Leases

12 Months Ended

Dec. 31, 2024

Leases [Abstract]

Leases

NOTE 16 – LEASES

Under ASC 842, leases are separated into two classifications: operating leases and financial leases. Lease classification under ASC 842 is relatively similar to ASC 840. For a lease to be classified as a finance lease, it must meet one of the five finance lease criteria: (1) transference of title/ownership to the lessee, (2) reasonably certain to exercise a purchase option, (3) lease term for major part of the remaining economic life of the asset, (4) present value represents substantially all of the fair value of the asset and (5) asset specialization. Any lease that does not meet these criteria is classified as an operating lease. ASC 842 requires all leases to be recognized on the Company’s balance sheet. Specifically, for operating leases, the Company recognizes a right-of-use asset and a corresponding lease liability upon lease commitment.

Company as a lessee

The Company is the lessee in a lease contract when the Company obtains the right to use the asset. The right-of-use asset represents the Company’s right to use an underlying asset for the lease term and lease obligations represent the Company’s obligations to make lease payments arising from the lease, both of which are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The Company has also elected the short-term lease exception whereby leases with a term of 12 months or less at inception are not recorded on the Consolidated Balance Sheets and are expensed on a straight-line basis over the lease term in our Consolidated Statements of Operations. The Company determines the lease term by agreement with the lessor. Options to renew are considered in lease terms if reasonably expected to be exercised.

ASC 842 requires a lessee to use the rate implicit in the lease whenever that rate is readily determinable, otherwise the incremental borrowing rate (“IBR”) should be used. Given the nature of the Company’s lease portfolio, which consists of leases of hangar spaces, aircraft, vehicles, copiers, buildings, aircraft equipment, the implicit rate is often unavailable. In such cases, the Company uses its incremental borrowing rate as the discount rate. The IBR is the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. The determination of the IBR requires judgment and is derived from the Company’s weighted average cost of capital.

Components of the Company’s operating and finance lease assets and liabilities as of December 31, 2024 and 2023 are as follows:

		As of December 31,
$s in thousands	Financial Statement Line Item	2024		2023
Assets
Operating lease right-of-use asset	Other noncurrent assets	$	7,951	$	7,777
Finance lease right-of-use asset, net	Property, plant and equipment, net	36		40
Liabilities
Operating lease right-of-use liabilities (current)	Operating right-of-use liability (current)	$	1,835	$	2,153
Finance lease right-of-use liabilities (current)	Accrued expenses and other current liabilities	11		22
Operating lease right-of-use liabilities (non-current)	Operating right-of-use liability (noncurrent)	6,083		5,779
Finance lease right-of-use liabilities (non-current)	Accrued expenses and other noncurrent liabilities	26		24

The Company leases various property and premises on a short-term basis and leases some of its premises under non-cancelable operating leases that expire on various dates through January 2052.

The Company recorded $2.1 million and $1.5 million of expenses associated with these operating leases in Cost of Revenues and Selling, general and administrative expense in the Consolidated Statements of Operations for the years ended December 31, 2024 and 2023. The Company recorded expenses associated with finance leases in Cost of revenues and Selling, general and administrative expense in the Consolidated Statements of Operations.

Supplemental cash flow information related to leases is as follows:

	Year Ended December 31,
$s in thousands	2024		2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2,222	$	1,208
Operating cash flows from finance leases	18		22
Financing cash flows from finance leases	3		6
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	1,262	$	7,940
Operating lease from purchase consideration of FMS acquisition	1,016		—

As of December 31, 2024, future minimum lease payments are as follows:

$s in thousands	Operating Leases			Finance Leases
Year Ending December 31:
2025	$	2,434		$	14
2026	2,301			9
2027	2,191			9
2028	1,077			9
2029	238			4
Thereafter	2,253			—
Total lease payments	10,494			45
Less: interest	(2,540)			(8)
Total lease liabilities	$	7,954		$	37
Weighted average remaining lease term:	8.1 years			4.1 years
Weighted average discount rate:	9.0		%	10.6		%

Leases

NOTE 16 – LEASES

Under ASC 842, leases are separated into two classifications: operating leases and financial leases. Lease classification under ASC 842 is relatively similar to ASC 840. For a lease to be classified as a finance lease, it must meet one of the five finance lease criteria: (1) transference of title/ownership to the lessee, (2) reasonably certain to exercise a purchase option, (3) lease term for major part of the remaining economic life of the asset, (4) present value represents substantially all of the fair value of the asset and (5) asset specialization. Any lease that does not meet these criteria is classified as an operating lease. ASC 842 requires all leases to be recognized on the Company’s balance sheet. Specifically, for operating leases, the Company recognizes a right-of-use asset and a corresponding lease liability upon lease commitment.

Company as a lessee

The Company is the lessee in a lease contract when the Company obtains the right to use the asset. The right-of-use asset represents the Company’s right to use an underlying asset for the lease term and lease obligations represent the Company’s obligations to make lease payments arising from the lease, both of which are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The Company has also elected the short-term lease exception whereby leases with a term of 12 months or less at inception are not recorded on the Consolidated Balance Sheets and are expensed on a straight-line basis over the lease term in our Consolidated Statements of Operations. The Company determines the lease term by agreement with the lessor. Options to renew are considered in lease terms if reasonably expected to be exercised.

ASC 842 requires a lessee to use the rate implicit in the lease whenever that rate is readily determinable, otherwise the incremental borrowing rate (“IBR”) should be used. Given the nature of the Company’s lease portfolio, which consists of leases of hangar spaces, aircraft, vehicles, copiers, buildings, aircraft equipment, the implicit rate is often unavailable. In such cases, the Company uses its incremental borrowing rate as the discount rate. The IBR is the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. The determination of the IBR requires judgment and is derived from the Company’s weighted average cost of capital.

Components of the Company’s operating and finance lease assets and liabilities as of December 31, 2024 and 2023 are as follows:

		As of December 31,
$s in thousands	Financial Statement Line Item	2024		2023
Assets
Operating lease right-of-use asset	Other noncurrent assets	$	7,951	$	7,777
Finance lease right-of-use asset, net	Property, plant and equipment, net	36		40
Liabilities
Operating lease right-of-use liabilities (current)	Operating right-of-use liability (current)	$	1,835	$	2,153
Finance lease right-of-use liabilities (current)	Accrued expenses and other current liabilities	11		22
Operating lease right-of-use liabilities (non-current)	Operating right-of-use liability (noncurrent)	6,083		5,779
Finance lease right-of-use liabilities (non-current)	Accrued expenses and other noncurrent liabilities	26		24

The Company leases various property and premises on a short-term basis and leases some of its premises under non-cancelable operating leases that expire on various dates through January 2052.

The Company recorded $2.1 million and $1.5 million of expenses associated with these operating leases in Cost of Revenues and Selling, general and administrative expense in the Consolidated Statements of Operations for the years ended December 31, 2024 and 2023. The Company recorded expenses associated with finance leases in Cost of revenues and Selling, general and administrative expense in the Consolidated Statements of Operations.

Supplemental cash flow information related to leases is as follows:

	Year Ended December 31,
$s in thousands	2024		2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2,222	$	1,208
Operating cash flows from finance leases	18		22
Financing cash flows from finance leases	3		6
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	1,262	$	7,940
Operating lease from purchase consideration of FMS acquisition	1,016		—

As of December 31, 2024, future minimum lease payments are as follows:

$s in thousands	Operating Leases			Finance Leases
Year Ending December 31:
2025	$	2,434		$	14
2026	2,301			9
2027	2,191			9
2028	1,077			9
2029	238			4
Thereafter	2,253			—
Total lease payments	10,494			45
Less: interest	(2,540)			(8)
Total lease liabilities	$	7,954		$	37
Weighted average remaining lease term:	8.1 years			4.1 years
Weighted average discount rate:	9.0		%	10.6		%