Leases

3 Months Ended

Mar. 31, 2025

13. Leases

The Company determines if an arrangement is a lease at inception. The Company has leases for manufacturing facilities, distribution centers, warehouses, office space and equipment, with remaining lease terms of one to eleven years. Certain of these leases include options to extend the lease for up to five years, and some include options to terminate the lease early. Leases with an initial term of 12 months or less are not recorded on the statement of financial position; the Company recognizes lease expense for these short-term leases on a straight-line basis over the lease term. Operating leases with an initial term greater than 12 months are included in Right of use asset – operating leases (“ROU assets”), Operating lease liability – short term, and Operating lease liability – long term and finance leases are included in Property, plant and equipment, Finance lease liability – short term, and Finance lease liability – long term in the Condensed Consolidated Statements of Financial Position (Unaudited).

The ROU assets represent the right to use an underlying asset for the lease term and the lease liabilities represent the obligation to make lease payments. ROU assets and lease liabilities are recognized at commencement date based on the present value of the lease payments over the lease term. When leases do not provide an implicit rate, the Company’s incremental borrowing rate is used, which is then applied at the portfolio level, based on the information available at commencement date in determining the present value of lease payments. The Company has also elected not to separate lease and non-lease components. The lease terms include options to extend or terminate the lease when it is reasonably certain the option will be exercised. Lease expense is recognized on a straight-line basis over the lease term.

Amounts included in the Condensed Consolidated Statements of Financial Position (Unaudited) related to leases include:


		March 31,		December 31,
	Classification	2025		2024
Assets:
Operating lease assets	Right of use asset - operating leases	$	29,413	$	30,561
Finance lease assets	Property, plant and equipment, net		7,741		7,927
Total lease assets		$	37,154	$	38,488

Liabilities:
Current	Operating lease liability - short-term	$	6,717	$	6,597
Long-term	Operating lease liability - long-term		22,527		23,700
Total operating lease liabilities			29,244		30,297
Current	Finance lease liability - short-term		627		621
Long-term	Finance lease liability - long-term		7,834		7,994
Total finance lease liabilities			8,461		8,615
Total lease liabilities		$	37,705	$	38,912

The components of lease expense include:


		For the Quarter Ended March 31,
Lease Cost	Classification	2025		2024
Operating lease cost (1)	Cost of sales	$	1,790	$	1,732
Operating lease cost (1)	Selling, general and administrative expenses		987		964
Finance lease cost
Amortization expense	Cost of sales		185		185
Interest expense on lease liabilities	Interest expense, net		77		83
Total lease cost		$	3,039	$	2,964

(1)

Includes short-term leases and variable lease costs, which are immaterial

Supplemental cash flow information related to leases was as follows:


	For the Quarter Ended March 31,
Supplemental Cash Flow Information	2025		2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2,092	$	2,007
Operating cash flows from finance leases	$	77	$	83
Financing cash flows from finance leases	$	154	$	143
Right-of-use assets obtained in exchange for new lease liabilities:
Operating leases	$	583	$	4,417
Finance leases	$	—	$	—


Lease Term and Discount Rate	March 31, 2025			December 31, 2024
Weighted-average remaining lease term (years):
Operating leases		4.71			4.93
Finance leases		10.75			11.00
Weighted-average discount rate:
Operating leases		6.3	%		6.3	%
Finance leases		3.7	%		3.7	%


Maturity of Lease Liabilities - As of March 31, 2025	Operating Leases			Finance Leases			Total
2025 (1)	$	6,269		$	693		$	6,962
2026		8,116			924			9,040
2027		6,929			945			7,874
2028		4,950			950			5,900
2029		3,258			950			4,208
After 2029		3,849			5,758			9,607
Total lease payments		33,371			10,220			43,591
Less: interest		(4,127	)		(1,759	)		(5,886	)
Present value of lease liabilities	$	29,244		$	8,461		$	37,705

(1)

Represents amounts due in 2025 after March 31, 2025