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Leases
12 Months Ended
Dec. 31, 2022
Leases [Abstract]  
Leases

9. Leases

The Company determines if a contractual arrangement qualifies as a lease at inception. The Company’s leases primarily relate to facilities, vehicles, equipment, and certain contract manufacturing agreements. Lease assets represent the Company’s right to use an underlying asset for the lease term, while lease liabilities represent the obligation to make lease payments arising from the lease. Lease assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company’s incremental borrowing rate is used as a discount rate, based on the information available at the commencement date, in determining the present value of lease payments. Lease assets also include the impact of any prepayments made and are reduced by the impact of any lease incentives.

 

The Company does not recognize lease liabilities or lease assets on the balance sheet for short-term leases (leases with a lease term of twelve months or less as of the commencement date). Rather, any short-term lease payments are recognized as an expense on a straight-line basis over the lease term. The current period short-term lease expense reasonably reflects our short-term lease commitments.

 

For all classifications of leases, the Company combines lease and non-lease components to account for them as a single lease component. Variable lease payments are excluded from the lease liability and recognized in the period in which the obligation is incurred. Additionally, lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise the option.

 

A summary of the Company’s lease portfolio as of December 31, 2022, and 2021, is presented in the table below:

 

(U.S. Dollars, in thousands, except lease term and discount rate)

 

Classification

 

December 31, 2022

 

 

December 31, 2021

 

Assets

 

 

 

 

 

 

 

 

Operating leases

 

Other long-term assets

 

$

6,788

 

 

$

3,155

 

Finance leases

 

Property, plant and equipment, net

 

 

17,360

 

 

 

18,600

 

Total lease assets

 

 

 

$

24,148

 

 

$

21,755

 

Liabilities

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

 

Operating leases

 

Other current liabilities

 

$

1,638

 

 

$

1,834

 

Finance leases

 

Current portion of finance lease liability

 

 

652

 

 

 

2,590

 

Long-term

 

 

 

 

 

 

 

 

Operating leases

 

Other long-term liabilities

 

 

5,376

 

 

 

1,443

 

Finance leases

 

Long-term portion of finance lease liability

 

 

19,239

 

 

 

19,890

 

Total lease liabilities

 

 

 

$

26,905

 

 

$

25,757

 

 

 

 

 

 

 

 

 

 

Weighted Average Remaining Lease Term

 

 

 

 

 

 

 

 

Operating leases

 

 

 

4.5 years

 

 

3.3 years

 

Finance leases

 

 

 

17.6 years

 

 

17.0 years

 

 

 

 

 

 

 

 

 

 

Weighted Average Discount Rate

 

 

 

 

 

 

 

 

Operating leases

 

 

 

 

4.0

%

 

 

2.6

%

Finance leases

 

 

 

 

4.4

%

 

 

4.2

%

 

The components of lease costs were as follows:

 

(U.S. Dollars, in thousands)

 

For the Year Ended December 31, 2022

 

 

For the Year Ended December 31, 2021

 

 

For the Year Ended December 31, 2020

 

Finance lease costs:

 

 

 

 

 

 

 

 

 

Amortization of right-of-use assets

 

$

1,238

 

 

$

2,049

 

 

$

1,766

 

Interest on finance lease liabilities

 

 

890

 

 

 

933

 

 

 

940

 

Operating lease costs

 

 

2,126

 

 

 

2,234

 

 

 

2,235

 

Short-term lease costs

 

 

152

 

 

 

213

 

 

 

230

 

Variable lease costs

 

 

932

 

 

 

815

 

 

 

673

 

Total lease costs

 

$

5,338

 

 

$

6,244

 

 

$

5,844

 

 

Supplemental cash flow information related to leases was as follows:

 

(U.S. Dollars, in thousands)

 

For the Year Ended December 31, 2022

 

 

For the Year Ended December 31, 2021

 

 

For the Year Ended December 31, 2020

 

Cash paid for amounts included in the measurement of lease liabilities

 

 

 

 

 

 

 

 

 

Operating cash flows from operating leases

 

$

3,805

 

 

$

4,627

 

 

$

4,299

 

Operating cash flows from finance leases

 

 

885

 

 

 

907

 

 

 

689

 

Financing cash flows from finance leases

 

 

2,594

 

 

 

537

 

 

 

323

 

Right-of-use assets obtained in exchange for lease obligations

 

 

 

 

 

 

 

 

 

Operating leases

 

 

5,603

 

 

 

589

 

 

 

959

 

Finance leases

 

 

 

 

 

149

 

 

 

1,949

 

 

A summary of the Company’s remaining lease liabilities as of December 31, 2022, is included below:

 

(U.S. Dollars, in thousands)

 

Operating
Leases

 

 

Finance
Leases

 

2023

 

$

1,821

 

 

$

1,508

 

2024

 

 

1,587

 

 

 

1,538

 

2025

 

 

1,497

 

 

 

1,543

 

2026

 

 

1,411

 

 

 

1,562

 

2027

 

 

1,211

 

 

 

1,593

 

Thereafter

 

 

129

 

 

 

21,021

 

Total undiscounted value of lease liabilities

 

 

7,656

 

 

 

28,765

 

Less: Interest

 

 

(642

)

 

 

(8,874

)

Present value of lease liabilities

 

$

7,014

 

 

$

19,891

 

 

 

 

 

 

 

 

Current portion of lease liabilities

 

$

1,638

 

 

$

652

 

Long-term portion of lease liabilities

 

 

5,376

 

 

 

19,239

 

Total lease liabilities

 

$

7,014

 

 

$

19,891