Quarterly report pursuant to Section 13 or 15(d)

Leases

v3.22.1
Leases
 3 Months Ended
Mar. 26, 2022
Leases [Abstract]  
Finance Leases
Lessee

The Company determines if a contract is or contains a lease at inception or modification of a contract. A contract is or contains
a lease if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration.
Control over the use of the identified asset means the lessee has both 1) the right to obtain substantially all of the economic
benefits from the use of the asset and 2) the right to direct the use of the asset. The Company leases certain distribution center
locations, vehicles, forklifts, computer equipment, and its corporate headquarters with expiration dates through 2032. Certain
lease arrangements include escalating rent payments and options to extend the lease term. Expected lease terms include these
options to extend or terminate the lease when it is reasonably certain the Company will exercise the option. The Company's
leasing arrangements do not contain material residual value guarantees, nor material restrictive covenants.
The components of operating and finance lease costs for the thirteen weeks ended March 26, 2022 and thirteen weeks ended March 27, 2021 were as follows:
Thirteen weeks ended March 26, 2022 Thirteen weeks ended March 27, 2021
Operating lease costs $ 4,994  $ 5,094 
Short term lease costs 1,657  887 
Variable lease costs 522  303 
Finance lease costs:
Amortization of right of use assets 265  215 
Interest on lease liabilities 26  34 


Rent expense is recognized on a straight-line basis over the expected lease term. Rent expense totaled $7,173 in the thirteen weeks ended March 26, 2022 and $6,284 in the thirteen weeks ended March 27, 2021. Rent expense includes operating lease costs as well as expenses for non-lease components such as common area maintenance, real estate taxes, real estate insurance, variable costs related to our leased vehicles and also short-term rental expenses.

The implicit rate is not determinable in most of the Company’s leases, as such management uses the Company’s incremental
borrowing rate based on the information available at commencement date in determining the present value of future payments.
The weighted average remaining lease terms and discount rates for all of our operating leases were as follows as of March 26, 2022 and December 25, 2021:

March 26, 2022 December 25, 2021
Operating Leases Finance Leases Operating Leases Finance Leases
Weighted average remaining lease term 6.44 2.53 6.60 2.60
Weighted average discount rate 7.89% 4.59% 7.88% 5.59%


Supplemental balance sheet information related to the Company's finance leases was as follows as of March 26, 2022 and December 25, 2021:
March 26, 2022 December 25, 2021
Finance lease assets, net, included in property plant and equipment $ 1,828  $ 1,768 
Current portion of long-term debt 1,163  767 
Long-term debt, less current portion 1,105  1,015 
Total principal payable on finance leases $ 2,268  $ 1,782 

Supplemental cash flow information related to the Company's operating leases was as follows for the thirteen weeks ended March 26, 2022 and thirteen weeks ended March 27, 2021:

Thirteen Weeks Ended
March 26, 2022		 Thirteen Weeks Ended
March 27, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow from operating leases $ 4,844  $ 4,907 
Operating cash outflow from finance leases 27  35 
Financing cash outflow from finance leases 259  227 
As of March 26, 2022, our future minimum rental commitments are immaterial for lease agreements beginning after the current reporting period. Maturities of our lease liabilities for all operating and finance leases are as follows as of March 26, 2022:
Operating Leases Finance Leases
Less than one year $ 18,818  $ 1,079 
1 to 2 years 16,854  822 
2 to 3 years 15,980  356 
3 to 4 years 15,147  99 
4 to 5 years 14,353  19 
After 5 years 26,472  — 
Total future minimum rental commitments 107,624  2,375 
Less - amounts representing interest (23,085) (107)
Present value of lease liabilities $ 84,539  $ 2,268 

In late 2022, the Company will have an additional operating lease for a new property located in Shannon, Georgia for the purposes of office, warehouse, and distribution. Occupancy has not yet commenced. The estimated future minimum rental commitments are approximately $26,721.

Lessor

The Company has certain arrangements for key duplication equipment under which we are the lessor. These leases meet the criteria for operating lease classification. Lease income associated with these leases is not material.
Operating Leases
Lessee

The Company determines if a contract is or contains a lease at inception or modification of a contract. A contract is or contains
a lease if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration.
Control over the use of the identified asset means the lessee has both 1) the right to obtain substantially all of the economic
benefits from the use of the asset and 2) the right to direct the use of the asset. The Company leases certain distribution center
locations, vehicles, forklifts, computer equipment, and its corporate headquarters with expiration dates through 2032. Certain
lease arrangements include escalating rent payments and options to extend the lease term. Expected lease terms include these
options to extend or terminate the lease when it is reasonably certain the Company will exercise the option. The Company's
leasing arrangements do not contain material residual value guarantees, nor material restrictive covenants.
The components of operating and finance lease costs for the thirteen weeks ended March 26, 2022 and thirteen weeks ended March 27, 2021 were as follows:
Thirteen weeks ended March 26, 2022 Thirteen weeks ended March 27, 2021
Operating lease costs $ 4,994  $ 5,094 
Short term lease costs 1,657  887 
Variable lease costs 522  303 
Finance lease costs:
Amortization of right of use assets 265  215 
Interest on lease liabilities 26  34 


Rent expense is recognized on a straight-line basis over the expected lease term. Rent expense totaled $7,173 in the thirteen weeks ended March 26, 2022 and $6,284 in the thirteen weeks ended March 27, 2021. Rent expense includes operating lease costs as well as expenses for non-lease components such as common area maintenance, real estate taxes, real estate insurance, variable costs related to our leased vehicles and also short-term rental expenses.

The implicit rate is not determinable in most of the Company’s leases, as such management uses the Company’s incremental
borrowing rate based on the information available at commencement date in determining the present value of future payments.
The weighted average remaining lease terms and discount rates for all of our operating leases were as follows as of March 26, 2022 and December 25, 2021:

March 26, 2022 December 25, 2021
Operating Leases Finance Leases Operating Leases Finance Leases
Weighted average remaining lease term 6.44 2.53 6.60 2.60
Weighted average discount rate 7.89% 4.59% 7.88% 5.59%


Supplemental balance sheet information related to the Company's finance leases was as follows as of March 26, 2022 and December 25, 2021:
March 26, 2022 December 25, 2021
Finance lease assets, net, included in property plant and equipment $ 1,828  $ 1,768 
Current portion of long-term debt 1,163  767 
Long-term debt, less current portion 1,105  1,015 
Total principal payable on finance leases $ 2,268  $ 1,782 

Supplemental cash flow information related to the Company's operating leases was as follows for the thirteen weeks ended March 26, 2022 and thirteen weeks ended March 27, 2021:

Thirteen Weeks Ended
March 26, 2022		 Thirteen Weeks Ended
March 27, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow from operating leases $ 4,844  $ 4,907 
Operating cash outflow from finance leases 27  35 
Financing cash outflow from finance leases 259  227 
As of March 26, 2022, our future minimum rental commitments are immaterial for lease agreements beginning after the current reporting period. Maturities of our lease liabilities for all operating and finance leases are as follows as of March 26, 2022:
Operating Leases Finance Leases
Less than one year $ 18,818  $ 1,079 
1 to 2 years 16,854  822 
2 to 3 years 15,980  356 
3 to 4 years 15,147  99 
4 to 5 years 14,353  19 
After 5 years 26,472  — 
Total future minimum rental commitments 107,624  2,375 
Less - amounts representing interest (23,085) (107)
Present value of lease liabilities $ 84,539  $ 2,268 

In late 2022, the Company will have an additional operating lease for a new property located in Shannon, Georgia for the purposes of office, warehouse, and distribution. Occupancy has not yet commenced. The estimated future minimum rental commitments are approximately $26,721.

Lessor

The Company has certain arrangements for key duplication equipment under which we are the lessor. These leases meet the criteria for operating lease classification. Lease income associated with these leases is not material.