Leases

12 Months Ended

Dec. 31, 2020

We lease certain transportation and mobile manufacturing equipment such as railcars and forklifts, as well as real estate.

The Company adopted ASC 842 on January 1, 2019, which requires that all leases, financing and operating, be included on the balance sheet. The Company adopted ASC 842 using the modified retrospective approach under which prior periods’ financial statements are not restated and a cumulative-effect adjustment to retained earnings at the beginning of the period of adoption is recorded, if applicable. The Company elected to adopt the transition package of practical expedients for lease identification, classification, initial direct costs and hindsight. At the adoption of ASC 842 on January 1, 2019, the Company recognized right-of-use ("RoU") assets and corresponding operating lease liabilities of $7.5 million with no cumulative-effect adjustment to retained earnings.

We determine if an arrangement is a lease at lease inception. When an arrangement contains a lease, we then determine if it meets any of the criteria for a financing lease. Leases with a term of 12 months or less are not recorded on the balance sheet.

RoU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. RoU assets and lease liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease term.

In order to compute the lease liability, when the rate implicit in the lease is not readily determinable, we discount the lease payments using our estimated incremental borrowing rate for secured fixed rate debt over the same term, derived from information available at the lease commencement date. Our lease term includes the option to extend the lease when it is reasonably certain that we will exercise that option.

The Company has elected to account for the lease and non-lease components as a single lease component, except for leases of warehouse space where they will be accounted for separately. Leases may include variable lease and variable non-lease components costs which are accounted for as variable lease expense in the income statement.

Components of lease expense are as follows:


		For the Year Ended December 31,
		2020		2019
	(Dollars in thousands)
Operating lease cost		6,138		4,816
Short-term lease cost		159		14
Variable lease cost		429		227
Total lease cost		$	6,726	$	5,057

Supplemental cash-flow and other information related to leases is as follows:


		For the Year Ended December 31,
		2020	2019
	(Dollars in thousands)
RoU assets obtained in exchange for new operating lease liabilities (non-cash)		5,262	4,995
Operating (use of cash) from operating leases		(6,177)	(4,724)

Supplemental balance sheet information related to leases is as follows:


		As of December 31,
		2020			2019
		(Dollars in thousands)
	Location
Operating RoU Assets	Other assets	$	7,164		$	7,994

Current operating lease liabilities	Other accrued liabilities	4,102			4,475
Non-current operating lease liabilities	Other long-term obligations	3,195			3,598
Total operating lease liabilities		$	7,297		$	8,073

Weighted average remaining lease term (in years)		2.7			2.3
Weighted average discount rate - operating leases		5.82		%	5.61		%

As of December 31, 2020, lease commitments under non-cancelable operating leases extending for one year or more will require the following future payments:


	(Dollars in thousands)
2021	4,124
2022	1,377
2023	1,024
2024	872
2025 and thereafter	449
Total lease payments	$	7,846
Less: Imputed interest	(549)
Present value of lease payments	$	7,297

As of December 31, 2020, we have not entered into any additional operating lease commitments that have yet to commence.