Leases

9 Months Ended

Sep. 30, 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 uses the interest rate on its term loan credit agreement as its incremental borrowing rate under ASC 842. 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 16 operating leases with remaining lease terms ranging from 1 to 64 months as of September 30, 2023. In connection with the real estate consolidation program, during the three months ended June 30, 2023, the Company exited additional offices including the Company’s former principal executive office and headquarters in New York. A reduction of the operating leases ROU asset of $5.3 million for impairment charges was recorded in impairments and disposals of long-lived assets in the unaudited condensed consolidated statements of operations and comprehensive income. The Company exercised termination options reducing the lease terms on certain operating leases and recorded lease remeasurements to the operating lease liability and corresponding reductions to the operating leases ROU asset in the amount of $4.7 million during the three months ended June 30, 2023. $1.5 million was recorded to de-recognize the operating lease ROU asset related to certain leases in selling, general and administrative expense due to abandonment, during the three months ended June 30, 2023.

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


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Components of total lease costs
Operating lease expense(1)	$	810	$	1,357	$	4,796	$	3,958
Sublease income	(278)		(216)		(843)		(504)
Total net lease costs	$	532	$	1,141	$	3,953	$	3,454

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(1)The nine months ended September 30, 2023 includes $1.5 million of lease expense to de-recognize certain operating ROU assets which were abandoned during the three months ended June 30, 2023.

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


(dollars in thousands)	September 30, 2023		December 31, 2022
Operating leases
Operating leases right-of-use asset	$	7,020	$	20,084

Operating leases liability, current portion	$	4,233	$	3,717
Long-term operating leases liability, net of current portion	8,834		16,835
Total operating leases liability	$	13,067	$	20,552


Weighted average remaining lease term in years - operating leases	3.7		4.8
Weighted average discount rate - operating leases	5.07	%	4.50	%

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


(in thousands)	September 30, 2023
Remainder of fiscal year 2023	$	1,229
2024	5,243
2025	2,337
2026	2,117
2027	2,149
Thereafter	1,113
Total future minimum lease payments	$	14,188
Less: imputed interest	(1,121)
Total	$	13,067