Leases

12 Months Ended

Dec. 31, 2022

Leases [Abstract]

Leases

Leases

Lease Policies

The Company determines if an arrangement contains a lease in whole or in part at the inception of the contract. Right-of-use (“ROU”) assets represent the right to use an underlying asset for the lease term while lease liabilities represent the obligation to make lease payments arising from the lease. All leases with an expected term greater than twelve months result in the recognition of a ROU asset and a liability at the lease commencement date based on the present value of the lease payments over the lease term. The Company uses its incremental borrowing rate based on the information available at the lease commencement date to determine the present value of the lease payments unless the implicit rate in the lease is readily determinable. The incremental borrowing rate is determined considering factors such as the lease term, the Company’s credit standing and the economic environment of the location of the lease.

The lease term includes all non-cancellable periods and may include options to extend (or to not terminate) the lease when it is reasonably certain that the Company will exercise the option. Leases that have a term of 12 months or less at the commencement date are expensed on a straight-line basis over the lease term and do not result in the recognition of a ROU asset or lease liability.

The Company classifies leases as finance leases when (i) there is a transfer of ownership of the underlying asset by the end of the lease term, (ii) the lease contains an option to purchase the asset that the Company is reasonably certain will be exercised, (iii) the lease term is for the majority of the remaining economic life of the asset, or (iv) the present value of the lease payments and any residual value guarantee equals or substantially exceeds the fair value of the asset.

Lease expense for operating leases is recognized on a straight-line basis over the lease term. Lease expense for finance leases is generally front-loaded as the finance lease ROU asset is depreciated on a straight-line basis, but interest expense on the lease liability is recognized using the interest method which results in more expense during the early years of the lease. Variable lease payments are expensed in the period in which the obligation for those payments is incurred. The Company has elected to combine lease and non-lease components, such as fixed maintenance costs, as a single lease component in calculating ROU assets and lease liabilities for all classes of leased assets.

Leases

The Company has obligations under lease arrangements primarily for facilities, equipment and vehicles. These leases have original lease periods expiring between April 2023 and July 2034. The following table summarizes the lease expense by category in the Consolidated Statement of Operations:

(in thousands)	For the Year Ended December 31,
	2022		2021
Cost of sales	$	6,300	$	6,079
Research, development and engineering expenses	267		326
Selling, general and administrative expenses	169		174
Interest expense	21		44
Total	$	6,757	$	6,623

The following table summarizes the components of lease expense:

(in thousands)	For the Year Ended December 31,
	2022		2021
Operating lease cost	$	4,706	$	4,855
Finance lease cost:
Amortization of ROU asset	148		192
Interest expense	21		33
Short-term lease cost	100		267
Variable lease cost	1,782		1,276
Sublease income	(1,062)		—
Total lease cost	$	5,695	$	6,623

The following table presents supplemental cash flow information related to leases:

(in thousands)	For the Year Ended December 31,
	2022		2021
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows paid for operating leases	$	4,859	$	4,959
Operating cash flows paid for interest portion of finance leases	21		33
Financing cash flows paid for principal portion of finance leases	157		194
Right-of-use assets obtained in exchange for lease obligations
Operating leases	3,540		137
Finance leases	—		—

As of December 31, 2022 and 2021, the weighted-average remaining lease term for both periods was 5.8 years for operating leases and 3.0 years and 3.4 years for finance leases, respectively. As of December 31, 2022 and 2021, the weighted-average discount rate for both periods was 7.1% for operating leases, and 6.6% and 6.5% for finance leases, respectively.

The following table presents supplemental balance sheet information related to leases:

(in thousands)	As of December 31,
	2022		2021
Operating lease ROU assets, net 1	$	13,282	$	13,545
Operating lease liabilities, current	2,894		3,978
Operating lease liabilities, non-current	10,971		10,304
Total operating lease liabilities	$	13,865	$	14,282
Finance lease ROU assets, net 1	$	225	$	364
Finance lease liabilities, current	90		147
Finance lease liabilities, non-current	170		260
Total finance lease liabilities	$	260	$	407

1.    Included in Other noncurrent assets for operating leases and Property, plant and equipment, net for finance leases on the Consolidated Balance Sheets.

The following table presents maturity analysis of lease liabilities as of December 31, 2022:

(in thousands)
Year Ending December 31,	Operating Leases		Finance Leases
2023	$	3,767	$	103
2024	2,668		85
2025	2,731		82
2026	2,421		17
2027	2,413		—
Thereafter	3,015		—
Total undiscounted lease payments	17,015		286
Less: imputed interest	3,150		26
Total lease liabilities	$	13,865	$	260

Leases

Leases

Lease Policies

The Company determines if an arrangement contains a lease in whole or in part at the inception of the contract. Right-of-use (“ROU”) assets represent the right to use an underlying asset for the lease term while lease liabilities represent the obligation to make lease payments arising from the lease. All leases with an expected term greater than twelve months result in the recognition of a ROU asset and a liability at the lease commencement date based on the present value of the lease payments over the lease term. The Company uses its incremental borrowing rate based on the information available at the lease commencement date to determine the present value of the lease payments unless the implicit rate in the lease is readily determinable. The incremental borrowing rate is determined considering factors such as the lease term, the Company’s credit standing and the economic environment of the location of the lease.

The lease term includes all non-cancellable periods and may include options to extend (or to not terminate) the lease when it is reasonably certain that the Company will exercise the option. Leases that have a term of 12 months or less at the commencement date are expensed on a straight-line basis over the lease term and do not result in the recognition of a ROU asset or lease liability.

The Company classifies leases as finance leases when (i) there is a transfer of ownership of the underlying asset by the end of the lease term, (ii) the lease contains an option to purchase the asset that the Company is reasonably certain will be exercised, (iii) the lease term is for the majority of the remaining economic life of the asset, or (iv) the present value of the lease payments and any residual value guarantee equals or substantially exceeds the fair value of the asset.

Lease expense for operating leases is recognized on a straight-line basis over the lease term. Lease expense for finance leases is generally front-loaded as the finance lease ROU asset is depreciated on a straight-line basis, but interest expense on the lease liability is recognized using the interest method which results in more expense during the early years of the lease. Variable lease payments are expensed in the period in which the obligation for those payments is incurred. The Company has elected to combine lease and non-lease components, such as fixed maintenance costs, as a single lease component in calculating ROU assets and lease liabilities for all classes of leased assets.

Leases

The Company has obligations under lease arrangements primarily for facilities, equipment and vehicles. These leases have original lease periods expiring between April 2023 and July 2034. The following table summarizes the lease expense by category in the Consolidated Statement of Operations:

(in thousands)	For the Year Ended December 31,
	2022		2021
Cost of sales	$	6,300	$	6,079
Research, development and engineering expenses	267		326
Selling, general and administrative expenses	169		174
Interest expense	21		44
Total	$	6,757	$	6,623

The following table summarizes the components of lease expense:

(in thousands)	For the Year Ended December 31,
	2022		2021
Operating lease cost	$	4,706	$	4,855
Finance lease cost:
Amortization of ROU asset	148		192
Interest expense	21		33
Short-term lease cost	100		267
Variable lease cost	1,782		1,276
Sublease income	(1,062)		—
Total lease cost	$	5,695	$	6,623

The following table presents supplemental cash flow information related to leases:

(in thousands)	For the Year Ended December 31,
	2022		2021
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows paid for operating leases	$	4,859	$	4,959
Operating cash flows paid for interest portion of finance leases	21		33
Financing cash flows paid for principal portion of finance leases	157		194
Right-of-use assets obtained in exchange for lease obligations
Operating leases	3,540		137
Finance leases	—		—

As of December 31, 2022 and 2021, the weighted-average remaining lease term for both periods was 5.8 years for operating leases and 3.0 years and 3.4 years for finance leases, respectively. As of December 31, 2022 and 2021, the weighted-average discount rate for both periods was 7.1% for operating leases, and 6.6% and 6.5% for finance leases, respectively.

The following table presents supplemental balance sheet information related to leases:

(in thousands)	As of December 31,
	2022		2021
Operating lease ROU assets, net 1	$	13,282	$	13,545
Operating lease liabilities, current	2,894		3,978
Operating lease liabilities, non-current	10,971		10,304
Total operating lease liabilities	$	13,865	$	14,282
Finance lease ROU assets, net 1	$	225	$	364
Finance lease liabilities, current	90		147
Finance lease liabilities, non-current	170		260
Total finance lease liabilities	$	260	$	407

1.    Included in Other noncurrent assets for operating leases and Property, plant and equipment, net for finance leases on the Consolidated Balance Sheets.

The following table presents maturity analysis of lease liabilities as of December 31, 2022:

(in thousands)
Year Ending December 31,	Operating Leases		Finance Leases
2023	$	3,767	$	103
2024	2,668		85
2025	2,731		82
2026	2,421		17
2027	2,413		—
Thereafter	3,015		—
Total undiscounted lease payments	17,015		286
Less: imputed interest	3,150		26
Total lease liabilities	$	13,865	$	260