Note 10 - Leases

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Lessee Operating and Finance Leases [Text Block]

10. LEASES

The Company leases various property and equipment under operating lease arrangements. On January 1, 2019, the Company adopted Topic 842 and ASU 2018-11 using the cumulative effect method and has elected to apply each available practical expedient. The standard requires companies to recognize operating lease assets and liabilities on the balance sheet and to disclose key information regarding leasing arrangements. The Company has elected to apply the short-term lease exception to all leases of one year or less.

 As of December 31, 2022, the right-of-use (“ROU”) asset had a balance of $16,396 which is included in the “Operating lease right-of-use assets” line item of these consolidated financial statements and current and non-current lease liabilities relating to the ROU asset of $1,882 and $16,696, respectively, and are included in the “Current portion of operating lease obligations” and “Long-term operating lease obligations, net of current portion” line items of these consolidated financial statements. As of December 31, 2021, the ROU asset had a balance of $18,029 and current and non-current lease liabilities relating to the ROU asset of $1,775 and $18,405, respectively. The discount rates used for leases accounted for under Topic 842 are based on an interest rate yield curve developed for the leases in the Company’s lease portfolio. 

Lease terms generally range from 3 to 15 years with renewal options for extended terms. Some of the Company’s facility leases include options to renew. The exercise of the renewal options is at the Company’s discretion. Therefore, the majority of renewals to extend the lease terms are not included in ROU assets and lease liabilities as they are not reasonably certain of exercise. The Company regularly evaluates the renewal options and includes them in the lease term when the Company is reasonably certain to exercise them. Certain leases contain rent escalation clauses 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 lease term. Operating rental expense for the years ended December 31, 2022 and 2021 was $4,253 and $4,302, respectively.

In addition, the Company has entered into finance lease arrangements to finance property and equipment and assumed finance lease obligations in connection with certain acquisitions. Finance rental expense for the years ended December 31, 2022 and 2021 was $1,639 and $1,379, respectively.

Amortization expense recorded in connection with assets recorded under finance leases was $1,172 and $984 for the years ended December 31, 2022 and 2021, respectively.

Quantitative information regarding the Company’s leases is as follows:

	Year Ended December 31,
	2022			2021
Components of lease cost
Finance lease cost components:
Amortization of finance lease assets	$	1,172		$	984
Interest on finance lease liabilities		467			395
Total finance lease costs		1,639			1,379
Operating lease cost components:
Operating lease cost		2,839			2,965
Short-term lease cost		707			654
Variable lease cost (1)		898			870
Sublease income		(191	)		(187	)
Total operating lease costs		4,253			4,302
Total lease cost	$	5,892		$	5,681
Supplemental cash flow information related to our operating leases is as follows for the twelve months ended December 31, 2022 and 2021:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow from operating leases	$	3,496		$	3,581
Right-of-use assets obtained in exchange for new
operating lease liabilities	$	187		$	907
Weighted-average remaining lease term-finance leases at end of period (in years)		3.3			1.9
Weighted-average remaining lease term-operating leases at end of period (in years)		8.1			8.9
Weighted-average discount rate-finance leases at end of period		6.0	%		6.3	%
Weighted-average discount rate-operating leases at end of period		8.7	%		8.6	%

(1) Variable lease costs consist primarily of taxes, insurance, utilities, and common area or other maintenance costs for the Company’s leased facilities and equipment.

Amortization associated with new right-of-use assets obtained in exchange for new operating lease liabilities is $20 and $270 for the years ended December 31, 2022 and 2021, respectively. 

As of December 31, 2022, future minimum lease payments under finance leases and operating leases were as follows:

	Finance			Operating
	Leases			Leases			Total
2023	$	2,372		$	3,453		$	5,825
2024		1,392			2,998			4,390
2025		986			3,064			4,050
2026		774			3,059			3,833
2027		671			3,098			3,769
2028 and thereafter		1,015			10,948			11,963
Total lease payments		7,210			26,620			33,830
Less—portion representing interest		(976	)		(8,042	)		(9,018	)
Present value of lease obligations		6,234			18,578			24,812
Less—current portion of lease obligations		(2,008	)		(1,882	)		(3,890	)
Long-term portion of lease obligations	$	4,226		$	16,696		$	20,922