EMCOR Group, Inc.EME
EMCOR Group, Inc. Leases Disclosure
LEASES
We lease real estate, vehicles, and equipment under various arrangements which are classified as either operating or finance leases. A lease exists when a contract or part of a contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. In determining whether a lease exists, we consider whether a contract provides us with both: (a) the right to obtain substantially all of the economic benefits from the use of the identified asset and (b) the right to direct the use of the identified asset.
Many of our leases include base rental periods coupled with options to renew or terminate the lease, generally at our discretion. Certain leases additionally include options to purchase the leased asset. In evaluating the lease term, we consider whether we are reasonably certain to exercise such options. To the extent a significant economic incentive exists to exercise an option, that option is included within the lease term. However, based on the nature of our lease arrangements, options generally do not provide us with a significant economic incentive and are therefore excluded from the lease term for the majority of our arrangements.
Our leases typically include a combination of fixed and variable payments. Fixed payments are generally included when measuring the right-of-use asset and lease liability. Variable payments, which primarily represent payments based on usage of the underlying asset, are generally excluded from such measurement and expensed as incurred. In addition, certain of our lease arrangements may contain a lease coupled with an arrangement to provide other services, such as maintenance, or may require us to make other payments on behalf of the lessor related to the leased asset, such as payments for taxes or insurance. We account for these non-lease components together with the associated lease component for each of our asset classes.
NOTE 16 - LEASES (Continued)
The measurement of right-of-use assets and lease liabilities requires us to estimate appropriate discount rates. To the extent the rate implicit in the lease is readily determinable, such rate is utilized. However, based on information available at lease commencement for the majority of our leases, the rate implicit in the lease is not known. In these instances, we utilize an incremental borrowing rate, which represents the rate of interest that we would pay to borrow on a collateralized basis, over a similar term, an amount equal to the lease payments.
Our lease arrangements generally do not contain significant restrictions or covenants; however, certain of our vehicle and equipment leases include residual value guarantees, whereby we provide a guarantee to the lessor that the value of the underlying asset will be at least a specified amount at the end of the lease. Amounts probable of being owed under these guarantees are included within the measurement of the right-of-use asset and lease liability.
Lease Position
The following table presents our lease-related assets and liabilities as of December 31, 2025 and 2024 (in thousands):
| Classification on the Consolidated Balance Sheet | December 31, 2025 | December 31, 2024 | |||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Operating lease assets | Operating lease right-of-use assets | $ | 439,029 | $ | 316,128 | ||||||||||||||||||
| Finance lease assets | Property, plant, and equipment, net | ||||||||||||||||||||||
| Total lease assets | $ | 445,140 | $ | 322,137 | |||||||||||||||||||
| Liabilities | |||||||||||||||||||||||
| Current | |||||||||||||||||||||||
| Operating | Operating lease liabilities, current | $ | 99,213 | $ | 81,247 | ||||||||||||||||||
| Finance | Other accrued expenses and liabilities | ||||||||||||||||||||||
| Noncurrent | |||||||||||||||||||||||
| Operating | Operating lease liabilities, long-term | 368,996 | 261,575 | ||||||||||||||||||||
| Finance | Other long-term obligations | ||||||||||||||||||||||
| Total lease liabilities | $ | 474,557 | $ | 348,917 | |||||||||||||||||||
Lease Costs
The following table presents information related to our lease expense for the years ended December 31, 2025, 2024, and 2023 (in thousands):
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Finance lease expense: | ||||||||||||||||||||
| Amortization expense | $ | 2,855 | $ | 2,604 | $ | 2,816 | ||||||||||||||
| Interest expense | 320 | 254 | 175 | |||||||||||||||||
| Operating lease expense | 121,996 | 103,261 | 93,158 | |||||||||||||||||
Short-term lease expense (1) | 382,289 | 290,267 | 224,047 | |||||||||||||||||
| Variable lease expense | 8,163 | 7,137 | 9,482 | |||||||||||||||||
| Total lease expense | $ | 515,623 | $ | 403,523 | $ | 329,678 | ||||||||||||||
_________________
(1)Short-term lease expense includes both leases and rentals with initial terms of one year or less and predominantly represents equipment used on construction projects.
Sublease rental income was approximately $1.0 million, $4.6 million, and $6.7 million for the years ended December 31, 2025, 2024, and 2023, respectively.
NOTE 16 - LEASES (Continued)
Lease Term and Discount Rate
The following table presents certain information related to the lease terms and discount rates for our leases as of December 31, 2025 and 2024:
| December 31, 2025 | December 31, 2024 | |||||||||||||
| Weighted-average remaining lease term: | ||||||||||||||
| Operating leases | 6.9 years | 5.1 years | ||||||||||||
| Finance leases | 3.1 years | 3.4 years | ||||||||||||
| Weighted-average discount rate: | ||||||||||||||
| Operating leases | 5.01 | % | 4.43 | % | ||||||||||
| Finance leases | 5.10 | % | 4.67 | % | ||||||||||
Other Information
The following table presents supplemental cash flow information related to our leases for the years ended December 31, 2025, 2024, and 2023 (in thousands):
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||||||||||||||
| Operating cash flows used for operating leases | $ | 118,840 | $ | 101,611 | $ | 90,412 | ||||||||||||||
| Operating cash flows used for finance leases | $ | 320 | $ | 254 | $ | 175 | ||||||||||||||
| Financing cash flows used for finance leases | $ | 2,692 | $ | 2,855 | $ | 2,776 | ||||||||||||||
| Right-of-use assets obtained in exchange for new operating lease liabilities | $ | 219,965 | $ | 94,538 | $ | 125,417 | ||||||||||||||
| Right-of-use assets obtained in exchange for new finance lease liabilities | $ | 2,882 | $ | 3,412 | $ | 1,427 | ||||||||||||||
Maturity of Lease Liabilities
The following table reconciles our future minimum lease payments on an undiscounted cash flow basis to our lease liabilities reported in the Consolidated Balance Sheet as of December 31, 2025 (in thousands):
| Operating Leases | Finance Leases | ||||||||||
2026 | $ | 119,602 | $ | 2,654 | |||||||
2027 | 96,345 | 2,051 | |||||||||
2028 | 79,533 | 1,221 | |||||||||
2029 | 65,874 | 633 | |||||||||
2030 | 50,498 | 255 | |||||||||
| Thereafter | 151,835 | 37 | |||||||||
| Total minimum lease payments | 563,687 | 6,851 | |||||||||
| Less: Amount of lease payments representing interest | (95,478) | (503) | |||||||||
| Present value of future minimum lease payments | $ | 468,209 | $ | 6,348 | |||||||
| Current portion of lease liabilities | $ | 99,213 | $ | 2,399 | |||||||
| Noncurrent portion of lease liabilities | 368,996 | 3,949 | |||||||||
| Present value of future minimum lease payments | $ | 468,209 | $ | 6,348 | |||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 27, 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.