Leases
The Company has operating leases with fixed and variable payment terms primarily associated with buildings and warehouses. The Company's leases have remaining lease terms of twelve months to ten years, some of which include options to extend the lease for three years. Operating leases are included in right-of-use ("ROU") assets, other accrued liabilities and other non-current liabilities on the Consolidated Balance Sheets. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease.
The Company used the applicable incremental borrowing rate at lease inception date to measure lease liabilities and ROU assets. The incremental borrowing rate used by the Company was based on baseline rates and adjusted by the credit spreads commensurate with the Company’s secured borrowing rate. When there is a new lease initiated, the Company will utilize the rate implicit in the lease if readily determinable and if not readily determinable, then the Company will utilize the incremental borrowing rate to perform lease classification tests on lease components and to measure ROU assets and lease liabilities.
The following table provides information related to the components of lease expense as of December 31 (in thousands):
| | | | | | | | | | | |
| 2025 | | 2024 |
| Operating lease cost | $ | 2,295 | | | $ | 1,237 | |
| Short-term lease cost | 1,246 | | | 1,782 | |
| Total net lease cost | $ | 3,541 | | | $ | 3,019 | |
The following table provides information related to other supplemental balance sheet information related to operating leases as of December 31, (in thousands):
| | | | | | | | | | | |
| 2025 | | 2024 |
| | | |
| Operating lease right of use assets | $ | 14,494 | | | $ | 2,112 | |
| Total operating lease right of use assets | $ | 14,494 | | | $ | 2,112 | |
| | | |
Current operating lease liabilities (A) | $ | 1,721 | | | $ | 1,178 | |
| Noncurrent operating lease liabilities | 13,113 | | | 997 | |
| Total operating lease liabilities | $ | 14,834 | | | $ | 2,175 | |
(A) Current operating lease liability included in "Other Current Accrued Liabilities" on the Consolidated Balance Sheets.
| | | | | | | | | | | |
| 2025 | | 2024 |
| Weighted average remaining lease term (in years): | 8.4 | | 1.6 |
| Weighted average discount rate: | 6.2 | % | | 5.5 | % |
For the years ended December 31, 2025 and 2024, cash payments on amounts included in the measurement of lease liabilities were $2,047,000 and $2,079,000, respectively. During the year ended December 31, 2025, the Company entered into a new lease related to the Monterrey expansion, resulting in $10,825,000 right of use assets obtained in exchange for new operating lease liabilities.
As of December 31, 2025, maturities of lease liabilities were as follows (in thousands):
| | | | | |
| Operating Leases |
| 2026 | $ | 2,599 | |
| 2027 | 2,311 | |
| 2028 | 2,355 | |
| 2029 | 2,382 | |
| 2030 and thereafter | 9,781 | |
| Total lease payments | 19,428 | |
| Less: imputed interest | (4,594) | |
| Total lease obligations | 14,834 | |
| Less: current obligations | (1,721) | |
| Long-term lease obligations | $ | 13,113 | |