Lease Obligations

9 Months Ended

Sep. 30, 2022

Leases [Abstract]

Lease Obligations

Lease Obligations

From time-to-time, the Company enters into non-cancelable leases for some of our facility, vehicle and equipment needs. These leases allow the Company to conserve cash by paying a monthly lease rental fee for the use of facilities, vehicles and equipment rather than purchasing them. The Company’s leases have remaining terms ranging from one to seven years, some of which may include options to extend the leases for up to five years, and some of which may include options to terminate the leases within one year. Currently, all the Company’s leases contain fixed payment terms. The Company may decide to cancel or terminate a lease before the end of its term, in which case we are typically liable to the lessor for the remaining lease payments under the term of the lease. Additionally, all of the Company's month-to-month leases are cancelable, by the Company or the lessor, at any time and are not included in our right-of-use asset or liability. At September 30, 2022, the Company had several leases with residual value guarantees. Typically, the Company has purchase options on the equipment underlying its long-term leases and many of its short-term rental arrangements. The Company may exercise some of these purchase options when the need for equipment is on-going and the purchase option price is attractive. Leases are accounted for as operating or finance leases, depending on the terms of the lease.

The following is a summary of the lease-related assets and liabilities recorded:

		September 30, 2022		December 31, 2021
(in thousands)	Classification on the Consolidated Balance Sheet
Assets
Operating lease right-of-use assets	Operating lease right-of-use assets	$	31,405	$	20,971
Finance lease right-of-use assets	Property and equipment, net of accumulated depreciation	3,457		—
Total right-of-use lease assets		$	34,862	$	20,971
Liabilities
Current
Operating lease obligations	Current portion of operating lease obligations	$	9,819	$	7,765
Finance lease obligations	Current portion of finance lease obligations	1,161		—
Total current obligations		10,980		7,765
Non-current
Operating lease obligations	Operating lease obligations, net of current maturities	21,606		13,230
Finance lease obligations	Finance lease obligations, net of current maturities	2,551		—
Total non-current obligations		24,157		13,230
Total lease obligations		$	35,137	$	20,995

The following is a summary of the lease terms and discount rates:

	September 30, 2022		December 31, 2021
Weighted-average remaining lease term - finance leases	2.1 years		0.0 years
Weighted-average remaining lease term - operating leases	3.7 years		2.9 years
Weighted-average discount rate - finance leases	3.0	%	—	%
Weighted-average discount rate - operating leases	3.9	%	3.9	%

The following is a summary of certain information related to the lease costs for finance and operating leases:

(in thousands)	Three months ended September 30,				Nine months ended September 30,
	2022		2021		2022		2021
Lease cost:
Finance lease cost:
Amortization of right-of-use assets	$	107	$	11	$	841	$	386
Interest on lease liabilities	30		—		105		—
Operating lease cost	3,488		2,515		9,898		7,474
Variable lease costs	102		78		313		233
Total lease cost	$	3,727	$	2,604	$	11,157	$	8,093

The following is a summary of other information and supplemental cash flow information related to finance and operating leases:

	Nine months ended September 30,
(in thousands)	2022		2021
Other information:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	9,779	$	7,635
Right-of-use asset obtained in exchange for new operating lease obligations	$	19,596	$	5,687
Right-of-use asset obtained in exchange for new finance lease obligations	$	510	$	—

The future undiscounted minimum lease payments, as reconciled to the discounted minimum lease obligation indicated on the Company’s consolidated balance sheets, under financial leases, less interest, and under operating leases, less imputed interest, as of September 30, 2022 were as follows:

(in thousands)	Finance Lease Obligations		Operating Lease Obligations		Total Lease Obligations
Remainder of 2022	$	346	$	3,392	$	3,738
2023	1,195		12,057		13,252
2024	2,013		8,561		10,574
2025	311		6,130		6,441
2026	—		4,765		4,765
2027	—		1,344		1,344
Thereafter	—		2,723		2,723
Total minimum lease payments	3,865		38,972		42,837
Financing component	(153)		(7,547)		(7,700)
Net present value of minimum lease payments	3,712		31,425		35,137
Less: current portion of finance and operating lease obligations	(1,161)		(9,819)		(10,980)
Long-term finance and operating lease obligations	$	2,551	$	21,606	$	24,157

The financing component for operating lease obligations represents the effect of discounting the lease payments to their present value.

Certain subsidiaries of the Company have operating leases for facilities from third party companies that are owned, in whole or part, by employees of the subsidiaries. The terms and rental rates of these leases are at or below market rental rates. As of September 30, 2022, the minimum lease payments required under these leases totaled $7.7 million, which are due over the next 4.3 years.

Lease Obligations

Lease Obligations

From time-to-time, the Company enters into non-cancelable leases for some of our facility, vehicle and equipment needs. These leases allow the Company to conserve cash by paying a monthly lease rental fee for the use of facilities, vehicles and equipment rather than purchasing them. The Company’s leases have remaining terms ranging from one to seven years, some of which may include options to extend the leases for up to five years, and some of which may include options to terminate the leases within one year. Currently, all the Company’s leases contain fixed payment terms. The Company may decide to cancel or terminate a lease before the end of its term, in which case we are typically liable to the lessor for the remaining lease payments under the term of the lease. Additionally, all of the Company's month-to-month leases are cancelable, by the Company or the lessor, at any time and are not included in our right-of-use asset or liability. At September 30, 2022, the Company had several leases with residual value guarantees. Typically, the Company has purchase options on the equipment underlying its long-term leases and many of its short-term rental arrangements. The Company may exercise some of these purchase options when the need for equipment is on-going and the purchase option price is attractive. Leases are accounted for as operating or finance leases, depending on the terms of the lease.

The following is a summary of the lease-related assets and liabilities recorded:

		September 30, 2022		December 31, 2021
(in thousands)	Classification on the Consolidated Balance Sheet
Assets
Operating lease right-of-use assets	Operating lease right-of-use assets	$	31,405	$	20,971
Finance lease right-of-use assets	Property and equipment, net of accumulated depreciation	3,457		—
Total right-of-use lease assets		$	34,862	$	20,971
Liabilities
Current
Operating lease obligations	Current portion of operating lease obligations	$	9,819	$	7,765
Finance lease obligations	Current portion of finance lease obligations	1,161		—
Total current obligations		10,980		7,765
Non-current
Operating lease obligations	Operating lease obligations, net of current maturities	21,606		13,230
Finance lease obligations	Finance lease obligations, net of current maturities	2,551		—
Total non-current obligations		24,157		13,230
Total lease obligations		$	35,137	$	20,995

The following is a summary of the lease terms and discount rates:

	September 30, 2022		December 31, 2021
Weighted-average remaining lease term - finance leases	2.1 years		0.0 years
Weighted-average remaining lease term - operating leases	3.7 years		2.9 years
Weighted-average discount rate - finance leases	3.0	%	—	%
Weighted-average discount rate - operating leases	3.9	%	3.9	%

The following is a summary of certain information related to the lease costs for finance and operating leases:

(in thousands)	Three months ended September 30,				Nine months ended September 30,
	2022		2021		2022		2021
Lease cost:
Finance lease cost:
Amortization of right-of-use assets	$	107	$	11	$	841	$	386
Interest on lease liabilities	30		—		105		—
Operating lease cost	3,488		2,515		9,898		7,474
Variable lease costs	102		78		313		233
Total lease cost	$	3,727	$	2,604	$	11,157	$	8,093

The following is a summary of other information and supplemental cash flow information related to finance and operating leases:

	Nine months ended September 30,
(in thousands)	2022		2021
Other information:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	9,779	$	7,635
Right-of-use asset obtained in exchange for new operating lease obligations	$	19,596	$	5,687
Right-of-use asset obtained in exchange for new finance lease obligations	$	510	$	—

The future undiscounted minimum lease payments, as reconciled to the discounted minimum lease obligation indicated on the Company’s consolidated balance sheets, under financial leases, less interest, and under operating leases, less imputed interest, as of September 30, 2022 were as follows:

(in thousands)	Finance Lease Obligations		Operating Lease Obligations		Total Lease Obligations
Remainder of 2022	$	346	$	3,392	$	3,738
2023	1,195		12,057		13,252
2024	2,013		8,561		10,574
2025	311		6,130		6,441
2026	—		4,765		4,765
2027	—		1,344		1,344
Thereafter	—		2,723		2,723
Total minimum lease payments	3,865		38,972		42,837
Financing component	(153)		(7,547)		(7,700)
Net present value of minimum lease payments	3,712		31,425		35,137
Less: current portion of finance and operating lease obligations	(1,161)		(9,819)		(10,980)
Long-term finance and operating lease obligations	$	2,551	$	21,606	$	24,157

The financing component for operating lease obligations represents the effect of discounting the lease payments to their present value.

Certain subsidiaries of the Company have operating leases for facilities from third party companies that are owned, in whole or part, by employees of the subsidiaries. The terms and rental rates of these leases are at or below market rental rates. As of September 30, 2022, the minimum lease payments required under these leases totaled $7.7 million, which are due over the next 4.3 years.