Leases

12 Months Ended

Dec. 31, 2020

Leases [Abstract]

Leases

Leases

The Company leases property used for distribution centers, office space, and Bolt branch locations throughout the U.S. and Canada, along with various equipment located in distribution centers and corporate headquarters.

The expenses and income generated by the leasing activity of Lawson as lessee for the years ended December 31, 2020 and December 31, 2019 were as follows:

		(Dollars in Thousands)
		Year Ended December 31,
Lease Type	Classification	2020		2019
Consolidated Operating Lease Expense (1)	Operating expenses	$	4,999	$	4,729
Consolidated Financing Lease Amortization	Operating expenses	226		206
Consolidated Financing Lease Interest	Interest expense	28		30
Consolidated Financing Lease Expense		254		236
Sublease Income (2)	Operating expenses	—		(160)
Net Lease Cost		$	5,253	$	4,805

(1) Includes short term lease expense, which is immaterial

(2) Sublease income from sublease of a portion of the Company headquarters. The sublease was terminated in June 2019 and the Company has no other subleases

The value of the net assets and liabilities generated by the leasing activity of Lawson as lessee as of December 31, 2020 were as follows:

	(Dollars in Thousands)
	Year Ended December 31,
Lease Type	2020		2019
Total ROU operating lease assets (1)	$	8,246	$	10,592
Total ROU financing lease assets (2)	518		654
Total lease assets	$	8,764	$	11,246
Total current operating lease obligation	$	4,360	$	3,591
Total current financing lease obligation	208		239
Total current lease obligations	$	4,568	$	3,830
Total long term operating lease obligation	$	5,498	$	9,133
Total long term financing lease obligation	240		371
Total long term lease obligation	$	5,738	$	9,504

(1) Operating lease assets are recorded net of accumulated amortization of $5.9 million and $1.2 million as of December 31, 2020 and December 31, 2019, respectively

(2) Financing lease assets are recorded net of accumulated amortization of $0.4 million and $0.2 million as of December 31, 2020 and December 31, 2019, respectively

The value of the lease liabilities generated by the leasing activities of Lawson as lessee as of December 31, 2020 were as follows (Dollars in thousands):

Year Ended December 31,	Operating Leases		Financing Leases		Total
2021	$	4,719	$	219	$	4,938
2022	3,212		143		3,355
2023	1,471		89		1,560
2024	509		25		534
2025	168		—		168
Thereafter	462		—		462
Total lease payments	10,541		476		11,017
Less: Interest	683		28		711
Present value of lease liabilities	$	9,858	$	448	$	10,306

(1)     Of the $10.5 million future minimum operating lease commitments outstanding at December 31, 2020, $2.2 million relates to a lease for the Company's headquarters which expires in March 2023

(2)     The Company has an operating lease for the McCook Facility which expires in June 2022 and includes future minimum lease payments of $2.6 million

The weighted average lease terms and interest rates of the leases held by Lawson as of December 31, 2020 are as follows:

Lease Type	Weighted Average Term in Years	Weighted Average Interest Rate
Operating Leases	2.9	5.2%
Financing Leases	2.5	5.3%

The cash outflows of the leasing activity of Lawson as lessee for the year ending December 31, 2020 are as follows (Dollars in thousands):

Cash Flow Source	Classification	Amount
Operating cash flows from operating leases	Operating activities	$	4,256
Operating cash flows from financing leases	Operating activities	28
Financing cash flows from financing leases	Financing activities	257

McCook Lease Adjustment

Subsequent to the adoption of ASC 842 in 2019 the Company recorded a non-cash transaction to establish $1.7 million of operating ROU assets, for which $1.7 million of operating lease liabilities were incurred. Also, in 2019 the Company recorded a non-cash transaction to establish $0.4 million of financing ROU assets, for which $0.4 million of financing lease liabilities were incurred.

Lawson as Lessor

Prior to acquisition, Partsmaster leased parts washer machines to customers through its Torrents leasing program. The Torrents leasing program comprised a minor portion of the Partsmaster business. The Company will continue the leasing program for the foreseeable future. These leases are classified as operating leases. The leased machines are recognized as fixed assets on the Company's consolidated balance sheet and the leasing revenue is recognized on a straight line basis. The Torrents machine leasing program generated $0.9 million of revenue in 2020 post-acquisition.

Leases

Leases

The Company leases property used for distribution centers, office space, and Bolt branch locations throughout the U.S. and Canada, along with various equipment located in distribution centers and corporate headquarters.

The expenses and income generated by the leasing activity of Lawson as lessee for the years ended December 31, 2020 and December 31, 2019 were as follows:

		(Dollars in Thousands)
		Year Ended December 31,
Lease Type	Classification	2020		2019
Consolidated Operating Lease Expense (1)	Operating expenses	$	4,999	$	4,729
Consolidated Financing Lease Amortization	Operating expenses	226		206
Consolidated Financing Lease Interest	Interest expense	28		30
Consolidated Financing Lease Expense		254		236
Sublease Income (2)	Operating expenses	—		(160)
Net Lease Cost		$	5,253	$	4,805

(1) Includes short term lease expense, which is immaterial

(2) Sublease income from sublease of a portion of the Company headquarters. The sublease was terminated in June 2019 and the Company has no other subleases

The value of the net assets and liabilities generated by the leasing activity of Lawson as lessee as of December 31, 2020 were as follows:

	(Dollars in Thousands)
	Year Ended December 31,
Lease Type	2020		2019
Total ROU operating lease assets (1)	$	8,246	$	10,592
Total ROU financing lease assets (2)	518		654
Total lease assets	$	8,764	$	11,246
Total current operating lease obligation	$	4,360	$	3,591
Total current financing lease obligation	208		239
Total current lease obligations	$	4,568	$	3,830
Total long term operating lease obligation	$	5,498	$	9,133
Total long term financing lease obligation	240		371
Total long term lease obligation	$	5,738	$	9,504

(1) Operating lease assets are recorded net of accumulated amortization of $5.9 million and $1.2 million as of December 31, 2020 and December 31, 2019, respectively

(2) Financing lease assets are recorded net of accumulated amortization of $0.4 million and $0.2 million as of December 31, 2020 and December 31, 2019, respectively

The value of the lease liabilities generated by the leasing activities of Lawson as lessee as of December 31, 2020 were as follows (Dollars in thousands):

Year Ended December 31,	Operating Leases		Financing Leases		Total
2021	$	4,719	$	219	$	4,938
2022	3,212		143		3,355
2023	1,471		89		1,560
2024	509		25		534
2025	168		—		168
Thereafter	462		—		462
Total lease payments	10,541		476		11,017
Less: Interest	683		28		711
Present value of lease liabilities	$	9,858	$	448	$	10,306

(1)     Of the $10.5 million future minimum operating lease commitments outstanding at December 31, 2020, $2.2 million relates to a lease for the Company's headquarters which expires in March 2023

(2)     The Company has an operating lease for the McCook Facility which expires in June 2022 and includes future minimum lease payments of $2.6 million

The weighted average lease terms and interest rates of the leases held by Lawson as of December 31, 2020 are as follows:

Lease Type	Weighted Average Term in Years	Weighted Average Interest Rate
Operating Leases	2.9	5.2%
Financing Leases	2.5	5.3%

The cash outflows of the leasing activity of Lawson as lessee for the year ending December 31, 2020 are as follows (Dollars in thousands):

Cash Flow Source	Classification	Amount
Operating cash flows from operating leases	Operating activities	$	4,256
Operating cash flows from financing leases	Operating activities	28
Financing cash flows from financing leases	Financing activities	257

McCook Lease Adjustment

Subsequent to the adoption of ASC 842 in 2019 the Company recorded a non-cash transaction to establish $1.7 million of operating ROU assets, for which $1.7 million of operating lease liabilities were incurred. Also, in 2019 the Company recorded a non-cash transaction to establish $0.4 million of financing ROU assets, for which $0.4 million of financing lease liabilities were incurred.

Lawson as Lessor

Prior to acquisition, Partsmaster leased parts washer machines to customers through its Torrents leasing program. The Torrents leasing program comprised a minor portion of the Partsmaster business. The Company will continue the leasing program for the foreseeable future. These leases are classified as operating leases. The leased machines are recognized as fixed assets on the Company's consolidated balance sheet and the leasing revenue is recognized on a straight line basis. The Torrents machine leasing program generated $0.9 million of revenue in 2020 post-acquisition. The Company has adopted the practical expedient not to separate non-lease components that would be within the scope of ASC 606 from the associated lease components as the relevant criteria under ASC 842 are met.