XML 29 R17.htm IDEA: XBRL DOCUMENT v3.24.1.u1

Leases

3 Months Ended

Mar. 31, 2024

Leases [Abstract]

Leases

9. Leases

Operating lease right-of-use-assets and assets held under finance leases are recognized in the Consolidated Balance Sheets within Other assets and Property, plant and equipment, net, respectively. Operating lease liabilities and finance lease liabilities are recognized in the Consolidated Balance Sheets within Other liabilities and Debt obligations, respectively. Right-of-use lease assets and lease liabilities consisted of the following (in millions):

						March 31, 2024						December 31, 2023
Right-of-use assets:
Operating lease (Other assets)						$	57.0					$	58.0
Finance lease (Property, plant and equipment, net)						0.9						2.3
Total right-of-use assets						$	57.9					$	60.3
Lease liabilities:
Current portion of operating lease (Other current liabilities)						$	13.5					$	13.5
Non-current portion of operating lease (Other liabilities)						46.8						48.6
Finance lease (Debt obligations)						0.9						2.4
Total lease liabilities						$	61.2					$	64.5

The Company has entered into operating and finance lease agreements primarily for land, office space, equipment and vehicles, expiring between 2024 and 2045. The tables below present financial information associated with the Company's leases for the three months ended March 31, 2024 and 2023.

The following table summarizes the components of lease expense (in millions):

												Three Months Ended March 31,
																		2024						2023
Finance lease cost:
Amortization of right-of-use assets																		$	0.1					$	0.1
Net finance lease cost																		0.1						0.1
Operating lease cost																		4.5						5.9
Variable lease cost																		0.1						0.1
Sublease income																		(0.2)						(0.2)
Total lease cost																		$	4.5					$	5.9

Cash flow information related to leases is as follows (in millions):

												Three Months Ended March 31,
																		2024						2023
Cash paid for amounts included in the measurement of lease liabilities:
Financing cash flows from finance leases																		$	0.1					$	0.1
Operating cash flows from operating leases																		$	5.0					$	6.3
Right-of-use assets obtained in exchange for new lease liabilities:
Finance leases																		$	—					$	0.6
Operating leases																		$	2.6					$	3.9

The weighted-average remaining lease term and the weighted-average discount rate for finance leases and operating leases are as follows:

						March 31, 2024						December 31, 2023
Weighted-average remaining lease term (years) - operating leases									7.4									7.5
Weighted-average remaining lease term (years) - finance leases						3.0						1.6
Weighted-average discount rate - operating leases						5.6		%				5.6		%
Weighted-average discount rate - finance leases						5.3		%				6.8		%

Future minimum lease commitments (undiscounted) as of March 31, 2024, were as follows (in millions):

			Operating Leases						Finance Leases
2024			$	12.5					$	0.3
2025			13.6						0.3
2026			10.1						0.2
2027			7.5						0.2
2028			5.9						—
Thereafter			24.0						—
Total future minimum lease payments			73.6						1.0
Less: amounts representing interest			(13.3)						(0.1)
Total lease liability balance			$	60.3					$	0.9

In November 2021, INNOVATE Corp. entered into a ten-year lease arrangement for a special purpose space in Palm Beach, Florida, which was amended in February 2023 to extend the term of the lease to 15 years, with future monthly lease payments of approximately $0.2 million over the entire lease term and annual common area maintenance charges of $0.6 million, both of which are subject to a 3% annual upward adjustment, with total square footage of 25,184, as amended. The lease had not yet commenced for accounting purposes as the space is still under construction, and, therefore, future lease payments were not recorded on the Company's Consolidated Balance Sheets. In December 2023, the Company entered into a sublease agreement with Palm Beach Cultural Innovation Center, Inc. (“PBCIC”), a Florida not-for-profit corporation and related party to Avram A. Glazer, the Chairman of INNOVATE's Board of Directors, who is also on the board of directors of PBCIC. Pursuant to the sublease, PBCIC would have use of the underlying space and, as consideration, PBCIC agreed to undertake all of the tenant’s build-out costs and related obligations under the lease agreement between the Company, as tenant, and RPP Palm Beach Property LP, as landlord. Effective March 29, 2024, the Company assigned the lease, as amended, and the sublease to an affiliate of Avram A. Glazer, releasing the Company of all obligations under the lease, as amended, and the sublease. The Company previously recorded $1.1 million in prepaid rent related to this lease, which was written-off in December 2023 upon the execution of the sublease to PBCIC. While there have been no new expenses incurred during 2024, the Company also previously incurred other expenses of $1.1 million since inception related to the special purpose space and PBCIC, of which $0.2 million is reflected in Selling, general and administrative in the Condensed Consolidated Statement of Operations for the three months ended March 31, 2023.

In December 2021, the Company entered into a five-year lease agreement for corporate office space in West Palm Beach, Florida, that would, on commencement of the lease, require future monthly lease payments of approximately $0.1 million over the entire lease term, subject to 3% annual upward adjustment. This lease had not yet commenced as the building is still under construction, and therefore, other than a $0.2 million deposit included in Other assets as of December 31, 2023, future lease payments were not recorded on the Company's Consolidated Balance Sheets. On March 29, 2024, the Company assigned the lease to Lancer Capital, LLC ("Lancer Capital"), an entity controlled by Avram A. Glazer, releasing the Company of all obligations under the lease. The $0.2 million security deposit on the lease was also assigned to Lancer and written-off in March 2024.

Leases

9. Leases

Operating lease right-of-use-assets and assets held under finance leases are recognized in the Consolidated Balance Sheets within Other assets and Property, plant and equipment, net, respectively. Operating lease liabilities and finance lease liabilities are recognized in the Consolidated Balance Sheets within Other liabilities and Debt obligations, respectively. Right-of-use lease assets and lease liabilities consisted of the following (in millions):

						March 31, 2024						December 31, 2023
Right-of-use assets:
Operating lease (Other assets)						$	57.0					$	58.0
Finance lease (Property, plant and equipment, net)						0.9						2.3
Total right-of-use assets						$	57.9					$	60.3
Lease liabilities:
Current portion of operating lease (Other current liabilities)						$	13.5					$	13.5
Non-current portion of operating lease (Other liabilities)						46.8						48.6
Finance lease (Debt obligations)						0.9						2.4
Total lease liabilities						$	61.2					$	64.5

The Company has entered into operating and finance lease agreements primarily for land, office space, equipment and vehicles, expiring between 2024 and 2045. The tables below present financial information associated with the Company's leases for the three months ended March 31, 2024 and 2023.

The following table summarizes the components of lease expense (in millions):

												Three Months Ended March 31,
																		2024						2023
Finance lease cost:
Amortization of right-of-use assets																		$	0.1					$	0.1
Net finance lease cost																		0.1						0.1
Operating lease cost																		4.5						5.9
Variable lease cost																		0.1						0.1
Sublease income																		(0.2)						(0.2)
Total lease cost																		$	4.5					$	5.9

Cash flow information related to leases is as follows (in millions):

												Three Months Ended March 31,
																		2024						2023
Cash paid for amounts included in the measurement of lease liabilities:
Financing cash flows from finance leases																		$	0.1					$	0.1
Operating cash flows from operating leases																		$	5.0					$	6.3
Right-of-use assets obtained in exchange for new lease liabilities:
Finance leases																		$	—					$	0.6
Operating leases																		$	2.6					$	3.9

The weighted-average remaining lease term and the weighted-average discount rate for finance leases and operating leases are as follows:

						March 31, 2024						December 31, 2023
Weighted-average remaining lease term (years) - operating leases									7.4									7.5
Weighted-average remaining lease term (years) - finance leases						3.0						1.6
Weighted-average discount rate - operating leases						5.6		%				5.6		%
Weighted-average discount rate - finance leases						5.3		%				6.8		%

Future minimum lease commitments (undiscounted) as of March 31, 2024, were as follows (in millions):

			Operating Leases						Finance Leases
2024			$	12.5					$	0.3
2025			13.6						0.3
2026			10.1						0.2
2027			7.5						0.2
2028			5.9						—
Thereafter			24.0						—
Total future minimum lease payments			73.6						1.0
Less: amounts representing interest			(13.3)						(0.1)
Total lease liability balance			$	60.3					$	0.9

In November 2021, INNOVATE Corp. entered into a ten-year lease arrangement for a special purpose space in Palm Beach, Florida, which was amended in February 2023 to extend the term of the lease to 15 years, with future monthly lease payments of approximately $0.2 million over the entire lease term and annual common area maintenance charges of $0.6 million, both of which are subject to a 3% annual upward adjustment, with total square footage of 25,184, as amended. The lease had not yet commenced for accounting purposes as the space is still under construction, and, therefore, future lease payments were not recorded on the Company's Consolidated Balance Sheets. In December 2023, the Company entered into a sublease agreement with Palm Beach Cultural Innovation Center, Inc. (“PBCIC”), a Florida not-for-profit corporation and related party to Avram A. Glazer, the Chairman of INNOVATE's Board of Directors, who is also on the board of directors of PBCIC. Pursuant to the sublease, PBCIC would have use of the underlying space and, as consideration, PBCIC agreed to undertake all of the tenant’s build-out costs and related obligations under the lease agreement between the Company, as tenant, and RPP Palm Beach Property LP, as landlord. Effective March 29, 2024, the Company assigned the lease, as amended, and the sublease to an affiliate of Avram A. Glazer, releasing the Company of all obligations under the lease, as amended, and the sublease. The Company previously recorded $1.1 million in prepaid rent related to this lease, which was written-off in December 2023 upon the execution of the sublease to PBCIC. While there have been no new expenses incurred during 2024, the Company also previously incurred other expenses of $1.1 million since inception related to the special purpose space and PBCIC, of which $0.2 million is reflected in Selling, general and administrative in the Condensed Consolidated Statement of Operations for the three months ended March 31, 2023.

In December 2021, the Company entered into a five-year lease agreement for corporate office space in West Palm Beach, Florida, that would, on commencement of the lease, require future monthly lease payments of approximately $0.1 million over the entire lease term, subject to 3% annual upward adjustment. This lease had not yet commenced as the building is still under construction, and therefore, other than a $0.2 million deposit included in Other assets as of December 31, 2023, future lease payments were not recorded on the Company's Consolidated Balance Sheets. On March 29, 2024, the Company assigned the lease to Lancer Capital, LLC ("Lancer Capital"), an entity controlled by Avram A. Glazer, releasing the Company of all obligations under the lease. The $0.2 million security deposit on the lease was also assigned to Lancer and written-off in March 2024.

X

- References

No definition available.

+ Details

Name:	us-gaap_LeasesAbstract
Namespace Prefix:	us-gaap_
Data Type:	xbrli:stringItemType
Balance Type:	na
Period Type:	duration

X

- 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
-Topic 842
-SubTopic 20
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//842-20/tableOfContent

+ Details

Name:	us-gaap_LesseeFinanceLeasesTextBlock
Namespace Prefix:	us-gaap_
Data Type:	dtr-types:textBlockItemType
Balance Type:	na
Period Type:	duration

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
-Topic 842
-SubTopic 20
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//842-20/tableOfContent

+ Details

Name:	us-gaap_LesseeOperatingLeasesTextBlock
Namespace Prefix:	us-gaap_
Data Type:	dtr-types:textBlockItemType
Balance Type:	na
Period Type:	duration