EnerSysENS
EnerSys Leases Disclosure
Leases
The Company leases manufacturing facilities, distribution centers, office space, vehicles and other equipment under non-cancellable leases with initial terms typically ranging from 1 to 16 years. At contract inception, the Company reviews the terms of the arrangement to determine if the contract is or contains a lease. Guidance in Topic 842 is used to evaluate whether the contract has an identified asset; if the Company has the right to obtain substantially all economic benefits from the asset; and if it has the right to direct the use of the underlying asset. When determining if a contract has an identified asset, the Company considers both explicit and implicit assets, and whether the supplier has the right to substitute the asset. When determining if the Company has the right to obtain substantially all economic benefits from the asset, the Company considers the primary outputs of the identified asset throughout the period of use and determines if it receives greater than 90% of those benefits. When determining if it has the right to direct the use of an underlying asset, the Company considers if it has the right to direct how and for what purpose the asset is used throughout the period of use and if it controls the decision-making rights over the asset.
Lease terms may include options to extend or terminate the lease. The Company exercises its judgment to determine the term of those leases when extension or termination options are present and include such options in the calculation of the lease term when it is reasonably certain that the Company will exercise those options.
The Company has elected to include both lease and non-lease components in the determination of lease payments for all asset classes. Payments made to a lessor for items such as taxes, insurance, common area maintenance, or other costs commonly referred to as executory costs, are also included in lease payments if they are fixed. The fixed portion of these payments are included in the calculation of the lease liability, while any variable portion would be recognized as variable lease expenses, when incurred. Variable payments made to third parties for these, or similar costs, such as utilities, are not included in the calculation of lease payments.
Both finance and operating leases are reflected as liabilities on the commencement date of the lease based on the present value of the lease payments to be made over the lease term. As most of the leases do not provide an implicit rate, the Company has exercised judgment in electing the incremental borrowing rate based on the information available when the lease commences to determine the present value of future payments. Right-of-use assets are valued at the initial measurement of the lease liability, plus any initial direct costs or rent prepayments and reduced by any lease incentives and any deferred lease payments.
Operating lease expense is recognized on a straight-line basis over the lease term. Finance lease expense includes depreciation, which is recognized on a straight-line basis over the expected life of the leased asset, and interest expense, which is recognized following an effective interest rate method.
Short term leases with an initial term of 12 months or less are not presented on the balance sheet and expense is recognized as incurred. The current and non-current portion of operating lease liabilities are reflected in accrued expenses and other liabilities, respectively, on the consolidated balance sheets. The right-of use assets relating to operating and finance leases are reflected in other assets and property, plant and equipment, respectively, on the consolidated balance sheets.
The following table presents lease assets and liabilities and their balance sheet classification:
| Classification | As of March 31, 2026 | As of March 31, 2025 | ||||||||||||||||||
| Operating Leases: | ||||||||||||||||||||
| Right-of-use assets | $ | 70,655 | $ | 83,635 | ||||||||||||||||
| Operating lease current liabilities | 24,976 | 22,357 | ||||||||||||||||||
| Operating lease non-current liabilities | 52,377 | 67,033 | ||||||||||||||||||
| Finance Leases: | ||||||||||||||||||||
| Right-of-use assets | $ | 3,346 | $ | 915 | ||||||||||||||||
| Finance lease current liabilities | Current portion of finance leases | 998 | 265 | |||||||||||||||||
| Finance lease non-current liabilities | Finance leases | 2,350 | 592 | |||||||||||||||||
The components of lease expense for the fiscal years ended March 31, 2026 and March 31, 2025 were as follows:
| Classification | March 31, 2026 | March 31, 2025 | ||||||||||||||||||
| Operating Leases: | ||||||||||||||||||||
| Operating lease cost | Operating expenses | $ | 29,232 | $ | 27,040 | |||||||||||||||
| Variable lease cost | Operating expenses | 6,905 | 6,338 | |||||||||||||||||
| Short term lease cost | Operating expenses | 15,733 | 16,573 | |||||||||||||||||
| Finance Leases: | ||||||||||||||||||||
| Depreciation | Operating expenses | $ | 911 | $ | 282 | |||||||||||||||
| Interest expense | Interest expense | 158 | 66 | |||||||||||||||||
| Total | $ | 52,939 | $ | 50,299 | ||||||||||||||||
The following table presents the weighted average lease term and discount rates for leases as of March 31, 2026 and March 31, 2025:
March 31, 2026 | March 31, 2025 | |||||||||||||
| Operating Leases: | ||||||||||||||
| Weighted average remaining lease term (years) | 4.4 years | 5.1 years | ||||||||||||
| Weighted average discount rate | 5.66% | 6.06% | ||||||||||||
| Finance Leases: | ||||||||||||||
| Weighted average remaining lease term (years) | 3.6 years | 3.2 years | ||||||||||||
| Weighted average discount rate | 5.29% | 7.07% | ||||||||||||
The following table presents future payments due under leases reconciled to lease liabilities as of March 31, 2026:
| Finance Leases | Operating Leases | |||||||||||||
| Year ended March 31, | ||||||||||||||
| 2027 | $ | 1,141 | $ | 28,942 | ||||||||||
| 2028 | 1,052 | 24,058 | ||||||||||||
| 2029 | 754 | 17,047 | ||||||||||||
| 2030 | 483 | 9,222 | ||||||||||||
| 2031 | 215 | 5,156 | ||||||||||||
| Thereafter | — | 6,727 | ||||||||||||
| Total undiscounted lease payments | 3,645 | 91,152 | ||||||||||||
| Present value discount | 296 | 13,798 | ||||||||||||
| Lease liability | $ | 3,349 | $ | 77,354 | ||||||||||
The following table presents supplemental disclosures of cash flow information related to leases for the fiscal years ended March 31, 2026 and March 31, 2025:
| March 31, 2026 | March 31, 2025 | |||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||||||||
| Operating cash flows from finance leases | $ | 156 | $ | 64 | ||||||||||
| Operating cash flows from operating leases | 29,915 | 26,022 | ||||||||||||
| Financing cash flows from finance leases | 878 | 268 | ||||||||||||
| Supplemental non-cash information on lease liabilities arising from right-of-use assets: | ||||||||||||||
| Right-of-use assets obtained in exchange for new finance lease liabilities | $ | 2,338 | $ | 302 | ||||||||||
| Right-of-use assets obtained in exchange for new operating lease liabilities | 13,651 | 28,184 | ||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | May 20, 2026 | Showing above |
| 2025 | May 21, 2025 | |
| 2024 | May 22, 2024 | |
| 2023 | May 24, 2023 | |
| 2022 | May 25, 2022 | |
| 2021 | May 26, 2021 | |
| 2020 | Jun 1, 2020 | |
| 2019 | May 29, 2019 | |
| 2018 | May 30, 2018 | |
| 2017 | May 30, 2017 | |
| 2016 | May 31, 2016 | |
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.