 million, of which $7.6 million was included in the current portion of long-term debt and $108.8 million was included in long-term debt. As of November 30, 2021, the total lease obligation was $123.8 million, of which $7.3 million was included in the current portion of long-term debt and $116.5 million was included in long-term debt.

Information regarding our lease terms and discount rates as of November 30 were as follows:

	2022			2021
	Weighted-average remaining lease term (years)	Weighted-average discount rate		Weighted-average remaining lease term (years)	Weighted-average discount rate
Operating leases	5.8	3.7	%	6.8	1.9	%
Finance leases	11.9	3.3	%	12.9	3.3	%

The future maturity of our lease liabilities as of November 30, 2022 were as follows (in millions):

	Operating leases		Finance leases		Total
2023	$	58.3	$	11.3	$	69.6
2024	50.9		11.5		62.4
2025	43.3		11.7		55.0
2026	39.0		11.9		50.9
2027	34.1		12.2		46.3
Thereafter	31.8		89.9		121.7
Total lease payments	257.4		148.5		405.9
Less: Imputed interest	26.9		30.2		57.1
Total lease liabilities	$	230.5	$	118.3	$	348.8

Supplemental cash flow and other information related to leases for the years ended November 30 were as follows (in millions):

	2022		2021
Cash paid for amounts included in the measurements of lease liabilities:
Operating cash flows used for operating leases	$	41.4	$	45.4
Operating cash flows used for finance leases	4.1		4.3
Financing cash flows used for finance leases	7.3		7.1
ROU assets obtained in exchange for lease liabilities
Operating leases	$	133.8	$	47.8