Quarterly report pursuant to Section 13 or 15(d)

LEASES

v3.21.2
LEASES
9 Months Ended
Sep. 30, 2021
LEASES  
LEASES

NOTE 3—LEASES

The Company primarily leases office space and related equipment, as well as equipment, modular units and vehicles directly used in providing services to its customers. The Company’s leases have remaining lease terms of one to ten years. Most leases contain renewal options for varying periods, which are at the Company’s sole discretion and included in the expected lease term if they are reasonably certain of being exercised. In accordance with ASU 2016-02, the Company accounts for lease components, such as fixed payments including rent, real estate taxes, and insurance costs, separately from the non-lease components, such as common area maintenance costs.

In accordance with ASU 2016-02, for leases with terms greater than twelve months, the Company records the related right-of-use assets and lease liabilities at the present value of the fixed lease payments over the lease term at the lease commencement date. The Company uses its incremental borrowing rate to determine the present value of the lease as the rate implicit in the lease is typically not readily determinable.

Short-term leases (leases with an initial term of twelve months or less or leases that are cancelable by the lessee and lessor without significant penalties) are expensed on a straight-line basis over the lease term. The majority of the Company’s short-term leases relate to equipment used in delivering services to its customers. These leases are entered into at agreed upon hourly, daily, weekly, or monthly rental rates for an unspecified duration and typically have a termination for convenience provision. Such equipment leases are considered short-term in nature unless it is reasonably certain that the equipment will be leased for a term greater than twelve months.

On September 2, 2021, the Company made the decision to relocate its corporate headquarters to Atlanta, Georgia and entered into a ten-year lease agreement. The lease is not presented as a right-of-use asset and lease liability because the commencement date of the lease is not expected to occur until early 2022 after substantial completion of the leasehold improvements as defined in the lease agreement. The lease liability amounts to $3.5 million with a present value of $2.3 million over a ten-year term. If the Company defaults, the landlord has the right to use the security deposit for rent or other payments due to other damages, injury, expense or liability as defined in the lease agreement. Although the security deposit shall be deemed the property of the landlord, any remaining balance of the security deposit shall be returned by the landlord to the Company after termination of the lease as the Company’s obligations under the lease have been fulfilled.

The components of lease expense were as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

Lease Cost (in thousands)

2021

2020

2021

2020

Operating lease cost

$

619

$

850

$

1,711

$

2,950

Short-term lease cost

1,051

505

2,484

1,972

Sublease income

(5)

(5)

Total lease cost

$

1,665

$

1,355

$

4,190

$

4,922

Lease cost related to finance leases was not significant for the three and nine months ended September 30, 2021 and 2020.

Information related to the Company’s right-of-use assets and lease liabilities was as follows:

Lease Assets/Liabilities (in thousands)

Balance Sheet Classification

September 30, 2021

December 31, 2020

Lease Assets

Right-of-use assets

Other long-term assets

$

1,583

$

2,029

Lease Liabilities

Short-term lease liabilities

Other current liabilities

$

1,603

$

1,362

Long-term lease liabilities

Other long-term liabilities

673

1,011

Total lease liabilities

$

2,276

$

2,373

Supplemental information related to the Company’s leases was as follows:

Nine Months Ended September 30,

(dollars in thousands)

2021

2020

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash used by operating leases

$

1,810

$

3,388

Right-of-use assets obtained in exchange for new operating lease liabilities

1,549

2,226

Weighted-average remaining lease term - operating leases

1.47 years

1.71 years

Weighted-average remaining lease term - finance leases

2.48 years

3.48 years

Weighted-average discount rate - operating leases

9%

9%

Weighted-average discount rate - finance leases

9%

9%

Total remaining lease payments under the Company’s operating and finance leases were as follows:

Operating Leases

Finance Leases

Nine Months Ended September 30,

(in thousands)

Remainder of 2021

$

582

$

2

2022

1,372

6

2023

360

6

2024

103

1

2025

3

Total lease payments

$

2,420

$

15

Less: interest

(159)

Present value of lease liabilities

$

2,261

$

15