COMFORT SYSTEMS USA INC Leases Disclosure
10. Leases
We lease certain facilities, vehicles and equipment primarily under noncancelable operating leases. The most significant portion of these noncancelable operating leases is for the facilities occupied by our corporate office and our operating locations. Leases with an initial term of 12 months or less are not recorded in the Consolidated Balance Sheet. We do not separate lease components from their associated non-lease components pursuant to lease accounting guidance. We have certain leases with variable payments based on an index as well as short-term leases on equipment and facilities. Variable lease expense and short-term lease expense for the year ended December 31, 2025, 2024 and 2023 aggregated to $138.8 million, $94.3 million and $53.7 million, respectively. These expenses were primarily related to short-term equipment rentals. Lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The weighted average discount rate for our operating leases as of December 31, 2025 and 2024 was 6.0% and 6.1%, respectively. We recognize operating lease expense, including escalating lease payments and lease incentives, on a straight-line basis over the lease term. Operating lease expense for the years ended December 31, 2025, 2024 and 2023 was $187.5 million, $136.9 million and $86.1 million, respectively.
The lease terms generally range from to 15 years. Some leases include one or more options to renew, which may be exercised to extend the lease term. We include the exercise of lease renewal options in the lease term when it is reasonably certain that we will exercise the option and such exercise is at our sole discretion. The weighted average remaining lease term for our operating leases was 11.7 years and 10.9 years at December 31, 2025 and 2024, respectively.
A majority of the Company’s real property leases are with individuals or entities with whom we have no other business relationship. However, in certain instances the Company enters into real property leases with current or former employees. Rent paid to related parties for the years ended December 31, 2025, 2024 and 2023 was approximately $10.1 million, $9.8 million and $7.6 million, respectively.
If we decide to cancel or terminate a lease before the end of its term, we would typically owe the lessor the remaining lease payments under the term of the lease. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. On rare occasions, we rent or sublease certain real estate assets that we no longer use to third parties.
The following table summarizes the operating lease assets and liabilities included in the Consolidated Balance Sheets as of December 31, 2025 and December 31, 2024 (in thousands):
December 31, | ||||||
2025 | | 2024 | ||||
Operating lease right-of-use assets | $ | 322,922 | $ | 229,106 | ||
Operating lease liabilities: | ||||||
$ | 35,542 | $ | 28,158 | |||
Long-term operating lease liabilities | 302,590 | 212,107 | ||||
Total operating lease liabilities | $ | 338,132 | $ | 240,265 | ||
The maturities of operating lease liabilities as of December 31, 2025 are as follows (in thousands):
Year ending December 31— | |||
2026 | $ | 53,668 | |
2027 | 49,622 | ||
2028 | 43,633 | ||
2029 | 37,828 | ||
2030 | 34,395 | ||
Thereafter | 266,684 | ||
Total lease payments | 485,830 | ||
Less—present value discount | (147,698) | ||
Present value of operating lease liabilities | $ | 338,132 |
Supplemental information related to operating leases was as follows (in thousands):
Year Ended December 31, | |||||
2025 | 2024 | ||||
Cash paid for amounts included in the measurement of operating lease liabilities | $ | 45,550 | $ | 39,702 | |
Operating lease right-of-use assets obtained in exchange for lease liabilities | $ | 127,664 | $ | 54,344 | |
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 22, 2023 | |
| 2021 | Feb 23, 2022 | |
| 2020 | Feb 25, 2021 | |
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.