Note 7 - Leases

9 Months Ended

Sep. 30, 2024

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

7. Leases

The Company has operating leases for manufacturing and upfit facilities, land and parking lots, warehousing space and certain equipment. The leases have remaining lease terms of less than one year to 15 years, some of which include options to extend the leases for up to 20 years. Such renewal options were not included in the determination of the lease term unless deemed reasonably certain of exercise. The discount rate used in measuring the lease liabilities is based on the Company’s interest rate on its secured Term Loan Credit Agreement. Certain of the Company’s leases contain escalating rental payments based on an index. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

During the three and nine months ended September 30, 2024, the Company closed on a sale leaseback transaction with an unrelated third party. Under this transaction, the Company sold seven properties with a combined net book value of $21,852 for gross proceeds of $64,150, which was reduced by transaction costs of $5,494 for net cash proceeds of approximately $58,656. The properties in the sale leaseback transaction are comprised of three facilities located in Milwaukee, Wisconsin and four additional facilities located in each of Huntley, Illinois; Manchester, Iowa; Rockland, Maine; and Madison Heights, Michigan, totaling approximately 780,000 square feet of manufacturing and upfitting space. The lease agreement has an initial term of 15 years, with two optional 10-year renewal options. The Company recognized a gain of $42,298 on this transaction, which is included in Gain on sale leaseback transaction in the Condensed Consolidated Statements of Operations and Comprehensive Income. Right-of-use assets and lease liabilities recognized related to this sale leaseback transaction were $51,879 and $51,879, respectively. 

Lease Expense

The components of lease expense, which are included in Cost of sales and Selling, general and administrative expenses on the Condensed Consolidated Statements of Operations and Comprehensive Income, were as follows:

	Three Months Ended September 30, 2024		Nine Months Ended September 30, 2024		Three Months Ended September 30, 2023		Nine Months Ended September 30, 2023
Operating lease expense	$	2,126	$	5,303	$	1,545	$	4,354
Short term lease cost	$	341	$	494	$	48	$	316
Total lease cost	$	2,467	$	5,797	$	1,593	$	4,670

Cash Flow

Supplemental cash flow information related to leases is as follows:

	Nine Months Ended September 30, 2024		Nine Months Ended September 30, 2023
Cash paid for amounts included in the measurement of operating lease liabilities	$	5,243	$	4,597
Non-cash lease expense - right-of-use assets	$	4,264	$	3,735
Right-of-use assets obtained in exchange for operating lease obligations	$	55,551	$	3,411

Balance Sheet

Supplemental balance sheet information related to leases is as follows:  

	September 30, 2024			December 31, 2023
Operating Leases
Operating lease right-of-use assets	$	69,295		$	18,008
Other current liabilities		6,848			5,347
Operating lease liabilities		63,802			13,887
Total operating lease liabilities	$	70,650		$	19,234
Weighted Average Remaining Lease Term
Operating leases (in months)		156			53
Weighted Average Discount Rate
Operating leases		7.04	%		5.36	%

Lease Maturities

Maturities of leases were as follows:

Year ending December 31,	Operating Leases
2024 (excluding the nine months ended September 30, 2024)	$	2,920
2025		11,387
2026		9,996
2027		8,185
2028		7,141
Thereafter		70,267
Total Lease Payments		109,896
Less: imputed interest		(39,246	)
Total	$	70,650