Annual report pursuant to Section 13 and 15(d)

Leases

v3.22.1
Leases
 12 Months Ended
Dec. 31, 2021
Leases [Abstract]  
Leases Leases
The Company's portfolio of leases contains both finance and operating leases that relate to real estate and manufacturing equipment. Substantially all of the value of the Company's lease portfolio relates to the Master Lease with Store Master Funding XII, LLC (“Store”), an affiliate of Store Capital Corporation ("Store Capital") that was entered into in 2016 and amended with the American Stainless acquisition in 2019 as well as the sale of land at the Munhall facility in 2020. As of December 31, 2021, operating lease liabilities related to the master lease agreement with Store Capital totaled $32.2 million, or 98% of the total lease liabilities on the consolidated balance sheet.

On August 30, 2021, the Company entered into a thirty-eight month operating lease agreement for office space with an entity affiliated with the Company's Interim President and Chief Executive Officer. Pursuant to the terms of the lease agreement, the Company will pay a base rent in the first year of the agreement of $5,364 monthly with an annual increase in October each year of 2.5% through the term of the agreement.

As discussed in Note 2, on October 22, 2021, the Company completed the DanChem acquisition. As part of the acquisition, the Company assumed certain operating and finance leases which were recorded net of preliminary purchase price accounting adjustments. As of December 31, 2021, the balances associated with these leases in the consolidated balance sheet include operating lease assets and liabilities of $0.2 million and finance lease assets and liabilities of $1.6 million.

During the year ended December 31, 2021, the Company had $0.3 million of right-of-use assets recognized in exchange for new operating lease liabilities.

Balance Sheet Presentation
Operating and finance lease amounts included in the consolidated balance sheet are as follows (in thousands):
Year Ended December 31,
Classification Financial Statement Line Item 2021 2020
Operating lease assets Right-of-use assets, operating leases $ 30,811  $ 31,769 
Finance lease assets Property, plant and equipment, net 1,640  56 
Current liabilities Current portion of lease liabilities, operating leases 1,104  867 
Current liabilities Current portion of lease liabilities, finance leases 233  19 
Non-current liabilities Non-current portion of lease liabilities, operating leases 32,059  32,771 
Non-current liabilities Non-current portion of lease liabilities, finance leases $ 1,414  $ 37 

Total Lease Cost
Individual components of the total lease cost incurred by the Company are as follows:
Year Ended December 31,
(in thousands) 2021 2020
Operating lease cost1
$ 4,099  $ 4,124 
Finance lease cost:
Reduction in carrying amount of right-of-use assets 100  92 
Interest on finance lease liabilities 11  24 
Total lease cost $ 4,210  $ 4,240 
1 Includes short term leases and sublease income, which is immaterial

Reduction in carrying amounts of right-of-use assets held under finance leases is included in depreciation expense. Minimum rental payments under operating leases are recognized on a straight-line method over the term of the lease including any periods of free rent and are included in selling, general, and administrative expense on the consolidated statement of operations.
Maturity of Leases
The amounts of undiscounted future minimum lease payments under leases as of December 31, 2021 are as follows:
(in thousands) Operating Finance
2022 $ 3,782  $ 269 
2023 3,818  260 
2024 3,658  246 
2025 3,677  233 
2026 3,683  233 
Thereafter 39,865  543 
Total undiscounted minimum future lease payments 58,483  1,784 
Imputed Interest (25,320) (137)
Total lease liabilities $ 33,163  $ 1,647 

Lease Term and Discount Rate
Year Ended December 31,
2021 2020
Weighted-average discount rate
Operating leases 8.30  % 8.33  %
Finance leases 2.27  % 2.44  %
Weighted-average remaining lease term
Operating leases 14.43 years 15.47 years
Finance leases 7.07 years 2.91 years
Leases Leases
The Company's portfolio of leases contains both finance and operating leases that relate to real estate and manufacturing equipment. Substantially all of the value of the Company's lease portfolio relates to the Master Lease with Store Master Funding XII, LLC (“Store”), an affiliate of Store Capital Corporation ("Store Capital") that was entered into in 2016 and amended with the American Stainless acquisition in 2019 as well as the sale of land at the Munhall facility in 2020. As of December 31, 2021, operating lease liabilities related to the master lease agreement with Store Capital totaled $32.2 million, or 98% of the total lease liabilities on the consolidated balance sheet.

On August 30, 2021, the Company entered into a thirty-eight month operating lease agreement for office space with an entity affiliated with the Company's Interim President and Chief Executive Officer. Pursuant to the terms of the lease agreement, the Company will pay a base rent in the first year of the agreement of $5,364 monthly with an annual increase in October each year of 2.5% through the term of the agreement.

As discussed in Note 2, on October 22, 2021, the Company completed the DanChem acquisition. As part of the acquisition, the Company assumed certain operating and finance leases which were recorded net of preliminary purchase price accounting adjustments. As of December 31, 2021, the balances associated with these leases in the consolidated balance sheet include operating lease assets and liabilities of $0.2 million and finance lease assets and liabilities of $1.6 million.

During the year ended December 31, 2021, the Company had $0.3 million of right-of-use assets recognized in exchange for new operating lease liabilities.

Balance Sheet Presentation
Operating and finance lease amounts included in the consolidated balance sheet are as follows (in thousands):
Year Ended December 31,
Classification Financial Statement Line Item 2021 2020
Operating lease assets Right-of-use assets, operating leases $ 30,811  $ 31,769 
Finance lease assets Property, plant and equipment, net 1,640  56 
Current liabilities Current portion of lease liabilities, operating leases 1,104  867 
Current liabilities Current portion of lease liabilities, finance leases 233  19 
Non-current liabilities Non-current portion of lease liabilities, operating leases 32,059  32,771 
Non-current liabilities Non-current portion of lease liabilities, finance leases $ 1,414  $ 37 

Total Lease Cost
Individual components of the total lease cost incurred by the Company are as follows:
Year Ended December 31,
(in thousands) 2021 2020
Operating lease cost1
$ 4,099  $ 4,124 
Finance lease cost:
Reduction in carrying amount of right-of-use assets 100  92 
Interest on finance lease liabilities 11  24 
Total lease cost $ 4,210  $ 4,240 
1 Includes short term leases and sublease income, which is immaterial

Reduction in carrying amounts of right-of-use assets held under finance leases is included in depreciation expense. Minimum rental payments under operating leases are recognized on a straight-line method over the term of the lease including any periods of free rent and are included in selling, general, and administrative expense on the consolidated statement of operations.
Maturity of Leases
The amounts of undiscounted future minimum lease payments under leases as of December 31, 2021 are as follows:
(in thousands) Operating Finance
2022 $ 3,782  $ 269 
2023 3,818  260 
2024 3,658  246 
2025 3,677  233 
2026 3,683  233 
Thereafter 39,865  543 
Total undiscounted minimum future lease payments 58,483  1,784 
Imputed Interest (25,320) (137)
Total lease liabilities $ 33,163  $ 1,647 

Lease Term and Discount Rate
Year Ended December 31,
2021 2020
Weighted-average discount rate
Operating leases 8.30  % 8.33  %
Finance leases 2.27  % 2.44  %
Weighted-average remaining lease term
Operating leases 14.43 years 15.47 years
Finance leases 7.07 years 2.91 years
Leases Leases
The Company's portfolio of leases contains both finance and operating leases that relate to real estate and manufacturing equipment. Substantially all of the value of the Company's lease portfolio relates to the Master Lease with Store Master Funding XII, LLC (“Store”), an affiliate of Store Capital Corporation ("Store Capital") that was entered into in 2016 and amended with the American Stainless acquisition in 2019 as well as the sale of land at the Munhall facility in 2020. As of December 31, 2021, operating lease liabilities related to the master lease agreement with Store Capital totaled $32.2 million, or 98% of the total lease liabilities on the consolidated balance sheet.

On August 30, 2021, the Company entered into a thirty-eight month operating lease agreement for office space with an entity affiliated with the Company's Interim President and Chief Executive Officer. Pursuant to the terms of the lease agreement, the Company will pay a base rent in the first year of the agreement of $5,364 monthly with an annual increase in October each year of 2.5% through the term of the agreement.

As discussed in Note 2, on October 22, 2021, the Company completed the DanChem acquisition. As part of the acquisition, the Company assumed certain operating and finance leases which were recorded net of preliminary purchase price accounting adjustments. As of December 31, 2021, the balances associated with these leases in the consolidated balance sheet include operating lease assets and liabilities of $0.2 million and finance lease assets and liabilities of $1.6 million.

During the year ended December 31, 2021, the Company had $0.3 million of right-of-use assets recognized in exchange for new operating lease liabilities.

Balance Sheet Presentation
Operating and finance lease amounts included in the consolidated balance sheet are as follows (in thousands):
Year Ended December 31,
Classification Financial Statement Line Item 2021 2020
Operating lease assets Right-of-use assets, operating leases $ 30,811  $ 31,769 
Finance lease assets Property, plant and equipment, net 1,640  56 
Current liabilities Current portion of lease liabilities, operating leases 1,104  867 
Current liabilities Current portion of lease liabilities, finance leases 233  19 
Non-current liabilities Non-current portion of lease liabilities, operating leases 32,059  32,771 
Non-current liabilities Non-current portion of lease liabilities, finance leases $ 1,414  $ 37 

Total Lease Cost
Individual components of the total lease cost incurred by the Company are as follows:
Year Ended December 31,
(in thousands) 2021 2020
Operating lease cost1
$ 4,099  $ 4,124 
Finance lease cost:
Reduction in carrying amount of right-of-use assets 100  92 
Interest on finance lease liabilities 11  24 
Total lease cost $ 4,210  $ 4,240 
1 Includes short term leases and sublease income, which is immaterial

Reduction in carrying amounts of right-of-use assets held under finance leases is included in depreciation expense. Minimum rental payments under operating leases are recognized on a straight-line method over the term of the lease including any periods of free rent and are included in selling, general, and administrative expense on the consolidated statement of operations.
Maturity of Leases
The amounts of undiscounted future minimum lease payments under leases as of December 31, 2021 are as follows:
(in thousands) Operating Finance
2022 $ 3,782  $ 269 
2023 3,818  260 
2024 3,658  246 
2025 3,677  233 
2026 3,683  233 
Thereafter 39,865  543 
Total undiscounted minimum future lease payments 58,483  1,784 
Imputed Interest (25,320) (137)
Total lease liabilities $ 33,163  $ 1,647 

Lease Term and Discount Rate
Year Ended December 31,
2021 2020
Weighted-average discount rate
Operating leases 8.30  % 8.33  %
Finance leases 2.27  % 2.44  %
Weighted-average remaining lease term
Operating leases 14.43 years 15.47 years
Finance leases 7.07 years 2.91 years