BROADWIND, INC. Leases Disclosure

12. LEASES

 

The Company leases various property and equipment under operating lease arrangements. The Company recognizes operating lease assets and liabilities on the balance sheet and discloses key information regarding leasing arrangements. The Company has elected to apply the short-term lease exception to all leases of one year or less.

 

 As of December 31, 2025, the right-of-use (“ROU”) asset had a balance of $11,892 which is included in the “Operating lease right-of-use assets” line item of these consolidated financial statements and current and non-current lease liabilities relating to the ROU asset of $2,306 and $11,252, respectively, and are included in the “Current portion of operating lease obligations” and “Long-term operating lease obligations, net of current portion” line items of these consolidated financial statements. As of December 31, 2024, the ROU asset had a balance of $13,841 and current and non-current lease liabilities relating to the ROU asset of $2,115 and $13,799, respectively. The discount rates used for leases accounted for under Topic 842 are based on an interest rate yield curve developed for the leases in the Company’s lease portfolio. 

 

Lease terms generally range from 3 to 15 years with renewal options for extended terms. Some of the Company’s facility leases include options to renew. The exercise of the renewal options is at the Company’s discretion. Therefore, the majority of renewals to extend the lease terms are not included in ROU assets and lease liabilities as they are not reasonably certain of exercise. The Company regularly evaluates the renewal options and includes them in the lease term when the Company is reasonably certain to exercise them. Certain leases contain rent escalation clauses that require additional rental payments in the later years of the term. Rent expense for these types of leases is recognized on a straight-line basis over the lease term. Operating rental expense for the years ended December 31, 2025 and 2024 was $3,842 and $4,210, respectively.

 

In addition, the Company has entered into finance lease arrangements to finance property and equipment and assumed finance lease obligations in connection with certain acquisitions. The related assets are included in the “Property and equipment, net” line item of these consolidated financial statements and the liabilities are included in the “Current portion of finance lease obligations” line item and “Long-term finance lease obligations, net of current portion” line item of these consolidated financial statements. Finance lease cost for the years ended December 31, 2025 and 2024 was $1,620 and $1,946, respectively.

 

Amortization expense recorded in connection with assets recorded under finance leases was $1,215 and $1,473 for the years ended December 31, 2025 and 2024, respectively.

 

Quantitative information regarding the Company’s leases is as follows:

 

		Year Ended December 31,
		2025				2024
Components of lease cost
Finance lease cost components:
Amortization of finance lease assets		$	1,215			$	1,473
Interest on finance lease liabilities			405				473
Total finance lease costs			1,620				1,946
Operating lease cost components:
Operating lease cost			2,392				2,694
Short-term lease cost			773				192
Variable lease cost (1)			999				1,524
Sublease income			(322	)			(200	)
Total operating lease costs			3,842				4,210
Total lease cost		$	5,462			$	6,156
Supplemental cash flow information related to our operating leases is as follows for the twelve months ended December 31, 2025 and 2024:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow from operating leases		$	3,104			$	3,359
Right-of-use assets obtained in exchange for new
operating lease liabilities		$	2,474			$	29
Weighted-average remaining lease term-finance leases at end of period (in years)			2.4				2.8
Weighted-average remaining lease term-operating leases at end of period (in years)			7.7				6.2
Weighted-average discount rate-finance leases at end of period			5.9	%			5.3	%
Weighted-average discount rate-operating leases at end of period			6.7	%			8.9	%

 

(1)	Variable lease costs consist primarily of taxes, insurance, utilities, and common area or other maintenance costs for the Company’s leased facilities and equipment.

 

Amortization associated with new right-of-use assets obtained in exchange for new operating lease liabilities is $13 and $4 for the years ended December 31, 2025 and 2024, respectively. During 2025, the Company executed a lease amendment that extended the term of the Gearing facility lease and reduced the amount of square footage leased. These lease provisions are effective December 1, 2026. 

 

As of December 31, 2025, future minimum lease payments under finance leases and operating leases were as follows:

 

		Finance				Operating
		Leases				Leases				Total
2026		$	2,325			$	3,134			$	5,459
2027			1,212				1,812				3,024
2028			952				2,034				2,986
2029			525				1,993				2,518
2030			—				2,029				2,029
2031 and thereafter			—				6,325				6,325
Total lease payments			5,014				17,327				22,341
Less—portion representing interest			(421	)			(3,769	)			(4,190	)
Present value of lease obligations			4,593				13,558				18,151
Less—current portion of lease obligations			(2,111	)			(2,306	)			(4,417	)
Long-term portion of lease obligations		$	2,482			$	11,252			$	13,734