LEASES

3 Months Ended

Mar. 31, 2025

The Company determines if an arrangement is a lease at its inception. The Company considers any contract where there is an identified asset as to which the Company has the right to control its use in determining whether the contract contains a lease. An operating lease ROU asset represents the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are to be recognized at the commencement date based on the present value of lease payments over the lease term. As all of the Company’s operating leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available on the commencement date in determining the present value of lease payments. We estimate the incremental borrowing rate based on a yield curve analysis, utilizing the interest rate derived from the fair value analysis of our credit facility and adjusting it for factors that appropriately reflect the profile of secured borrowing over the expected term of the lease. The operating lease ROU assets include any lease payments made prior to the rent commencement date and exclude lease incentives. Our leases have remaining lease terms of one year to 20 years. Lease terms may include options to extend the lease term used in determining the lease obligation when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments are recognized on a straight-line basis over the lease term for operating leases.

On December 12, 2024, the Company entered into a lease for approximately 65,000 square feet of space to serve as the Company’s new campus in Hicksville, New York. The lease term is currently planned to commence on or about August 1, 2025, with an initial lease term of 15 years and 9 months. The lease contains a renewal option allowing for either a 10-year renewal or two five-year renewals. The Company signed the lease commitment on January 1, 2025. However, the Company will not take possession until the lease commencement date.

The following table presents components of lease cost and classification on the Condensed Consolidated Statements of Operations:

		Three Months Ended March 31,
in thousands	Consolidated Statement of Operations Classification	2025		2024
Operating Lease Cost	Selling, general and administrative	$	4,989	$	4,800
Finance lease cost
Amortization of leased assets	Depreciation and amortization		418		369
Interest on lease Liabilities	Interest expense		582		487
Variable lease cost	Selling, general and administrative		216		88
		$	6,205	$	5,744

The net change in ROU asset and operating lease liability is included in the net change in other assets in the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2025 and 2024.

The net change in ROU asset and finance lease liability is split between principal payments, interest expense and amortization expense. Principal payments are classified in the financing section, interest expense is included in net income and amortization expense is broken out separately in the operating section of the Consolidated Statements of Cash Flows.

Supplemental cash flow information and non-cash activity related to our leases are as follows:

	Three Months Ended March 31,
	2025			2024
Cash flow information:
Cash paid for amounts included in the measurement of lease liabilities
Operating Cash Flows - operating leases	$	4,783		$	4,495
Operating Cash Flows - finance leases	$	582		$	487
Financing Cash Flows - finance leases	$	(1,108	)	$	-

Non-cash activity:
Lease liabilities arising from obtaining right-of-use assets
Operating leases	$	-		$	15,714
Finance leases	$	-		$	12,570

During the three months ended March 31, 2025, the Company did not enter into any new operating or finance leases and did not make any lease modifications.

Weighted-average remaining lease term and discount rate for our leases are as follows:

	As of March 31,
	2025			2024
Weighted-average remaining lease term
Operating leases	12.76 years			12.51 years
Finance leases	16.19 years			17.08 years

Weighted-average discount rate
Operating leases		6.59	%		6.84	%
Finance leases		7.69	%		7.71	%

Maturities of lease liabilities by fiscal year for our leases as of March 31, 2025, are as follows:

	Operating Leases			Finance Leases
Year ending December 31,
2025 (excluding the three months ending March 31, 2025)	$	13,504		$	1,033
2026		18,894			2,817
2027		18,140			2,918
2028		18,973			3,023
2029		17,237			3,132
2030		14,438			3,244
Thereafter		117,072			40,174
Total lease payments		218,258			56,341
Less: imputed interest		(72,324	)		(25,971	)
Present value of lease liabilities	$	145,934		$	30,370