Leases

12 Months Ended

Dec. 31, 2024

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


	Year Ended December 31,
	2024		2023
	(in thousands)
Operating lease expense	$	9,708	$	6,171
Short-term lease expense	1,367		314
Variable lease expense	1,520		1,130
Total lease expense	$	12,595	$	7,615

For the year ended December 31, 2024 and 2023, total lease expense included in operating expenses was $10,337,000 and $6,541,000, respectively, and total lease expense included in cost of goods sold was $2,258,000 and $1,074,000, respectively.

The following table presents supplemental information related to operating leases:


	December 31, 2024			December 31, 2023
	(in thousands, except lease term and discount rate)
Weighted average remaining lease term	4.33 years			4.51 years
Weighted average discount rate	7.0		%	6.2		%
Right-of-use assets obtained in exchange for operating lease liabilities	$	29,504		$	9,995
Cash paid for amounts included in measurement of lease obligations:
Operating cash flows from operating leases	$	8,805		$	5,768

As of December 31, 2024, future lease payments under operating lease were as follows:


	(in thousands)
2025	$	11,749
2026	12,212
2027	11,203
2028	10,071
2029	5,654
Thereafter	737
Total future lease payments	51,626
Less: imputed interest	(7,214)
Total lease liability balance	$	44,412

During the year ended December 31, 2024, the Company recorded a non-cash impairment of a ROU asset of $1,993,000 resulting from the sublease of its City of Industry warehouse in California.

Sublease income for the year ended December 31, 2024 and 2023 was $1,038,000 and $76,000, respectively. Sublease income is included in rental income in the accompanying consolidated statements of income.

Global Wells has been the landlord under an operating lease agreement with an unrelated party since September 2020. During both the years ended December 31, 2024 and 2023, Global Wells recognized rental income from this tenant of $739,000. As discussed in Note 22 — Subsequent Events, on February 28, 2025, the lease agreement between Global Wells and the tenant was terminated and effective March 1, 2025, Global Wells entered into a new six-year operating lease agreement with a different unrelated party, which ends February 28, 2031 and is expected to generate rental income of $1,128,000 per annum over the next five years.