LEASES

9 Months Ended

Sep. 30, 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 September 30, 2023 and December 31, 2022, assets associated with the finance lease were $79.3 million. As of September 30, 2023 and December 31, 2022, liabilities associated with the finance lease were $79.5 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 $31.7 million of sales proceeds received as a financial liability within other long-term liabilities in the condensed consolidated balance sheets as of September 30, 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):

	September 30, 2023		December 31, 2022
Operating leases:
Operating lease right-of-use assets	$	221,657	$	215,160
Other current liabilities	$	24,925	$	11,269
Other long-term liabilities	246,818		243,843
Total operating lease liabilities	$	271,743	$	255,112
Finance leases:
Property, plant and equipment, net	$	86,254	$	90,386
Total finance lease assets	$	86,254	$	90,386
Finance lease liabilities, current portion	$	8,964	$	10,586
Finance lease liabilities, net of current portion	77,019		81,336
Total finance lease liabilities	$	85,983	$	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 September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Operating lease expense:
Operating lease expense(1)	$	14,000	$	11,888	$	40,578	$	32,215
Variable lease expense	438		906		1,306		2,581
Finance lease expense:
Amortization of leased assets	$	1,326	$	1,217	$	4,133	$	3,446
Interest on lease liabilities	1,204		897		3,677		1,186
Total finance lease expense	$	2,530	$	2,114	$	7,810	$	4,632
Total lease expense	$	16,968	$	14,908	$	49,694	$	39,428

(1) Excluded short-term leases, which were not material.

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

	September 30, 2023		December 31, 2022
Weighted-average remaining lease term (in years):
Operating leases	7.1		7.6
Finance leases	2.8		3.5
Weighted-average discount rate:
Operating leases	10.87	%	10.52	%
Finance leases	5.58	%	5.57	%

As of September 30, 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)	$	9,179	$	1,321
2024	59,125		8,340
2025	59,693		6,619
2026	56,748		82,488
2027	49,491		117
Thereafter	167,124		37
Total minimum lease payments	401,360		98,922
Less: Interest	(129,617)		(12,939)
Present value of lease obligations	271,743		85,983
Less: Current portion	(24,925)		(8,964)
Long-term portion of lease obligations	$	246,818	$	77,019

As of September 30, 2023, the Company entered into additional leases for facilities and equipment that have not yet commenced with undiscounted future lease payments of $7.6 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 September 30, 2023 and December 31, 2022, assets associated with the finance lease were $79.3 million. As of September 30, 2023 and December 31, 2022, liabilities associated with the finance lease were $79.5 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 $31.7 million of sales proceeds received as a financial liability within other long-term liabilities in the condensed consolidated balance sheets as of September 30, 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):

	September 30, 2023		December 31, 2022
Operating leases:
Operating lease right-of-use assets	$	221,657	$	215,160
Other current liabilities	$	24,925	$	11,269
Other long-term liabilities	246,818		243,843
Total operating lease liabilities	$	271,743	$	255,112
Finance leases:
Property, plant and equipment, net	$	86,254	$	90,386
Total finance lease assets	$	86,254	$	90,386
Finance lease liabilities, current portion	$	8,964	$	10,586
Finance lease liabilities, net of current portion	77,019		81,336
Total finance lease liabilities	$	85,983	$	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 September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Operating lease expense:
Operating lease expense(1)	$	14,000	$	11,888	$	40,578	$	32,215
Variable lease expense	438		906		1,306		2,581
Finance lease expense:
Amortization of leased assets	$	1,326	$	1,217	$	4,133	$	3,446
Interest on lease liabilities	1,204		897		3,677		1,186
Total finance lease expense	$	2,530	$	2,114	$	7,810	$	4,632
Total lease expense	$	16,968	$	14,908	$	49,694	$	39,428

(1) Excluded short-term leases, which were not material.

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

	September 30, 2023		December 31, 2022
Weighted-average remaining lease term (in years):
Operating leases	7.1		7.6
Finance leases	2.8		3.5
Weighted-average discount rate:
Operating leases	10.87	%	10.52	%
Finance leases	5.58	%	5.57	%

As of September 30, 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)	$	9,179	$	1,321
2024	59,125		8,340
2025	59,693		6,619
2026	56,748		82,488
2027	49,491		117
Thereafter	167,124		37
Total minimum lease payments	401,360		98,922
Less: Interest	(129,617)		(12,939)
Present value of lease obligations	271,743		85,983
Less: Current portion	(24,925)		(8,964)
Long-term portion of lease obligations	$	246,818	$	77,019

As of September 30, 2023, the Company entered into additional leases for facilities and equipment that have not yet commenced with undiscounted future lease payments of $7.6 million. The leases are expected to commence over the next twelve months.