Commitments and Contingencies

12 Months Ended

Dec. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Leases

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 seven 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 2026. In addition, Rockwell occupies 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.

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


	For the year ended December 31,			For the year ended December 31,
	2022			2021
Operating leases
Operating lease cost	$	1,710		$	1,793
Variable lease cost	388			373
Operating lease expense	2,098			2,166
Finance leases
Amortization of right-of-use assets	565			313
Interest on lease obligations	179			99
Finance lease expense	744			412
Short-term lease rent expense	17			17
Total rent expense	$	2,859		$	2,595

Other information
Operating cash flows from operating leases	$	1,772		$	1,772
Operating cash flows from finance leases	$	179		$	99
Financing cash flows from finance leases	$	482		$	255
Right of use assets exchanged for operating lease liabilities	$	768		$	4,217
Right of use assets exchanged for finance lease liabilities	$	—		$	2,431
Weighted-average remaining lease term - operating leases	3.0			3.5
Weighted-average remaining lease term – finance leases	4.4			5.4
Weighted-average discount rate - operating leases	6.4		%	6.3		%
Weighted-average discount rate – finance leases	6.4		%	6.4		%

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


	Operating		Finance
Year ending December 31, 2023	$	1,672	$	668
Year ending December 31, 2024	1,405		672
Year ending December 31, 2025	937		676
Year Ended December 31, 2026	310		666
Year Ended December 31, 2027	121		311
Remaining future payments	—		—
Total	4,445		2,993
Less present value discount	$	(380)	$	(384)
Operating and Finance lease liabilities.	$	4,065	$	2,609

Insurance

The Company evaluates various kinds of risk that it is exposed to in its business. In its evaluation of risk, the Company evaluates options and alternatives to mitigating such risks. For certain insurable risks, Rockwell may acquire insurance policies to protect against potential losses or to partially insure against certain risks. For the Company's subsidiary, Rockwell Transportation, Inc., Rockwell maintains a partially self-insured workers' compensation policy. Under the policy, its self‑insurance retention is $350,000 per occurrence and $621,000 in aggregate coverage for the policy year ending July 1, 2023. The total amount at December 31, 2022 by which retention limits exceed the claims paid and accrued is approximately $534,000 for the policy year ending July 1, 2023. Estimated loss and additional future claims of approximately $306,000 have been reserved and accrued for the year ended December 31, 2022.

As of December 31, 2022, approximately $0.4 million was held in cash collateral and escrow by the insurance carrier for workers’ compensation insurance. At December 31, 2022, amounts held in cash collateral and escrow are included in prepaid expenses and other non-current assets in the consolidated financial statements.

Purchase Obligations

Rockwell has contracts for anticipated future obligations through December 31, 2022 of approximately $31.0 million, which include $29.4 million for concentrate manufacturing and $1.6 million in ancillary supplies.

Litigation

SEC Investigation

As a follow up to certain prior inquiries, the Company received a subpoena from the SEC during the Company’s quarter ended September 30, 2018 requesting, among other things, certain information and documents relating to the status of the Company’s request to the Centers for Medicare & Medicaid Services for separate reimbursement status for Triferic (dialysate), the Company’s reserving methodology for expiring Triferic inventory, and the basis for the Board’s termination of the former Chief Executive Officer, Robert Chioini, and former Chief Financial Officer, Thomas Klema, in 2018. On January 31, 2022, the Company received a letter from the United States Securities and Exchange Commission (the "Commission") concluding it’s investigation and stating that it does not intend to recommend an enforcement action by the Commission against the Company.