Operating Leases |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating Leases | Operating LeasesArkansas 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.
Michigan Lease
On October 20, 2021, the Company entered into a real estate lease for office space ("Michigan office lease") and research and development space ("Michigan R&D lease") located in Auburn Hills, Michigan (collectively the “Michigan lease”). The Michigan R&D lease commenced on August 25, 2022 once the Company gained control of the underlying asset. The Michigan R&D lease expires January 31, 2033 and is classified as an operating lease. As of September 30, 2022, the Company does not have control of the office space and therefore, the Michigan office lease has not commenced. The total minimum lease payments over the Michigan office lease is $8.9 million. Upon the execution of the lease agreement, the Company provided the landlord with a standby letter of credit of $1.1 million, which was included in restricted cash, current on the condensed consolidated balance sheets.
The Michigan lease contains one option to extend the term for an additional five-year period. At the inception of the lease, it was not reasonably certain we would exercise the option to extend the term of the lease. The rent payments made by the Company under the Michigan 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 6.96%. As of September 30, 2022, the remaining operating lease ROU asset and operating lease liability were approximately $28.5 million and $29.3 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 September 30, 2022 and December 31, 2021, $1.8 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 $0.4 million for the three and nine months ended September 30, 2022, respectively. Related party lease expense related to these leases were $0.1 million and $1.2 million for the three and nine months ended September 30, 2021, respectively.
The weighted average remaining lease term at September 30, 2022 and December 31, 2021 was 9.7 years and 10.7 years, respectively.
Maturities of the Company’s operating lease liabilities at September 30, 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.
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