Quarterly report pursuant to Section 13 or 15(d)

Leases

v3.23.1
Leases
 3 Months Ended
Mar. 31, 2023
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 March 31, 2023, operating lease liabilities related to the master lease agreement with Store Capital totaled $31.3 million, or 94% of the total lease liabilities on the consolidated balance sheet.
During the three months ended March 31, 2023, the Company entered into new finance lease agreements resulting in an additional $0.3 million of right-of-use assets and lease liabilities.
Balance Sheet Presentation
Operating and finance lease amounts included in the unaudited condensed consolidated balance sheet are as follows (in thousands):
Classification Financial Statement Line Item March 31, 2023 December 31, 2022
Assets Right-of-use assets, operating leases $ 28,871  $ 29,224 
Assets Property, plant and equipment 1,617  1,494 
Current liabilities Current portion of lease liabilities, operating leases 1,077  1,056 
Current liabilities Current portion of lease liabilities, finance leases 273  280 
Non-current liabilities Non-current portion of lease liabilities, operating leases 30,628  30,911 
Non-current liabilities Non-current portion of lease liabilities, finance leases 1,378  1,242 
Total Lease Cost
Individual components of the total lease cost incurred by the Company are as follows:
Three Months Ended March 31,
(in thousands) 2023 2022
Operating lease cost1
$ 1,000  $ 1,048 
Finance lease cost:
Amortization of right-of-use assets 78  67 
Interest on finance lease liabilities 13  9 
Sublease income (91) (33)
Total lease cost $ 1,000  $ 1,091 
1Includes short term leases, which are 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 unaudited condensed consolidated statement of income.
Future expected cash receipts from the sublease as of March 31, 2023 are as follows:
(in thousands) Sublease Receipts
Remainder of 2023 $ 272 
2024 370 
2025 377 
2026 385 
2027 392 
Thereafter 3,786 
Total sublease receipts $ 5,582 
Maturity of Leases
The amounts of undiscounted future minimum lease payments under leases as of March 31, 2023 are as follows:
(in thousands) Operating Finance
Remainder of 2023 $ 2,736  $ 300 
2024 3,667  333 
2025 3,687  326 
2026 3,703  326 
2027 3,765  326 
Thereafter 36,152  354 
Total undiscounted minimum future lease payments 53,710  1,965 
Imputed interest (22,005) (314)
Present value of lease liabilities $ 31,705  $ 1,651 
Lease Term and Discount Rate
Weighted-average remaining lease term March 31, 2023 December 31, 2022
Operating leases 13.37 years 13.61 years
Finance leases 5.75 years 6.06 years
Weighted-average discount rate
Operating leases 8.32  % 8.31  %
Finance leases 5.85  % 2.32  %
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 March 31, 2023, operating lease liabilities related to the master lease agreement with Store Capital totaled $31.3 million, or 94% of the total lease liabilities on the consolidated balance sheet.
During the three months ended March 31, 2023, the Company entered into new finance lease agreements resulting in an additional $0.3 million of right-of-use assets and lease liabilities.
Balance Sheet Presentation
Operating and finance lease amounts included in the unaudited condensed consolidated balance sheet are as follows (in thousands):
Classification Financial Statement Line Item March 31, 2023 December 31, 2022
Assets Right-of-use assets, operating leases $ 28,871  $ 29,224 
Assets Property, plant and equipment 1,617  1,494 
Current liabilities Current portion of lease liabilities, operating leases 1,077  1,056 
Current liabilities Current portion of lease liabilities, finance leases 273  280 
Non-current liabilities Non-current portion of lease liabilities, operating leases 30,628  30,911 
Non-current liabilities Non-current portion of lease liabilities, finance leases 1,378  1,242 
Total Lease Cost
Individual components of the total lease cost incurred by the Company are as follows:
Three Months Ended March 31,
(in thousands) 2023 2022
Operating lease cost1
$ 1,000  $ 1,048 
Finance lease cost:
Amortization of right-of-use assets 78  67 
Interest on finance lease liabilities 13  9 
Sublease income (91) (33)
Total lease cost $ 1,000  $ 1,091 
1Includes short term leases, which are 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 unaudited condensed consolidated statement of income.
Future expected cash receipts from the sublease as of March 31, 2023 are as follows:
(in thousands) Sublease Receipts
Remainder of 2023 $ 272 
2024 370 
2025 377 
2026 385 
2027 392 
Thereafter 3,786 
Total sublease receipts $ 5,582 
Maturity of Leases
The amounts of undiscounted future minimum lease payments under leases as of March 31, 2023 are as follows:
(in thousands) Operating Finance
Remainder of 2023 $ 2,736  $ 300 
2024 3,667  333 
2025 3,687  326 
2026 3,703  326 
2027 3,765  326 
Thereafter 36,152  354 
Total undiscounted minimum future lease payments 53,710  1,965 
Imputed interest (22,005) (314)
Present value of lease liabilities $ 31,705  $ 1,651 
Lease Term and Discount Rate
Weighted-average remaining lease term March 31, 2023 December 31, 2022
Operating leases 13.37 years 13.61 years
Finance leases 5.75 years 6.06 years
Weighted-average discount rate
Operating leases 8.32  % 8.31  %
Finance leases 5.85  % 2.32  %
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 March 31, 2023, operating lease liabilities related to the master lease agreement with Store Capital totaled $31.3 million, or 94% of the total lease liabilities on the consolidated balance sheet.
During the three months ended March 31, 2023, the Company entered into new finance lease agreements resulting in an additional $0.3 million of right-of-use assets and lease liabilities.
Balance Sheet Presentation
Operating and finance lease amounts included in the unaudited condensed consolidated balance sheet are as follows (in thousands):
Classification Financial Statement Line Item March 31, 2023 December 31, 2022
Assets Right-of-use assets, operating leases $ 28,871  $ 29,224 
Assets Property, plant and equipment 1,617  1,494 
Current liabilities Current portion of lease liabilities, operating leases 1,077  1,056 
Current liabilities Current portion of lease liabilities, finance leases 273  280 
Non-current liabilities Non-current portion of lease liabilities, operating leases 30,628  30,911 
Non-current liabilities Non-current portion of lease liabilities, finance leases 1,378  1,242 
Total Lease Cost
Individual components of the total lease cost incurred by the Company are as follows:
Three Months Ended March 31,
(in thousands) 2023 2022
Operating lease cost1
$ 1,000  $ 1,048 
Finance lease cost:
Amortization of right-of-use assets 78  67 
Interest on finance lease liabilities 13  9 
Sublease income (91) (33)
Total lease cost $ 1,000  $ 1,091 
1Includes short term leases, which are 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 unaudited condensed consolidated statement of income.
Future expected cash receipts from the sublease as of March 31, 2023 are as follows:
(in thousands) Sublease Receipts
Remainder of 2023 $ 272 
2024 370 
2025 377 
2026 385 
2027 392 
Thereafter 3,786 
Total sublease receipts $ 5,582 
Maturity of Leases
The amounts of undiscounted future minimum lease payments under leases as of March 31, 2023 are as follows:
(in thousands) Operating Finance
Remainder of 2023 $ 2,736  $ 300 
2024 3,667  333 
2025 3,687  326 
2026 3,703  326 
2027 3,765  326 
Thereafter 36,152  354 
Total undiscounted minimum future lease payments 53,710  1,965 
Imputed interest (22,005) (314)
Present value of lease liabilities $ 31,705  $ 1,651 
Lease Term and Discount Rate
Weighted-average remaining lease term March 31, 2023 December 31, 2022
Operating leases 13.37 years 13.61 years
Finance leases 5.75 years 6.06 years
Weighted-average discount rate
Operating leases 8.32  % 8.31  %
Finance leases 5.85  % 2.32  %