LEASES

12 Months Ended

Dec. 31, 2024

Leases [Abstract]

LEASES

LEASES

The Company has both real estate leases and equipment leases. The main types of equipment leases include forklifts, trailers, printers and copiers, railcars, and trucks. Leases are categorized as both operating leases and finance leases. As a result of electing the practical expedient within ASU 2016-02, variable lease payments are combined and recognized on the balance sheet in the event that those charges and any related increases are explicitly stated in the lease. Such payments include common area maintenance charges, property taxes, and insurance charges and are recorded in the right of use asset and corresponding liability when the payments are stated in the lease with (a) fixed or in-substance fixed amounts, or (b) a variable payment based on an index or rate. Due to the acquisitive nature of the Company and the potential for synergies upon integration of acquired entities, the Company determined that the reasonably certain criterion could not be met for any renewal periods beginning two years from December 31, 2024. In addition, the Company has historically not been exercising purchase options under the equipment leases as it does not make economic sense to buy the equipment. Instead, the Company has historically replaced the equipment with new leases. Therefore, the Company determined that the reasonably certain criterion could not be met as it relates to purchase options. The Company has no residual value guarantees in lease transactions.

The Company did not identify any embedded leases. As indicated above, the Company elected the practical expedient to combine lease and non-lease components and recognizes the combined amount on the consolidated balance sheet. Management determined that since the Company has a centralized treasury function, the parent company would either fund or guarantee a subsidiary's loan for borrowing over a similar term. As such, the Company's management determined it is appropriate to utilize a corporate based borrowing rate for all locations. The Company developed four tranches of leases based on lease terms and these tranches reflect the composition of the current lease portfolio. The Company's borrowing history shows that interest rates of a term loan or a line of credit depend on the duration of the loan rather than the nature of the assets purchased by those funds. Based on this understanding, the Company elected to use a portfolio approach to discount rates, applying corporate rates to the tranches of leases based on lease terms. Based on the Company's risk rating, the company applied the following discount rates for new leases entered into during 2024: (1) 1-2 years, 6.76%-6.25% (2) 3-4 years, 7.35%-6.84% (3) 5-9 years, 7.69%-7.18% and (4) 10+ years, 8.41%-7.90%.

Right of use assets and lease liabilities at December 31, 2024 and 2023 are summarized as follows:

Right of use assets	2024		2023
Operating leases	$	15,320	$	17,763
Finance lease	1,730		2,101
Total	$	17,050	$	19,864

Lease liabilities - current	2024		2023
Operating leases	$	3,134	$	3,949
Finance lease	194		272
Total	$	3,328	$	4,221

Lease liabilities - non-current	2024		2023
Operating leases	$	12,967	$	14,601
Finance lease	1,749		1,943
Total	$	14,716	$	16,544

For the years ended December 31, 2024, 2023, and 2022, the Company's total lease costs were as follows, which included both amounts recognized in profits or losses during the period and amounts capitalized on the balance sheet, and the cash flows arising from lease transactions:

	Year ended December 31,
	2024			2023			2022
Lease Cost
Operating lease cost	$	5,456		$	5,307		$	4,478
Finance Lease cost
Amortization of ROU asset	232			242			210
Interest on lease liabilities	105			115			125
Total finance lease	337			357			335
Total lease cost	$	5,793		$	5,664		$	4,813
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	5,454		$	4,757		$	4,269
Operating cash flows from finance leases	105			115			125
Financing cash flows from finance leases	216			222			177
	$	5,775		$	5,094		$	4,571
ROU assets obtained in exchange for new operating lease liabilities, net of ROU asset disposals	$	1,669		$	6,365		$	11,488
Weighted-average remaining lease term - operating leases	9.03 years			9.33 years			5.63 years
Weighted-average remaining lease term - finance leases	8.37 years			9.07 years			9.95 years
Weighted-average discount rate - operating leases	7.6		%	7.4		%	2.7		%
Weighted-average discount rate - finance leases	5.1		%	5.0		%	5.0		%

Rent expense charged to operations under operating lease agreements for 2024, 2023, and 2022 aggregated approximately $5,456, $5,307, and $4,478, respectively.

Aggregate future minimum rental payments required under non-cancelable operating and finance leases at December 31, 2024 are as follows:

Year
2025	$	5,008
2026	4,399
2027	3,155
2028	2,393
2029	1,937
Thereafter	5,819
Total minimum lease payments	$	22,711

LEASES

LEASES

The Company has both real estate leases and equipment leases. The main types of equipment leases include forklifts, trailers, printers and copiers, railcars, and trucks. Leases are categorized as both operating leases and finance leases. As a result of electing the practical expedient within ASU 2016-02, variable lease payments are combined and recognized on the balance sheet in the event that those charges and any related increases are explicitly stated in the lease. Such payments include common area maintenance charges, property taxes, and insurance charges and are recorded in the right of use asset and corresponding liability when the payments are stated in the lease with (a) fixed or in-substance fixed amounts, or (b) a variable payment based on an index or rate. Due to the acquisitive nature of the Company and the potential for synergies upon integration of acquired entities, the Company determined that the reasonably certain criterion could not be met for any renewal periods beginning two years from December 31, 2024. In addition, the Company has historically not been exercising purchase options under the equipment leases as it does not make economic sense to buy the equipment. Instead, the Company has historically replaced the equipment with new leases. Therefore, the Company determined that the reasonably certain criterion could not be met as it relates to purchase options. The Company has no residual value guarantees in lease transactions.

The Company did not identify any embedded leases. As indicated above, the Company elected the practical expedient to combine lease and non-lease components and recognizes the combined amount on the consolidated balance sheet. Management determined that since the Company has a centralized treasury function, the parent company would either fund or guarantee a subsidiary's loan for borrowing over a similar term. As such, the Company's management determined it is appropriate to utilize a corporate based borrowing rate for all locations. The Company developed four tranches of leases based on lease terms and these tranches reflect the composition of the current lease portfolio. The Company's borrowing history shows that interest rates of a term loan or a line of credit depend on the duration of the loan rather than the nature of the assets purchased by those funds. Based on this understanding, the Company elected to use a portfolio approach to discount rates, applying corporate rates to the tranches of leases based on lease terms. Based on the Company's risk rating, the company applied the following discount rates for new leases entered into during 2024: (1) 1-2 years, 6.76%-6.25% (2) 3-4 years, 7.35%-6.84% (3) 5-9 years, 7.69%-7.18% and (4) 10+ years, 8.41%-7.90%.

Right of use assets and lease liabilities at December 31, 2024 and 2023 are summarized as follows:

Right of use assets	2024		2023
Operating leases	$	15,320	$	17,763
Finance lease	1,730		2,101
Total	$	17,050	$	19,864

Lease liabilities - current	2024		2023
Operating leases	$	3,134	$	3,949
Finance lease	194		272
Total	$	3,328	$	4,221

Lease liabilities - non-current	2024		2023
Operating leases	$	12,967	$	14,601
Finance lease	1,749		1,943
Total	$	14,716	$	16,544

For the years ended December 31, 2024, 2023, and 2022, the Company's total lease costs were as follows, which included both amounts recognized in profits or losses during the period and amounts capitalized on the balance sheet, and the cash flows arising from lease transactions:

	Year ended December 31,
	2024			2023			2022
Lease Cost
Operating lease cost	$	5,456		$	5,307		$	4,478
Finance Lease cost
Amortization of ROU asset	232			242			210
Interest on lease liabilities	105			115			125
Total finance lease	337			357			335
Total lease cost	$	5,793		$	5,664		$	4,813
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	5,454		$	4,757		$	4,269
Operating cash flows from finance leases	105			115			125
Financing cash flows from finance leases	216			222			177
	$	5,775		$	5,094		$	4,571
ROU assets obtained in exchange for new operating lease liabilities, net of ROU asset disposals	$	1,669		$	6,365		$	11,488
Weighted-average remaining lease term - operating leases	9.03 years			9.33 years			5.63 years
Weighted-average remaining lease term - finance leases	8.37 years			9.07 years			9.95 years
Weighted-average discount rate - operating leases	7.6		%	7.4		%	2.7		%
Weighted-average discount rate - finance leases	5.1		%	5.0		%	5.0		%

Rent expense charged to operations under operating lease agreements for 2024, 2023, and 2022 aggregated approximately $5,456, $5,307, and $4,478, respectively.

Aggregate future minimum rental payments required under non-cancelable operating and finance leases at December 31, 2024 are as follows:

Year
2025	$	5,008
2026	4,399
2027	3,155
2028	2,393
2029	1,937
Thereafter	5,819
Total minimum lease payments	$	22,711