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Leases | 9 Months Ended
--- | ---
Sep. 30, 2024
Leases [Abstract] |
Leases | Leases The Company primarily leases manufacturing facilities, distribution centers, and office spaces with lease terms expiring through 2031. In May 2024, the Company determined there was a change in the assessment of whether the renewal option on the lease agreement for its Chino, California facility was reasonably certain to be exercised. As a result, the Company remeasured the lease liability and the right-of-use asset for this lease, utilizing the fair market rate determined by independent arbitrators on July 8, 2024, and an extended lease term expiring July 31, 2029. The Company recognized the following lease costs in the accompanying condensed consolidated statement of income:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2024 | 2023 |  | 2024 | 2023
| (in thousands) |  | (in thousands)
Operating lease expense | $ | 2,752 |  | $ | 1,606 |  |  | $ | 6,694 |  | $ | 4,454 |
Short-term lease expense | 370 |  | 106 |  |  | 795 |  | 143 |
Variable lease expense | 357 |  | 260 |  |  | 1,125 |  | 750 |
Total lease expense | $ | 3,479 |  | $ | 1,972 |  |  | $ | 8,614 |  | $ | 5,347 |
For the three months ended September 30, 2024 and 2023, rent expense included in operating expenses was $2,843,000 and $1,653,000, respectively, and rent expense included in cost of goods sold was $636,000 and $319,000, respectively. For the nine months ended September 30, 2024 and 2023, rent expense included in operating expenses was $7,209,000 and $4,542,000, respectively, and rent expense included in cost of goods sold was $1,405,000 and $805,000, respectively. The following table presents supplemental information related to operating leases:
| September 30, 2024 |  | December 31, 2023
Weighted average remaining lease term | 4.55 years |  | 4.51 years
Weighted average discount rate | 7.0 | % |  | 6.2 | %
| Nine Months Ended September 30,
| 2024 |  | 2023
| (in thousands)
Cash paid for amounts included in measurement of lease obligations: |  |  |
Operating cash flows from operating leases | $ | 5,721 |  |  | $ | 4,129 |
As of September 30, 2024, future lease payments under operating leases were as follows:
|  | (in thousands)
2024 (remainder) |  | $ | 2,825 |
2025 |  | 11,550
2026 |  | 11,909
2027 |  | 10,827
2028 |  | 9,617
Thereafter |  | 6,216
Total future lease payments |  | 52,944
Less: imputed interest |  | (7,725) |
Total lease liability balance |  | $ | 45,219 |
During the nine months ended September 30, 2024, the Company recorded a non-cash impairment of a ROU asset of $1,993,000 resulting from the sublease of its City of Industry warehouse in California. Global Wells is the landlord under an operating lease agreement with an unrelated party that generates monthly rental payments from $62,000 to $65,000 and ends on October 31, 2025. The expected rental income is $185,000 for the remaining three months of the year ending December 31, 2024, and $616,000 for the year ending December 31, 2025

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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/842-20/tableOfContent + Details
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