Leases

9 Months Ended

Sep. 30, 2023

The Company primarily leases manufacturing facilities, distribution centers and office spaces with lease terms expiring through 2031. The Company recognized the following lease costs in the accompanying condensed consolidated statement of income:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(in thousands)				(in thousands)
Operating lease expense	$	1,606	$	1,336	$	4,454	$	3,256
Short-term lease expense	106		4		143		14
Variable lease expense	260		212		750		501
Total lease expense	$	1,972	$	1,552	$	5,347	$	3,771

For the three months ended September 30, 2023 and 2022, rent expense included in operating expenses was $1,653,000 and $1,260,000, respectively, and rent expense included in cost of goods sold was $319,000 and $292,000, respectively. For the nine months ended September 30, 2023 and 2022, rent expense included in operating expenses was $4,542,000 and $2,974,000, respectively, and rent expense included in cost of goods sold was $805,000 and $797,000, respectively.

The following table presents supplemental information related to operating leases:


	September 30, 2023		December 31, 2022
Weighted average remaining lease term	4.41 years		4.27 years
Weighted average discount rate	5.8	%	5.3	%


	Nine Months Ended September 30,
	2023		2022
	(in thousands)
Cash paid for amounts included in measurement of lease obligations:
Operating cash flows from operating leases	$	4,129	$	3,120

As of September 30, 2023, future lease payments under operating leases were as follows:


	(in thousands)
2023 (remainder)	$	1,544
2024	5,254
2025	3,928
2026	4,044
2027	2,711
Thereafter	2,885
Total future lease payments	20,366
Less: imputed interest	2,573
Total lease liability balance	$	17,793

In September 2020, Global Wells entered into an operating lease with an unrelated party as the landlord. The lease generates monthly rental payments from $58,000 to $61,000 over the lease term of 38 months beginning September 9,

2020. The lease was extended for a period of two additional years beginning November 1, 2023, and will generate monthly rental payments from $62,000 to $65,000. The expected rental income is $185,000 for the remaining three months of the year ending December 31, 2023, and $739,000 and $616,000 for the years ending December 31, 2024, and 2025, respectively.