Leases

6 Months Ended

Jun. 30, 2022

LeasesThe Company leases certain real estate for commercial, production, and retail purposes, as well as equipment from third parties. Lease expiration dates are between 2022 and 2027. A portion of leases are denominated in foreign currencies.

For both operating and finance leases, the Company recognizes a right-of-use (“ROU”) asset, which represents the right to use the underlying asset for the lease term, and a lease liability, which represents the present value of our obligation to make payments arising over the lease term.

We elected the short-term lease exemption for all leases that qualify. This means leases having an initial term of twelve months or less are not recorded on the balance sheet and the related lease expense is recognized on a straight-line basis over the term of the lease.

The Company’s leases may include options to extend or terminate the lease. Renewal options generally range from one to ten years and the options to extend are included in the lease term when it is reasonably certain that we will exercise that option. Some leases have variable payments, however, because they are not based on an index or rate, they are not included in the ROU assets and liabilities. Variable payments for real estate leases primarily relate to common area maintenance, insurance, taxes and utilities. Variable payments for equipment and vehicles primarily relate to usage, repairs, and maintenance. As the implicit rate is not readily determinable for most of the Company’s leases, the Company applies a portfolio approach using an estimated incremental borrowing rate, giving consideration to company specific information and publicly available interest rates for instruments with similar characteristics, to determine the initial present value of lease payments over the lease terms.

The components of lease expense consists of the following:


	For the Three Months Ended				For the Six Months Ended
$'s in 000's	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Finance lease cost
Amortization of right-of-use assets	$	458	$	803	$	983	$	1,369
Interest on lease liabilities	57		123		121		214
Operating lease cost	1,737		1,332		3,314		2,624
Variable lease cost(1)	266		309		781		615
Short-term lease cost	8		2		13		6
Sublease income	(65)		(65)		(130)		(108)
Total lease cost	$	2,461	$	2,504	$	5,082	$	4,720

(1)Variable lease cost primarily relates to percentage rent, common area maintenance, property taxes, and insurance on leased real estate.

Other information related to leases was as follows as of:


	June 30, 2022	June 30, 2021
Weighted-average remaining lease term (years)
Operating leases	3.59	4.13
Finance leases	2.19	2.62
Weighted-average discount rate
Operating leases	4.5%	5.2%
Finance leases	4.5%	4.8%

Annual future commitments under non-cancelable leases as of June 30, 2022, consist of the following:


	Lease Obligations
$'s in 000's	Operating Leases		Finance Leases
Remainder of 2022	$	3,564	$	819
2023	7,137		1,702
2024	5,613		613
2025	4,584		239
2026	2,230		73
Thereafter	151		—
Total minimum future obligations	$	23,278	$	3,446
Less interest	(1,685)		(174)
Present value of net future minimum obligations	21,594		3,272
Less current lease obligations	(6,334)		(1,442)
Long-term lease obligations	$	15,259	$	1,830

Supplemental cash flow information:


$'s in 000's	Six Months Ended June 30, 2022		Six Months Ended June 30, 2021
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$	121	$	214
Operating cash flows from operating leases	3,386		2,525
Financing cash flows from finance leases	744		1,226
(Noncash) right-of-use assets obtained in exchange for lease obligations
Operating leases	3,620		2,810
Finance leases	59		141