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Leases

12 Months Ended

Dec. 31, 2022

Leases [Abstract]

Leases

Leases

The Company leases certain office and operating facilities, machinery, equipment, and vehicles. Concurrent with the adoption of ASC 842, the Company recognized a right-of-use (ROU) asset and lease liability based on the present value of the future lease payments over the lease term for each lease agreement. The Company elected not to recognize a ROU asset and lease liability for leases with terms of 12 months or less and will continue to recognize lease expense for these leases on a straight-line basis over the lease term. The Company has leases with both lease components and non-lease components, such as common area maintenance, utilities, or other repairs and maintenance. For all asset classes, the Company decided to utilize the practical expedient to include both fixed lease components and fixed non-lease components in calculating the ROU asset and lease liability. The Company identified variable lease payments, such as maintenance payments based on actual activities performed or costs incurred, at lease commencement by assessing the nature of the payment provisions, including whether the payments are subject to a minimum charge. Many of the Company's leases include one or more options to renew. When it is reasonably certain that the Company will exercise the option, the Company will include the impact of the option in the lease term for purposes of determining future lease payments. As the Company is unable to determine the discount rate implicit in its lease agreements, the Company uses its incremental borrowing rate on the commencement date to calculate the present value of future payments.

The Company’s Consolidated Balance Sheets include the following related to operating leases as of December 31, 2022 and 2021 (in thousands):

Leases						Classification						2022						2021
Assets:
ROU assets						Other Assets						$	36,946					$	42,451
Liabilities:
ROU liability - current						Accrued expenses and other current liabilities						$	10,376					$	10,040
ROU liability - long-term						Other long-term liabilities						28,066						34,030
Total ROU liabilities												$	38,442					$	44,070

Included within the balance of operating leases is a lease for the Company’s headquarters which is with a related party. The ROU liability for this facility is approximately $1.8 million as of December 31, 2022 and $2.9 million as of December 31, 2021. Total rent payments for this facility were approximately $1.0 million and $1.3 million during the years ended December 31, 2022 and 2021. An agreement was reached with the related party to reduce rental payments by 12.5% for the lease of the Company’s headquarters, effective February 2022 as part of a voluntary reduction.

As of December 31, 2022 and 2021, the total ROU assets attributable to finance leases are approximately $13.0 million and $13.8 million, respectively, which is included in Property, plant, and equipment, net on the Consolidated Balance Sheets.

The components of lease costs for the year ended December 31, 2022 and 2021 are as follows (in thousands):

						Classification						2022						2021
Finance lease expense:
Amortization of ROU assets						Depreciation and amortization						$	4,068					$	4,111
Interest on lease liabilities						Interest expense						624						721
Operating lease expense						Cost of revenue; Selling, general & administrative expenses						12,783						13,042
Short-term lease expense						Cost of revenue; Selling, general & administrative expenses						77						27
Variable lease expense						Cost of revenue; Selling, general & administrative expenses						2,141						2,507
Total												$	19,693					$	20,408

Additional information related to leases as of December 31, 2022 and 2021 is as follows:

						2022						2021
Cash paid for amounts included in the measurement of lease liabilities for finance and operating leases (in thousands):
Finance - financing cash flows						$	4,140					$	4,060
Finance - operating cash flows						624						721
Operating - operating cash flows						12,502						13,098
ROU assets obtained in the exchange for lease liabilities:
Finance leases						$	5,076					2,923
Operating leases						6,067						7,021
Weighted-average remaining lease term (in years):
Finance leases						5.1						5.4
Operating leases						4.7						5.3
Weighted-average discount rate:
Finance leases						5.5		%				5.3		%
Operating leases						5.6		%				5.7		%

Maturities of lease liabilities as of December 31, 2022 is as follows (in thousands):

			Finance						Operating
2023			$	6,131					$	12,109
2024			3,970						9,869
2025			2,448						7,304
2026			1,747						5,272
2027			842						4,119
Thereafter			255						5,089
Total			15,393						43,762
Less: Present value discount			1,147						5,320
Lease liability			$	14,246					$	38,442

Leases

Leases

The Company leases certain office and operating facilities, machinery, equipment, and vehicles. Concurrent with the adoption of ASC 842, the Company recognized a right-of-use (ROU) asset and lease liability based on the present value of the future lease payments over the lease term for each lease agreement. The Company elected not to recognize a ROU asset and lease liability for leases with terms of 12 months or less and will continue to recognize lease expense for these leases on a straight-line basis over the lease term. The Company has leases with both lease components and non-lease components, such as common area maintenance, utilities, or other repairs and maintenance. For all asset classes, the Company decided to utilize the practical expedient to include both fixed lease components and fixed non-lease components in calculating the ROU asset and lease liability. The Company identified variable lease payments, such as maintenance payments based on actual activities performed or costs incurred, at lease commencement by assessing the nature of the payment provisions, including whether the payments are subject to a minimum charge. Many of the Company's leases include one or more options to renew. When it is reasonably certain that the Company will exercise the option, the Company will include the impact of the option in the lease term for purposes of determining future lease payments. As the Company is unable to determine the discount rate implicit in its lease agreements, the Company uses its incremental borrowing rate on the commencement date to calculate the present value of future payments.

The Company’s Consolidated Balance Sheets include the following related to operating leases as of December 31, 2022 and 2021 (in thousands):

Leases						Classification						2022						2021
Assets:
ROU assets						Other Assets						$	36,946					$	42,451
Liabilities:
ROU liability - current						Accrued expenses and other current liabilities						$	10,376					$	10,040
ROU liability - long-term						Other long-term liabilities						28,066						34,030
Total ROU liabilities												$	38,442					$	44,070

Included within the balance of operating leases is a lease for the Company’s headquarters which is with a related party. The ROU liability for this facility is approximately $1.8 million as of December 31, 2022 and $2.9 million as of December 31, 2021. Total rent payments for this facility were approximately $1.0 million and $1.3 million during the years ended December 31, 2022 and 2021. An agreement was reached with the related party to reduce rental payments by 12.5% for the lease of the Company’s headquarters, effective February 2022 as part of a voluntary reduction.

As of December 31, 2022 and 2021, the total ROU assets attributable to finance leases are approximately $13.0 million and $13.8 million, respectively, which is included in Property, plant, and equipment, net on the Consolidated Balance Sheets.

The components of lease costs for the year ended December 31, 2022 and 2021 are as follows (in thousands):

						Classification						2022						2021
Finance lease expense:
Amortization of ROU assets						Depreciation and amortization						$	4,068					$	4,111
Interest on lease liabilities						Interest expense						624						721
Operating lease expense						Cost of revenue; Selling, general & administrative expenses						12,783						13,042
Short-term lease expense						Cost of revenue; Selling, general & administrative expenses						77						27
Variable lease expense						Cost of revenue; Selling, general & administrative expenses						2,141						2,507
Total												$	19,693					$	20,408

Additional information related to leases as of December 31, 2022 and 2021 is as follows:

						2022						2021
Cash paid for amounts included in the measurement of lease liabilities for finance and operating leases (in thousands):
Finance - financing cash flows						$	4,140					$	4,060
Finance - operating cash flows						624						721
Operating - operating cash flows						12,502						13,098
ROU assets obtained in the exchange for lease liabilities:
Finance leases						$	5,076					2,923
Operating leases						6,067						7,021
Weighted-average remaining lease term (in years):
Finance leases						5.1						5.4
Operating leases						4.7						5.3
Weighted-average discount rate:
Finance leases						5.5		%				5.3		%
Operating leases						5.6		%				5.7		%

Maturities of lease liabilities as of December 31, 2022 is as follows (in thousands):

			Finance						Operating
2023			$	6,131					$	12,109
2024			3,970						9,869
2025			2,448						7,304
2026			1,747						5,272
2027			842						4,119
Thereafter			255						5,089
Total			15,393						43,762
Less: Present value discount			1,147						5,320
Lease liability			$	14,246					$	38,442

X

- References

No definition available.

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- Definition

The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 842
-SubTopic 20
-URI https://asc.fasb.org/subtopic&trid=77888251

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X

- 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
-Publisher FASB
-Name Accounting Standards Codification
-Topic 842
-SubTopic 20
-URI https://asc.fasb.org/subtopic&trid=77888251

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