Leases:

We have various noncancelable operating lease agreements for office, lab, warehouse and manufacturing space with original remaining lease terms of three years to twenty years, some of which include an option to extend the lease term for up to ten years. Because the Company is not reasonably certain to exercise the renewal options on these lease arrangements, the options are not considered in determining the lease term and associated potential option payments are excluded from lease payments. The Company’s leases generally do not include termination options for either party to the lease or restrictive financial or other covenants.

We also have finance lease agreements for manufacturing equipment and land with initial terms of ten years and twenty years, with options to extend the lease terms by the corresponding number of years, which the Company is not reasonably certain to exercise. The manufacturing equipment agreement does not include termination options for either party to the lease or restrictive financial or other covenants. The land agreement contains termination options that are not wholly within the control of the Company, and therefore, are not considered as part of the term of the lease.

Weighted-average remaining lease term (in years) and discount rate related to operating and finance leases were as follows:


	As of December 31, 2025
	Operating Leases		Finance Lease
Weighted-average remaining lease term	17.60		10.25
Weighted-average discount rate	8.4	%	8.6	%

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date to determine the present value of lease payments.

Maturities of lease liabilities under noncancelable operating leases and finance lease as of December 31, 2025 were as follows:


	As of December 31, 2025
	Operating Leases		Finance Lease
2026	$	7,808	$	4,791
2027	7,164		4,810
2028	6,461		4,831
2029	6,537		4,852
2030 and beyond	108,423		27,379
Total lease payments	$	136,393	$	46,663
Less: Imputed interest	(69,129)		(16,273)
Present value of lease liabilities	$	67,264	$	30,390

A summary of lease costs for 2025, 2024 and 2023 were as follows:


		Year Ended December 31,
		2025		2024		2023
Operating Lease:
Lease cost	Cost of goods sold and selling, general and administrative	$	5,652	$	1,591	$	1,752

Finance Lease:
Amortization of right of use asset	Cost of goods sold and selling, general and administrative	$	3,117	$	2,812	$	1,459
Interest on lease liabilities	Interest expense	$	2,533	$	2,244	$	1,235
Variable lease cost (a)	Inventory/Cost of goods sold (1)	$	22,023	$	13,972	$	6,733

(1) Variable lease cost primarily consists of the procurement and manufacturing costs capitalized to inventory. For the year ended 2025, 2024 and 2023, $22,023 $13,972 and $6,733 of variable lease costs, respectively, were capitalized to inventory and will be captured as part of cost of goods sold as the inventory turns.

Supplemental balance sheet information related to leases as of December 31, 2025 and December 31, 2024 are as follows:


		As of December 31, 2025		As of December 31, 2024
Assets:
Operating leases	Operating lease right of use assets	$	66,424	$	3,366
Finance lease, net	Property, plant and equipment, net	28,323		24,206
Total lease assets		$	94,747	$	27,572


Liabilities:
Current:
Operating lease liabilities	Current operating lease liabilities	$	2,241	$	1,322
Finance lease liabilities	Current finance lease liabilities	2,315		2,120
Non-current:
Operating lease liabilities	Long term operating lease liabilities	65,023		2,213
Finance lease liabilities	Long term finance lease liabilities	28,075		23,273
Total lease liabilities		$	97,654	$	28,928

Supplemental cash flow information and non-cash activity relating to operating and finance leases are as follows:


	Year Ended December 31,
Operating cash flow information:	2025		2024		2023
Cash paid for amounts included in the measurement of operating lease liabilities	$	4,982	$	1,645	$	1,802
Cash paid for amounts included in the measurement of finance lease liabilities (i.e. interest)	$	2,101	$	2,244	$	1,235
Finance cash flow information:
Cash paid for amounts included in the measurement of finance lease liabilities (i.e. principal payment)	$	2,120	$	1,977	$	1,109

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.

Freshpet, Inc. Leases Disclosure

About Leases Disclosures

Other Available Disclosures