Leases

6 Months Ended

Jun. 30, 2024

Lessee Disclosure [Abstract]

Leases

9.LEASES

The Company rents certain equipment and facilities under short-term agreements, non-cancelable operating lease agreements and finance leases.  The Company determines if an arrangement is or contains a lease at contract inception. The Company recognizes a right-of-use (“ROU”) asset and a lease liability at the lease commencement date.  The lease liability is initially measured at the present value of the unpaid lease payments at the lease commencement date.

Key estimates and judgments include how the Company determines (1) the discount rate it uses to discount the unpaid lease payments to present value, (2) lease term and (3) lease payments.

The lease guidance requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. Generally, the Company cannot determine the interest rate implicit in the lease because it does not have access to the lessor’s estimated residual value or the amount of the lessor’s deferred initial direct costs.  Therefore, the Company generally uses its incremental borrowing rate as the discount rate for the lease. The Company’s incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms.

The lease term for the Company’s leases includes the noncancelable period of the lease, plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor.

Lease payments included in the measurement of the lease liability comprise fixed payments or variable lease payments.  The variable lease payments take into account annual changes in the consumer price index and common area maintenance charges, if known.

ROU assets for operating and finance leases are periodically reviewed for impairment losses. The Company uses the long-lived asset impairment guidance in ASC Subtopic 360-10, Property, Plant, and Equipment – Overall, to determine whether an ROU asset is impaired, and if so, the amount of the impairment loss to recognize.  The Company did not recognize an impairment charge for any of its ROU assets during the six months ended June 30, 2024 and 2023.

The Company monitors for events or changes in circumstances that require a reassessment of one of its leases. When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding ROU asset.  The Company did not recognize any significant remeasurements during the six months ended June 30, 2024 and 2023.

The Company has elected not to recognize ROU assets and lease liabilities for short-term leases that have a lease term of 12 months or less. The Company has elected to apply the short-term lease recognition and measurement exemption allowed for in the lease accounting standard.  The Company recognizes the lease payments associated with its short-term leases as an expense on a straight-line basis over the lease term.

Lease cost for operating and finance leases for the three and six months ended June 30, 2024 and 2023 were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Operating lease cost	$	13,036	$	11,821	$	25,163	$	22,967
Finance lease cost:
Amortization of leased assets		833		682		1,579		1,365
Interest on leased liabilities		69		51		125		105
Total lease cost	$	13,938	$	12,554	$	26,867	$	24,437

Supplemental cash flow information and non-cash activity related to the Company’s leases are as follows:

	Six Months Ended June 30,
	2024			2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	24,657	$	22,668
Operating cash flows from finance leases	$	125	$	105
Financing cash flows from finance leases	$	9,945	$	6,908
Non-cash activity:
Right-of-use assets obtained in exchange for lease liabilities - operating leases	$	50,302	$	74,605
Right-of-use assets obtained in exchange for lease liabilities - finance leases	$	2,569	$	398

Weighted-average remaining lease term and discount rate for the Company’s leases are as follows:

	Six Months Ended June 30,
	2024		2023
Weighted average remaining lease term - operating leases	10.0	years	10.3	years
Weighted average remaining lease term - finance leases	3.1	years	3.7	years
Weighted average discount rate - operating leases	4.19	%	3.75	%
Weighted average discount rate - finance leases	2.85	%	1.96	%

As of June 30, 2024, future minimum lease payments, reconciled to the respective lease liabilities, are as follows:

		Operating Leases		Finance Leases
Last 6 months of 2024	$	26,130	$	1,965
2025		47,283		3,851
2026		44,550		3,266
2027		41,717		1,840
2028		35,738		521
Thereafter		193,453		107
Minimum lease payments		388,871		11,550
Less: imputed interest		(80,156)		(516)
Present value of minimum lease payments		308,715		11,034
Less: current portion of lease liabilities		(38,434)		(3,584)
Long-term portion of lease liabilities	$	270,281	$	7,450