TENNANT CO
For the period ended Dec 31, 2023. Filed Feb 22, 2024.
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FY2023 · Filed Feb 22, 2024
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Leases
- Leases
We lease facilities, vehicles and equipment under the operating lease agreements, which include both monthly and longer-term arrangements.
Certain operating leases for vehicles contain residual value guarantee provisions, which would become due at the expiration of the operating lease agreement if the fair value of the leased vehicles is less than the guaranteed residual value. As of December 31, 2023, of those leases that contain residual value guarantees, the aggregate residual value at lease expiration was $14.6 million, of which we have guaranteed $8.1 million.
The lease assets and liabilities as of December 31 are as follows:
| Leases | Classification | 2023 | 2022 |
|---|---|---|---|
| Assets | |||
| Operating lease assets | Operating lease assets | $41.7 | $31.8 |
| Finance lease assets | Property, plant and equipment(a) | 0.6 | 0.2 |
| Total leased assets | $42.3 | $32.0 | |
| Liabilities | |||
| Current: | |||
| Operating | Other current liabilities | $14.4 | $15.0 |
| Finance | Current portion of long-term debt | 0.1 | — |
| Noncurrent: | |||
| Operating | Long-term operating lease liabilities | 27.4 | 17.1 |
| Finance | Long-term debt | 0.5 | 0.1 |
| Total lease liabilities | $42.4 | $32.2 | |
| (a) | Finance lease assets are recorded net of accumulated amortization of $0.1 million and less than $0.1 million as of December 31, 2023 and December 31, 2022, respectively. |
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The lease cost for the three years ended December 31 was as follows:
| Lease Cost | 2023 | 2022 | 2021 |
|---|---|---|---|
| Operating lease cost(a) | $28.9 | $26.2 | $26.6 |
| Finance lease cost(b) | 0.1 | 0.1 | 0.1 |
| Total lease cost | $29.0 | $26.3 | $26.7 |
| (a) | Includes short-term lease costs of $5.9 million and $4.8 million and variable lease costs of $4.2 million and $3.3 million for the years ended December 31, 2023 and December 31, 2022, respectively. |
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| (b) | Includes amortization of leased assets and interest on lease liabilities. |
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The maturity of lease liabilities as of December 31, 2023 was as follows:
| Maturity of Lease Liabilities | Operating Leases | Finance Leases | Total |
|---|---|---|---|
| 2024 | $16.0 | $0.2 | $16.2 |
| 2025 | 11.6 | 0.2 | 11.8 |
| 2026 | 8.2 | 0.1 | 8.3 |
| 2027 | 4.6 | 0.1 | 4.7 |
| 2028 | 3.3 | 0.1 | 3.4 |
| Thereafter | 3.0 | — | 3.0 |
| Total lease payments | $46.7 | $0.7 | $47.4 |
| Less: Interest | (4.9) | (0.1) | (5.0) |
| Present value of lease liabilities | $41.8 | $0.6 | $42.4 |
The lease term and discount rate as of December 31 were as follows:
| Lease Term and Discount Rate | 2023 | 2022 |
|---|---|---|
| Weighted-average remaining lease term (years): | ||
| Operating leases | 3.8 | 2.9 |
| Finance leases | 4.7 | 4.1 |
| Weighted-average discount rate: | ||
| Operating leases | 6.0% | 3.9% |
| Finance leases | 6.0% | 2.5% |
Other information related to cash paid related to lease liabilities and lease assets obtained for the years ended December 31 was as follows:
| Other Information | 2023 | 2022 |
|---|---|---|
| Cash paid for amounts included in the measurement of lease liabilities: | ||
| Operating cash flows from operating leases | $18.9 | $18.2 |
| Financing cash flows from finance leases | 0.1 | 0.1 |
| Lease assets obtained in exchange for new finance lease liabilities | 0.7 | 0.3 |
| Lease assets obtained in exchange for new operating lease liabilities | 18.8 | 11.4 |
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