Quarterly report pursuant to Section 13 or 15(d)

Leases

v3.20.2
Leases
9 Months Ended
Sep. 30, 2020
Leases [Abstract]  
Leases
5. Leases

 

The Company’s operating lease right-of-use (“ROU”) assets and operating lease liabilities represent primarily leases for office spaces used to conduct our business. These leases have remaining terms of approximately 3 to 10 years which include one or more options to renew (which are included in valuing our ROU assets and liabilities). As most of our operating leases do not provide an implicit rate, the Company uses its incremental borrowing rate as the discount rate when determining the present value of the lease payments. The incremental borrowing rate is determined based on the Company’s secured borrowing rate, lease terms and current economic environment. Lease expense for operating leases is recognized on a straight-line basis over the lease term.

 

Finance leases primarily consist of processing and transport equipment used by our facilities’ operations. Our finance leases also include a building with land for our waste treatment operations. The Company’s finance leases generally have initial terms between one to six years and some of the leases include options to purchase the underlying assets at fair market value at the conclusion of the lease term. The lease for the building and land has a term of two years with an option to buy at the end of the lease term, which the Company is reasonably certain to exercise.

 

The Company adopted the policy to not recognize ROU assets and liabilities for short term leases.

 

The components of lease cost for the Company’s leases for the three and nine months ended September 30, 2020 and 2019 were as follows (in thousands):

 

    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2020     2019     2020     2019  
                         
Operating Leases:                                
Lease cost   $ 114     $ 114     $ 342     $ 342  
                                 
Finance Leases:                                
Amortization of ROU assets     109       20       161       39  
Interest on lease liability     47       15       97       40  
      156       35       258       79  
                                 
Short-term lease rent expense     3       41       7       113  
                                 
Total lease cost   $ 273     $ 190     $ 607     $ 534  

 

The weighted average remaining lease term and the weighted average discount rate for operating and finance leases at September 30, 2020 were:

 

    Operating Leases     Finance Leases  
Weighted average remaining lease terms (years)     8.2       3.4  
                 
Weighted average discount rate     8.0 %     7.9 %

 

The following table reconciles the undiscounted cash flows for the operating and finance leases at September 30, 2020 to the operating and finance lease liabilities recorded on the balance sheet (in thousands):

 

    Operating Leases     Finance Leases  
2020 Remainder   $ 112     $ 263  
2021     450       554  
2022     458       272  
2023     466       149  
2024     342       146  
2025 and thereafter     1,457       164  
Total undiscounted lease payments     3,285       1,548  
Less: Imputed interest     (879 )     (158 )
Present value of lease payments   $ 2,406     $ 1,390  
                 
Current portion of operating lease obligations   $ 265     $  
Long-term operating lease obligations, less current portion   $ 2,141     $  
Current portion of finance lease obligations   $     $ 675  
Long-term finance lease obligations, less current portion   $     $ 715  

 

Supplemental cash flow and other information related to our leases were as follows for the three and nine months ended September 30, 2020 and 2019 (in thousands):

 

    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2020     2019     2020     2019  
Cash paid for amounts included in the measurement of lease liabilities:                                
Operating cash flow used in operating leases   $ 111     $ 109     $ 331     $ 326  
Operating cash flow used in finance leases   $ 47     $ 15     $ 97     $ 40  
Financing cash flow used in finance leases   $ 182     $ 73     $ 411     $ 174  
                                 
ROU assets obtained in exchange for lease obligations for:                                
Finance liabilities   $ 751     $ 390     $ 874     $ 528  
Operating liabilities   $                   182