Leases

9 Months Ended

Sep. 30, 2023

Leases [Abstract]

Leases

Leases

Lessee Accounting

The Company leases certain office spaces, warehouses, facilities, vehicles and equipment. Our leases have maturity dates ranging from September 2023 to November 2034. Leases with an initial term of twelve months or less are not recorded on the balance sheet. Operating lease right-of-use (“ROU”) assets are classified as property, plant and equipment, net in the condensed consolidated balance sheets. Finance lease ROU assets are classified as other assets in the condensed consolidated balance sheets. Operating lease liabilities are classified as operating lease liabilities, current and operating lease liabilities, non-current. Finance lease liabilities are classified as other current liabilities and other long-term liabilities in the consolidated balances sheets.

We incurred $13.8 and $4.7 of rental expense under operating leases for the three months ended September 30, 2023 and 2022, and $23.6 and $12.3 for the nine months ended September 30, 2023 and 2022, respectively. Certain operating leases contain rent escalation clauses and lease concessions that require additional rental payments in the later years of the term. Rent expense for these types of leases is recognized on a straight-line basis over the minimum lease term. Adjustments for straight-line rental expense for the respective periods was not material and as such, the majority of expense recognized was reflected in cash provided by operating activities for the respective periods. This expense consisted primarily of payments for base rent on building and equipment leases. Payments related to short-term lease costs and taxes and variable service charges on leased properties were immaterial. In addition, we have the right, but no obligation, to renew certain leases for various renewal terms.

We incurred $0.2 and $0.1 of finance lease interest for the three months ended September 30, 2023 and 2022, and $0.4 and $0.2 for the nine months ended September 30, 2023 and 2022, respectively.

The following table presents the lease balances within our condensed consolidated balance sheets, weighted average remaining lease term and weighted average discount rates related to our leases:

Lease Assets and Liabilities	September 30, 2023		December 31, 2022
Assets
Operating lease, net	$	66.4	$	21.1
Finance lease, net	7.9		3.0
Total lease assets	$	74.3	$	24.1
Liabilities
Current:
Operating lease liabilities	$	16.4	$	5.4
Finance lease liabilities	1.6		1.7
Non-current:
Operating lease liabilities	50.0		15.6
Finance lease liabilities	8.5		1.5
Total lease liabilities	$	76.5	$	24.2
Weighted-average remaining lease terms
Operating leases	5.1 years
Finance leases	6.1 years
Weighted-average discount rate
Operating leases	6.6%
Finance leases	6.7%

The following table summarizes future minimum lease payments for non-cancelable operating leases and for finance leases as of September 30, 2023:

	Finance		Operating
2023	$	1.1	$	5.0
2024	2.5		19.7
2025	1.4		15.6
2026	1.2		10.8
2027	1.1		7.0
Thereafter (1)	5.9		19.8
Total future minimum lease payments	$	13.2	$	77.9
Less: Present value discount	(3.1)		(11.5)
Lease Liability	$	10.1	$	66.4

_______________

(1)     As of September 30, 2023, future minimum lease payments for non-cancelable operating leases for the period subsequent to 2027 relate to twenty leased facilities.

Lessor Accounting

We lease equipment manufactured by Chart primarily through our Cryo-Lease program as sales-type and operating leases. As of September 30, 2023 and December 31, 2022, our short-term net investment in sales-type leases was $18.4 and $14.5, respectively, and is included in other current assets in our condensed consolidated balance sheets. Our long-term net investment in sales type leases was $54.0 and $44.3 as of September 30, 2023 and December 31, 2022, respectively, and is included in other assets in our condensed consolidated balance sheets. For sales type leases, interest income was $0.8 and $0.6 in the condensed consolidated statements of operations and comprehensive income (loss) for the three months ended September 30, 2023 and 2022, and $2.3 and $1.7 for the nine months ended September 30, 2023 and 2022, respectively.

Operating leases offered by Chart may include early termination options. At the end of a lease, a lessee generally has the option to either extend the lease, purchase the underlying equipment for a fixed price or return it to Chart. The lease agreements clearly define applicable return conditions and remedies for non-compliance to ensure that leased equipment will be in good operating condition upon return.

The following table represents sales from sales-type and operating leases:

	Three Months Ended September 30,
	2023		2022
Sales-type leases	$	6.0	$	7.3
Operating leases	1.9		1.0
Total sales from leases	$	7.9	$	8.3
	Nine Months Ended September 30, 2023
	2023		2022
Sales-type leases	$	25.2	$	18.5
Operating leases	4.2		3.0
Total sales from leases	$	29.4	$	21.5

The following table represents scheduled payments for sales-type leases as of September 30, 2023:

2023	$	3.9
2024	18.6
2025	19.0
2026	16.0
2027	9.6
Thereafter	25.0
Total	92.1
Less: unearned income	19.7
Total	$	72.4

The following table represents the cost of equipment leased to others:

	September 30, 2023		December 31, 2022
Equipment leased to others, cost	$	20.5	$	17.3
Less: accumulated depreciation	4.3		3.1
Equipment leased to others, net	$	16.2	$	14.2

The following table represents payments due for operating leases as of September 30, 2023:

2023	$	0.3
2024	0.2
2025	0.1
2026	—
2027	—
Thereafter	—
Total	$	0.6

Leases

Leases

Lessee Accounting

The Company leases certain office spaces, warehouses, facilities, vehicles and equipment. Our leases have maturity dates ranging from September 2023 to November 2034. Leases with an initial term of twelve months or less are not recorded on the balance sheet. Operating lease right-of-use (“ROU”) assets are classified as property, plant and equipment, net in the condensed consolidated balance sheets. Finance lease ROU assets are classified as other assets in the condensed consolidated balance sheets. Operating lease liabilities are classified as operating lease liabilities, current and operating lease liabilities, non-current. Finance lease liabilities are classified as other current liabilities and other long-term liabilities in the consolidated balances sheets.

We incurred $13.8 and $4.7 of rental expense under operating leases for the three months ended September 30, 2023 and 2022, and $23.6 and $12.3 for the nine months ended September 30, 2023 and 2022, respectively. Certain operating leases contain rent escalation clauses and lease concessions that require additional rental payments in the later years of the term. Rent expense for these types of leases is recognized on a straight-line basis over the minimum lease term. Adjustments for straight-line rental expense for the respective periods was not material and as such, the majority of expense recognized was reflected in cash provided by operating activities for the respective periods. This expense consisted primarily of payments for base rent on building and equipment leases. Payments related to short-term lease costs and taxes and variable service charges on leased properties were immaterial. In addition, we have the right, but no obligation, to renew certain leases for various renewal terms.

We incurred $0.2 and $0.1 of finance lease interest for the three months ended September 30, 2023 and 2022, and $0.4 and $0.2 for the nine months ended September 30, 2023 and 2022, respectively.

The following table presents the lease balances within our condensed consolidated balance sheets, weighted average remaining lease term and weighted average discount rates related to our leases:

Lease Assets and Liabilities	September 30, 2023		December 31, 2022
Assets
Operating lease, net	$	66.4	$	21.1
Finance lease, net	7.9		3.0
Total lease assets	$	74.3	$	24.1
Liabilities
Current:
Operating lease liabilities	$	16.4	$	5.4
Finance lease liabilities	1.6		1.7
Non-current:
Operating lease liabilities	50.0		15.6
Finance lease liabilities	8.5		1.5
Total lease liabilities	$	76.5	$	24.2
Weighted-average remaining lease terms
Operating leases	5.1 years
Finance leases	6.1 years
Weighted-average discount rate
Operating leases	6.6%
Finance leases	6.7%

The following table summarizes future minimum lease payments for non-cancelable operating leases and for finance leases as of September 30, 2023:

	Finance		Operating
2023	$	1.1	$	5.0
2024	2.5		19.7
2025	1.4		15.6
2026	1.2		10.8
2027	1.1		7.0
Thereafter (1)	5.9		19.8
Total future minimum lease payments	$	13.2	$	77.9
Less: Present value discount	(3.1)		(11.5)
Lease Liability	$	10.1	$	66.4

_______________

(1)     As of September 30, 2023, future minimum lease payments for non-cancelable operating leases for the period subsequent to 2027 relate to twenty leased facilities.

Lessor Accounting

We lease equipment manufactured by Chart primarily through our Cryo-Lease program as sales-type and operating leases. As of September 30, 2023 and December 31, 2022, our short-term net investment in sales-type leases was $18.4 and $14.5, respectively, and is included in other current assets in our condensed consolidated balance sheets. Our long-term net investment in sales type leases was $54.0 and $44.3 as of September 30, 2023 and December 31, 2022, respectively, and is included in other assets in our condensed consolidated balance sheets. For sales type leases, interest income was $0.8 and $0.6 in the condensed consolidated statements of operations and comprehensive income (loss) for the three months ended September 30, 2023 and 2022, and $2.3 and $1.7 for the nine months ended September 30, 2023 and 2022, respectively.

Operating leases offered by Chart may include early termination options. At the end of a lease, a lessee generally has the option to either extend the lease, purchase the underlying equipment for a fixed price or return it to Chart. The lease agreements clearly define applicable return conditions and remedies for non-compliance to ensure that leased equipment will be in good operating condition upon return.

The following table represents sales from sales-type and operating leases:

	Three Months Ended September 30,
	2023		2022
Sales-type leases	$	6.0	$	7.3
Operating leases	1.9		1.0
Total sales from leases	$	7.9	$	8.3
	Nine Months Ended September 30, 2023
	2023		2022
Sales-type leases	$	25.2	$	18.5
Operating leases	4.2		3.0
Total sales from leases	$	29.4	$	21.5

The following table represents scheduled payments for sales-type leases as of September 30, 2023:

2023	$	3.9
2024	18.6
2025	19.0
2026	16.0
2027	9.6
Thereafter	25.0
Total	92.1
Less: unearned income	19.7
Total	$	72.4

The following table represents the cost of equipment leased to others:

	September 30, 2023		December 31, 2022
Equipment leased to others, cost	$	20.5	$	17.3
Less: accumulated depreciation	4.3		3.1
Equipment leased to others, net	$	16.2	$	14.2

The following table represents payments due for operating leases as of September 30, 2023:

2023	$	0.3
2024	0.2
2025	0.1
2026	—
2027	—
Thereafter	—
Total	$	0.6

Leases

Leases

Lessee Accounting

The Company leases certain office spaces, warehouses, facilities, vehicles and equipment. Our leases have maturity dates ranging from September 2023 to November 2034. Leases with an initial term of twelve months or less are not recorded on the balance sheet. Operating lease right-of-use (“ROU”) assets are classified as property, plant and equipment, net in the condensed consolidated balance sheets. Finance lease ROU assets are classified as other assets in the condensed consolidated balance sheets. Operating lease liabilities are classified as operating lease liabilities, current and operating lease liabilities, non-current. Finance lease liabilities are classified as other current liabilities and other long-term liabilities in the consolidated balances sheets.

We incurred $13.8 and $4.7 of rental expense under operating leases for the three months ended September 30, 2023 and 2022, and $23.6 and $12.3 for the nine months ended September 30, 2023 and 2022, respectively. Certain operating leases contain rent escalation clauses and lease concessions that require additional rental payments in the later years of the term. Rent expense for these types of leases is recognized on a straight-line basis over the minimum lease term. Adjustments for straight-line rental expense for the respective periods was not material and as such, the majority of expense recognized was reflected in cash provided by operating activities for the respective periods. This expense consisted primarily of payments for base rent on building and equipment leases. Payments related to short-term lease costs and taxes and variable service charges on leased properties were immaterial. In addition, we have the right, but no obligation, to renew certain leases for various renewal terms.

We incurred $0.2 and $0.1 of finance lease interest for the three months ended September 30, 2023 and 2022, and $0.4 and $0.2 for the nine months ended September 30, 2023 and 2022, respectively.

The following table presents the lease balances within our condensed consolidated balance sheets, weighted average remaining lease term and weighted average discount rates related to our leases:

Lease Assets and Liabilities	September 30, 2023		December 31, 2022
Assets
Operating lease, net	$	66.4	$	21.1
Finance lease, net	7.9		3.0
Total lease assets	$	74.3	$	24.1
Liabilities
Current:
Operating lease liabilities	$	16.4	$	5.4
Finance lease liabilities	1.6		1.7
Non-current:
Operating lease liabilities	50.0		15.6
Finance lease liabilities	8.5		1.5
Total lease liabilities	$	76.5	$	24.2
Weighted-average remaining lease terms
Operating leases	5.1 years
Finance leases	6.1 years
Weighted-average discount rate
Operating leases	6.6%
Finance leases	6.7%

The following table summarizes future minimum lease payments for non-cancelable operating leases and for finance leases as of September 30, 2023:

	Finance		Operating
2023	$	1.1	$	5.0
2024	2.5		19.7
2025	1.4		15.6
2026	1.2		10.8
2027	1.1		7.0
Thereafter (1)	5.9		19.8
Total future minimum lease payments	$	13.2	$	77.9
Less: Present value discount	(3.1)		(11.5)
Lease Liability	$	10.1	$	66.4

_______________

(1)     As of September 30, 2023, future minimum lease payments for non-cancelable operating leases for the period subsequent to 2027 relate to twenty leased facilities.

Lessor Accounting

We lease equipment manufactured by Chart primarily through our Cryo-Lease program as sales-type and operating leases. As of September 30, 2023 and December 31, 2022, our short-term net investment in sales-type leases was $18.4 and $14.5, respectively, and is included in other current assets in our condensed consolidated balance sheets. Our long-term net investment in sales type leases was $54.0 and $44.3 as of September 30, 2023 and December 31, 2022, respectively, and is included in other assets in our condensed consolidated balance sheets. For sales type leases, interest income was $0.8 and $0.6 in the condensed consolidated statements of operations and comprehensive income (loss) for the three months ended September 30, 2023 and 2022, and $2.3 and $1.7 for the nine months ended September 30, 2023 and 2022, respectively.

Operating leases offered by Chart may include early termination options. At the end of a lease, a lessee generally has the option to either extend the lease, purchase the underlying equipment for a fixed price or return it to Chart. The lease agreements clearly define applicable return conditions and remedies for non-compliance to ensure that leased equipment will be in good operating condition upon return.

The following table represents sales from sales-type and operating leases:

	Three Months Ended September 30,
	2023		2022
Sales-type leases	$	6.0	$	7.3
Operating leases	1.9		1.0
Total sales from leases	$	7.9	$	8.3
	Nine Months Ended September 30, 2023
	2023		2022
Sales-type leases	$	25.2	$	18.5
Operating leases	4.2		3.0
Total sales from leases	$	29.4	$	21.5

The following table represents scheduled payments for sales-type leases as of September 30, 2023:

2023	$	3.9
2024	18.6
2025	19.0
2026	16.0
2027	9.6
Thereafter	25.0
Total	92.1
Less: unearned income	19.7
Total	$	72.4

The following table represents the cost of equipment leased to others:

	September 30, 2023		December 31, 2022
Equipment leased to others, cost	$	20.5	$	17.3
Less: accumulated depreciation	4.3		3.1
Equipment leased to others, net	$	16.2	$	14.2

The following table represents payments due for operating leases as of September 30, 2023:

2023	$	0.3
2024	0.2
2025	0.1
2026	—
2027	—
Thereafter	—
Total	$	0.6