Leases

3 Months Ended

May 31, 2022

The Company is a lessee under various leases for facilities and equipment. As of May 31, 2022, the Company was the lessee for 153 operating leases with terms of 12 months or more and 12 finance leases. Many of the operating leases either have renewal options of between one and five years or convert to month-to-month agreements at the end of the specified lease term.

The Company’s operating leases are primarily for (i) operating facilities, (ii) vehicles and equipment used in operations, (iii) facilities used for back-office functions and (iv) equipment used for back-office functions. The majority of the Company’s long-term lease expenses are at fixed prices.

Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets and the Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company has a significant number of short-term leases, including month-to-month agreements, some of which continue in perpetuity until the lessor or the Company terminates the lease agreement. The Company's short-term lease agreements include expenses incurred hourly, daily, monthly and for other durations for a time period of one year or less.

The Company’s future lease commitments as of May 31, 2022 do not reflect all of the Company’s short-term lease commitments.

The following table outlines the classification of the Company's right-of-use assets and lease liabilities in the consolidated balance sheets as of May 31, 2022 and fiscal year end 2022 (in thousands):


Balance Sheet	Classification	May 31, 2022		February 28, 2022
Assets
Right-of-use assets	Right-of-use assets	$	51,909	$	43,286
Liabilities
Operating lease liabilities ― ST	Lease liability - short-term	8,786		7,140
Operating lease liabilities ― LT	Lease liability - long-term	41,978		34,965
Finance lease liabilities ― ST	Lease liability - short-term	189		178
Finance lease liabilities ― LT	Lease liability - long-term	625		645

Supplemental information related to the Company's portfolio of operating leases was as follows (in thousands):


	Three Months Ended May 31,
	2022		2021
Operating cash flows from operating leases included in lease liabilities	$	2,419	$	2,299
Lease liabilities obtained from new ROU assets - operating	11,070		12,661
Operating and financing cash flows from financing leases included in lease liabilities	52		18
Lease liabilities obtained from new ROU assets - financing	38		—


	May 31, 2022		February 28, 2022
Weighted-average remaining lease term - operating leases (years)	7.28		7.90
Weighted-average discount rate - operating leases	4.48	%	4.56	%
Weighted-average remaining lease term - financing leases (years)	4.48		4.73
Weighted-average discount rate - financing leases	2.99	%	2.95	%

The following table outlines the classification of lease expense in the statements of income (in thousands):


	Three Months Ended May 31,
	2022		2021
Cost of sales	$	3,226	$	2,546
Selling, general and administrative	946		1,130
Total lease expense	$	4,172	$	3,676

As of May 31, 2022, maturities of the Company's lease liabilities were as follows (in thousands):


Fiscal year:	Operating Leases		Finance Leases		Total
2023	$	8,254	$	158	$	8,412
2024	10,144		211		10,355
2025	9,155		203		9,358
2026	7,608		139		7,747
2027	6,815		111		6,926
Thereafter	17,851		46		17,897
Total lease payments	59,827		868		60,695
Less imputed interest	(9,064)		(53)		(9,117)
Total	$	50,763	$	815	$	51,578