Stabilis Solutions, Inc.SLNG
Stabilis Solutions, Inc. Leases Disclosure
LEASES
Our lease portfolio primarily consists of operating leases for certain facilities and office spaces, and financing leases for equipment. Our leases have remaining terms of 1 year to 3 years and may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Operating lease assets also include any upfront lease payments made and exclude lease incentives and initial direct cost incurred. Lease expense for operating leases is recognized on a straight-line basis over the lease term.
Lease termination and impairment of ROU lease asset
On July 30, 2021, the Company terminated its office lease with Millenium-Windfall Partners, Ltd for a fixed settlement of $0.4 million, payable in 43 monthly payments. In accordance with the termination, the Company was released from all future rights and obligations under the lease. In accordance with the termination of the lease, the Company recorded an impairment charge of $0.4 million related to its remaining right-of-use asset for this lease during the third quarter 2021 which is included within selling, general and administrative expenses of the Company's Consolidated Statement of Operations for the year-ended December 31, 2021. The Company also remeasured the lease obligation as of July 30, 2021 and the remaining obligation of $0.4 million under the termination settlement was included in the Company's at December 31, 2021. At December 31, 2022, the remaining obligation of $0.3 million is included in Consolidated Balance Sheet.
The following table summarizes our operating and finance lease assets and liabilities as of December 31, 2022 and 2021 (in thousands):
| December 31, | |||||||||||||||||
| Balance sheet line item classification | 2022 | 2021 | |||||||||||||||
| Assets | |||||||||||||||||
| Operating lease assets | $ | — | $ | 167 | |||||||||||||
| Finance lease assets | 64 | 85 | |||||||||||||||
| Total lease assets | $ | 64 | $ | 252 | |||||||||||||
| Liabilities | |||||||||||||||||
| Current | |||||||||||||||||
| Operating | $ | 114 | $ | 275 | |||||||||||||
| Finance | Current portion of finance lease obligation (includes related parties) | 19 | 17 | ||||||||||||||
| Noncurrent | |||||||||||||||||
| Operating | 141 | 255 | |||||||||||||||
| Finance | 42 | 64 | |||||||||||||||
| Total lease liabilities | $ | 316 | $ | 611 | |||||||||||||
The following table summarizes the components of lease expense for the year ended December 31, 2022 and 2021 (in thousands):
Lease Cost | Classification | Year Ended December 31, | ||||||||||||||||||
| 2022 | 2021 | |||||||||||||||||||
Operating lease cost | Cost of sales | $ | 142 | $ | 155 | |||||||||||||||
| Operating lease cost | Selling, general and administrative expenses | 215 | 202 | |||||||||||||||||
| Finance lease cost: | ||||||||||||||||||||
Amortization of leased assets | Depreciation expense | 21 | 19 | |||||||||||||||||
Interest on lease liabilities | Interest expense | 9 | 18 | |||||||||||||||||
Net lease cost | $ | 387 | $ | 394 | ||||||||||||||||
Other
The Company leases certain buildings and facilities, including office space in Houston, Texas; Monterrey, Mexico; storage sites for commercial trailers in Herber, California; Christmas, Florida and Hudson, Colorado; and certain equipment under non-cancellable operating leases expiring at various dates through January 2024. Leases which are less than twelve months and have no cancellation penalties are not recorded on the Consolidated Balance Sheets.
Office rent expense totaled approximately $216 thousand and $202 thousand for the years ended December 31, 2022 and 2021, respectively.
The following schedule presents the future minimum lease payments for our operating and finance lease obligations at December 31, 2022 (in thousands):
| Operating Leases | Finance Leases | Total | |||||||||||||||
| 2023 | $ | 126 | $ | 25 | $ | 151 | |||||||||||
| 2024 | 125 | 42 | 167 | ||||||||||||||
| 2025 | 21 | — | 21 | ||||||||||||||
| 2026 and Thereafter | — | — | — | ||||||||||||||
Total lease payments | 272 | 67 | 339 | ||||||||||||||
Less: Interest | (17) | (6) | (23) | ||||||||||||||
Present value of lease liabilities | $ | 255 | $ | 61 | $ | 316 | |||||||||||
Lease term and discount rates for our operating and finance lease obligations are as follows:
| December 31, | ||||||||||||||
Lease Term and Discount Rate | 2022 | 2021 | ||||||||||||
Weighted-average remaining lease term (years) | ||||||||||||||
Operating leases | 2.2 | 2.6 | ||||||||||||
Finance leases | 1.1 | 2.1 | ||||||||||||
Weighted-average discount rate | ||||||||||||||
Operating leases | 5.8% | 6.0% | ||||||||||||
Finance leases | 10.7% | 10.7% | ||||||||||||
The following table summarizes the supplemental cash flow information related to leases as of December 31, 2022 and 2021(in thousands):
Other information | December 31, 2022 | December 31, 2021 | ||||||||||||
Cash paid for amounts included in the measurement of lease liabilities | ||||||||||||||
Operating cash flows from operating leases | $ | 274 | $ | 168 | ||||||||||
Financing cash flows from finance leases | 19 | 671 | ||||||||||||
Interest paid | 9 | 18 | ||||||||||||
Noncash activities from right-of-use assets obtained in exchange for lease obligations: | ||||||||||||||
Operating leases | $ | — | $ | 104 | ||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2022 | Mar 9, 2023 | Showing above |
| 2021 | Mar 10, 2022 | |
| 2020 | Mar 16, 2021 | |
| 2019 | Mar 16, 2020 | |
| 2018 | Apr 16, 2019 | |
| 2017 | Mar 29, 2018 | |
| 2016 | Mar 28, 2017 | |
| 2015 | Mar 30, 2016 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.