Leases
As lessor, and as of December 31, 2024, the majority of our leases were operating leases with the exception of certain failed sale-leaseback transactions classified as notes receivable or investments in sales-type leases under the guidance provided by ASC 842.
As lessee, the significant majority of leases the Company enters are for real estate (office and warehouse space for our operations) as well as automobiles. These lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Leases with terms of 12 months or less are not recorded on the Consolidated Balance Sheets; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Some of the Company’s leases include variable non-lease components (e.g., taxes) which are not separated from associated lease components (e.g., fixed rent, common-area maintenance costs, vehicle protection plans and other service fees) as elected under the practical expedient package provided by ASC 842.
The Company’s leases have remaining lease terms of approximately two months to 13 years, some of which include options to renew or extend the lease term from one to five years. Our automobile leases include an option to purchase the vehicle at lease termination. The depreciable lives of assets are limited by the expected lease terms, unless there is a transfer of title or purchase option reasonably certain of exercise. The exercise of lease renewal options or purchase at lease termination is at the Company’s sole discretion. If it is reasonably certain that we will exercise such options, the periods covered by such options are included in the lease term and are recognized as part of our ROU assets and lease liabilities.
Supplemental information to the Consolidated Balance Sheets related to leases was as follows:
| | | | | | | | | | | | | | | | | | | | |
| Leases | | Classification | | December 31, 2024 | | December 31, 2023 |
| | | | (in thousands, except lease term and discount rate) |
| Assets | | | | | | |
| Operating lease right-of-use assets | | Other assets | | $ | 6,584 | | | $ | 8,652 | |
| | | | | | |
| Liabilities | | | | | | |
| Lease liabilities | | Accounts payable and accrued expenses | | $ | 5,848 | | | $ | 7,941 | |
| | | | | | |
| Weighted average remaining lease term (years) | | | | |
| Operating leases | | | | 2.70 | | 2.90 |
| Weighted average discount rate | | | | | | |
| Operating leases | | | | 5.2 | % | | 4.6 | % |
The weighted average discount rate is based on the incremental borrowing rate for each lease and the remaining balance of the lease payments for each lease at the reporting date.
Future maturities of the Company’s lease liabilities at December 31, 2024 are as follows:
| | | | | | | | |
| Year | | (in thousands) |
| 2025 | | $ | 3,147 | |
| 2026 | | 1,114 | |
| 2027 | | 801 | |
| 2028 | | 577 | |
| 2029 | | 504 | |
| Thereafter | | 210 | |
| Total undiscounted lease liabilities | | 6,353 | |
| Less: interest | | (505) | |
| Total lease liabilities | | $ | 5,848 | |
The components of lease expense were as follows:
| | | | | | | | | | | | | | | | | | | | |
| | | | Years Ended December 31, |
| Lease expense | | Classification | | 2024 | | 2023 |
| | | | (in thousands) |
| Operating lease cost | | General and administrative | | $ | 4,235 | | | $ | 3,709 | |
| Net lease cost | | | | $ | 4,235 | | | $ | 3,709 | |
Supplemental cash flow information related to leases was as follows:
| | | | | | | | | | | | | | |
| | Years Ended December 31, |
| | 2024 | | 2023 |
| | (in thousands) |
| Cash paid for amounts included in the measurement of lease liabilities: | | | | |
| Operating cash flows from operating leases | | $ | 3,538 | | | $ | 3,327 | |
| | | | |
| Right-of-use assets obtained in exchange for lease obligations: | | | | |
| Operating leases | | $ | 1,016 | | | $ | 307 | |