Financing and Operating Leases

12 Months Ended

Dec. 31, 2024

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,
	2024		2023
Operating lease costs	$	3,278	$	3,191
Short-term and variable lease costs		1,009		741
Total expense from operating leases	$	4,287	$	3,932
Finance lease costs:
Right-of-use amortization expense	$	3,198	$	2,314
Interest on lease liabilities		1,104		784
Total financing lease costs	$	4,302	$	3,098

The following table reflects balances for operating and financing leases:

	December 31,
	2024		2023
Operating leases:
Operating lease right-of-use assets, net of amortization	$	9,853	$	11,234
Current operating lease liabilities	$	2,468	$	2,539
Non-current operating lease liabilities		8,242		9,384
Total operating lease liabilities	$	10,710	$	11,923
Financing leases:
Plant, equipment and leasehold improvements	$	32,272	$	23,774
Accumulated depreciation		(6,533)		(3,335)
Total financing leases in plant, equipment and leasehold improvements, net	$	25,739	$	20,439
Current financing lease liabilities	$	6,597	$	4,779
Non-current financing lease liabilities		16,204		13,327
Total financing lease liabilities	$	22,801	$	18,106

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

operating lease right-of-use assets, net” on the Company's consolidated balance sheets. Financing and operating lease liabilities are recorded in “Accrued expenses” and “Other long-term liabilities” on the Company's consolidated balance sheets. As of December 31, 2024, the Company had additional operating lease payment obligations, related to buildings and office space, of approximately $8.0 million which had not yet commenced. These leases are expected to commence in 2025 and have lease terms of up to 10 years.

Components of lease expense were as follows:

	December 31,
	2024	2023
Weighted-average remaining lease term:
Operating leases	4.06	4.70
Financing leases	3.84	3.98
Weighted-average discount rate:
Operating leases	7.04%	7.19%
Financing leases	6.23%	6.28%

Cash paid on operating lease liabilities was $2.5 million and $2.4 million during the years ended December 31, 2024 and 2023, respectively.

Future cash payment with respect to lease obligations as of December 31, 2024 were as follows:

	Operating		Financing
	Lease		Leases
Year Ending
2025	$	3,142	$	7,831
2026		2,987		6,416
2027		2,833		5,485
2028		2,513		4,224
2029		886		1,707
Total lease payments		12,361		25,663
Less imputed interest		(1,651)		(2,862)
Total	$	10,710	$	22,801