Quarterly report pursuant to Section 13 or 15(d)

Commitments and Contingencies

v3.21.2
Commitments and Contingencies
9 Months Ended
Sep. 30, 2021
Commitments And Contingencies Disclosure [Abstract]  
Commitments and Contingencies
12.
COMMITMENTS AND CONTINGENCIES
(a)
Commitments

The Company has a supply agreement to purchase elemental phosphorus (P4) from a supplier through 2023. The contract price is tied to the contract year cost times a multiplier, subject to a market-driven benchmark price adjustment, which is generally settled once per year. The Company did not purchase the anticipated minimum pounds of P4 during the nine months ended September 30, 2021 and 2020. Further, the Company has no obligation to record, as there is no financial penalty owed to the vendor. Costs incurred under this supply agreement were $9,712 and $26,859 respectively, during the three and nine months ended September 30, 2021 compared to $1,798 and $18,455 during the three and nine months ended September 30, 2020, respectively.

(b)
Leases

The Company leases facilities and other machinery and equipment under long-term noncancelable operating leases through August 31, 2037. As of September 30, 2021, the future minimum rental payments required by the long-term noncancelable operating leases are as follows (in thousands):

 

 

 

Amount

 

Years Ending December 31:

 

 

 

Remainder of 2021

 

$

784

 

2022

 

 

2,898

 

2023

 

 

2,603

 

2024

 

 

1,824

 

2025

 

 

1,616

 

Thereafter

 

 

4,106

 

Total

 

$

13,831

 

 

Minimum rental payments under operating leases are recognized on a straight-line basis over the term of the lease including any periods of free rent. Rent expense for operating leases for the nine months ended September 30, 2021 and 2020 was $2,295 and $1,836, respectively, of which, $1,901 and $1,554 was presented in cost of goods sold and $394 and $282 was presented in selling, general, and administrative in the condensed consolidated statements of operations and comprehensive income for the nine months ended September 30, 2021 and 2020, respectively. Rent expense for operating leases for the three months ended September 30, 2021 and 2020 was $463 and $267, respectively, of which, $299 and $150 was presented in cost of goods sold and $165 and $177 was presented in selling, general, and administrative in the condensed consolidated statements of operations and comprehensive income for the three months ended September 30, 2021 and 2020, respectively.

(c)
Legal Proceedings

The Company is involved in various claims, actions, and legal proceedings arising in the ordinary course of business, including a number of matters related to the aqueous film forming foam litigation consolidated in the District of South Carolina multi-district litigation and other similar matters pending in other jurisdictions in the United States. The Company’s exposure to losses, if any, is not considered probable or reasonably estimable at this time.