LEASES
The Company has both real estate leases and equipment leases. The main types of equipment leases include forklifts, trailers, printers and copiers, railcars, and trucks. Leases are categorized as both operating leases and finance leases. The Company elected the practical expedient to combine lease and non-lease components and recognizes the combined amount on the consolidated balance sheet. Management determined that since the Company has a centralized treasury function, the parent company would either fund or guarantee a subsidiary's loan for borrowing over a similar term. As such, the Company's management determined it is appropriate to utilize a corporate based borrowing rate for all locations. The Company developed four tranches of leases based on lease terms and these tranches reflect the composition of the current lease portfolio. The Company's borrowing history shows that interest rates of a term loan or a line of credit depend on the duration of the loan rather than the nature of the assets purchased by those funds. Based on this understanding, the Company elected to use a portfolio approach to discount rates, applying corporate rates to the tranches of leases based on lease terms. The Company reviews the discount rates quarterly. Based on the Company's risk rating, the Company applied the following discount rates for new leases entered into during 2025: (1) 1-2 years, 5.45% - 5.62% (2) 3-4 years, 6.04% - 6.21% (3) 5-9 years, 6.38% - 6.55% and (4) 10+ years, 7.10% - 7.27%.
Right of use assets and lease liabilities at December 31, 2025 and 2024 are summarized as follows:
| | | | | | | | | | | | | | |
| Right of use assets | | 2025 | | 2024 |
| Operating leases | | $ | 14,672 | | | $ | 15,320 | |
| Finance lease | | 1,520 | | | 1,730 | |
| Total | | $ | 16,192 | | | $ | 17,050 | |
| | | | | | | | | | | | | | |
| Lease liabilities - current | | 2025 | | 2024 |
| Operating leases | | $ | 3,614 | | | $ | 3,134 | |
| Finance lease | | 205 | | | 194 | |
| Total | | $ | 3,819 | | | $ | 3,328 | |
| | | | | | | | | | | | | | |
| Lease liabilities - non-current | | 2025 | | 2024 |
| Operating leases | | $ | 11,324 | | | $ | 12,967 | |
| Finance lease | | 1,544 | | | 1,749 | |
| Total | | $ | 12,868 | | | $ | 14,716 | |
For the years ended December 31, 2025, 2024, and 2023, the Company's total lease costs were as follows, which included both amounts recognized in profits or losses during the period and amounts capitalized on the balance sheet, and the cash flows arising from lease transactions:
| | | | | | | | | | | | | | | | | | | | |
| | Year ended December 31, |
| | 2025 | | 2024 | | 2023 |
| Lease Cost | | | | | | |
| Operating lease cost | | $ | 5,444 | | | $ | 5,456 | | | $ | 5,307 | |
| | | | | | |
| Finance Lease cost | | | | | | |
| Amortization of ROU asset | | 210 | | | 232 | | | 242 | |
| Interest on lease liabilities | | 94 | | | 105 | | | 115 | |
| Total finance lease | | 304 | | | 337 | | | 357 | |
| | | | | | |
| Total lease cost | | $ | 5,748 | | | $ | 5,793 | | | $ | 5,664 | |
| | | | | | |
| Cash paid for amounts included in the measurement of lease liabilities | | | | | | |
| Operating cash flows from operating leases | | $ | 5,497 | | | $ | 5,454 | | | $ | 4,757 | |
| Operating cash flows from finance leases | | 94 | | | 105 | | | 115 | |
| Financing cash flows from finance leases | | 194 | | | 216 | | | 222 | |
| | $ | 5,785 | | | $ | 5,775 | | | $ | 5,094 | |
| | | | | | |
| ROU assets obtained in exchange for new operating lease liabilities, net of ROU asset disposals | | $ | 3,358 | | | $ | 1,669 | | | $ | 6,365 | |
| | | | | | |
| Weighted-average remaining lease term - operating leases | | 5.91 years | | 9.03 years | | 9.33 years |
| Weighted-average remaining lease term - finance leases | | 7.35 years | | 8.37 years | | 9.07 years |
| | | | | | |
| Weighted-average discount rate - operating leases | | 6.7 | % | | 7.6 | % | | 7.4 | % |
| Weighted-average discount rate - finance leases | | 5.1 | % | | 5.1 | % | | 5.0 | % |
Rent expense charged to operations under operating lease agreements for 2025, 2024, and 2023 aggregated approximately $5,444, $5,456, and $5,307, respectively.
Aggregate future minimum rental payments required under non-cancelable operating and finance leases at December 31, 2025 are as follows:
| | | | | | | | |
| Year | | |
| 2026 | | $ | 4,769 | |
| 2027 | | 3,734 | |
| 2028 | | 2,965 | |
| 2029 | | 2,497 | |
| 2030 | | 2,041 | |
| Thereafter | | 4,344 | |
| Total undiscounted lease payments | | 20,350 | |
| Less: Present value adjustment | | (3,663) | |
| Present value of lease liabilities | | $ | 16,687 | |