Leases (Notes)

3 Months Ended

Oct. 31, 2023

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. Certain of our leases for a shared warehouse and office facility, rail track 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. Further information about our accounting policy for leases is included in Note 1 of the Notes to the unaudited Condensed Consolidated Financial Statements.

We have no material finance leases, and variable costs for operating leases are immaterial for the three months ended October 31, 2023. 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):


	For the Three Months Ended October 31,

	2023		2022
Operating Lease Cost
Operating lease cost	$	546	$	696
Short-term operating lease cost	2		1

Supplemental cash flow information related to leases was as follows (in thousands):


	For the Three Months Ended October 31,

	2023		2022
Other Information
Cash paid for amounts included in the measurement of operating lease liabilities:	$	461	$	595
Right-of-use assets obtained in exchange for new operating lease liabilities	$	—	$	21

Operating lease ROU assets and operating lease liabilities are separately presented on the unaudited Condensed Consolidated Balance Sheet, excluding leases with an initial term of twelve months or less. Other supplemental balance sheet information related to leases was as follows:


	October 31, 2023	July 31, 2023









Weighted-average remaining lease term - operating leases	7.1 years	7.7 years


Weighted-average discount rate - operating leases	4.19%	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 October 31, 2023, (in thousands):




2024	$	1,686
2025	2,167
2026	1,848
2027	1,432
2028	883
Thereafter	3,825
Total	11,841
Less: imputed interest	(1,624)
Net lease obligation	$	10,217