Leases

9 Months Ended

Sep. 30, 2020

15. Leases

The Company has leases for equipment, office space, plant sites and distribution centers. Certain of these leases include options to extend the lease and some include options to terminate the lease early. Leases with an initial term of 12 months or less are not recorded on the balance sheet and the related lease expense is recognized on a straight-line basis over the lease term.

There are no leases that have not yet commenced that create significant rights and obligations for the Company.

The components of lease cost are shown below:



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in thousands)	2020		2019		2020		2019		Income Statement Location
Operating lease cost⁽¹⁾	$	1,143	$	1,239	$	3,606	$	3,885	Selling, general and administrative expenses
Operating lease cost⁽²⁾		1,871		2,161		5,608		6,687	Cost of sales
Finance lease cost
Amortization of right-of-use assets		81		45		217		158	Cost of sales
Interest of lease liabilities		10		4		24		10	Interest expense
Net lease cost	$	3,105	$	3,449	$	9,455	$	10,740

(1)Included in operating lease cost is $0.3 million and $0.7 million of short-term lease costs for the three and nine months ended September 30, 2020, respectively, and $0.2 million and $0.6 million for the three and nine months ended September 30, 2019 and $0.1 million and $0.3 million of variable lease costs for the three and nine months ended September 30, 2020, respectively, and $0.1 million and $0.3 million for the three and nine months ended September 30, 2019, respectively.

(2)Included in operating lease cost is $0.7 million and $2.0 million of short-term lease costs for the three and nine months ended September 30, 2020, respectively, and $0.5 and $1.8 million of short-term lease costs for the three and nine months ended September 30, 2019 and $0.1 million and $0.5 million of variable lease costs for the three and nine months ended September 30, 2020, respectively, and $0.2 million and $0.7 million of variable lease costs for the three and nine months ended September 30, 2019, respectively.

Supplemental balance sheet information related to leases is shown below:


	September 30,		December 31,
(Dollars in thousands)	2020		2019		Balance Sheet Location
Assets
Operating leased assets	$	14,246	$	20,088	Operating leased assets
Finance leased assets ⁽¹⁾		1,189		859	Property, plant and equipment, net
Total leased assets	$	15,435	$	20,947
Liabilities
Current
Operating	$	5,262	$	6,515	Accrued expenses and other current liabilities
Finance		564		438	Loans payable and current portion of long-term debt
Noncurrent
Operating		9,000		14,474	Operating lease non-current liabilities
Finance		2,046		1,867	Long-term debt, less current portion
Total lease liabilities	$	16,872	$	23,294

(1)Finance leases are net of accumulated depreciation of $3.4 million and $3.4 million for September 30, 2020 and December 31, 2019, respectively.

Supplemental cash flow information related to leases are shown below:



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in thousands)	2020		2019		2020		2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$	10	$	4	$	24	$	10
Operating cash flows from operating leases		1,922		1,941		5,749		6,610
Financing cash flows from finance leases		97		49		239		151
Leased assets obtained in exchange for new finance lease liabilities		379		419		534		637
Leased assets obtained in exchange for new operating lease liabilities		1,580		1,107		4,142		25,326


	September 30,
	2020
Weighted-average remaining lease term (years)
Operating leases		3.8
Finance leases		5.4
Weighted-average discount rate
Operating leases		4.2%
Finance leases		4.9%

Maturities of lease liabilities are shown below as of September 30, 2020:


	Finance		Operating
(Dollars in thousands)	Leases		Leases
Remaining in 2020	$	201	$	1,788
2021		748		5,834
2022		728		3,607
2023		658		1,842
2024		549		872
2025		443		697
Thereafter		455		1,689
Net minimum lease payments	$	3,782	$	16,329
Less: interest		1,172		2,068
Present value of lease liabilities	$	2,610	$	14,261