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LEASES

9 Months Ended

Sep. 30, 2023

9. LEASES

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

(in thousands)
Lease obligation
December 31, 2022	$	33,999
Sale leaseback additions		29,647
Lease principal payments		(1,551	)
Lease remeasurement		(1,477	)
Lease settlement		(1,202	)
September 30, 2023	$	59,416

In May 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.

In June 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 September 30, 2023 and December 31, 2022, are as follows:

	September 30,		December 31,
(in thousands)	2023		2022
Lease obligation, current portion	$	1,523	$	2,659
Lease obligation, long-term portion		57,893		31,340
Total	$	59,416	$	33,999

The key assumptions used in accounting for leases as of September 30, 2023 were a weighted average remaining lease term of 17.6 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 nine months ended September 30, 2023 and 2022, are as follows:

	Three Months Ended				Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
(in thousands)	2023		2022		2023		2022
Amortization of leased assets ⁽¹⁾	$	939	$	818	$	2,329	$	2,475
Interest on lease liabilities ⁽²⁾		459		549		1,441		1,683
Total	$	1,398	$	1,367	$	3,770	$	4,158

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 September 30, 2023 were as follows:

(in thousands)	September 30, 2023
Balance of 2023	$	1,461
2024		5,541
2025		5,559
2026		5,587
2027 and beyond		90,806
Total lease payments		108,954
Less imputed interest		(49,538	)
Total	$	59,416