Lease Obligations

6 Months Ended

Jun. 30, 2023

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 six 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 June 30, 2023, 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 ongoing 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:

		June 30, 2023		December 31, 2022
(in thousands)	Classification on the Consolidated Balance Sheet
Assets
Operating lease right-of-use assets	Operating lease right-of-use assets	$	28,500	$	30,544
Finance lease right-of-use assets	Property and equipment, net of accumulated depreciation	2,741		3,238
Total right-of-use lease assets		$	31,241	$	33,782
Liabilities
Current
Operating lease obligations	Current portion of operating lease obligations	$	9,835	$	9,711
Finance lease obligations	Current portion of finance lease obligations	2,349		1,127
Total current obligations		12,184		10,838
Non-current
Operating lease obligations	Operating lease obligations, net of current maturities	18,635		20,845
Finance lease obligations	Finance lease obligations, net of current maturities	575		2,313
Total non-current obligations		19,210		23,158
Total lease obligations		$	31,394	$	33,996

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

	June 30, 2023		December 31, 2022
Weighted-average remaining lease term - finance leases	1.4 years		1.9 years
Weighted-average remaining lease term - operating leases	3.4 years		3.6 years
Weighted-average discount rate - finance leases	3.0	%	3.0	%
Weighted-average discount rate - operating leases	3.9	%	3.8	%

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

(in thousands)	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Lease cost:
Finance lease cost:
Amortization of right-of-use assets	$	80	$	218	$	1,416	$	656
Interest on lease liabilities	22		47		45		75
Operating lease cost	3,558		3,265		7,148		6,388
Variable lease costs	83		102		172		211
Total lease cost	$	3,743	$	3,632	$	8,781	$	7,330

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

	Six months ended June 30,
(in thousands)	2023		2022
Other information:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	7,259	$	6,355
Right-of-use asset obtained in exchange for new operating lease obligations	$	3,366	$	17,647
Right-of-use asset obtained in exchange for new finance lease obligations	$	—	$	543

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 June 30, 2023 were as follows:

(in thousands)	Finance Lease Obligations		Operating Lease Obligations		Total Lease Obligations
Remainder of 2023	$	598	$	6,835	$	7,433
2024	2,087		10,427		12,514
2025	323		7,693		8,016
2026	—		5,772		5,772
2027	—		1,752		1,752
2028	—		1,162		1,162
Thereafter	—		1,810		1,810
Total minimum lease payments	3,008		35,451		38,459
Financing component	(84)		(6,981)		(7,065)
Net present value of minimum lease payments	2,924		28,470		31,394
Less: current portion of finance and operating lease obligations	(2,349)		(9,835)		(12,184)
Long-term finance and operating lease obligations	$	575	$	18,635	$	19,210

The financing component for finance lease obligations represents the interest component of finance leases that will be recognized as interest expense in future periods. 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 June 30, 2023, the minimum lease payments required under these leases totaled $5.9 million, which are due over the next 3.5 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 six 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 June 30, 2023, 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 ongoing 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:

		June 30, 2023		December 31, 2022
(in thousands)	Classification on the Consolidated Balance Sheet
Assets
Operating lease right-of-use assets	Operating lease right-of-use assets	$	28,500	$	30,544
Finance lease right-of-use assets	Property and equipment, net of accumulated depreciation	2,741		3,238
Total right-of-use lease assets		$	31,241	$	33,782
Liabilities
Current
Operating lease obligations	Current portion of operating lease obligations	$	9,835	$	9,711
Finance lease obligations	Current portion of finance lease obligations	2,349		1,127
Total current obligations		12,184		10,838
Non-current
Operating lease obligations	Operating lease obligations, net of current maturities	18,635		20,845
Finance lease obligations	Finance lease obligations, net of current maturities	575		2,313
Total non-current obligations		19,210		23,158
Total lease obligations		$	31,394	$	33,996

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

	June 30, 2023		December 31, 2022
Weighted-average remaining lease term - finance leases	1.4 years		1.9 years
Weighted-average remaining lease term - operating leases	3.4 years		3.6 years
Weighted-average discount rate - finance leases	3.0	%	3.0	%
Weighted-average discount rate - operating leases	3.9	%	3.8	%

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

(in thousands)	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Lease cost:
Finance lease cost:
Amortization of right-of-use assets	$	80	$	218	$	1,416	$	656
Interest on lease liabilities	22		47		45		75
Operating lease cost	3,558		3,265		7,148		6,388
Variable lease costs	83		102		172		211
Total lease cost	$	3,743	$	3,632	$	8,781	$	7,330

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

	Six months ended June 30,
(in thousands)	2023		2022
Other information:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	7,259	$	6,355
Right-of-use asset obtained in exchange for new operating lease obligations	$	3,366	$	17,647
Right-of-use asset obtained in exchange for new finance lease obligations	$	—	$	543

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 June 30, 2023 were as follows:

(in thousands)	Finance Lease Obligations		Operating Lease Obligations		Total Lease Obligations
Remainder of 2023	$	598	$	6,835	$	7,433
2024	2,087		10,427		12,514
2025	323		7,693		8,016
2026	—		5,772		5,772
2027	—		1,752		1,752
2028	—		1,162		1,162
Thereafter	—		1,810		1,810
Total minimum lease payments	3,008		35,451		38,459
Financing component	(84)		(6,981)		(7,065)
Net present value of minimum lease payments	2,924		28,470		31,394
Less: current portion of finance and operating lease obligations	(2,349)		(9,835)		(12,184)
Long-term finance and operating lease obligations	$	575	$	18,635	$	19,210

The financing component for finance lease obligations represents the interest component of finance leases that will be recognized as interest expense in future periods. 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 June 30, 2023, the minimum lease payments required under these leases totaled $5.9 million, which are due over the next 3.5 years.