XML 31 R14.htm IDEA: XBRL DOCUMENT v3.24.0.1
LEASES
 12 Months Ended
Dec. 31, 2023
Leases [Abstract]  
LEASES LEASES
The Company leases its distribution centers and manufacturing facilities from third parties under various non-cancelable lease agreements expiring at various dates through 2038. Also, the Company leases some property, plant and equipment under finance leases. Certain leases contain escalation provisions and/or renewal options, giving the Company the right to extend the leases by up to 20 years. However, these options are generally not reflected in the calculation of the right-of-use assets and lease liabilities due to uncertainty surrounding the likelihood of renewal. The Company recognizes operating lease costs over the respective lease periods, including short-term and month-to-month leases.
The Company has operating subleases which have been accounted for by reference to the underlying asset subject to the lease, primarily as an offset to rent expense within SG&A.
In January 2023, Gotham Properties LLC, an Oregon limited liability company and a subsidiary of the Company (“Seller”), consummated a Purchase and Sale Agreement with J & D Property, LLC, a Nevada limited liability company (“Purchaser”) pursuant to which certain real property located in the City of Eugene, County of Lane, State of Oregon (the “Eugene Property”) was sold to Purchaser for $8,598 and then leased back by Seller (the “Sale-Leaseback Transaction”). The new lease has a term of 15 years with annual rent starting at $731 and fixed increases to the final year when annual rent is $964. The Company is accounting for the transaction as a failed sale-leaseback which requires retaining the assets associated with the property and recognizing a corresponding financial liability for the cash received. The Eugene Property serves as the manufacturing and processing site for certain of the Company’s grow media and nutrient brands. Refer to Note 9 - Debt for further discussion.
Total right-of-use ("ROU") assets, finance lease assets, and lease liabilities were as follows:
December 31,
Balance Sheet Classification20232022
Lease assets
Operating lease assetsOperating lease right-of-use assets$54,494 $65,265 
Finance lease assetsProperty, plant and equipment, net9,315 2,005 
Total lease assets$63,809 $67,270 
Lease liabilities
Current:
Operating leasesCurrent portion of operating lease liabilities$8,336 $9,099 
Finance leasesCurrent portion of finance lease liabilities954 704 
Noncurrent:
Operating leasesLong-term operating lease liabilities47,506 56,299 
Finance leasesLong-term finance lease liabilities8,734 1,200 
Total lease liabilities$65,530 $67,302 
Total lease costs and sublease income were as follows:
Years ended December 31,
Classification20232022
Operating lease costs
Selling, general and administrative(1)
$12,371 $11,484 
Finance lease costs:
Amortization of lease assetsSelling, general and administrative1,047 285 
Amortization of lease assetsCost of goods sold328 327 
Interest on lease liabilitiesInterest expense519 61 
Sublease incomeSelling, general and administrative(1,722)(1,533)
(1) Operating lease costs are primarily recorded in SG&A.
In addition to the operating lease costs above, short-term and month-to-month lease expense was $182 and $341 for the years ended December 31, 2023, and 2022, respectively, and other costs associated with operating leases were $3,132 and $2,573, respectively, for non-lease components such as common area maintenance and other miscellaneous items. These costs were included primarily within SG&A in the consolidated statements of operations.
The aggregate future minimum lease payments under long-term non-cancelable operating and finance leases with remaining terms greater than one year as of December 31, 2023, are as follows:
Year ending December 31,OperatingFinance
2024$10,442 $1,442 
202510,368 1,305 
20269,212 852 
20278,993 855 
20288,432 806 
Thereafter16,989 8,039 
Total lease payments64,436 13,299 
Less portion representing interest8,594 3,611 
Total principal55,842 9,688 
Less current portion8,336 954 
Long-term portion$47,506 $8,734 
The following table summarizes the weighted-average remaining lease term as well as the weighted average discount rate as of December 31, 2023, and 2022:
December 31,
20232022
Weighted-average remaining lease term in years:
Operating leases6.77.1
Finance leases12.53.1
Weighted-average discount rate:
Operating leases4.20 %4.00 %
Finance leases5.25 %3.63 %
Cash paid for amounts included in lease liabilities for the years ended December 31, 2023, and 2022, were:
Years ended December 31,
Cash paid for amounts included in lease liabilities: 20232022
Operating cash flows from operating leases$(12,121)$(9,035)
Operating cash flows from finance leases(516)(61)
Financing cash flows from finance leases(1,007)(757)
LEASES LEASES
The Company leases its distribution centers and manufacturing facilities from third parties under various non-cancelable lease agreements expiring at various dates through 2038. Also, the Company leases some property, plant and equipment under finance leases. Certain leases contain escalation provisions and/or renewal options, giving the Company the right to extend the leases by up to 20 years. However, these options are generally not reflected in the calculation of the right-of-use assets and lease liabilities due to uncertainty surrounding the likelihood of renewal. The Company recognizes operating lease costs over the respective lease periods, including short-term and month-to-month leases.
The Company has operating subleases which have been accounted for by reference to the underlying asset subject to the lease, primarily as an offset to rent expense within SG&A.
In January 2023, Gotham Properties LLC, an Oregon limited liability company and a subsidiary of the Company (“Seller”), consummated a Purchase and Sale Agreement with J & D Property, LLC, a Nevada limited liability company (“Purchaser”) pursuant to which certain real property located in the City of Eugene, County of Lane, State of Oregon (the “Eugene Property”) was sold to Purchaser for $8,598 and then leased back by Seller (the “Sale-Leaseback Transaction”). The new lease has a term of 15 years with annual rent starting at $731 and fixed increases to the final year when annual rent is $964. The Company is accounting for the transaction as a failed sale-leaseback which requires retaining the assets associated with the property and recognizing a corresponding financial liability for the cash received. The Eugene Property serves as the manufacturing and processing site for certain of the Company’s grow media and nutrient brands. Refer to Note 9 - Debt for further discussion.
Total right-of-use ("ROU") assets, finance lease assets, and lease liabilities were as follows:
December 31,
Balance Sheet Classification20232022
Lease assets
Operating lease assetsOperating lease right-of-use assets$54,494 $65,265 
Finance lease assetsProperty, plant and equipment, net9,315 2,005 
Total lease assets$63,809 $67,270 
Lease liabilities
Current:
Operating leasesCurrent portion of operating lease liabilities$8,336 $9,099 
Finance leasesCurrent portion of finance lease liabilities954 704 
Noncurrent:
Operating leasesLong-term operating lease liabilities47,506 56,299 
Finance leasesLong-term finance lease liabilities8,734 1,200 
Total lease liabilities$65,530 $67,302 
Total lease costs and sublease income were as follows:
Years ended December 31,
Classification20232022
Operating lease costs
Selling, general and administrative(1)
$12,371 $11,484 
Finance lease costs:
Amortization of lease assetsSelling, general and administrative1,047 285 
Amortization of lease assetsCost of goods sold328 327 
Interest on lease liabilitiesInterest expense519 61 
Sublease incomeSelling, general and administrative(1,722)(1,533)
(1) Operating lease costs are primarily recorded in SG&A.
In addition to the operating lease costs above, short-term and month-to-month lease expense was $182 and $341 for the years ended December 31, 2023, and 2022, respectively, and other costs associated with operating leases were $3,132 and $2,573, respectively, for non-lease components such as common area maintenance and other miscellaneous items. These costs were included primarily within SG&A in the consolidated statements of operations.
The aggregate future minimum lease payments under long-term non-cancelable operating and finance leases with remaining terms greater than one year as of December 31, 2023, are as follows:
Year ending December 31,OperatingFinance
2024$10,442 $1,442 
202510,368 1,305 
20269,212 852 
20278,993 855 
20288,432 806 
Thereafter16,989 8,039 
Total lease payments64,436 13,299 
Less portion representing interest8,594 3,611 
Total principal55,842 9,688 
Less current portion8,336 954 
Long-term portion$47,506 $8,734 
The following table summarizes the weighted-average remaining lease term as well as the weighted average discount rate as of December 31, 2023, and 2022:
December 31,
20232022
Weighted-average remaining lease term in years:
Operating leases6.77.1
Finance leases12.53.1
Weighted-average discount rate:
Operating leases4.20 %4.00 %
Finance leases5.25 %3.63 %
Cash paid for amounts included in lease liabilities for the years ended December 31, 2023, and 2022, were:
Years ended December 31,
Cash paid for amounts included in lease liabilities: 20232022
Operating cash flows from operating leases$(12,121)$(9,035)
Operating cash flows from finance leases(516)(61)
Financing cash flows from finance leases(1,007)(757)