Alto Ingredients, Inc. Leases Disclosure
| 10. | LEASES. |
The Company leases equipment and land for certain of its facilities. Operating lease right of use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company uses an estimated incremental borrowing rate, unless an implicit rate is readily determinable, as the discount rate for each lease in determining the present value of lease payments. For the years ended December 31, 2025 and 2024, the Company’s weighted-average discount rate was approximately 7.87% and 7.78%, respectively. Operating lease expense is recognized on a straight-line basis over the lease term.
Upon the adoption of ASC 842, the Company elected the following practical expedients allowable under the guidance: not to reassess whether any expired or existing contracts are or contain leases; not to reassess the lease classification for any expired or existing leases; not to reassess initial direct costs for any existing leases; not to separately identify lease and non-lease components; and not to evaluate historical land easements. Additionally, the Company elected the short-term lease exemption policy, applying the requirements of ASC 842 to only long-term (greater than 1 year) leases.
The Company determines if an arrangement is a lease or contains a lease at inception. The Company’s leases have remaining lease terms of approximately 1 year to 50 years, which includes options to extend the lease when it is reasonably certain the Company will exercise those options. For the year ended December 31, 2025, the weighted-average remaining lease terms of equipment and land-related leases were 3.32 years and 17.56 years, respectively. For the year ended December 31, 2024, the weighted-average remaining lease terms of equipment and land-related leases were 4.14 years and 16.42 years, respectively. The Company does not have lease arrangements with residual value guarantees, sale-leaseback terms or material restrictive covenants. The Company does not have any material finance lease obligations nor sublease agreements.
Leases consist of the following (in thousands):
| December 31, | ||||||||||
| Classification | 2025 | 2024 | ||||||||
| Assets Operating | $ | 16,931 | $ | 20,553 | ||||||
| Liabilities Operating - Current | $ | 4,958 | $ | 4,851 | ||||||
| Operating - Noncurrent | $ | 13,012 | $ | 16,913 | ||||||
The Components of lease costs were as follows (in thousands):
| Years Ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Fixed lease cost | $ | 6,589 | $ | 5,989 | $ | 5,722 | ||||||
| Variable lease cost | 109 | 529 | 871 | |||||||||
| Total lease cost | $ | 6,698 | $ | 6,518 | $ | 6,593 | ||||||
The following table summarizes the remaining maturities of the Company’s operating lease liabilities, assuming all land lease extensions are taken, as of December 31, 2025 (in thousands):
| Year Ended: | Equipment | Land Related | ||||||
| 2026 | $ | 5,200 | $ | 1,037 | ||||
| 2027 | 4,596 | 1,011 | ||||||
| 2028 | 3,618 | 1,024 | ||||||
| 2029 | 2,047 | 660 | ||||||
| 2030 | 173 | 107 | ||||||
| 2031-76 | 3,773 | |||||||
| Less imputed interest | (2,180 | ) | (3,096 | ) | ||||
| Total present value of lease liabilities | $ | 13,454 | $ | 4,516 | ||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 13, 2026 | Showing above |
| 2024 | Mar 13, 2025 | |
| 2023 | Mar 14, 2024 | |
| 2022 | Mar 14, 2023 | |
| 2021 | Mar 15, 2022 | |
| 2019 | Mar 30, 2020 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.