Operating Leases |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating Leases | Operating Leases Arkansas Facility Lease During the first quarter of 2022, the Company entered into a real estate lease for its industrialization facility in Bentonville, Arkansas ("Bentonville lease"). The original lease term is 10 years and commenced on February 1, 2022.
The Bentonville lease contains an option to extend the term for 10 years and is classified as an operating lease. At the inception of the lease, it was not reasonably certain we would exercise any of the options to extend the term of the leases.
The rent payments made by the Company under the Bentonville lease are expensed on a straight-line basis in the condensed consolidated statements of operations.
Lease Portfolio
The Company used judgment in determining an appropriate incremental borrowing rate to calculate the operating
lease right-of-use asset and operating lease liability. The weighted average discount rate used was 7.04%. As of March 31, 2022, the remaining operating lease ROU asset and operating lease liability were approximately $26.8 million and $27.4 million, respectively. As of December 31, 2021, the operating lease ROU asset and operating lease liability were
approximately $14.2 million and $14.6 million, respectively. As of March 31, 2022 and December 31, 2021, $1.6 million and $0.8 million, respectively, of the lease liability was determined to be short term and was included in accrued expenses and other current liabilities within the condensed consolidated balance sheets.
Related party lease expense related to these leases were $0.1 million and $0.5 million for the three months ended March 31, 2022 and 2021, respectively.
The weighted average remaining lease term at March 31, 2022 and December 31, 2021 was 10.2 years and 10.7 years, respectively.
Maturities of the Company’s operating lease liabilities at March 31, 2022 were as follows (in thousands):
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(1)Calculated using the incremental borrowing rate
(2)Included within Accrued expenses and other current liabilities line item on the Condensed Consolidated Balance Sheet.
Michigan Facility Lease
On October 20, 2021, the Company entered into an agreement for a facility lease for which we did not have control of the underlying assets as of March 31, 2022. Accordingly, we did not record the lease liability and ROU asset within the condensed consolidated balance sheets. The lease is for additional office and research and development spaces located in Auburn Hills, Michigan. We expect the lease commencement date to begin in the second quarter of fiscal year 2022 with a lease term of approximately 11 years from the commencement date and one option to extend the lease by a term of 5 years. The total minimum lease payments over the initial lease term is $12.7 million.
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