Leases

6 Months Ended

Jun. 30, 2022

Rockwell leases its production facilities and administrative offices as well as certain equipment used in its operations including leases on transportation equipment used in the delivery of its products. The lease terms range from monthly to six years. Rockwell occupies a 51,000 square foot facility and a 17,500 square foot facility in Wixom, Michigan under a lease expiring in August 2024. Rockwell also occupies two other manufacturing facilities, a 51,000 square foot facility in Grapevine, Texas under a lease expiring in December 2025, and a 57,000 square foot facility in Greer, South Carolina under a lease expiring February 2023. In addition, Rockwell occupied 4,100 square feet of office space in Hackensack, New Jersey under a lease expiring on October 31, 2024. This lease was subleased on December 15, 2021 with an expiration date of October 31, 2024.

At June 30, 2022, the Company had operating and finance lease liabilities of $6.9 million and right-of-use assets of $6.7 million, which are included in the consolidated balance sheet.

At December 31, 2021, the Company had operating lease liabilities of $7.9 million and right-of-use assets of $7.7 million, which are included in the consolidated balance sheet.

The following summarizes quantitative information about the Company’s operating leases (table in thousands):


	Three Months Ended June 30, 2022			Three Months Ended June 30, 2021			Six Months Ended June 30, 2022			Six Months Ended June 30, 2021
Operating leases
Operating lease cost	$	431		$	432		$	880		$	851
Variable lease cost	92			90			187			192
Operating lease expense	523			522			1,067			1,043
Finance leases
Amortization of right-of-use assets	141			67			282			112
Interest on lease obligations	45			20			92			33
Finance lease expense	186			87			374			145
Short-term lease rent expense	4			4			8			8
Total rent expense	$	713		$	613		$	1,449		$	1,196

Other information
Operating cash flows from operating leases	$	447		$	428		$	911		$	853
Operating cash flows from finance leases	$	45		$	21		$	92		$	34
Financing cash flows from finance leases	$	119		$	56		$	237		$	93
Right of use assets exchanged for operating lease liabilities	$	—		$	1,476		$	—		$	3,371
Right of use assets exchanged for finance lease liabilities	$	—		$	316		$	—		$	777
Weighted-average remaining lease term – operating leases	3.2			3.5			3.2			3.5
Weighted-average remaining lease term – finance leases	4.9			5.5			4.9			5.5
Weighted-average discount rate – operating leases	6.3		%	6.2		%	6.3		%	6.2		%
Weighted-average discount rate – finance leases	6.4		%	5.5		%	6.4		%	5.5		%

Future minimum rental payments under operating lease agreements are as follows (in thousands):


	Operating		Finance
Year ending December 31, 2022 (remaining)	$	861	$	331
Year ending December 31, 2023	1,456		669
Year ending December 31, 2024	1,114		672
Year ending December 31, 2025	637		676
Year ending December 31, 2026	260		666
Remaining future payments	120		310
Total	$	4,448	$	3,324
Less present value discount	(420)		(470)
Operating and finance lease liabilities	$	4,028	$	2,854

Leases

At June 30, 2022, the Company had operating and finance lease liabilities of $6.9 million and right-of-use assets of $6.7 million, which are included in the consolidated balance sheet.

At December 31, 2021, the Company had operating lease liabilities of $7.9 million and right-of-use assets of $7.7 million, which are included in the consolidated balance sheet.

The following summarizes quantitative information about the Company’s operating leases (table in thousands):


	Three Months Ended June 30, 2022			Three Months Ended June 30, 2021			Six Months Ended June 30, 2022			Six Months Ended June 30, 2021
Operating leases
Operating lease cost	$	431		$	432		$	880		$	851
Variable lease cost	92			90			187			192
Operating lease expense	523			522			1,067			1,043
Finance leases
Amortization of right-of-use assets	141			67			282			112
Interest on lease obligations	45			20			92			33
Finance lease expense	186			87			374			145
Short-term lease rent expense	4			4			8			8
Total rent expense	$	713		$	613		$	1,449		$	1,196

Other information
Operating cash flows from operating leases	$	447		$	428		$	911		$	853
Operating cash flows from finance leases	$	45		$	21		$	92		$	34
Financing cash flows from finance leases	$	119		$	56		$	237		$	93
Right of use assets exchanged for operating lease liabilities	$	—		$	1,476		$	—		$	3,371
Right of use assets exchanged for finance lease liabilities	$	—		$	316		$	—		$	777
Weighted-average remaining lease term – operating leases	3.2			3.5			3.2			3.5
Weighted-average remaining lease term – finance leases	4.9			5.5			4.9			5.5
Weighted-average discount rate – operating leases	6.3		%	6.2		%	6.3		%	6.2		%
Weighted-average discount rate – finance leases	6.4		%	5.5		%	6.4		%	5.5		%

Future minimum rental payments under operating lease agreements are as follows (in thousands):


	Operating		Finance
Year ending December 31, 2022 (remaining)	$	861	$	331
Year ending December 31, 2023	1,456		669
Year ending December 31, 2024	1,114		672
Year ending December 31, 2025	637		676
Year ending December 31, 2026	260		666
Remaining future payments	120		310
Total	$	4,448	$	3,324
Less present value discount	(420)		(470)
Operating and finance lease liabilities	$	4,028	$	2,854