Arq, Inc.ARQ
Arq, Inc. Leases Disclosure
Leases
The Company's operating and finance lease ROU assets and liabilities as of December 31, 2025 and 2024 consisted of the following items (in thousands):
As of | ||||||||||||||
| (in thousands) | December 31, 2025 | December 31, 2024 | ||||||||||||
| Operating Leases | ||||||||||||||
Operating lease right-of-use assets, net of accumulated amortization (1) | $ | 6,793 | $ | 9,312 | ||||||||||
| Operating lease obligations, current | $ | 2,842 | $ | 2,081 | ||||||||||
| Long-term operating lease obligations | 6,086 | 7,460 | ||||||||||||
| Total operating lease obligation | $ | 8,928 | $ | 9,541 | ||||||||||
| Finance Leases | ||||||||||||||
Finance lease right-of-use assets, net of accumulated amortization (2) | $ | 276 | $ | 824 | ||||||||||
| $ | 231 | $ | 855 | |||||||||||
| Long-term finance lease obligations | 88 | 414 | ||||||||||||
| Total finance lease obligations | $ | 319 | $ | 1,269 | ||||||||||
(1) Operating lease assets are reported net of accumulated amortization of $6.6 million and $4.5 million as of December 31, 2025 and 2024, respectively.
(2) Finance lease assets are reported net of accumulated amortization of $2.8 million and $3.2 million as of December 31, 2025 and 2024, respectively.
Finance leases
ROU assets under finance leases are included in the "Property, plant and equipment" line item, and finance lease liabilities are included in the "Current portion of long-term debt" and "Long-term debt, net of current portion" line items, respectively, in the Consolidated Balance Sheets as of December 31, 2025 and 2024.
Interest expense related to finance lease liabilities and amortization of ROU assets under finance leases are included in the "Interest expense" and "Depreciation, amortization, depletion and accretion" line items, respectively, in the Consolidated Statements of Operations for the years ended December 31, 2025 and 2024.
Operating leases
ROU assets under operating leases are included in the "" line item, and operating lease liabilities are included in " and " line items, respectively, in the Consolidated Balance Sheets as of December 31, 2025 and 2024.
Lease expense for operating leases for the year ended December 31, 2025 was $5.7 million, of which $5.0 million is included in the "Cost of revenue, exclusive of depreciation and amortization" line item and $0.7 million is included in the "Selling, general and administrative" line item in the Consolidated Statement of Operations for the year ended December 31, 2025. Lease expense for operating leases for the year ended December 31, 2024 was $5.3 million, of which $3.8 million is included in the "Cost of revenue, exclusive of depreciation and amortization" line item and $1.5 million is included in the "Selling, general and administrative" line item in the Consolidated Statement of Operations for the year ended December 31, 2024.
In 2025, the Company renewed its lease of land where the Corbin Facility is located (the "Corbin Lease") through August 31, 2030 in accordance with the Corbin Lease renewal term, which allows for automatic five-year renewals by the Company. As of December 31, 2025 and based on the Company's decision to idle indefinitely the Corbin Facility, the Company revalued the Corbin Lease liability and the related ROU asset (the "Corbin ROU Asset") based on a reduction from its estimated expected
termination date of August 31, 2040, to August 31, 2030. The revaluation resulted in a reduction to both the Corbin Lease Liability and the Corbin ROU Asset in the amount of $0.8 million.
Lease financial information as of and for the years ended December 31, 2025 and 2024 is provided in the following table:
| Year ended December 31, | ||||||||||||||
| (in thousands) | 2025 | 2024 | ||||||||||||
| Finance lease cost: | ||||||||||||||
| Amortization of right-of-use assets | $ | 396 | $ | 489 | ||||||||||
| Interest on lease liabilities | 131 | 194 | ||||||||||||
| Operating lease cost | 3,600 | 3,229 | ||||||||||||
| Short-term lease cost | 1,896 | 1,636 | ||||||||||||
Variable lease cost (1) | 240 | 417 | ||||||||||||
| Total lease cost | $ | 6,263 | $ | 5,965 | ||||||||||
| Other Information: | ||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||||||||
| Operating cash flows from finance leases | $ | 131 | $ | 194 | ||||||||||
| Operating cash flows from operating leases | $ | 2,438 | $ | 1,996 | ||||||||||
| Financing cash flows from finance leases | $ | 447 | $ | 1,022 | ||||||||||
| Right-of-use assets obtained in exchange for new operating lease liabilities | $ | 2,643 | $ | 724 | ||||||||||
| Weighted-average remaining lease term - finance leases | 1.3 years | 1.6 years | ||||||||||||
| Weighted-average remaining lease term - operating leases | 3.8 years | 7.3 years | ||||||||||||
| Weighted-average discount rate - finance leases | 8.9 | % | 6.2 | % | ||||||||||
| Weighted-average discount rate - operating leases | 11.3 | % | 12.2 | % | ||||||||||
(1) Primarily includes common area maintenance, property taxes and insurance payable to lessors.
The following table summarizes the Company's future lease payments under finance and operating leases as of December 31, 2025:
| (in thousands) | Operating Lease Commitments | Finance Lease Commitments | Total Lease Commitments | |||||||||||||||||
| 2026 | $ | 3,862 | $ | 250 | $ | 4,112 | ||||||||||||||
| 2027 | 2,417 | 87 | 2,504 | |||||||||||||||||
| 2028 | 1,612 | — | 1,612 | |||||||||||||||||
| 2029 | 1,508 | — | 1,508 | |||||||||||||||||
| 2030 | 1,098 | — | 1,098 | |||||||||||||||||
| Thereafter | 242 | — | 242 | |||||||||||||||||
| Total lease payments | 10,739 | 337 | 11,076 | |||||||||||||||||
| Less: Imputed interest | (1,811) | (18) | (1,829) | |||||||||||||||||
| $ | 8,928 | $ | 319 | $ | 9,247 | |||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 10, 2026 | Showing above |
| 2024 | Mar 5, 2025 | |
| 2023 | Mar 12, 2024 | |
| 2022 | Mar 8, 2023 | |
| 2021 | Mar 8, 2022 | |
| 2020 | Mar 10, 2021 | |
| 2019 | Mar 16, 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.