Quarterly report [Sections 13 or 15(d)]

Note 7 - Leases

v3.25.1
Note 7 - Leases
3 Months Ended
Mar. 31, 2025
Notes to Financial Statements  
Lessee, Operating Leases [Text Block]

7.

Leases

 ​

The Company has operating leases for manufacturing and upfit facilities, land and parking lots, warehousing space and certain equipment. The leases have remaining lease terms of less than one year to 15 years, some of which include options to extend the leases for up to 20 years. Such renewal options were not included in the determination of the lease term unless deemed reasonably certain of exercise. The discount rate used in measuring the lease liabilities is based on the Company’s interest rate on the term loan facility under its secured Agreement. Certain of the Company’s leases contain escalating rental payments based on an index. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

 

In September 2024, the Company closed on a sale leaseback transaction with an unrelated third party. Under this transaction, the Company sold seven properties with a combined net book value of $21,852 for gross proceeds of $64,150, which was reduced by transaction costs of $5,494 for net cash proceeds of approximately $58,656. The properties in the sale leaseback transaction are comprised of three facilities located in Milwaukee, Wisconsin and four additional facilities located in each of Huntley, Illinois; Manchester, Iowa; Rockland, Maine; and Madison Heights, Michigan, totaling approximately 780,000 square feet of manufacturing and upfitting space. The lease agreement has an initial term of 15 years, with two optional 10-year renewal options. The Company recognized a gain of $42,298 on this transaction, which is included in Gain on sale leaseback transaction in the Consolidated Statements of Operations and Comprehensive Income in the year ended December 31, 2024. Right-of-use assets and lease liabilities recognized related to this sale leaseback transaction were $51,879 and $51,879, respectively. 

 ​ ​

Lease Expense

 ​

The components of lease expense, which are included in Cost of sales and Selling, general and administrative expenses on the Condensed Consolidated Statements of Operations and Comprehensive Loss, were as follows:

 

   

Three Months Ended March 31, 2025

   

Three Months Ended March 31, 2024

 

Operating lease expense

  $ 3,269     $ 1,596  

Short term lease cost

  $ 123     $ 93  

Total lease cost

  $ 3,392     $ 1,689  

  

Cash Flow

 ​

Supplemental cash flow information related to leases is as follows:

 ​

    Three Months Ended March 31, 2025     Three Months Ended March 31, 2024  
                 

Cash paid for amounts included in the measurement of operating lease liabilities

  $ 3,060     $ 1,639  

Non-cash lease expense - right-of-use assets

  $ 2,056     $ 1,364  

Right-of-use assets obtained in exchange for operating lease obligations

  $ 163     $ 43  

 ​ ​

Balance Sheet

 ​

Supplemental balance sheet information related to leases is as follows:  

 ​

   

March 31, 2025

   

December 31, 2024

 

Operating Leases

               

Operating lease right-of-use assets

  $ 68,271     $ 70,801  
                 

Other current liabilities

    7,185       7,394  

Operating lease liabilities

    62,636       64,785  

Total operating lease liabilities

  $ 69,821     $ 72,179  
                 

Weighted Average Remaining Lease Term

               

Operating leases (in months)

    151       151  
                 

Weighted Average Discount Rate

               

Operating leases

    7.09 %     7.05 %

 ​

Lease Maturities

 ​

Maturities of leases were as follows:

 ​

Year ending December 31,

 

Operating Leases

 

2025 (excluding the three months ended March 31, 2025)

  $ 8,944  

2026

    10,637  

2027

    8,839  

2028

    7,798  

2029

    7,102  

Thereafter

    63,864  

Total Lease Payments

    107,184  

Less: imputed interest

    (37,363 )

Total

  $ 69,821