Leases

3 Months Ended

Mar. 30, 2025

The Company determines if an arrangement is a lease at inception of a contract. The Company leases equipment and real estate including office space, branch locations, and distribution centers under operating leases. Most leases include one or more options to renew, with renewal terms that can extend the lease term from one year to five years or more. The exercises of lease renewal options are at the Company’s sole discretion. Finance lease obligations consist primarily of the Company’s vehicle fleet. Certain leases include options to purchase the leased property. ROU assets represent the Company's right to use an underlying asset during the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the commencement date based on the net present value of fixed lease payments over the lease term. As most of the Company's operating leases do not provide an implicit interest rate, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Finance lease agreements generally include an interest rate that is used to determine the present value of future lease payments. Variable lease payment amounts that cannot be determined at the commencement of the lease such as increases in lease payments based on changes in index rates or usage, are not included in the ROU assets or lease liabilities and are expensed as incurred and recorded as variable lease expense. Leases with an initial term of 12 months or less are not recorded in the Consolidated Balance Sheets.

The components of lease expense were as follows (in millions):


		Three Months Ended
Lease Cost	Classification		March 30, 2025		March 31, 2024
Finance lease cost:
Amortization of right-of-use assets	Cost of goods sold		$	0.2	$	—
Amortization of right-of-use assets	Selling, general and administrative expenses		8.1		6.2
Interest on lease liabilities	Interest and other non-operating expenses, net		2.2		1.4
Operating lease cost	Cost of goods sold		2.0		2.0
Operating lease cost	Selling, general and administrative expenses		25.1		24.3
Short-term lease cost	Cost of goods sold		0.1		—
Short-term lease cost	Selling, general and administrative expenses		1.3		0.9

Variable lease cost	Selling, general and administrative expenses		0.5		0.9
Sublease income	Selling, general and administrative expenses		(0.2)		(0.2)
Total lease cost			$	39.3	$	35.5

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


	Three Months Ended
Other Information		March 30, 2025		March 31, 2024
Cash paid for amounts included in the measurements of lease liabilities:
Operating cash flows from finance leases		$	2.2	$	1.4
Operating cash flows from operating leases		$	28.8	$	27.4
Financing cash flows from finance leases		$	7.7	$	5.8
Right-of-use assets obtained in exchange for new lease liabilities:
Finance leases		$	11.5	$	15.8
Operating leases		$	15.3	$	12.6

The aggregate future lease payments for operating and finance leases as of March 30, 2025 were as follows (in millions):


Maturity of Lease Liabilities	Operating Leases		Finance Leases
Fiscal year:
2025 (remainder)	$	76.2	$	29.2
2026	97.8		36.0
2027	84.0		32.1
2028	68.3		28.2
2029	55.2		19.9
2030	37.3		8.3
Thereafter	87.0		0.5
Total lease payments	505.8		154.2
Less: interest	80.3		20.2
Present value of lease liabilities	$	425.5	$	134.0

The weighted-average lease terms and discount rates were as follows:

Lease Term and Discount Rate

March 30, 2025

March 31, 2024

Weighted-average remaining lease term:

Finance leases

4.5 years

4.6 years

Operating leases

6.0 years

6.2 years

Weighted-average discount rate:

Finance leases

6.6

6.2

Operating leases

5.5

5.2

Leases

The components of lease expense were as follows (in millions):


		Three Months Ended
Lease Cost	Classification		March 30, 2025		March 31, 2024
Finance lease cost:
Amortization of right-of-use assets	Cost of goods sold		$	0.2	$	—
Amortization of right-of-use assets	Selling, general and administrative expenses		8.1		6.2
Interest on lease liabilities	Interest and other non-operating expenses, net		2.2		1.4
Operating lease cost	Cost of goods sold		2.0		2.0
Operating lease cost	Selling, general and administrative expenses		25.1		24.3
Short-term lease cost	Cost of goods sold		0.1		—
Short-term lease cost	Selling, general and administrative expenses		1.3		0.9

Variable lease cost	Selling, general and administrative expenses		0.5		0.9
Sublease income	Selling, general and administrative expenses		(0.2)		(0.2)
Total lease cost			$	39.3	$	35.5

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


	Three Months Ended
Other Information		March 30, 2025		March 31, 2024
Cash paid for amounts included in the measurements of lease liabilities:
Operating cash flows from finance leases		$	2.2	$	1.4
Operating cash flows from operating leases		$	28.8	$	27.4
Financing cash flows from finance leases		$	7.7	$	5.8
Right-of-use assets obtained in exchange for new lease liabilities:
Finance leases		$	11.5	$	15.8
Operating leases		$	15.3	$	12.6

The aggregate future lease payments for operating and finance leases as of March 30, 2025 were as follows (in millions):


Maturity of Lease Liabilities	Operating Leases		Finance Leases
Fiscal year:
2025 (remainder)	$	76.2	$	29.2
2026	97.8		36.0
2027	84.0		32.1
2028	68.3		28.2
2029	55.2		19.9
2030	37.3		8.3
Thereafter	87.0		0.5
Total lease payments	505.8		154.2
Less: interest	80.3		20.2
Present value of lease liabilities	$	425.5	$	134.0

The weighted-average lease terms and discount rates were as follows:

Lease Term and Discount Rate

March 30, 2025

March 31, 2024

Weighted-average remaining lease term:

Finance leases

4.5 years

4.6 years

Operating leases

6.0 years

6.2 years

Weighted-average discount rate:

Finance leases

6.6

6.2

Operating leases

5.5

5.2

SiteOne Landscape Supply, Inc. 10-Q