Financing and Operating Leases

12 Months Ended

Dec. 31, 2023

Financing and Operating Leases

Financing and Operating Leases

9. Financing and Operating Leases

Right-of-use (“ROU”) represents the right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. A lease is deemed to exist when the Company has the right to control the use of identified property, plant or equipment, as conveyed through a contract, for a certain period of time and consideration paid. The right to control is deemed to occur when the Company has the right to obtain substantially all of the economic benefits of the identified assets and the right to direct the use of such assets. Certain leases contain escalation provisions and/or renewal options, giving the Company

the right to extend the leases by up to 10 years. However, these options are generally not reflected in the calculation of the ROU assets and lease liabilities due to uncertainty surrounding the likelihood of renewal.

The components of operating and finance lease costs were as follows:

	Year Ended December 31,
	2023		2022
Operating lease costs	$	3,191	$	3,064
Variable lease costs		741		642
Total expense from operating leases	$	3,932	$	3,706
Finance lease costs:
Right-of-use amortization expense	$	2,314	$	1,718
Interest on lease liabilities		784		482
Total financing lease costs	$	3,098	$	2,200

The following table reflects balances for operating and financing leases:

	December 31,
	2023		2022
Operating leases:
Operating lease right-of-use assets, net of amortization	$	11,234	$	10,705
Current operating lease liabilities	$	2,539	$	2,355
Non-current operating lease liabilities		9,384		8,905
Total operating lease liabilities	$	11,923	$	11,260
Financing leases:
Property, equipment and leasehold improvements	$	23,774	$	15,717
Accumulated depreciation		(3,335)		(3,135)
Total financing leases in property, equipment and leasehold improvements, net	$	20,439	$	12,582
Current financing lease liabilities	$	4,779	$	3,342
Non-current financing lease liabilities		13,327		7,355
Total financing lease liabilities	$	18,106	$	10,697

Finance and operating lease ROU assets are recorded in “Plant, equipment, leasehold improvements, and

operating lease right-of-use assets, net.” Financing and operating lease liabilities are recorded in “Accrued expenses” and “Other long-term liabilities.”

Components of lease expense were as follows:

	December 31,
	2023	2022
Weighted-average remaining lease term:
Operating leases	4.70	5.06
Financing leases	3.98	3.60
Weighted-average discount rate:
Operating leases	7.19%	7.93%
Financing leases	6.28%	6.62%

Cash paid on operating lease liabilities was $2.4 million during the years ended December 31, 2023 and 2022, respectively.

Future cash payment with respect to lease obligations as of December 31, 2023 were as follows:

	Operating		Financing
	Lease		Leases
Year Ending
2024	$	3,310	$	5,777
2025		2,851		5,472
2026		2,684		4,111
2027		2,518		3,180
2028		2,185		1,919
Thereafter		574		—
Total lease payments		14,122		20,459
Less imputed interest		(2,199)		(2,353)
Total	$	11,923	$	18,106