Quarterly report pursuant to Section 13 or 15(d)

LEASES

v3.22.1
LEASES
3 Months Ended
Mar. 31, 2022
LEASES  
LEASES

16. LEASES

Lessee

At March 31, 2022, the Company recorded $24.3 million as a right of use asset and $24.5 million as an operating lease liability. At December 31, 2021, the Company recorded $17.8 million as a right of use asset and $17.8 million as an operating lease liability. The Company assesses its right of use asset and other lease-related assets for impairment. There were no impairments recorded related to these assets during the three months ended March 31, 2022 and the year ended December 31, 2021.

The Company reviews all supplier, vendor, and service provider contracts to determine whether any service arrangements contain a lease component. The Company identified two service agreements that contain an embedded lease. The agreements do not contain fixed or minimum payments, and the variable lease expense was immaterial during the three months ended March 31, 2022 and 2021.

Information about other lease-related balances is as follows (in thousands):

Three Months Ended March 31, 

 

2022

2021

 

Lease cost

  

 

  

Operating lease cost

$

1,460

$

323

Finance lease cost

19

Short‑term lease cost

 

70

 

22

Variable lease cost

 

61

 

39

Total lease cost

$

1,610

$

384

Other Information

 

  

 

  

Operating cash flows used in operating leases

$

1,464

$

244

Operating cash flows used in finance leases

21

Weighted‑average remaining lease term—operating leases (years)

 

3.5

 

2.9

Weighted‑average remaining lease term—finance leases (years)

7.6

Weighted‑average discount rate—operating leases

3.9

%  

5.5

%

Weighted‑average discount rate—finance leases

 

1.5

%  

 

%

The rate implicit in the lease is not readily determinable in most of the Company’s leases, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of the lease.

Future minimum lease payments under noncancelable operating leases, including immaterial future minimum lease payments under finance leases, at March 31, 2022, are as follows (in thousands):

Operating Leases

Finance Leases

2022 (remaining 9 months)

$

4,633

$

63

2023

 

5,790

84

2024

 

4,386

80

2025

 

3,681

79

2026

 

3,427

79

2027 and after

5,267

351

Total lease payments

 

27,184

736

Less amount representing interest

 

(2,685)

(53)

Total lease liability

 

24,499

683

Less current portion of lease liability

 

(5,264)

(62)

Lease liability, net of current portion

$

19,235

621

In February 2022, the Company amended its existing facility lease for the ExOne European headquarters and operating facility in Gersthofen, Germany, extending the lease term set to expire in December 2022 through December 2027, with the option to extend for two additional five-year extension periods. The rent is fixed through December 31, 2024 for an aggregate annual rent totaling $1.7 million, plus applicable taxes and is subject to adjustment on an annual basis thereafter (in accordance with the consumer price index for Germany) through December 31, 2027.

In March 2022, the Company entered into a lease for new office, light manufacturing and research and development space for Adaptive 3D in Richardson, Texas. The commencement date for the lease is August 1, 2022. The rent is fixed through July 31, 2030 for an aggregate annual rent totaling $0.3 million, plus taxes and operating expenses. The Company has an option to terminate the lease, for a termination fee, at the end of the fifth year of the lease. The Company also has the option to renew the lease for consecutive one-year terms, with the rent subject to adjustment for each renewal term.

Lessor

The Company leases machinery and equipment to customers (principally 3D printing machines and related equipment) under lease arrangements classified as either operating leases or sales-type leases. At March 31, 2022, the Company estimated that the total fair market value approximated the related net book value of the machinery and equipment held under the Company’s operating lease arrangements. The Company’s net investment in sales-type lease arrangements at March 31, 2022 is immaterial and is recorded in prepaid expense and other current assets in the consolidated balance sheets. There was no net investment in sales-type lease arrangements at March 31, 2021.

The Company recognized the following components under operating and sales-type lease arrangements in the accompanying consolidated statements of operations and comprehensive loss for the periods indicated:

Three Months Ended March 31, 

2022

2021

Operating

Sales-type

Operating

Sales-type

Revenue

$

192

$

Interest Income (1)

9

(1) Interest income related to sales-type leases is recorded as a component of revenue in the consolidated statements of operations and comprehensive loss for each of the periods presented.

The Company’s net investment in sales-type leases consisted of the following:

Three Months Ended March 31, 

2022

2021

Future minimum lease payments receivable

$

1,184

$

Less: Allowance for doubtful accounts

(523)

Net future minimum lease payments receivable

661

Less: Unearned interest income

(30)

Net investment in sales-type leases

$

631

$

The Company did not record any provisions for bad debt related to lessees during the three months ended March 31, 2022.

Future minimum lease receipts of non-cancellable operating and sales-type lease arrangements as of March 31, 2022 were as follows:

Operating

Sales-type

2022

$

243

$

632

2023

 

211

463

2024

 

37

45

2025

 

9

44

2026

 

Thereafter

Total minimum lease payments

 

$

500

$

1,184

Less: Allowance for doubtful accounts

 

(523)

Less: Present value discount

 

(30)

Future minimum lease payments receivable

 

$

631