LEASES

12 Months Ended

Dec. 31, 2023

The Company has operating leases for corporate offices, distribution facilities, manufacturing plants, and certain vehicles. Leases with an initial term of 12 months or less are not recorded on the condensed consolidated balance sheets. The Company has elected the practical expedient to account for each separate lease component of a contract and its associated non-lease components as a single lease component, thus causing all fixed payments to be capitalized. Variable lease payment amounts that cannot be determined at the commencement of the lease, such as increases in lease payments that do not depend on changes in index rates or payments based on usage, are not included in the ROU assets or liabilities. These are expensed as incurred and recorded as variable lease expense.

ROU assets represent the Company’s right to use an underlying asset during the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the commencement date based on the net present value of fixed lease payments over the lease term. The Company’s lease term includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. ROU assets also include any advance lease payments. As most of the Company’s operating leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

The components of lease costs for the year ended December 31, 2023, 2022 and 2021 were as follows (in thousands):


	Year Ended December 31,
	2023		2022		2021
Operating lease costs (1):
Fixed lease expense	$	16,911	$	17,855	$	17,860
Variable lease expense	5,432		$	4,698	$	5,833
Total	$	22,343	$	22,553	$	23,693

(1) Expenses are recorded within distribution expenses and selling, general and administrative expenses.

Supplemental cash flow information for the year ended December 31, 2023, 2022 and 2021 were as follows (in thousands):


	Year Ended December 31,
	2023		2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	18,800	$	19,338	$	19,154
Total	$	18,800	$	19,338	$	19,154


	Year Ended December 31,
	2023		2022		2021
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	5,718	$	2,540	$	1,299
Total	$	5,718	$	2,540	$	1,299

Included in machinery, furniture and equipment as of December 31, 2023 and 2022 is $0.2 million and $0.3 million, respectively, related to assets recorded under finance leases. Included in accumulated depreciation and amortization at December 31, 2023 and December 31, 2022 is $0.1 million and $0.2 million, respectively, related to assets recorded under finance leases.

The aggregate future lease payments for operating leases as of December 31, 2023 were as follows (in thousands):


	Operating
2024	$	18,971
2025	18,740
2026	18,367
2027	14,236
2028	12,842
Thereafter	18,522
Total lease payments	101,678
Less: Interest	(17,594)
Present value of lease payments	$	84,084

Average lease terms and discount rates were as follows:


	December 31, 2023		December 31, 2022
Weighted-average remaining lease term (years)
Operating leases	5.9		6.3
Weighted-average discount rate
Operating leases	6.4	%	6.1	%