Leases

3 Months Ended

Mar. 31, 2023

Effective January 1, 2022 using the effective date method, the Company adopted the FASB’s Accounting Standards Update No. 2016-02, “Leases” (“ASC 842”), which requires the recognition of all leases, including operating leases on the unaudited condensed consolidated balance sheets by recording a right-of-use (“ROU”) asset and related liability, and elected to exclude short-term leases from adoption. The lease liability and ROU asset will be remeasured when there is a change in the lease term (or upon the occurrence of another reassessment trigger).

Upon adoption on January 1, 2022, the Company recognized a ROU asset of $23.5 million and a lease liability of $23.8 million.

The Company determines if a contract is a lease or contains a lease at inception. Operating lease liabilities are measured, on each reporting date, based on the present value of the future minimum lease payments over the remaining lease term. The Company’s leases generally do not provide an implicit rate and, therefore, the Company used the incremental borrowing rate of the former first lien term loan credit agreement of 4.50% for all leases entered into for the period prior to November 29, 2022. Operating lease assets are measured by adjusting the lease liability for lease incentives, initial direct costs incurred and asset impairments. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term with the operating lease asset reduced by the amount of the expense. Lease terms may include options to extend or terminate a lease when they are reasonably certain to occur.

The Company leases real estate and equipment for use in its operations. The Company has 23 operating leases with remaining lease terms ranging from 1 month to 70 months.

The components of lease expense for the periods presented are as follows:


	Three Months Ended March 31,
(in thousands)	2022		2023
Components of total lease costs
Operating lease expense	$	1,299	$	1,379
Sublease income	(72)		(222)
Total net lease costs	$	1,227	$	1,157

Information related to the Company’s ROU assets and lease liabilities for the period presented is as follows:


(dollar amounts in thousands)	March 31, 2023
Operating leases
Operating leases ROU asset - long-term	$	19,652
Operating leases ROU asset, net	$	19,652

Operating leases liability - current	$	3,565
Operating leases liability - long-term	16,574
Total operating leases liability	$	20,139


Weighted average remaining lease term in years - operating leases	4.5
Weighted average discount rate - operating leases	4.50	%

Total remaining lease payments under the Company’s operating leases for the period presented are as follows:


(in thousands)	March 31, 2023
Remainder of fiscal year 2023	$	4,378
2024	4,958
2025	4,610
2026	3,796
2027	3,468
2028	1,073
Thereafter	85
Total future minimum lease payments	$	22,368
Less: imputed interest	(2,229)
Total	$	20,139