Quarterly report pursuant to Section 13 or 15(d)

Leases

v3.23.3
Leases
 9 Months Ended
Sep. 30, 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 September 30, 2023, operating lease liabilities related to the master lease agreement with Store Capital totaled $30.9 million, or 94% of the total lease liabilities on the consolidated balance sheet.
During the three and nine months ended September 30, 2023, the Company entered into new finance lease agreements resulting in an additional $0.1 million and $0.5 million, respectively, of right-of-use assets and lease liabilities.
Balance Sheet Presentation
Operating and finance lease amounts from continuing operations included in the unaudited condensed consolidated balance sheet are as follows (in thousands):
Classification Financial Statement Line Item September 30, 2023 December 31, 2022
Long-term Assets Right-of-use assets, operating leases $ 28,170  $ 29,198 
Long-term Assets Property, plant and equipment 1,624  1,494 
Current liabilities Current portion of lease liabilities, operating leases 1,132  1,029 
Current liabilities Current portion of lease liabilities, finance leases 296  280 
Non-current liabilities Non-current portion of lease liabilities, operating leases 30,051  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 September 30, Nine Months Ended September 30,
(in thousands) 2023 2022 2023 2022
Operating lease cost1
$ 989  $ 1,039  $ 2,971  $ 3,116 
Finance lease cost:
Amortization of right-of-use assets 87  71  251  204 
Interest on finance lease liabilities 24  9  62  27 
Sublease income (91) (32) (273) (96)
Total lease cost $ 1,009  $ 1,087  $ 3,011  $ 3,251 
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 statements of income (loss).
Future expected cash receipts from the Company's sublease as of September 30, 2023 are as follows:
(in thousands) Sublease Receipts
Remainder of 2023 $ 92 
2024 370 
2025 377 
2026 385 
2027 392 
Thereafter 3,786 
Total sublease receipts $ 5,402 
Maturity of Leases
The amounts of undiscounted future minimum lease payments under leases in continuing operations as of September 30, 2023 are as follows:
(in thousands) Operating Finance
Remainder of 2023 $ 916  $ 99 
2024 3,667  367 
2025 3,687  361 
2026 3,703  361 
2027 3,765  361 
Thereafter 36,152  387 
Total undiscounted minimum future lease payments 51,890  1,936 
Imputed interest (20,707) (262)
Present value of lease liabilities $ 31,183  $ 1,674 
Lease Term and Discount Rate
Weighted-average remaining lease term September 30, 2023 December 31, 2022
Operating leases 12.90 years 13.61 years
Finance leases 5.30 years 6.06 years
Weighted-average discount rate
Operating leases 8.32  % 8.31  %
Finance leases 5.92  % 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 September 30, 2023, operating lease liabilities related to the master lease agreement with Store Capital totaled $30.9 million, or 94% of the total lease liabilities on the consolidated balance sheet.
During the three and nine months ended September 30, 2023, the Company entered into new finance lease agreements resulting in an additional $0.1 million and $0.5 million, respectively, of right-of-use assets and lease liabilities.
Balance Sheet Presentation
Operating and finance lease amounts from continuing operations included in the unaudited condensed consolidated balance sheet are as follows (in thousands):
Classification Financial Statement Line Item September 30, 2023 December 31, 2022
Long-term Assets Right-of-use assets, operating leases $ 28,170  $ 29,198 
Long-term Assets Property, plant and equipment 1,624  1,494 
Current liabilities Current portion of lease liabilities, operating leases 1,132  1,029 
Current liabilities Current portion of lease liabilities, finance leases 296  280 
Non-current liabilities Non-current portion of lease liabilities, operating leases 30,051  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 September 30, Nine Months Ended September 30,
(in thousands) 2023 2022 2023 2022
Operating lease cost1
$ 989  $ 1,039  $ 2,971  $ 3,116 
Finance lease cost:
Amortization of right-of-use assets 87  71  251  204 
Interest on finance lease liabilities 24  9  62  27 
Sublease income (91) (32) (273) (96)
Total lease cost $ 1,009  $ 1,087  $ 3,011  $ 3,251 
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 statements of income (loss).
Future expected cash receipts from the Company's sublease as of September 30, 2023 are as follows:
(in thousands) Sublease Receipts
Remainder of 2023 $ 92 
2024 370 
2025 377 
2026 385 
2027 392 
Thereafter 3,786 
Total sublease receipts $ 5,402 
Maturity of Leases
The amounts of undiscounted future minimum lease payments under leases in continuing operations as of September 30, 2023 are as follows:
(in thousands) Operating Finance
Remainder of 2023 $ 916  $ 99 
2024 3,667  367 
2025 3,687  361 
2026 3,703  361 
2027 3,765  361 
Thereafter 36,152  387 
Total undiscounted minimum future lease payments 51,890  1,936 
Imputed interest (20,707) (262)
Present value of lease liabilities $ 31,183  $ 1,674 
Lease Term and Discount Rate
Weighted-average remaining lease term September 30, 2023 December 31, 2022
Operating leases 12.90 years 13.61 years
Finance leases 5.30 years 6.06 years
Weighted-average discount rate
Operating leases 8.32  % 8.31  %
Finance leases 5.92  % 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 September 30, 2023, operating lease liabilities related to the master lease agreement with Store Capital totaled $30.9 million, or 94% of the total lease liabilities on the consolidated balance sheet.
During the three and nine months ended September 30, 2023, the Company entered into new finance lease agreements resulting in an additional $0.1 million and $0.5 million, respectively, of right-of-use assets and lease liabilities.
Balance Sheet Presentation
Operating and finance lease amounts from continuing operations included in the unaudited condensed consolidated balance sheet are as follows (in thousands):
Classification Financial Statement Line Item September 30, 2023 December 31, 2022
Long-term Assets Right-of-use assets, operating leases $ 28,170  $ 29,198 
Long-term Assets Property, plant and equipment 1,624  1,494 
Current liabilities Current portion of lease liabilities, operating leases 1,132  1,029 
Current liabilities Current portion of lease liabilities, finance leases 296  280 
Non-current liabilities Non-current portion of lease liabilities, operating leases 30,051  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 September 30, Nine Months Ended September 30,
(in thousands) 2023 2022 2023 2022
Operating lease cost1
$ 989  $ 1,039  $ 2,971  $ 3,116 
Finance lease cost:
Amortization of right-of-use assets 87  71  251  204 
Interest on finance lease liabilities 24  9  62  27 
Sublease income (91) (32) (273) (96)
Total lease cost $ 1,009  $ 1,087  $ 3,011  $ 3,251 
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 statements of income (loss).
Future expected cash receipts from the Company's sublease as of September 30, 2023 are as follows:
(in thousands) Sublease Receipts
Remainder of 2023 $ 92 
2024 370 
2025 377 
2026 385 
2027 392 
Thereafter 3,786 
Total sublease receipts $ 5,402 
Maturity of Leases
The amounts of undiscounted future minimum lease payments under leases in continuing operations as of September 30, 2023 are as follows:
(in thousands) Operating Finance
Remainder of 2023 $ 916  $ 99 
2024 3,667  367 
2025 3,687  361 
2026 3,703  361 
2027 3,765  361 
Thereafter 36,152  387 
Total undiscounted minimum future lease payments 51,890  1,936 
Imputed interest (20,707) (262)
Present value of lease liabilities $ 31,183  $ 1,674 
Lease Term and Discount Rate
Weighted-average remaining lease term September 30, 2023 December 31, 2022
Operating leases 12.90 years 13.61 years
Finance leases 5.30 years 6.06 years
Weighted-average discount rate
Operating leases 8.32  % 8.31  %
Finance leases 5.92  % 2.32  %