Leases

9 Months Ended

Sep. 30, 2023

Note 8. Leases

We have operating and finance leases for our manufacturing facilities, warehouses, office space, automobiles, and certain equipment. Our leases have remaining lease terms of up to eleven years, some of which may include one or more five-year renewal options. We have not included any of the renewal options in our operating lease payments as we concluded that it is not reasonably certain that we will exercise any of these renewal options. Leases with an initial term of twelve months or less are not recorded on the balance sheet. Operating lease expense is recognized on a straight-line basis over the lease term. Finance leases are not material.

The following tables provide quantitative disclosures related to our operating leases and include all operating leases acquired from the date of acquisition (in thousands):

Balance Sheet Information	September 30, 2023			December 31, 2022
Assets
Operating lease right-of-use assets	$	99,067		$	49,838

Liabilities
Sundry payables and accrued expenses	$	15,819		$	10,763
Noncurrent operating lease liabilities		88,186			40,709
Total operating lease liabilities	$	104,005		$	51,472

Weighted Average Remaining Lease Term
Operating leases	8.5 Years			7 Years

Weighted Average Discount Rate
Operating leases		4.7	%		3.7	%

Expense and Cash Flow Information	Three Months Ended September 30,
	2023		2022
Lease Expense
Operating lease expense (a)	$	4,762	$	2,817

	Nine Months Ended September 30,
	2023		2022
Lease Expense
Operating lease expense (a)	$	11,647	$	8,358

Supplemental Cash Flow Information
Cash paid for the amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	8,212	$	8,188
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases (b)	$	61,929	$	26,206

(a)

Excludes expenses of approximately $1.3 million and $2.6 million for the three and nine months ended September 30, 2023, respectively, and approximately $0.8 million and $1.9 million for the comparable periods in 2022, respectively, related to non-lease components such as maintenance, property taxes, etc., and operating lease expense for leases with an initial term of 12 months or less, which is not material.

(b)

Includes $27.8 million of right-of-use assets related to the lease modification and extension for our distribution center and office in Lewisville, Texas; $26.1 million of right-of-use assets related to the new distribution center in Shawnee, Kansas; and $4.4 million of right-of-use assets obtained in Gwo Yng step-acquisition during the nine months ended September 30, 2023.

Minimum Lease Payments

At September 30, 2023, we are obligated to make minimum lease payments through 2034, under operating leases, which are as follows (in thousands):

2023	$	3,697
2024		16,850
2025		15,257
2026		14,021
2027		12,982
Thereafter		66,854
Total lease payments	$	129,661
Less: Interest		(25,656	)
Present value of lease liabilities	$	104,005