Leases

12 Months Ended

Dec. 31, 2024

9. Leases

The Company determines if a contractual arrangement qualifies as a lease at inception. The Company’s leases primarily relate to facilities, vehicles, and equipment. Lease assets represent the Company’s right to use an underlying asset for the lease term, while lease liabilities represent the obligation to make lease payments arising from the lease. Lease assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company’s incremental borrowing rate is used as a discount rate, based on the information available at the commencement date, in determining the present value of lease payments. Lease assets also include the impact of any prepayments made and are reduced by the impact of any lease incentives.

The Company does not recognize lease liabilities or lease assets on the balance sheet for short-term leases (leases with a lease term of twelve months or less as of the commencement date). Rather, any short-term lease payments are recognized as an expense on a straight-line basis over the lease term. The current period short-term lease expense reasonably reflects the Company's short-term lease commitments.

For all classifications of leases, the Company combines lease and non-lease components to account for them as a single lease component. Variable lease payments are excluded from the lease liability and recognized in the period in which the obligation is incurred. Additionally, lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise the option.

A summary of the Company’s lease portfolio as of December 31, 2024, and 2023, is presented in the table below:


(U.S. Dollars, in thousands, except lease term and discount rate)	Classification	December 31, 2024			December 31, 2023
Assets
Operating leases	Other long-term assets	$	17,238		$	19,869
Finance leases	Property, plant and equipment, net		15,386			16,345
Total lease assets		$	32,624		$	36,214
Liabilities
Current
Operating leases	Other current liabilities	$	4,023		$	3,477
Finance leases	Current portion of finance lease liability		755			708
Long-term
Operating leases	Other long-term liabilities		14,084			17,125
Finance leases	Long-term portion of finance lease liability		17,835			18,532
Total lease liabilities		$	36,697		$	39,842

Weighted Average Remaining Lease Term
Operating leases		5.4 years			6.2 years
Finance leases		15.6 years			16.6 years

Weighted Average Discount Rate
Operating leases			7.6	%		7.3	%
Finance leases			4.4	%		4.4	%

The components of lease costs were as follows:


(U.S. Dollars, in thousands)	For the Year Ended December 31, 2024		For the Year Ended December 31, 2023		For the Year Ended December 31, 2022
Finance lease costs:
Amortization of right-of-use assets	$	1,014	$	1,013	$	1,238
Interest on finance lease liabilities		832		857		890
Operating lease costs		5,257		5,015		2,126
Short-term lease costs		249		313		152
Variable lease costs		1,796		1,883		932
Total lease costs	$	9,148	$	9,081	$	5,338

Supplemental cash flow information related to leases was as follows:


(U.S. Dollars, in thousands)	For the Year Ended December 31, 2024		For the Year Ended December 31, 2023		For the Year Ended December 31, 2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	8,917	$	7,682	$	3,805
Operating cash flows from finance leases		831		857		885
Financing cash flows from finance leases		706		652		2,594
Right-of-use assets obtained in exchange for lease obligations
Operating leases		1,449		16,688		5,603
Finance leases		55		—		—

A summary of the Company’s remaining lease liabilities as of December 31, 2024, is included below:


(U.S. Dollars, in thousands)	Operating Leases			Finance Leases
2025	$	5,185		$	1,553
2026		5,006			1,581
2027		3,651			1,612
2028		1,841			1,643
2029		1,636			1,662
Thereafter		5,116			17,740
Total undiscounted value of lease liabilities		22,435			25,791
Less: Interest		(4,328	)		(7,201	)
Present value of lease liabilities	$	18,107		$	18,590

Current portion of lease liabilities	$	4,023		$	755
Long-term portion of lease liabilities		14,084			17,835
Total lease liabilities	$	18,107		$	18,590