Leases

12 Months Ended

Dec. 31, 2023

Leases

Leases

Note 17 - Leases

Lease Obligations

We determine if an arrangement is a lease at inception. Operating lease right-of-use (“ROU”) assets and liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use our estimated incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. Additionally, we use the portfolio approach in determining the discount rate used to present value lease payments. We give consideration to our 2027 Notes, line of credit, macroeconomic factors as well as publicly available data for instruments with similar characteristics when estimating our incremental borrowing rates. The ROU asset also includes any lease payments made and initial direct costs incurred and excludes lease incentives.

We have operating leases for office space and logistical functions. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. For leases beginning on or after January 1, 2019, we account for lease components separately from non-lease components for all asset classes.

Our leases have remaining terms of less than one to approximately 10 years, some of which include one or more options to renew for up to five years, and some of which include options to terminate the leases within one year. The exercise of lease renewal options is at our sole discretion and such options are included in ROU assets and liabilities for renewal periods that are reasonably certain of exercise. Certain of our lease agreements include stated rental payment escalations. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. We had no finance leases as of December 31, 2023.

Leases (in thousands)	Classification	December 31, 2023		December 31, 2022
Assets
Operating lease assets	Other assets	$	36,155	$	38,370
Liabilities
Current
Operating	Other current liabilities	$	7,938	$	6,357
Noncurrent
Operating	Other long-term liabilities		33,550		37,143
Total lease liabilities		$	41,488	$	43,500

The components of operating lease expense were as follows for the years ended December 31 (in thousands):

	Classification	2023		2022		2021
Operating lease expense	Sales, general and administrative expenses (1)	$	6,659	$	4,388	$	3,820
	Research and development expense		3,366		4,315		3,675
Total operating lease expense (2)		$	10,025	$	8,703	$	7,495

(1) An immaterial portion of operating lease expense is included within cost of sales.

(2) Includes short-term leases, which are immaterial.

Other information related to leases was as follows (in thousands, except lease term and discount rate):

	Twelve Months Ended			Twelve Months Ended
	December 31, 2023			December 31, 2022
Supplemental Cash Flows Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	8,846		$	9,216
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases		5,927			21,815
Weighted average remaining lease term:
Operating leases		7.1	years		7.2	years
Weighted average discount rate:
Operating leases		6.05	%		5.44	%

Future minimum lease payments under non-cancellable leases as of December 31, 2023 were as follows (in thousands):

	Operating
2024		10,234
2025		9,864
2026		6,218
2027		3,915
2028		3,855
Thereafter		19,166
Total minimum lease payments		53,252
Less: Amount representing interest		(11,764)
Present value of lease payments	$	41,488

As of December 31, 2023, we have entered into an additional lease that has not yet commenced, with estimated future minimum lease payments totaling $20.8 million over 12 years.