Leases

12 Months Ended

Dec. 31, 2021

The Company has entered into non-cancellable operating leases for office, warehouse, and distribution facilities, with original lease periods expiring through 2032. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company combines lease and non-lease components for new and reassessed leases.

Some operating leases also contain the option to renew for five years periods at prevailing market rates at the time of renewal. In addition to minimum rent, certain of the leases require payment of real estate taxes, insurance, common area maintenance charges, and other executory costs. For certain leases the Company receives lease incentives, such as tenant improvement allowances, and records those as adjustments to operating lease right-of-use assets and operating leases liabilities on the consolidated balance sheets and amortize the lease incentives on a straight-line basis over the lease term as an adjustment to rent expense. Rent expense, included in selling, general and administrative expenses on the consolidated statements of income, was $16.5 million, $15.3 million and $14.9 million for the years ended December 31, 2021, 2020 and 2019, respectively.

During the years ended December 31, 2021 and 2020, operating cash outflows relating to operating lease liabilities was $14.4 million and $11.6 million, respectively and operating lease right-of-use assets obtained in exchange for new operating lease obligations was $4.0 million, with no lease incentives obtained and $5.8 million, net of lease incentives obtained of $0.3 million, respectively. As of December 31, 2021 and 2020, the Company’s operating leases had a weighted-average remaining term of 7.0 years and 7.3 years, respectively and weighted-average discount rate of 6.22% and 6.28%, respectively. Excluded from the measurement of operating lease liabilities and operating lease right-of-use assets were certain warehouse and distribution contracts that either qualify for the short-term lease recognition exception and/or do not give the Company the right to control the warehouse and/or distribution facilities underlying the contract.

During the year ended December 31, 2020, the Company recognized an impairment loss of $1.4 million related to the right of use lease asset in Bath, England. The related lease liability was remeasured and reduced by $0.9 million. The lease agreement was terminated in December 2021.

In January 2020, the Company has also entered into a non-cancellable operating sub-lease for office space expiring in 2024. Rental income recognized for the years ended December 31, 2021 and 2020 was $0.3 million and $0.3 million, respectively, included as a reduction of selling, general and administrative expenses on the consolidated statements of income.

The future payments on the Company’s operating lease liabilities as of December 31, 2021 were as follows (in thousands):


2022	$	15,445
2023	12,582
2024	12,013
2025	10,504
2026	9,303
Thereafter	20,489
Total lease payments	80,336
Less: imputed interest	(14,918)
Total	$	65,418

Not included in the lease payments table above are future payments related to Warehouse and Distribution lease in Buckeye, Arizona. The Company expects lease commencement to occur in mid-2022 and extend through October 2032. The 862,000 square foot building is expected to add approximately $1.5 million, $4.6 million, $4.7 million, $4.8 million, $4.9 million and $31.2 million in minimum rental expense for 2022, 2023, 2024, 2025, 2026 and thereafter, respectively.