Quarterly report pursuant to Section 13 or 15(d)

Leases

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Leases
6 Months Ended
Jun. 30, 2024
Leases  
Leases

4. Leases

 

At the inception of an arrangement, the Company determines if an arrangement is, or contains, a lease based on facts and circumstances present in that arrangement. Lease classifications, recognition, and measurement are then determined at the lease commencement date.

 

The Company’s operating lease right-of-use (“ROU”) assets and operating lease liabilities include primarily leases for office and warehouse spaces used to conduct our business. The Company’s operating leases also include a building with land utilized for our waste treatment operations which includes a purchase option (see “Note 15 – Subsequent Events” for a discussion of the purchase of this property by the Company in July 2024). Finance leases consist primarily of processing and transport equipment used by our facilities’ operations.

 

 

The components of lease cost for the Company’s leases for the three and six months ended June 30, 2024 and 2023 were as follows (in thousands):

 

    2024     2023     2024     2023  
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2024     2023     2024     2023  
                         
Operating Leases:                                
Lease cost   $ 149     $ 156     $ 292     $ 313  
                                 
Finance Leases:                                
Amortization of ROU assets     65       38       131       76  
Interest on lease liability     21       7       43       13  
Finance lease     86       45       174       89  
                                 
Short-term lease rent expense     2       1       2       1  
                                 
Total lease cost     237       202       468       403  

 

The weighted average remaining lease term and the weighted average discount rate for operating and finance leases at June 30, 2024, were:

 

    Operating Leases     Finance Leases  
Weighted average remaining lease terms (years)     5.0       4.1  
                 
Weighted average discount rate     7.4 %     8.9 %

 

The weighted average remaining lease term and the weighted average discount rate for operating and finance leases at June 30, 2023, were:

 

    Operating Leases     Finance Leases  
Weighted average remaining lease terms (years)     6.0       2.2  
                 
Weighted average discount rate     7.9 %     6.0 %

 

The following table reconciles the undiscounted cash flows for the operating and finance leases at June 30, 2024, to the operating and finance lease liabilities recorded on the balance sheet (in thousands):

 

    Operating Leases     Finance Leases  
2024   $ 266     $ 183  
2025     595       345  
2026     594       192  
2027     567       157  
2028     436       134  
2029 and thereafter     407       102  
Total undiscounted lease payments     2,865       1,113  
Less: Imputed interest     (531 )     (191 )
Present value of lease payments   $ 2,334     $ 922  
                 
Current portion of operating lease obligations   $ 378     $  
Long-term operating lease obligations, less current portion   $ 1,956     $  
Current portion of finance lease obligations   $     $ 286  
Long-term finance lease obligations, less current portion   $     $ 636  

 

 

Supplemental cash flow and other information related to our leases were as follows for the three and six months ended June 30, 2024, and 2023 (in thousands):

 

    2024     2023     2024     2023  
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2024     2023     2024     2023  
Cash paid for amounts included in the measurement of lease liabilities:                                
Operating cash flow used in operating leases   $ 149     $ 146     $ 296     $ 290  
Operating cash flow used in finance leases   $ 21     $ 7     $ 43     $ 13  
Financing cash flow used in finance leases   $ 71     $ 40     $ 146     $ 81  
                                 
ROU assets obtained in exchange for lease obligations for:                                
Finance liabilities   $     $ 107     $     $ 157  
Operating liabilities   $ 497     $     $ 497     $  

 

The addition of the ROU assets obtained in exchange for operating lease liabilities in the second quarter of 2024 resulted from extensions of the terms on two of the Company’s leases.