Mirion Technologies, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Leased Assets

Leased Assets

6 Months Ended

Jun. 30, 2023

The Company primarily leases certain logistics, office, and manufacturing facilities, as well as vehicles, copiers and other equipment. These operating leases generally have remaining lease terms between 1 month and 30 years, and some include options to extend (generally 1 to 10 years). The exercise of lease renewal options is at the Company’s discretion. The Company evaluates renewal options at lease inception and on an ongoing basis, and includes renewal options that it is reasonably certain to exercise in its expected lease terms when classifying leases and measuring lease liabilities. Lease agreements generally do not require material variable lease payments, residual value guarantees or restrictive covenants.

During the three months ended June 30, 2023, the Company terminated an operating lease associated with its Rehab business (see Note 3, Disposal of a Business) including a payment of a $0.4 million termination fee. The associated right-of-use asset and lease liability were removed from the Condensed Consolidated Balance Sheets and a gain on lease termination of $0.6 million, net of termination fee paid, was recorded in selling, general and administrative expenses in the Condensed Consolidated Statement of Operations.

The table below presents the locations of the operating lease assets and liabilities on the Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022, respectively (in millions):


	Balance Sheet Line Item	June 30, 2023		December 31, 2022
Operating lease assets	Operating lease right-of-use assets	$	37.1	$	40.1
Financing lease assets	Other assets	$	0.2	$	0.5

Operating lease liabilities:
Current operating lease liabilities	Current operating lease liabilities	$	7.4	$	8.5
Non-current operating lease liabilities	Operating lease liability, non-current	30.3		34.3
Liabilities held for sale	Accrued expenses and other current liabilities	—		0.5
Total operating lease liabilities:		$	37.7	$	43.3

Financing lease liabilities:
Current financing lease liabilities	Accrued expenses and other current liabilities	$	0.1	$	0.4
Non-current financing lease liabilities	Deferred income taxes and other long-term liabilities	0.1		0.1
Total financing lease liabilities:		$	0.2	$	0.5

The depreciable lives are limited by the expected lease term for operating lease assets and by shorter of either the expected lease term or economic useful life for financing lease assets.

The Company’s leases generally do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring the 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 within a particular currency environment. The Company used incremental borrowing rates as of July 1, 2021 for leases that commenced prior to that date.

The Company’s weighted average remaining lease term and weighted average discount rate for operating leases as of June 30, 2023 and December 31, 2022, respectively, are:


	June 30, 2023		December 31, 2022
Operating leases
Weighted average remaining lease term (in years)	6.6		6.9
Weighted average discount rate	4.17	%	4.13	%

The table below reconciles the undiscounted future minimum lease payments (displayed by year and in the aggregate) under non-cancelable operating leases with terms of more than one year to the total lease liabilities recognized on the Condensed Consolidated Balance Sheets as of June 30, 2023 (in millions):


Fiscal year ending December 31:
2023	$	4.6
2024	7.8
2025	6.6
2026	5.6
2027	4.9
2028 and thereafter	13.9
Total undiscounted future minimum lease payments	43.4
Less: Imputed interest	(5.7)
Total operating lease liabilities	$	37.7

For the three and six months ended June 30, 2023, operating lease costs (as defined under ASU 2016-02) were $2.7 million and $5.4 million, respectively. For the three and six months ended June 30, 2022, operating lease costs were $2.7 million and $5.3 million, respectively. Operating lease costs are included within costs of goods sold, selling, general and administrative, and research and development expenses on the consolidated statements of income and comprehensive income. Short-term lease costs, variable lease costs and sublease income were not material for the periods presented.

Cash paid for amounts included in the measurement of operating lease liabilities was $2.7 million and $5.3 million for the three and six months ended June 30, 2023, respectively, and $2.9 million and $5.8 million for the three and six months ended June 30, 2022 respectively, and these amounts are included in operating activities in the Condensed Consolidated Statements of Cash Flows. Operating lease assets obtained in exchange for new operating lease liabilities were $0.4 million and $0.6 million for the three and six months ended June 30, 2023, respectively, and $2.0 million and $2.9 million for the three and six months ended June 30, 2022, respectively.