LEASES

6 Months Ended

Jun. 30, 2024

Leases [Abstract]

LEASES

LEASES

The Company has entered into various non-cancellable operating and finance lease agreements for certain of the Company’s offices, manufacturing and warehouse facilities, retail and service locations, equipment and vehicles, worldwide.

In August 2022, the Company entered into a four-year agreement (“Lease Agreement”) to lease land in Casa Grande, Arizona adjacent to our manufacturing facility. The Company classifies this lease as a finance lease because the Lease Agreement contains a purchase option which the Company is reasonably certain to exercise. As of June 30, 2024 and December 31, 2023, assets associated with the finance lease were $79.3 million. As of June 30, 2024 and December 31, 2023, liabilities associated with the finance lease were $80.3 million and $80.6 million, respectively.

Contemporaneously with the execution of the Lease Agreement, the Company entered into a sale agreement, pursuant to which the Company sold certain parcels of land for $31.7 million to the lessor and leased back these parcels of land under the Lease Agreement. The sale of the land and subsequent lease did not result in change in the transfer of control of the land; therefore, the sale-leaseback transaction is accounted for as a failed sale and leaseback financing obligation. The Company recorded $31.7 million of sales proceeds received as a financial liability within other long-term liabilities in the condensed consolidated balance sheets as of June 30, 2024 and December 31, 2023.

The balances for the operating and finance leases where the Company is the lessee are presented as follows within the Company’s condensed consolidated balance sheets (in thousands):

	June 30, 2024		December 31, 2023
Operating leases:
Right-of-use assets	$	212,877	$	221,508
Other current liabilities	$	30,228	$	28,431
Other long-term liabilities	234,358		244,122
Total operating lease liabilities	$	264,586	$	272,553
Finance leases:
Property, plant and equipment, net	$	83,213	$	85,055
Total finance lease assets	$	83,213	$	85,055
Finance lease liabilities, current portion	$	7,099	$	8,202
Finance lease liabilities, net of current portion	76,533		77,653
Total finance lease liabilities	$	83,632	$	85,855

The components of lease expense were as follows within the Company’s condensed consolidated statements of operations and comprehensive loss (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Operating lease expense:
Operating lease expense (1)	$	15,419	$	13,763	$	30,429	$	26,578
Variable lease expense	463		423		910		868
Finance lease expense:
Amortization of leased assets	$	808	$	1,402	$	1,827	$	2,807
Interest on lease liabilities	1,165		1,229		2,334		2,473
Total finance lease expense	$	1,973	$	2,631	$	4,161	$	5,280
Total lease expense	$	17,855	$	16,817	$	35,500	$	32,726

(1) Excluded short-term leases, which were not material.

Other information related to leases where the Company is the lessee was as follows:

	June 30, 2024		December 31, 2023
Weighted-average remaining lease term (in years):
Operating leases	6.4		6.8
Finance leases	2.1		2.6
Weighted-average discount rate:
Operating leases	11.58	%	11.01	%
Finance leases	5.63	%	5.59	%

As of June 30, 2024, the maturities of the Company’s operating and finance lease liabilities (excluding short-term leases) were as follows (in thousands):

	Operating Leases		Finance Leases
2024 (remainder of the year)	$	27,340	$	3,779
2025	64,355		6,617
2026	62,222		82,486
2027	53,884		138
2028	50,126		68
Thereafter	124,958		8
Total minimum lease payments	382,885		93,096
Less: Interest	(118,299)		(9,464)
Present value of lease obligations	264,586		83,632
Less: Current portion	(30,228)		(7,099)
Long-term portion of lease obligations	$	234,358	$	76,533

As of June 30, 2024, the Company entered into additional leases for facilities and equipment that have not yet commenced with undiscounted future lease payments of $11.1 million. The leases are expected to commence over the next twelve months.

LEASES

LEASES

The Company has entered into various non-cancellable operating and finance lease agreements for certain of the Company’s offices, manufacturing and warehouse facilities, retail and service locations, equipment and vehicles, worldwide.

In August 2022, the Company entered into a four-year agreement (“Lease Agreement”) to lease land in Casa Grande, Arizona adjacent to our manufacturing facility. The Company classifies this lease as a finance lease because the Lease Agreement contains a purchase option which the Company is reasonably certain to exercise. As of June 30, 2024 and December 31, 2023, assets associated with the finance lease were $79.3 million. As of June 30, 2024 and December 31, 2023, liabilities associated with the finance lease were $80.3 million and $80.6 million, respectively.

Contemporaneously with the execution of the Lease Agreement, the Company entered into a sale agreement, pursuant to which the Company sold certain parcels of land for $31.7 million to the lessor and leased back these parcels of land under the Lease Agreement. The sale of the land and subsequent lease did not result in change in the transfer of control of the land; therefore, the sale-leaseback transaction is accounted for as a failed sale and leaseback financing obligation. The Company recorded $31.7 million of sales proceeds received as a financial liability within other long-term liabilities in the condensed consolidated balance sheets as of June 30, 2024 and December 31, 2023.

The balances for the operating and finance leases where the Company is the lessee are presented as follows within the Company’s condensed consolidated balance sheets (in thousands):

	June 30, 2024		December 31, 2023
Operating leases:
Right-of-use assets	$	212,877	$	221,508
Other current liabilities	$	30,228	$	28,431
Other long-term liabilities	234,358		244,122
Total operating lease liabilities	$	264,586	$	272,553
Finance leases:
Property, plant and equipment, net	$	83,213	$	85,055
Total finance lease assets	$	83,213	$	85,055
Finance lease liabilities, current portion	$	7,099	$	8,202
Finance lease liabilities, net of current portion	76,533		77,653
Total finance lease liabilities	$	83,632	$	85,855

The components of lease expense were as follows within the Company’s condensed consolidated statements of operations and comprehensive loss (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Operating lease expense:
Operating lease expense (1)	$	15,419	$	13,763	$	30,429	$	26,578
Variable lease expense	463		423		910		868
Finance lease expense:
Amortization of leased assets	$	808	$	1,402	$	1,827	$	2,807
Interest on lease liabilities	1,165		1,229		2,334		2,473
Total finance lease expense	$	1,973	$	2,631	$	4,161	$	5,280
Total lease expense	$	17,855	$	16,817	$	35,500	$	32,726

(1) Excluded short-term leases, which were not material.

Other information related to leases where the Company is the lessee was as follows:

	June 30, 2024		December 31, 2023
Weighted-average remaining lease term (in years):
Operating leases	6.4		6.8
Finance leases	2.1		2.6
Weighted-average discount rate:
Operating leases	11.58	%	11.01	%
Finance leases	5.63	%	5.59	%

As of June 30, 2024, the maturities of the Company’s operating and finance lease liabilities (excluding short-term leases) were as follows (in thousands):

	Operating Leases		Finance Leases
2024 (remainder of the year)	$	27,340	$	3,779
2025	64,355		6,617
2026	62,222		82,486
2027	53,884		138
2028	50,126		68
Thereafter	124,958		8
Total minimum lease payments	382,885		93,096
Less: Interest	(118,299)		(9,464)
Present value of lease obligations	264,586		83,632
Less: Current portion	(30,228)		(7,099)
Long-term portion of lease obligations	$	234,358	$	76,533

As of June 30, 2024, the Company entered into additional leases for facilities and equipment that have not yet commenced with undiscounted future lease payments of $11.1 million. The leases are expected to commence over the next twelve months.