Quarterly report pursuant to Section 13 or 15(d)

Leases

v3.23.3
Leases
 9 Months Ended
Sep. 30, 2023
Leases [Abstract]  
Leases Leases
At lease commencement, a right-of-use (“ROU”) asset and lease liability is recorded based on the present value of the future lease payments over the lease term. The Company has elected not to recognize a ROU asset and lease liability for leases with terms of 12 months or less. The Company leases facilities, vehicles, and other equipment under long-term operating and financing leases with varying terms.
In addition to the base rent, real estate leases typically contain provisions for common-area maintenance and other similar service, which are considered non-lease components for accounting purposes. For our real estate leases, we apply a practical expedient to include these non-lease components in calculating the ROU asset and lease liability. Furthermore, for all other types of leases, the practical expedient was also elected whereby lease and non-lease components have been combined.
The Company uses the non-cancellable lease term unless it is reasonably certain that a renewal or termination option will be exercised. When available, the Company will use the rate implicit in the lease to discount lease payments to present value, however as most leases do not provide an implicit rate, the Company will estimate the incremental borrowing rate to discount the lease payments. The Company estimates the incremental borrowing rate based on the rates of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis, over a similar term, and in a similar economic environment. The ROU asset also includes any lease prepayments and initial direct costs, offset by lease incentives. The Company does not consider renewal periods or early terminations to be reasonably certain and are thus not included in the lease term for real estate or equipment assets.
The components of ROU assets and lease liabilities were as follows:
(in millions) Balance Sheet Classification September 30, 2023 December 31, 2022
Assets:
Operating lease assets Right-of-use assets, net $ 46.8  $ 43.3 
Finance lease assets Right-of-use assets, net 2.9  1.0 
Total leased assets $ 49.7  $ 44.3 
Liabilities:
Current:
Operating Other accrued expenses $ 5.3  $ 5.3 
Financing Current maturities of long-term debt 0.9  0.3 
Noncurrent:
Operating Other long-term liabilities $ 45.4  $ 40.9 
Financing Long-term debt 2.1  0.8 
Total lease liabilities $ 53.7  $ 47.3 
The components of lease expense were as follows:
Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended
(in millions) September 30, 2023 October 1, 2022 September 30, 2023 October 1, 2022
Operating lease cost $ 2.2  $ 2.1  $ 6.5  $ 6.1 
Variable lease cost 0.2  0.1  0.5  0.3 
Short-term lease cost —  —  —  0.1 
Finance lease cost:
Amortization of right-of-use assets $ 0.2  $ 0.1  $ 0.5  $ 0.1 
Interest on lease liabilities 0.1  —  0.1  — 
Total lease cost $ 2.7  $ 2.3  $ 7.6  $ 6.6 
Other information related to leases was as follows:
September 30, 2023 December 31, 2022
Weighted Average Remaining Lease Term (in years)
Operating Leases 9.07 9.66
Finance Leases 3.34 3.37
Weighted Average Discount Rate
Operating Leases 7.5% 7.1%
Finance Leases 8.4% 6.6%
As of September 30, 2023, future minimum lease payments under noncancellable operating leases with initial or remaining lease terms in excess of one year were as follows:
(in millions)
2023 $ 2.2 
2024 8.7 
2025 8.2 
2026 7.7 
2027 7.0 
Thereafter 37.8 
Total future lease payments $ 71.6 
Less: imputed interest $ (20.9)
Present value of future lease payments $ 50.7 
As of September 30, 2023, future minimum repayments of finance leases were as follows:
(in millions)
2023 $ 0.3 
2024 1.1 
2025 1.1 
2026 0.5 
2027 0.3 
Thereafter 0.1 
Total future lease payments $ 3.4 
Less: imputed interest $ (0.4)
Present value of future lease payments $ 3.0 
Leases Leases
At lease commencement, a right-of-use (“ROU”) asset and lease liability is recorded based on the present value of the future lease payments over the lease term. The Company has elected not to recognize a ROU asset and lease liability for leases with terms of 12 months or less. The Company leases facilities, vehicles, and other equipment under long-term operating and financing leases with varying terms.
In addition to the base rent, real estate leases typically contain provisions for common-area maintenance and other similar service, which are considered non-lease components for accounting purposes. For our real estate leases, we apply a practical expedient to include these non-lease components in calculating the ROU asset and lease liability. Furthermore, for all other types of leases, the practical expedient was also elected whereby lease and non-lease components have been combined.
The Company uses the non-cancellable lease term unless it is reasonably certain that a renewal or termination option will be exercised. When available, the Company will use the rate implicit in the lease to discount lease payments to present value, however as most leases do not provide an implicit rate, the Company will estimate the incremental borrowing rate to discount the lease payments. The Company estimates the incremental borrowing rate based on the rates of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis, over a similar term, and in a similar economic environment. The ROU asset also includes any lease prepayments and initial direct costs, offset by lease incentives. The Company does not consider renewal periods or early terminations to be reasonably certain and are thus not included in the lease term for real estate or equipment assets.
The components of ROU assets and lease liabilities were as follows:
(in millions) Balance Sheet Classification September 30, 2023 December 31, 2022
Assets:
Operating lease assets Right-of-use assets, net $ 46.8  $ 43.3 
Finance lease assets Right-of-use assets, net 2.9  1.0 
Total leased assets $ 49.7  $ 44.3 
Liabilities:
Current:
Operating Other accrued expenses $ 5.3  $ 5.3 
Financing Current maturities of long-term debt 0.9  0.3 
Noncurrent:
Operating Other long-term liabilities $ 45.4  $ 40.9 
Financing Long-term debt 2.1  0.8 
Total lease liabilities $ 53.7  $ 47.3 
The components of lease expense were as follows:
Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended
(in millions) September 30, 2023 October 1, 2022 September 30, 2023 October 1, 2022
Operating lease cost $ 2.2  $ 2.1  $ 6.5  $ 6.1 
Variable lease cost 0.2  0.1  0.5  0.3 
Short-term lease cost —  —  —  0.1 
Finance lease cost:
Amortization of right-of-use assets $ 0.2  $ 0.1  $ 0.5  $ 0.1 
Interest on lease liabilities 0.1  —  0.1  — 
Total lease cost $ 2.7  $ 2.3  $ 7.6  $ 6.6 
Other information related to leases was as follows:
September 30, 2023 December 31, 2022
Weighted Average Remaining Lease Term (in years)
Operating Leases 9.07 9.66
Finance Leases 3.34 3.37
Weighted Average Discount Rate
Operating Leases 7.5% 7.1%
Finance Leases 8.4% 6.6%
As of September 30, 2023, future minimum lease payments under noncancellable operating leases with initial or remaining lease terms in excess of one year were as follows:
(in millions)
2023 $ 2.2 
2024 8.7 
2025 8.2 
2026 7.7 
2027 7.0 
Thereafter 37.8 
Total future lease payments $ 71.6 
Less: imputed interest $ (20.9)
Present value of future lease payments $ 50.7 
As of September 30, 2023, future minimum repayments of finance leases were as follows:
(in millions)
2023 $ 0.3 
2024 1.1 
2025 1.1 
2026 0.5 
2027 0.3 
Thereafter 0.1 
Total future lease payments $ 3.4 
Less: imputed interest $ (0.4)
Present value of future lease payments $ 3.0