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LEASES

6 Months Ended

Jun. 30, 2023

9. LEASES

A reconciliation of lease obligations for the six months ended June 30, 2023, is as follows:

(in thousands)
Lease obligation
December 31, 2022	$	33,999
Sale leaseback additions		29,647
Lease principal payments		(1,142	)
Lease remeasurement		(1,477	)
Lease settlement		(1,202	)
June 30, 2023	$	59,825

During the three months ended June 30, 2023, the Company completed a sale leaseback of the Company’s drying and midstream processing facility. As a result of the transaction, the Company recorded a lease liability of $29,647.

During the three months ended June 30, 2023, the Company disposed of $1,202 of lease liabilities related to its Los Angeles distribution facility. In conjunction with the settlement, net of closing entries, the Company negotiated a $300 payment and recognized a $880 gain in other income on the consolidated statement of income.

All extension options that are reasonably certain to be exercised have been included in the measurement of lease obligations. The Company reassesses the likelihood of extension option exercise if there is a significant event or change in circumstances within its control.

Current and long-term portions of lease obligations at June 30, 2023 and December 31, 2022, are as follows:

	June 30,		December 31,
(in thousands)	2023		2022
Lease obligation, current portion	$	1,592	$	2,659
Lease obligation, long-term portion		58,233		31,340
Total	$	59,825	$	33,999

The key assumptions used in accounting for leases as of June 30, 2023 were a weighted average remaining lease term of 17.8 years and a weighted average discount rate of 7.0%.

The key assumptions used in accounting for leases as of December 31, 2022 were a weighted average remaining lease term of 14.6 years and a weighted average discount rate of 6.0%.

The components of lease expense for the three and six months ended June 30, 2023 and 2022, are as follows:

	Three Months Ended				Six Months Ended
	June 30,		June 30,		June 30,		June 30,
(in thousands)	2023		2022		2023		2022
Amortization of leased assets ⁽¹⁾	$	817	$	840	$	1,390	$	1,657
Interest on lease liabilities ⁽²⁾		482		561		982		1,134
Total	$	1,299	$	1,401	$	2,372	$	2,791

1) Included in cost of goods sold, general and administrative and other income/expense in the Condensed Consolidated Statements of Income (Loss).

2) Included in interest expense in the Condensed Consolidated Statements of Income (Loss).

The future lease payments with initial remaining terms in excess of one year as of June 30, 2023 were as follows:

(in thousands)	June 30, 2023
Balance of 2023	$	2,923
2024		5,541
2025		5,559
2026		5,587
2027 and beyond		90,806
Total lease payments		110,416
Less imputed interest		(50,591	)
Total	$	59,825