Leases

3 Months Ended

Mar. 31, 2023

Leases

Leases

Note 4. Leases

The Company has real property operating leases for office and light manufacturing space. Operating leases for the Company’s personal property consist of leases for office equipment, vehicles, forklifts and storage tanks for bulk gases. The Company recognizes a ROU asset and a lease liability for operating leases based on the net present value of future minimum lease payments. Lease expense for the Company’s operating leases is recognized on a straight-line basis over the lease term, including renewal periods that are considered reasonably certain.

The Company has finance leases for two laser cutting systems and three vehicles. The Company recognizes an ROU asset and a lease liability for finance leases based on the net present value of future minimum lease payments. Lease expense for the Company’s finance leases is comprised of the amortization of the ROU asset and interest expense recognized based on the effective interest method.

Variable lease expense is related to certain of the Company’s real property leases and personal property leases, and it generally consists of property tax and insurance components that are for the benefit of the lessor (real property leases) and variable overage fees (personal property leases) that are remitted as part of the Company’s lease payments.

The components of lease expense were as follows:

	Three Months Ended
	March 31,
	2023		2022
Finance lease cost:
Amortization of finance lease assets	$	94	$	79
Interest on finance lease liabilities		11		11
Total finance lease expense		105		90
Operating lease expense		1,286		1,522
Short-term lease expense		139		179
Variable lease expense		69		47
Sublease income (1)		(631)		—
Total lease expense	$	968	$	1,838

(1) The Company subleased a portion of its Hazel Park, MI facility starting in June 2022.

Lease related supplemental cash flow information:

	Three Months Ended
	March 31,
	2023		2022
Cash paid for amounts included in the measurement of lease liabilities for finance leases:
Operating cash flows	$	11	$	11
Financing cash flows	$	96	$	78
Cash paid for amounts included in the measurement of lease liabilities for operating leases:
Operating cash flows	$	1,425	$	1,430
Right-of-use assets obtained in exchange for recorded lease obligations:
Operating leases	$	—	$	46
Finance leases	$	—	$	—

ROU assets are assessed for impairment in accordance with the Company’s long-lived asset policy. The Company reassesses lease classification and remeasures ROU assets and lease liabilities when a lease is modified, and that modification is not accounted for as a separate new lease or upon certain other events that require reassessment in accordance with ASC 842.