Leases

12 Months Ended

Dec. 31, 2022

LeasesThe Company leases certain office space, warehouses, manufacturing facilities, land, and equipment. Leases with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheets; we recognize lease expense for these short-term leases in General expense in the Consolidated Statements of Income (Loss) on a straight-line basis over the lease term. For leases without lease terms (e.g. month-to-month leases), lease expense is recognized as

incurred and no asset or liability is recorded for these leases.

The Company accounts for lease components (e.g. fixed payments including rent, real estate taxes and insurance costs) separately from non-lease components (e.g. common-area maintenance costs). Most leases include one or more options to renew, with renewal terms that can extend the lease term. The exercise of lease renewal options is at our sole discretion. Lease assets and liabilities are determined based on the lease term including those periods for which renewal options are considered reasonably certain to be exercised. Certain leases also include options to purchase the leased property, although we are unlikely to do so in most cases. The depreciable life of assets and leasehold improvements are limited by the expected lease term unless there is a transfer of title or purchase option reasonably certain of exercise. When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of the Company's leases do not provide a readily determinable implicit rate. Therefore, the Company must estimate its incremental borrowing rate to discount the lease payments based on information available at lease commencement.

Components of lease expense incurred by the Company are as follows (in millions):


	Years Ended December 31,
	2022		2021
Finance lease cost (cost resulting from lease payments)
Interest expense on lease liabilities	$	0.7	$	0.7
Amortization of right-of-use assets	0.9		0.9
Operating lease cost	10.6		8.4
Short-term lease expense	3.4		2.3
Variable lease expense	0.6		—

Total lease cost	$	16.2	$	12.3

The following table represents future contractual lease liabilities for finance and operating leases at December 31, 2022 (in millions):


	Finance		Operating		Total
2023	$	2.3	$	11.5	$	13.8
2024	2.3		10.3		12.6
2025	2.2		7.9		10.1
2026	2.2		5.5		7.7
2027	2.2		4.0		6.2

Thereafter	21.1		6.0		27.1
Total lease payments	$	32.3	$	45.2	$	77.5
Less: Interest	13.8		6.2		20.0
Present value of lease liabilities	$	18.5	$	39.0	$	57.5

Weighted-average remaining lease term (in years) and discount rate are as follows:


	December 31,
	2022		2021
Weighted-average remaining lease term
Operating leases	5.1		4.9
Finance leases	15.7		5.5
Weighted-average discount rate
Operating leases	5.54	%	5.44	%
Finance leases	7.60	%	5.22	%

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


	Years Ended December 31,
	2022		2021
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	10.6	$	8.7
Operating cash flows from finance leases	0.7		0.7
Leased assets obtained in exchange for new finance lease liabilities	16.4		15.1
Leased assets obtained in exchange for new operating lease liabilities	25.9		10.0

Refer to the Consolidated Statements of Cash Flows for information on payments on financing lease obligations.

The Company's leased office space for its headquarters in Alpharetta, GA will terminate in December 2024. We entered into a new lease for our headquarters that is due to commence on July 1, 2023 which will expire after 12.5 years, unless terminated sooner.

Leases