LEASES

12 Months Ended

Dec. 31, 2021

15.

LEASES

The Company leases a variety of assets throughout its organization, such as office space, funeral homes, warehouses and equipment. In addition the Company has a sale-leaseback related to one of its warehouses. Leases with an initial term of 12 months or less are not recorded on the Company’s consolidated balance sheets, and the Company recognizes lease expense for these leases on a straight-line basis over the lease term. For lease agreements with an initial term of more than 12 months, the Company measures the lease liability at the present value of the sum of the remaining minimum rental payments, which exclude executory costs.

Certain leases provide the Company with the option to renew for additional periods, with renewal terms that can extend the lease term for periods ranging from 1 to 30 years. The exercise of lease renewal options is at the Company’s sole discretion, and the Company is only including the renewal option in the lease term when the Company can be reasonably certain that it will exercise the renewal options. The Company does have residual value guarantees on the finance leases for its vehicles, but no residual guarantees on any of its operating leases.

Certain of the Company’s leases have variable payments with annual escalations based on the proportion by which the consumer price index (“CPI”) for all urban consumers increased over the CPI index for the prior comparative year.

The Company has the following balances recorded on its consolidated balance sheets related to leases (in thousands):


	December 31, 2021		December 31, 2020
Assets:
Operating	$	5,944	$	5,171
Finance		3,343		4,296
Total ROU assets(1)	$	9,287	$	9,467
Liabilities:
Current
Operating	$	1,103	$	1,182
Finance		1,859		1,416
Long-term
Operating		4,969		3,441
Finance		1,035		2,592
Total lease liabilities(2)	$	8,966	$	8,631

(1)

The Company’s ROU operating assets and finance assets are presented within Other assets and Property and equipment, net of accumulated depreciation, respectively, in its consolidated balance sheet.

(2)

The Company’s current and long-term lease liabilities are presented within Accounts payable and accrued liabilities and Other long-term liabilities, respectively, in its consolidated balance sheet.

As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate, based on the information available at commencement date, in determining the present value of lease payments. The Company used the incremental borrowing rate on January 1, 2019 for operating leases that commenced prior to that date. The weighted average borrowing rates for operating and finance leases were 10.0% and 8.7%, respectively as of December 31, 2021.

The components of lease expense were as follows (in thousands):


		Year ended December 31,
		2021		2020
Lease cost	Classification
Operating lease costs(1)	General and administrative expense	$	2,168	$	2,967
Finance lease costs
Amortization of leased assets	Depreciation and Amortization		1,101		1,215
Interest on lease liabilities	Interest expense		337		421
Short-term lease costs(2)	General and administrative expense		—		—
Net Lease costs		$	3,606	$	4,603

(1)

The Company includes its variable lease costs under operating lease costs as these variable lease costs are immaterial.

(2)

The Company does not have any short-term leases with lease terms greater than one month.

Maturities of the Company’s lease liabilities as of December 31, 2021 were as follows (in thousands):


Year ending December 31,	Operating			Finance
2022	$	1,661		$	2,099
2023		1,460			780
2024		1,223			168
2025		1,111			95
2026		1,086			100
Thereafter		1,498			—
Total		8,039			3,242
Less: Interest		(1,967	)		(348	)
Present value of lease liabilities	$	6,072		$	2,894

Maturities of the Company’s lease liabilities as of as of December 31, 2020 were as follows (in thousands):


Year ending December 31,	Operating			Finance
2021	$	1,615		$	1,791
2022		1,186			1,939
2023		881			643
2024		702			107
2025		595			33
Thereafter		1,092			—
Total		6,071			4,513
Less: Interest		(1,448	)		(505	)
Present value of lease liabilities	$	4,623		$	4,008

Operating and finance lease payments include $0.7 million related to options to extend lease terms that are reasonably certain of being exercised and $1.5 million related to residual value guarantees. The weighted-average remaining lease term for the Company’s operating and finance leases was 5.6 years and 1.6 years, respectively, as of December 31, 2021.

As of December 31, 2021, the Company had no additional operating leases that had not yet commenced and no lease transactions with its related parties. In addition, as of December 31, 2021, the Company had not entered into any new sale-leaseback arrangements.