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Note 9 - Leases

12 Months Ended

Dec. 31, 2023

9.	*Leases*:

The Company leases warehouses and office space, industrial equipment, office equipment, vehicles, industrial gas tanks and forklifts from other parties and leases warehouse space to third parties. The Company determines if a contract contains a lease when the contract conveys the right to control the use of identified assets for a period of time in exchange for consideration. Upon identification and commencement of a lease, the Company establishes a right-of-use (ROU) asset and a lease liability. Operating leases are included in ROU assets, current portion of lease liabilities, and lease liabilities on the accompanying Consolidated Balance Sheets. Financing leases are included in property, plant and equipment, other accrued liabilities and other long-term liabilities.

The Company has remaining lease terms ranging from 1 year to 15 years, some of these include options to renew the lease for up to five years. The total lease term is determined by considering the initial term per the lease agreement, which is adjusted to include any renewal options that the Company is reasonably certain to exercise as well as any period that the Company has control over the space before the stated initial term of the agreement. If the Company determines a reasonable certainty of exercising termination or early buyout options, then the lease terms are adjusted to account for these facts.

The Company leases one warehouse from a related party. The Company’s Executive Chairman of the Board owns 50% of an entity that owns one of the Cleveland warehouses and leases it to the Company at a fair market value annual rental of $0.2 million. The lease expires on December 31, 2028 with two five-year renewal options.

ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of the leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. Lease expense is recognized on a straight-line basis over the lease term.

The components of lease expense were as follows for the years ended December 31, 2023, 2022 and 2021:

(in thousands)	*2023*		*2022*		*2021*
Operating lease cost	$	9,008	$	7,446	$	6,952
Finance lease cost
Amortization		1,056		720		721
Interest on lease liabilities		157		67		71
	$	1,213	$	787	$	792

Supplemental cash flow information related to leases was as follows for the years ended December 31, 2023, 2022 and 2021:

(in thousands)	*2023*		*2022*		*2021*

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	8,901	$	7,268	$	6,830
Operating cash flows from finance leases		157		67		71
Financing cash flows from finance leases		1,039		703		828
Total cash paid for amounts included in the measurement of lease liabilities	$	10,097	$	8,038	$	7,729

Supplemental balance sheet information related to leases was as follows:

(in thousands)	*2023*			*2022*

Operating leases
Operating lease	$	56,117		$	45,987
Operating lease accumulated amortization		(21,737	)		(17,763	)
Operating lease right of use asset, net	$	34,380		$	28,224

Operating lease current liabilities		7,813			6,098
Operating lease liabilities		27,261			22,655
	$	35,074		$	28,753

(in thousands)	*2023*			*2022*
Finance leases
Finance lease	$	5,686		$	3,144
Finance lease accumulated depreciation		(2,615	)		(1,585	)
Finance lease, net	$	3,071		$	1,559

Finance lease current liabilities		1,087			594
Finance lease liabilities		2,106			1,025
	$	3,193		$	1,619

Weighted average remaining lease term (in years)	*2023*			*2022*
Operating leases		6			6
Finance leases		4			3

Weighted average discount rate
Operating leases		4.07	%		3.41	%
Finance leases		5.06	%		3.56	%

Maturities of lease liabilities were as follows:

(in thousands)	*Operating Lease*			*Finance Lease*
Year Ending December 31,
2024	$	9,040		$	1,218
2025		7,482			910
2026		6,307			618
2027		5,049			417
2028		3,782			300
Thereafter		8,139			39
Total future minimum lease payments	$	39,799		$	3,502
Less remaining imputed interest		(4,725	)		(309	)
Total	$	35,074		$	3,193