LEASES

6 Months Ended

Jun. 30, 2022

Leases [Abstract]

LEASES

LEASES

We adopted ASC 842, Leases, effective January 1, 2019 and elected the modified retrospective transition method. We determine if an arrangement is a lease at inception. Operating leases are included in “Operating lease right-of-use (‘ROU’) assets”, “operating lease liabilities” and “current portion of operating lease obligations” on our consolidated balance sheets. Finance leases are included in “property, plant and equipment, net”, “current portion of long-term debt and finance lease obligations” and “long-term debt and finance lease obligations” on our consolidated balance sheets.  

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Operating lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Variable lease payments and short-term lease payments (leases with initial terms less than twelve months) are expensed as incurred.

We have lease agreements with lease and non-lease components for certain equipment, office, and vehicle leases. We have elected the practical expedient to not separate lease and non-lease components and account for both as a single lease component. We have operating and finance leases primarily for equipment, real estate, and vehicles. Our leases have remaining lease terms of 1 year to 14 years, some of which may include options to extend the leases for up to 10 years, and some of which may include options to terminate the leases within 1 year.

The components of lease expense are as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Operating lease costs	$	6,334	$	7,021	$	13,021	$	14,260
Variable lease costs	1,442		1,326		2,900		2,602
Finance lease costs:
Amortization of right-of-use assets	67		195		261		312
Interest on lease liabilities	38		90		126		168
Total lease cost	$	7,881	$	8,632	$	16,308	$	17,342

Other information related to leases are as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022	2021
Supplemental cash flow information:	(unaudited)		(unaudited)		(unaudited)	(unaudited)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	5,095	$	5,990	10,500	11,346
Operating cash flows from finance leases	25		91		115	171
Financing cash flows from finance leases	158		159		320	237
Right-of-use assets obtained in exchange for lease obligations
Operating leases	514		411		1,354	8,583
Finance leases	77		384		100	406

Amounts recognized in the condensed consolidated balance sheet are as follows (in thousands):

	June 30, 2022			December 31, 2021
Operating Leases:	(unaudited)
Operating lease right-of-use assets	$	52,925		$	60,700
Current portion of operating lease obligations	14,389			16,176
Operating lease obligations (non-current)	43,090			49,221
Finance Leases:
Property, plant and equipment, net	$	4,412		$	5,123
Current portion of long-term finance lease obligations	655			669
Long-term finance lease obligations	4,656			4,980
Weighted average remaining lease term:
Operating leases	5.9 years			6.0 years
Finance leases	9.9 years			10.0 years
Weighted average discount rate:
Operating leases	6.9		%	6.8		%
Finance leases	6.5		%	6.4		%

As of June 30, 2022, we have no material additional operating and finance leases that have not yet commenced. As of June 30, 2022, future minimum lease payments under non-cancellable leases (including short-term leases) are as follows (in thousands):

	Operating Leases		Finance Leases
	(unaudited)		(unaudited)
2022 (Remainder of the year)	$	10,647	$	68
2023	15,317		905
2024	11,918		745
2025	8,609		575
2026	6,729		562
Thereafter	18,161		3,925
Total future minimum lease payments	71,381		6,780
Less: Interest	(13,902)		(1,469)
Present value of lease liabilities	$	57,479	$	5,311

LEASES

LEASES

We adopted ASC 842, Leases, effective January 1, 2019 and elected the modified retrospective transition method. We determine if an arrangement is a lease at inception. Operating leases are included in “Operating lease right-of-use (‘ROU’) assets”, “operating lease liabilities” and “current portion of operating lease obligations” on our consolidated balance sheets. Finance leases are included in “property, plant and equipment, net”, “current portion of long-term debt and finance lease obligations” and “long-term debt and finance lease obligations” on our consolidated balance sheets.  

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Operating lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Variable lease payments and short-term lease payments (leases with initial terms less than twelve months) are expensed as incurred.

We have lease agreements with lease and non-lease components for certain equipment, office, and vehicle leases. We have elected the practical expedient to not separate lease and non-lease components and account for both as a single lease component. We have operating and finance leases primarily for equipment, real estate, and vehicles. Our leases have remaining lease terms of 1 year to 14 years, some of which may include options to extend the leases for up to 10 years, and some of which may include options to terminate the leases within 1 year.

The components of lease expense are as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Operating lease costs	$	6,334	$	7,021	$	13,021	$	14,260
Variable lease costs	1,442		1,326		2,900		2,602
Finance lease costs:
Amortization of right-of-use assets	67		195		261		312
Interest on lease liabilities	38		90		126		168
Total lease cost	$	7,881	$	8,632	$	16,308	$	17,342

Other information related to leases are as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022	2021
Supplemental cash flow information:	(unaudited)		(unaudited)		(unaudited)	(unaudited)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	5,095	$	5,990	10,500	11,346
Operating cash flows from finance leases	25		91		115	171
Financing cash flows from finance leases	158		159		320	237
Right-of-use assets obtained in exchange for lease obligations
Operating leases	514		411		1,354	8,583
Finance leases	77		384		100	406

Amounts recognized in the condensed consolidated balance sheet are as follows (in thousands):

	June 30, 2022			December 31, 2021
Operating Leases:	(unaudited)
Operating lease right-of-use assets	$	52,925		$	60,700
Current portion of operating lease obligations	14,389			16,176
Operating lease obligations (non-current)	43,090			49,221
Finance Leases:
Property, plant and equipment, net	$	4,412		$	5,123
Current portion of long-term finance lease obligations	655			669
Long-term finance lease obligations	4,656			4,980
Weighted average remaining lease term:
Operating leases	5.9 years			6.0 years
Finance leases	9.9 years			10.0 years
Weighted average discount rate:
Operating leases	6.9		%	6.8		%
Finance leases	6.5		%	6.4		%

As of June 30, 2022, we have no material additional operating and finance leases that have not yet commenced. As of June 30, 2022, future minimum lease payments under non-cancellable leases (including short-term leases) are as follows (in thousands):

	Operating Leases		Finance Leases
	(unaudited)		(unaudited)
2022 (Remainder of the year)	$	10,647	$	68
2023	15,317		905
2024	11,918		745
2025	8,609		575
2026	6,729		562
Thereafter	18,161		3,925
Total future minimum lease payments	71,381		6,780
Less: Interest	(13,902)		(1,469)
Present value of lease liabilities	$	57,479	$	5,311