v3.24.3
Leases
 9 Months Ended
Sep. 30, 2024
Leases [Abstract]  
Leases Leases
We have various noncancelable operating lease agreements for office and warehouse space with original remaining lease terms of two years to nine years, some of which include an option to extend the lease term for up to four years. Because the Company is not reasonably certain to exercise the renewal options on these lease arrangements, the options are not considered in determining the lease term and associated potential option payments are excluded from lease payments. The Company’s leases generally do not include termination options for either party to the lease or restrictive financial or other covenants.
During the third quarter of 2023, we also entered into a finance lease agreement for manufacturing equipment with an initial term of ten years, which includes an option to extend the lease term for up to ten years, which the Company is not reasonably certain to exercise. The agreement did not include termination options for either party to the lease or restrictive financial or other covenants. In connection with the manufacturing equipment lease, which is a new asset class, we elected the practical expedient to combine lease and non-lease components to determine the right of use asset and lease liability.
Weighted-average remaining lease term (in years) and discount rate related to operating and finance leases were as follows:
Operating Leases
Finance Lease
Weighted-average remaining lease term2.768.75
Weighted-average discount rate7.3 %8.6 %
As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date to determine the present value of lease payments.
Maturities of lease liabilities under noncancelable operating leases and finance lease as of September 30, 2024 were as follows:
As of September 30, 2024
Operating Leases
Finance Lease
2024 (a)$379 $1,055 
20251,538 4,221 
20261,575 4,221 
2027778 4,221 
2028 and beyond— 23,217 
Total lease payments$4,270 $36,935 
Less: Imputed interest(424)(11,040)
Present value of lease liabilities$3,846 $25,895 
(a)Excluding the nine months ended September 30, 2024.
A summary of lease costs for the three and nine months ended September 30, 2024 and 2023 was as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Operating Lease:
Lease costCost of goods sold and selling, general and administrative$343 $438 $1,219 $1,314 
Finance Lease:
Amortization of right of use assetCost of goods sold$712 $730 $2,100 $730 
Interest on lease liabilitiesInterest expense$564 $624 $1,691 $624 
Variable lease cost (b)Inventory/Cost of goods sold (b)$3,328 $2,894 $9,997 $2,894 
(b)Variable lease cost primarily consists of the procurement and manufacturing costs capitalized to inventory. For the three and nine months ended September 30, 2024, $3,328 and $9,997, respectively, of variable lease cost were capitalized to inventory and will be captured as part of cost of goods sold as the inventory turns.
Supplemental balance sheet information related to leases as of September 30, 2024 and December 31, 2023 is as follows:
As of September 30, 2024As of December 31, 2023
Assets:
Operating leasesOperating lease right of use assets$3,671 $3,616 
Finance lease, netProperty, plant and equipment, net24,918 27,728 
Total lease assets$28,589 $31,344 
Liabilities:
Current:
Operating lease liabilitiesCurrent operating lease liabilities$1,290 $1,312 
Finance lease liabilitiesCurrent finance lease liabilities2,075 1,998 
Long-term:   
Operating lease liabilitiesLong term operating lease liabilities2,556 2,591 
Finance lease liabilitiesLong term finance lease liabilities23,820 26,080 
Total lease liabilities$29,741 $31,981 
Supplemental cash flow information and non-cash activity relating to operating and finance leases are as follows:
Three Months Ended
September 30,		Nine Months Ended September 30,
Operating cash flow information:2024202320242023
Cash paid for amounts included in the measurement of operating lease liabilities$350 $453 $1,266 $1,349 
Cash paid for amounts included in the measurement of finance lease liabilities (i.e. interest)$564 $624 $1,691 $624 
Finance cash flow information:    
Cash paid for amounts included in the measurement of finance lease liabilities (i.e. principal payment)$492 $548 $1,444 $548 
Leases Leases
We have various noncancelable operating lease agreements for office and warehouse space with original remaining lease terms of two years to nine years, some of which include an option to extend the lease term for up to four years. Because the Company is not reasonably certain to exercise the renewal options on these lease arrangements, the options are not considered in determining the lease term and associated potential option payments are excluded from lease payments. The Company’s leases generally do not include termination options for either party to the lease or restrictive financial or other covenants.
During the third quarter of 2023, we also entered into a finance lease agreement for manufacturing equipment with an initial term of ten years, which includes an option to extend the lease term for up to ten years, which the Company is not reasonably certain to exercise. The agreement did not include termination options for either party to the lease or restrictive financial or other covenants. In connection with the manufacturing equipment lease, which is a new asset class, we elected the practical expedient to combine lease and non-lease components to determine the right of use asset and lease liability.
Weighted-average remaining lease term (in years) and discount rate related to operating and finance leases were as follows:
Operating Leases
Finance Lease
Weighted-average remaining lease term2.768.75
Weighted-average discount rate7.3 %8.6 %
As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date to determine the present value of lease payments.
Maturities of lease liabilities under noncancelable operating leases and finance lease as of September 30, 2024 were as follows:
As of September 30, 2024
Operating Leases
Finance Lease
2024 (a)$379 $1,055 
20251,538 4,221 
20261,575 4,221 
2027778 4,221 
2028 and beyond— 23,217 
Total lease payments$4,270 $36,935 
Less: Imputed interest(424)(11,040)
Present value of lease liabilities$3,846 $25,895 
(a)Excluding the nine months ended September 30, 2024.
A summary of lease costs for the three and nine months ended September 30, 2024 and 2023 was as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Operating Lease:
Lease costCost of goods sold and selling, general and administrative$343 $438 $1,219 $1,314 
Finance Lease:
Amortization of right of use assetCost of goods sold$712 $730 $2,100 $730 
Interest on lease liabilitiesInterest expense$564 $624 $1,691 $624 
Variable lease cost (b)Inventory/Cost of goods sold (b)$3,328 $2,894 $9,997 $2,894 
(b)Variable lease cost primarily consists of the procurement and manufacturing costs capitalized to inventory. For the three and nine months ended September 30, 2024, $3,328 and $9,997, respectively, of variable lease cost were capitalized to inventory and will be captured as part of cost of goods sold as the inventory turns.
Supplemental balance sheet information related to leases as of September 30, 2024 and December 31, 2023 is as follows:
As of September 30, 2024As of December 31, 2023
Assets:
Operating leasesOperating lease right of use assets$3,671 $3,616 
Finance lease, netProperty, plant and equipment, net24,918 27,728 
Total lease assets$28,589 $31,344 
Liabilities:
Current:
Operating lease liabilitiesCurrent operating lease liabilities$1,290 $1,312 
Finance lease liabilitiesCurrent finance lease liabilities2,075 1,998 
Long-term:   
Operating lease liabilitiesLong term operating lease liabilities2,556 2,591 
Finance lease liabilitiesLong term finance lease liabilities23,820 26,080 
Total lease liabilities$29,741 $31,981 
Supplemental cash flow information and non-cash activity relating to operating and finance leases are as follows:
Three Months Ended
September 30,		Nine Months Ended September 30,
Operating cash flow information:2024202320242023
Cash paid for amounts included in the measurement of operating lease liabilities$350 $453 $1,266 $1,349 
Cash paid for amounts included in the measurement of finance lease liabilities (i.e. interest)$564 $624 $1,691 $624 
Finance cash flow information:    
Cash paid for amounts included in the measurement of finance lease liabilities (i.e. principal payment)$492 $548 $1,444 $548