Leases

12 Months Ended

Dec. 31, 2024

9. Leases

The Company has entered into operating leases for land, office space, and certain Company vehicles and equipment and has entered into finance leases for certain Company vehicles and equipment. The leases will expire between 2025 and 2045. Right-of-use lease assets and lease liabilities consisted of the following (in millions):


	Balance Sheet Location	December 31,
		2024		2023
Right-of-use assets:
Operating lease	Other assets (non-current)	$	53.7	$	58.0
Finance lease	Property, plant and equipment, net	0.5		2.3
Total right-of-use assets		$	54.2	$	60.3

Lease liabilities:
Current portion of operating lease	Other current liabilities	$	12.9	$	13.5
Non-current portion of operating lease	Other liabilities	43.5		48.6
Finance lease	Debt obligations	0.6		2.4
Total lease liabilities		$	57.0	$	64.5

For the year ended December 31, 2023, the Company recorded an impairment charge to right-of-use-assets of $0.6 million, that primarily related to FCC licenses impaired. Impairment charges are included in Other operating (income) loss in the Consolidated Statements of Operations.

The tables below present financial information associated the Company's leases. The following table summarizes the components of lease expense (in millions):


	Year ended December 31,
		2024		2023
Finance lease cost:
Amortization of right-of-use assets		$	0.4	$	0.4
Interest on lease liabilities		0.1		0.2
Net finance lease cost		0.5		0.6
Operating lease cost		17.5		22.1

Variable lease cost		0.6		0.6
Sublease income		(0.7)		(0.7)
Total non-current lease cost		17.9		22.6
Short-term lease costs		30.0		39.2
Total lease cost		$	47.9	$	61.8

Based on the short-term leases executed as of December 31, 2024, the Company expects that it will incur approximately $9.0 million in estimated short-term lease costs for the year ended December 31, 2025.

Cash flow information related to leases is as follows (in millions):


	Year ended December 31,
		2024		2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases(1)		$	19.3	$	22.8
Operating cash flows for finance leases		$	0.1	$	0.2
Financing cash flows for finance leases		$	0.4	$	0.4

Right-of-use assets obtained in exchange for new lease liabilities:
Operating leases		$	18.5	$	9.3
Finance leases		$	—	$	0.8

(1) For the year ended December 31, 2024, excludes $4.0 million received for a lease modification incentive. See below for additional information.

The weighted-average remaining lease term and the weighted-average discount rate for the Company's leases were as follows:


	Year ended December 31,
	2024		2023
Weighted-average remaining lease term (years) - operating leases	7.4		7.5
Weighted-average remaining lease term (years) - finance leases	2.7		1.6
Weighted-average discount rate - operating leases	6.1	%	5.6	%
Weighted-average discount rate - finance leases	5.3	%	6.8	%

Future minimum lease commitments (undiscounted) as of December 31, 2024, were as follows (in millions):


	Operating Leases		Finance Leases
2025	$	15.6	$	0.3
2026	12.0		0.2
2027	9.4		0.1
2028	6.9		—
2029	4.3		—
Thereafter	21.3		—
Total future minimum lease payments	69.5		0.6
Less: amounts representing interest	(13.1)		—
Total lease liability	$	56.4	$	0.6

On May 1, 2024, a subsidiary of DBMG amended the termination date of three property leases that had an original expiry date of March 31, 2031. In exchange, and as an inducement for DBMG to early terminate, the landlord agreed to pay DBMG $12.0 million in surrender fees in three equal installments, contingent on timely vacate and inspection milestones, of which DBMG has received $4.0 million in surrender fees as of December 31, 2024, with the remaining two $4.0 million payments due to DBMG due within five business days of the vacate dates in 2025 and 2027. After final surrender of the properties, DBMG will have no further obligations under these leases. The Company accounted for this transaction as a lease modification, and recognized a $8.7 million gain on lease modification, which is included in Other operating (income) loss in the Consolidated Statement of Operations for the year ending December 31, 2024.

In November 2021, INNOVATE entered into a ten-year lease arrangement for a special purpose space in Palm Beach, Florida, which was amended in February 2023 to extend the term of the lease to 15 years, with future monthly lease payments of approximately $0.2 million over the entire lease term and annual common area maintenance charges of $0.6 million, both of which are subject to a 3% annual upward adjustment, with total square footage of 25,184, as amended. The lease had not yet commenced for accounting purposes as the space was still under construction, and, therefore, future lease payments were not recorded on the Company's Consolidated Balance Sheets. In December 2023, the Company entered into a sublease agreement with Palm Beach Cultural Innovation Center, Inc. (“PBCIC”), a Florida not-for-profit corporation and related party to Avram A. Glazer, the Chairman of INNOVATE's Board of Directors, who is also on the board of directors of PBCIC. Pursuant to the sublease, PBCIC would have use of the underlying space and, as consideration, PBCIC agreed to undertake all of the tenant’s build-out costs and related obligations under the lease agreement between the Company, as tenant, and RPP Palm Beach Property LP, as landlord. Effective March 29, 2024, the Company assigned the lease, as amended, and the sublease to an affiliate of Mr. Glazer, releasing the Company of all obligations under the lease, as amended, and the sublease. The Company previously recorded $1.1 million in prepaid rent related to this lease, which was written-off in December 2023 upon the execution of the sublease to PBCIC. While there were no new expenses incurred during 2024, the Company also previously incurred other expenses of $1.1 million since inception related to the special purpose space and PBCIC, of which $0.7 million is included in Selling, general and administrative in the Consolidated Statement of Operations for the year ended December 31, 2023.

In December 2021, the Company entered into a five-year lease agreement for corporate office space in West Palm Beach, Florida, that would, on commencement of the lease, require future monthly lease payments of approximately $0.1 million over the entire lease term, subject to 3% annual upward adjustment. This lease had not yet commenced as the building was still under construction, and therefore, other than a $0.2 million deposit included in Other assets as of December 31, 2023, future lease payments were not recorded on the Company's Consolidated Balance Sheets. On March 29, 2024, the Company assigned the lease to Lancer Capital, an entity controlled by Mr. Glazer, releasing the Company of all obligations under the lease. The $0.2 million security deposit on the lease was also assigned to Lancer Capital and written-off in March 2024.

Leases