LEASES

3 Months Ended

Mar. 31, 2023

Leases [Abstract]

LEASES

LEASES

The Company has entered into various non-cancellable operating and finance lease agreements for certain of the Company’s offices, manufacturing and warehouse facilities, retail and service locations, equipment and vehicles, worldwide.

In August 2022, the Company entered into a four-year agreement (“Lease Agreement”) to lease land in Casa Grande, Arizona adjacent to our manufacturing facility. The Company classifies this lease as a finance lease because the Lease Agreement contains a purchase option which the Company is reasonably certain to exercise. As of March 31, 2023 and December 31, 2022, assets associated with the finance lease were $79.3 million. As of March 31, 2023 and December 31, 2022, liabilities associated with the finance lease were $74.7 million and $81.1 million, respectively.

Contemporaneously with the execution of the Lease Agreement, the Company entered into a sale agreement, pursuant to which the Company sold certain parcels of land for $31.7 million to the lessor and leased back these parcels of land under the Lease Agreement. The sale of the land and subsequent lease did not result in change in the transfer of control of the land; therefore, the sale-leaseback transaction is accounted for as a failed sale and leaseback financing obligation. The Company recorded the sales proceeds received as a financial liability within other long-term liabilities on our condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022.

The balances for the operating and finance leases where the Company is the lessee are presented as follows within the Company’s condensed consolidated balance sheets (in thousands):

	March 31, 2023		December 31, 2022
Operating leases:
Operating lease right-of-use assets	$	213,193	$	215,160
Other current liabilities	$	15,753	$	11,269
Other long-term liabilities	239,588		243,843
Total operating lease liabilities	$	255,341	$	255,112
Finance leases:
Property, plant and equipment, net	$	88,982	$	90,386
Total finance lease assets	$	88,982	$	90,386
Finance lease liabilities, current portion	$	10,239	$	10,586
Finance lease liabilities, net of current portion	78,845		81,336
Total finance lease liabilities	$	89,084	$	91,922

The components of lease expense were as follows within the Company’s condensed consolidated statements of operations and comprehensive loss (in thousands):

	Three Months Ended March 31,
	2023		2022
Operating lease expense:
Operating lease expense(1)	$	12,815	$	9,578
Variable lease expense	445		778
Finance lease expense:
Amortization of leased assets	$	1,405	$	1,096
Interest on lease liabilities	1,244		145
Total finance lease expense	$	2,649	$	1,241
Total lease expense	$	15,909	$	11,597

(1) Excluded short-term leases, which were immaterial.

Other information related to leases where the Company is the lessee was as follows:

	March 31, 2023		December 31, 2022
Weighted-average remaining lease term (in years):
Operating leases	7.4		7.6
Finance leases	3.2		3.5
Weighted-average discount rate:
Operating leases	10.55	%	10.52	%
Finance leases	5.57	%	5.57	%

As of March 31, 2023, the maturities of the Company’s operating and finance lease liabilities (excluding short-term leases) were as follows (in thousands):

	Operating Leases		Finance Leases
2023 (remainder of the year)	$	28,270	$	6,856
2024	55,896		8,340
2025	55,269		6,619
2026	51,765		82,488
2027	43,935		117
Thereafter	146,868		37
Total minimum lease payments	382,003		104,457
Less: Interest	(126,662)		(15,373)
Present value of lease obligations	255,341		89,084
Less: Current portion	(15,753)		(10,239)
Long-term portion of lease obligations	$	239,588	$	78,845

As of March 31, 2023, the Company entered into additional leases for facilities and equipment that have not yet commenced with undiscounted future lease payments of $26.8 million. The leases are expected to commence over the next twelve months.

LEASES

LEASES

The Company has entered into various non-cancellable operating and finance lease agreements for certain of the Company’s offices, manufacturing and warehouse facilities, retail and service locations, equipment and vehicles, worldwide.

In August 2022, the Company entered into a four-year agreement (“Lease Agreement”) to lease land in Casa Grande, Arizona adjacent to our manufacturing facility. The Company classifies this lease as a finance lease because the Lease Agreement contains a purchase option which the Company is reasonably certain to exercise. As of March 31, 2023 and December 31, 2022, assets associated with the finance lease were $79.3 million. As of March 31, 2023 and December 31, 2022, liabilities associated with the finance lease were $74.7 million and $81.1 million, respectively.

Contemporaneously with the execution of the Lease Agreement, the Company entered into a sale agreement, pursuant to which the Company sold certain parcels of land for $31.7 million to the lessor and leased back these parcels of land under the Lease Agreement. The sale of the land and subsequent lease did not result in change in the transfer of control of the land; therefore, the sale-leaseback transaction is accounted for as a failed sale and leaseback financing obligation. The Company recorded the sales proceeds received as a financial liability within other long-term liabilities on our condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022.

The balances for the operating and finance leases where the Company is the lessee are presented as follows within the Company’s condensed consolidated balance sheets (in thousands):

	March 31, 2023		December 31, 2022
Operating leases:
Operating lease right-of-use assets	$	213,193	$	215,160
Other current liabilities	$	15,753	$	11,269
Other long-term liabilities	239,588		243,843
Total operating lease liabilities	$	255,341	$	255,112
Finance leases:
Property, plant and equipment, net	$	88,982	$	90,386
Total finance lease assets	$	88,982	$	90,386
Finance lease liabilities, current portion	$	10,239	$	10,586
Finance lease liabilities, net of current portion	78,845		81,336
Total finance lease liabilities	$	89,084	$	91,922

The components of lease expense were as follows within the Company’s condensed consolidated statements of operations and comprehensive loss (in thousands):

	Three Months Ended March 31,
	2023		2022
Operating lease expense:
Operating lease expense(1)	$	12,815	$	9,578
Variable lease expense	445		778
Finance lease expense:
Amortization of leased assets	$	1,405	$	1,096
Interest on lease liabilities	1,244		145
Total finance lease expense	$	2,649	$	1,241
Total lease expense	$	15,909	$	11,597

(1) Excluded short-term leases, which were immaterial.

Other information related to leases where the Company is the lessee was as follows:

	March 31, 2023		December 31, 2022
Weighted-average remaining lease term (in years):
Operating leases	7.4		7.6
Finance leases	3.2		3.5
Weighted-average discount rate:
Operating leases	10.55	%	10.52	%
Finance leases	5.57	%	5.57	%

As of March 31, 2023, the maturities of the Company’s operating and finance lease liabilities (excluding short-term leases) were as follows (in thousands):

	Operating Leases		Finance Leases
2023 (remainder of the year)	$	28,270	$	6,856
2024	55,896		8,340
2025	55,269		6,619
2026	51,765		82,488
2027	43,935		117
Thereafter	146,868		37
Total minimum lease payments	382,003		104,457
Less: Interest	(126,662)		(15,373)
Present value of lease obligations	255,341		89,084
Less: Current portion	(15,753)		(10,239)
Long-term portion of lease obligations	$	239,588	$	78,845

As of March 31, 2023, the Company entered into additional leases for facilities and equipment that have not yet commenced with undiscounted future lease payments of $26.8 million. The leases are expected to commence over the next twelve months.