The Company, as lessee, leases certain of its dealership locations, office space, equipment and vehicles under operating and financing classified leasing arrangements. The Company has elected to not record leases with a lease term at commencement of 12 months or less on the consolidated balance sheet; these leases are expensed on a straight-line basis over the lease term. Many real estate lease agreements require the Company to pay the real estate taxes on the properties during the lease term and require that the Company maintain property insurance on each of the leased premises. These payments are deemed to be variable lease payments as the amounts may change during the term of the lease. Certain leases include renewal options that can extend the lease term for periods of one to ten years. Most real estate leases grant the Company a right of first refusal or other options to purchase the real estate, generally at fair market value, either during the lease term or at its conclusion. In most cases, the Company has not included these renewal and purchase options within the measurement of the right-of-use asset and lease liability. Most often, the Company cannot readily determine the interest rate implicit in the lease and thus applies its incremental borrowing rate to capitalize the right-of-use asset and lease liability. The Company estimates its incremental borrowing rate by incorporating considerations of lease term, asset class and lease currency and geographical market. The Company's lease agreements do not contain any material non-lease components, residual value guarantees or material restrictive covenants.

The components of lease expense were as follows:


		Three Months Ended July 31,				Six Months Ended July 31,
	Classification	2022		2021		2022		2021
		(in thousands)				(in thousands)
Finance lease cost:
Amortization of leased assets	Operating expenses	$	207	$	243	$	415	$	688
Interest on lease liabilities	Other interest expense	45		64		88		152
Operating lease cost	Operating expenses and rental and other cost of revenue	3,164		3,735		6,638		7,501
Short-term lease cost	Operating expenses	44		66		70		132
Variable lease cost	Operating expenses	473		639		1,018		1,252
Sublease income	Interest and other income	(360)		(219)		(729)		(416)
		$	3,573	$	4,528	$	7,500	$	9,309

Right-of-use lease assets and lease liabilities consist of the following:


	Classification	July 31, 2022		January 31, 2022
		(in thousands)
Assets
Operating lease assets	Operating lease assets	$	51,888	$	56,150
Finance lease assets(a)	Property and equipment, net of accumulated depreciation	2,442		9,045
Total leased assets		$	54,330	$	65,195
Liabilities
Current
Operating	Current operating lease liabilities	$	9,465	$	9,601
Finance	Accrued expenses and other	554		7,466
Noncurrent
Operating	Operating lease liabilities	50,998		55,595
Finance	Other long-term liabilities	1,880		1,518
Total lease liabilities		$	62,897	$	74,180

(a)Finance lease assets are recorded net of accumulated amortization of $1.8 million as of July 31, 2022 and $1.7 million as of January 31, 2022.

Maturities of lease liabilities as of July 31, 2022 are as follows:


	Operating		Finance
	Leases		Leases		Total
Fiscal Year Ended January 31,	(in thousands)
2023 (remainder)	$	6,440	$	400	$	6,840
2024	12,484		607		13,091
2025	11,943		554		12,497
2026	11,552		460		12,012
2027	10,815		431		11,246
2028	9,394		297		9,691
Thereafter	9,839		343		10,182
Total lease payments	72,467		3,092		75,559
Less: Interest	12,005		657		12,662
Present value of lease liabilities	$	60,462	$	2,435	$	62,897

The Company rents equipment to customers, primarily in the Construction segment, on a short-term basis. Our rental arrangements generally do not include minimum, noncancellable periods as the lessee is entitled to cancel the arrangement at any time. Most often, our rental arrangements extend for periods ranging from a few days to a few months. We maintain a fleet of dedicated rental assets within our Construction segment and, within all segments, we may also provide short-term rentals of certain equipment inventory assets. Some rental arrangements may include rent-to-purchase options whereby customers are given a period of time to exercise an option to purchase the related equipment at an established price with any rental payments paid applied to reduce the purchase price.

All of the Company's leasing arrangements as lessor are classified as operating leases. Rental revenue is recognized on a straight-line basis over the rental period. Rental revenue includes amounts charged for loss and damage insurance on rented equipment. In most cases, our rental arrangements include non-lease components, including delivery and pick-up services. The Company accounts for these non-lease components separate from the rental arrangement and recognizes the revenue associated with these components when the service is performed. The Company has elected to exclude from rental revenue all sales, value

added and other taxes collected from our customers concurrent with our rental activities. Rental billings most often occur on a monthly basis and may be billed in advance or in arrears, thus creating unbilled rental receivables or deferred rental revenue amounts. The Company manages the residual value risk of its rented assets by (i) monitoring the quality, aging and anticipated retail market value of our rental fleet assets to determine the optimal period to remove an asset from the rental fleet, (ii) maintaining the quality of our assets through on-site parts and service support and (iii) requiring physical damage insurance of our lessee customers. We primarily dispose of our rental assets through the sale of the asset by our retail sales force.

Revenue generated from leasing activities is disclosed, by segment, in Note 3. The following is the balance of our dedicated rental fleet assets, included in Property and equipment, net of accumulated depreciation in the condensed consolidated balance sheet, of our Construction segment as of July 31, 2022 and January 31, 2022:


	July 31, 2022		January 31, 2022
	(in thousands)
Rental fleet equipment	$	73,014	$	65,117
Less accumulated depreciation	25,205		23,501
	$	47,809	$	41,616