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Leases | 6 Months Ended
--- | ---
Jun. 30, 2024
Leases [Abstract] |
Leases | Leases The Company's portfolio of leases contains both finance and operating leases that relate to real estate and manufacturing equipment. Substantially all of the value of the Company's lease portfolio relates to the Master Lease with Store Master Funding XII, LLC (“Store”), an affiliate of Store Capital Corporation ("Store Capital") that was entered into in 2016 and amended with the American Stainless acquisition in 2019 as well as the sale of land at the Munhall facility in 2020. As of June 30, 2024, operating lease liabilities related to the master lease agreement with Store Capital totaled $30.1 million, or 95% of the total lease liabilities on the consolidated balance sheet. During the three months and six months ended June 30, 2024, the Company did not enter into any new finance lease agreements. Operating and finance lease amounts from continuing operations included in the unaudited condensed consolidated balance sheet are as follows (in thousands):
Classification |  | Financial Statement Line Item |  | June 30, 2024 |  | December 31, 2023
Long-term Assets |  | Right-of-use assets, operating leases |  | $ | 27,073 |  |  | $ | 27,784 |
Long-term Assets |  | Property, plant and equipment |  | 1,378 |  |  | 1,543 |
Current liabilities |  | Current portion of lease liabilities, operating leases |  | 1,194 |  |  | 1,140 |
Current liabilities |  | Current portion of lease liabilities, finance leases |  | 286 |  |  | 292 |
Non-current liabilities |  | Non-current portion of lease liabilities, operating leases |  | 29,110 |  |  | 29,729 |
Non-current liabilities |  | Non-current portion of lease liabilities, finance leases |  | 1,163 |  |  | 1,307 |
Total Lease Cost Individual components of the total lease cost incurred by the Company are as follows:
| Three Months Ended June 30, |  | Six Months Ended June 30,
(in thousands) | 2024 |  | 2023 |  | 2024 |  | 2023
Operating lease cost 1 | $ | 985 |  |  | $ | 985 |  |  | $ | 1,971 |  |  | $ | 1,974 |
Finance lease cost: |  |  |  |  |  |  |
Amortization of right-of-use assets | 79 |  |  | 86 |  |  | 162 |  |  | 164 |
Interest on finance lease liabilities | 22 |  |  | 24 |  |  | 45 |  |  | 38 |
Sublease income | (92) |  |  | (91) |  |  | (184) |  |  | (182) |
Total lease cost | $ | 994 |  |  | $ | 1,004 |  |  | $ | 1,994 |  |  | $ | 1,994 |
1 Includes short term leases, which are immaterial Reduction in carrying amounts of right-of-use assets held under finance leases is included in depreciation expense. Minimum rental payments under operating leases are recognized on a straight-line method over the term of the lease including any periods of free rent and are included in selling, general, and administrative expense on the unaudited condensed consolidated statements of income (loss). Maturity of Leases The amounts of undiscounted future minimum lease payments under leases in continuing operations as of June 30, 2024 are as follows:
(in thousands) | Operating |  | Finance
Remainder of 2024 | $ | 1,826 |  |  | $ | 246 |
2025 | 3,671 |  |  | 361 |
2026 | 3,691 |  |  | 361 |
2027 | 3,765 |  |  | 361 |
2028 | 3,840 |  |  | 303 |
Thereafter | 32,312 |  |  | 85 |
Total undiscounted minimum future lease payments | 49,105 |  |  | 1,717 |
Imputed interest | (18,801) |  |  | (268) |
Present value of lease liabilities | $ | 30,304 |  |  | $ | 1,449 |
Lease Term and Discount Rate
Weighted-average remaining lease term | June 30, 2024 |  | December 31, 2023
Operating leases | 12.19 years |  | 12.67 years
Finance leases | 4.62 years |  | 5.07 years
Weighted-average discount rate |  |  |
Operating leases | 8.34 | % |  | 8.33 | %
Finance leases | 5.93 | % |  | 5.92 | %
Subleases During the second quarter of 2024, the Company entered into a sublease agreement with a third party to sublease the former Specialty Pipe and Tube, Inc. facilities in Mineral Ridge, Ohio and Houston, Texas. The sublease agreement continues through the remaining term of the Master Lease Agreement and will expire on September 30, 2036, unless terminated in accordance with the sublease agreement. The sublease provides for an annual base rent of approximately $0.1 million in the first year, which increases on an annual basis by 2.0%. The sublessee is responsible for taxes and all operating expenses related to the subleased space. The Company also currently subleases the former Palmer facility and records cash receipts related to the subleases in other expense (income) on the unaudited condensed consolidated statements of income (loss). Future expected cash receipts from the Company's subleases as of June 30, 2024 are as follows:
(in thousands) | Sublease Receipts
Remainder of 2024 | $ | 287 |
2025 | 582 |
2026 | 594 |
2027 | 606 |
2028 | 618 |
Thereafter | 5,229 |
Total sublease receipts | $ | 7,916 |
Leases | Leases The Company's portfolio of leases contains both finance and operating leases that relate to real estate and manufacturing equipment. Substantially all of the value of the Company's lease portfolio relates to the Master Lease with Store Master Funding XII, LLC (“Store”), an affiliate of Store Capital Corporation ("Store Capital") that was entered into in 2016 and amended with the American Stainless acquisition in 2019 as well as the sale of land at the Munhall facility in 2020. As of June 30, 2024, operating lease liabilities related to the master lease agreement with Store Capital totaled $30.1 million, or 95% of the total lease liabilities on the consolidated balance sheet. During the three months and six months ended June 30, 2024, the Company did not enter into any new finance lease agreements. Operating and finance lease amounts from continuing operations included in the unaudited condensed consolidated balance sheet are as follows (in thousands):
Classification |  | Financial Statement Line Item |  | June 30, 2024 |  | December 31, 2023
Long-term Assets |  | Right-of-use assets, operating leases |  | $ | 27,073 |  |  | $ | 27,784 |
Long-term Assets |  | Property, plant and equipment |  | 1,378 |  |  | 1,543 |
Current liabilities |  | Current portion of lease liabilities, operating leases |  | 1,194 |  |  | 1,140 |
Current liabilities |  | Current portion of lease liabilities, finance leases |  | 286 |  |  | 292 |
Non-current liabilities |  | Non-current portion of lease liabilities, operating leases |  | 29,110 |  |  | 29,729 |
Non-current liabilities |  | Non-current portion of lease liabilities, finance leases |  | 1,163 |  |  | 1,307 |
Total Lease Cost Individual components of the total lease cost incurred by the Company are as follows:
| Three Months Ended June 30, |  | Six Months Ended June 30,
(in thousands) | 2024 |  | 2023 |  | 2024 |  | 2023
Operating lease cost 1 | $ | 985 |  |  | $ | 985 |  |  | $ | 1,971 |  |  | $ | 1,974 |
Finance lease cost: |  |  |  |  |  |  |
Amortization of right-of-use assets | 79 |  |  | 86 |  |  | 162 |  |  | 164 |
Interest on finance lease liabilities | 22 |  |  | 24 |  |  | 45 |  |  | 38 |
Sublease income | (92) |  |  | (91) |  |  | (184) |  |  | (182) |
Total lease cost | $ | 994 |  |  | $ | 1,004 |  |  | $ | 1,994 |  |  | $ | 1,994 |
1 Includes short term leases, which are immaterial Reduction in carrying amounts of right-of-use assets held under finance leases is included in depreciation expense. Minimum rental payments under operating leases are recognized on a straight-line method over the term of the lease including any periods of free rent and are included in selling, general, and administrative expense on the unaudited condensed consolidated statements of income (loss). Maturity of Leases The amounts of undiscounted future minimum lease payments under leases in continuing operations as of June 30, 2024 are as follows:
(in thousands) | Operating |  | Finance
Remainder of 2024 | $ | 1,826 |  |  | $ | 246 |
2025 | 3,671 |  |  | 361 |
2026 | 3,691 |  |  | 361 |
2027 | 3,765 |  |  | 361 |
2028 | 3,840 |  |  | 303 |
Thereafter | 32,312 |  |  | 85 |
Total undiscounted minimum future lease payments | 49,105 |  |  | 1,717 |
Imputed interest | (18,801) |  |  | (268) |
Present value of lease liabilities | $ | 30,304 |  |  | $ | 1,449 |
Lease Term and Discount Rate
Weighted-average remaining lease term | June 30, 2024 |  | December 31, 2023
Operating leases | 12.19 years |  | 12.67 years
Finance leases | 4.62 years |  | 5.07 years
Weighted-average discount rate |  |  |
Operating leases | 8.34 | % |  | 8.33 | %
Finance leases | 5.93 | % |  | 5.92 | %
Subleases During the second quarter of 2024, the Company entered into a sublease agreement with a third party to sublease the former Specialty Pipe and Tube, Inc. facilities in Mineral Ridge, Ohio and Houston, Texas. The sublease agreement continues through the remaining term of the Master Lease Agreement and will expire on September 30, 2036, unless terminated in accordance with the sublease agreement. The sublease provides for an annual base rent of approximately $0.1 million in the first year, which increases on an annual basis by 2.0%. The sublessee is responsible for taxes and all operating expenses related to the subleased space. The Company also currently subleases the former Palmer facility and records cash receipts related to the subleases in other expense (income) on the unaudited condensed consolidated statements of income (loss). Future expected cash receipts from the Company's subleases as of June 30, 2024 are as follows:
(in thousands) | Sublease Receipts
Remainder of 2024 | $ | 287 |
2025 | 582 |
2026 | 594 |
2027 | 606 |
2028 | 618 |
Thereafter | 5,229 |
Total sublease receipts | $ | 7,916 |
Leases | Leases The Company's portfolio of leases contains both finance and operating leases that relate to real estate and manufacturing equipment. Substantially all of the value of the Company's lease portfolio relates to the Master Lease with Store Master Funding XII, LLC (“Store”), an affiliate of Store Capital Corporation ("Store Capital") that was entered into in 2016 and amended with the American Stainless acquisition in 2019 as well as the sale of land at the Munhall facility in 2020. As of June 30, 2024, operating lease liabilities related to the master lease agreement with Store Capital totaled $30.1 million, or 95% of the total lease liabilities on the consolidated balance sheet. During the three months and six months ended June 30, 2024, the Company did not enter into any new finance lease agreements. Operating and finance lease amounts from continuing operations included in the unaudited condensed consolidated balance sheet are as follows (in thousands):
Classification |  | Financial Statement Line Item |  | June 30, 2024 |  | December 31, 2023
Long-term Assets |  | Right-of-use assets, operating leases |  | $ | 27,073 |  |  | $ | 27,784 |
Long-term Assets |  | Property, plant and equipment |  | 1,378 |  |  | 1,543 |
Current liabilities |  | Current portion of lease liabilities, operating leases |  | 1,194 |  |  | 1,140 |
Current liabilities |  | Current portion of lease liabilities, finance leases |  | 286 |  |  | 292 |
Non-current liabilities |  | Non-current portion of lease liabilities, operating leases |  | 29,110 |  |  | 29,729 |
Non-current liabilities |  | Non-current portion of lease liabilities, finance leases |  | 1,163 |  |  | 1,307 |
Total Lease Cost Individual components of the total lease cost incurred by the Company are as follows:
| Three Months Ended June 30, |  | Six Months Ended June 30,
(in thousands) | 2024 |  | 2023 |  | 2024 |  | 2023
Operating lease cost 1 | $ | 985 |  |  | $ | 985 |  |  | $ | 1,971 |  |  | $ | 1,974 |
Finance lease cost: |  |  |  |  |  |  |
Amortization of right-of-use assets | 79 |  |  | 86 |  |  | 162 |  |  | 164 |
Interest on finance lease liabilities | 22 |  |  | 24 |  |  | 45 |  |  | 38 |
Sublease income | (92) |  |  | (91) |  |  | (184) |  |  | (182) |
Total lease cost | $ | 994 |  |  | $ | 1,004 |  |  | $ | 1,994 |  |  | $ | 1,994 |
1 Includes short term leases, which are immaterial Reduction in carrying amounts of right-of-use assets held under finance leases is included in depreciation expense. Minimum rental payments under operating leases are recognized on a straight-line method over the term of the lease including any periods of free rent and are included in selling, general, and administrative expense on the unaudited condensed consolidated statements of income (loss). Maturity of Leases The amounts of undiscounted future minimum lease payments under leases in continuing operations as of June 30, 2024 are as follows:
(in thousands) | Operating |  | Finance
Remainder of 2024 | $ | 1,826 |  |  | $ | 246 |
2025 | 3,671 |  |  | 361 |
2026 | 3,691 |  |  | 361 |
2027 | 3,765 |  |  | 361 |
2028 | 3,840 |  |  | 303 |
Thereafter | 32,312 |  |  | 85 |
Total undiscounted minimum future lease payments | 49,105 |  |  | 1,717 |
Imputed interest | (18,801) |  |  | (268) |
Present value of lease liabilities | $ | 30,304 |  |  | $ | 1,449 |
Lease Term and Discount Rate
Weighted-average remaining lease term | June 30, 2024 |  | December 31, 2023
Operating leases | 12.19 years |  | 12.67 years
Finance leases | 4.62 years |  | 5.07 years
Weighted-average discount rate |  |  |
Operating leases | 8.34 | % |  | 8.33 | %
Finance leases | 5.93 | % |  | 5.92 | %
Subleases During the second quarter of 2024, the Company entered into a sublease agreement with a third party to sublease the former Specialty Pipe and Tube, Inc. facilities in Mineral Ridge, Ohio and Houston, Texas. The sublease agreement continues through the remaining term of the Master Lease Agreement and will expire on September 30, 2036, unless terminated in accordance with the sublease agreement. The sublease provides for an annual base rent of approximately $0.1 million in the first year, which increases on an annual basis by 2.0%. The sublessee is responsible for taxes and all operating expenses related to the subleased space. The Company also currently subleases the former Palmer facility and records cash receipts related to the subleases in other expense (income) on the unaudited condensed consolidated statements of income (loss). Future expected cash receipts from the Company's subleases as of June 30, 2024 are as follows:
(in thousands) | Sublease Receipts
Remainder of 2024 | $ | 287 |
2025 | 582 |
2026 | 594 |
2027 | 606 |
2028 | 618 |
Thereafter | 5,229 |
Total sublease receipts | $ | 7,916 |

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