Note 15. Leases
The Company’s operating and finance lease portfolio primarily consists of manufacturing and warehouse space, office space, IT equipment, office equipment, manufacturing equipment and vehicles. Operating lease ROU assets are presented within other non-current assets. The current portion of operating lease liabilities are presented within accrued expenses and other liabilities, and the non-current portion of operating lease liabilities are presented within other non-current liabilities on the consolidated balance sheets. Finance lease assets are included in property, plant and equipment - net, and the finance lease obligations are included in current portion of long-term debt and in long-term debt on the consolidated balance sheets.
The Company has elected to use the short-term lease recognition exemption for all asset classes. This means, for those leases that qualify, the Company will not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets. For these short-term leases, expense will be recognized on a straight-line basis over the terms of the leases. The Company has also elected the practical expedient to not separate lease and non-lease components for all asset classes, meaning all consideration that is fixed, or in-substance fixed, will be captured as part of its lease components for balance sheet purposes.
The following lease cost is included in the consolidated statements of operations (in thousands):
| | | | | | | | | | | |
| Year Ended December 31, 2025 | | Year Ended December 31, 2024 |
Lease cost (a) | | | |
| Operating leases cost | $ | 14,412 | | | $ | 12,413 | |
| Amortization of ROU assets | 1,001 | | | 835 | |
| Interest on lease liabilities | 142 | | | 133 | |
| Finance leases cost | 1,143 | | | 968 | |
| | | |
| Total lease cost | $ | 15,555 | | | $ | 13,381 | |
| | | |
| (a) With the exception of interest on lease liabilities, the Company records lease costs to cost of sales or selling, general and administrative expense on the consolidated statements of operations, depending on the use of the leased asset. Interest on lease liabilities are recorded to interest expense, net on the consolidated statements of operations. |
Supplemental cash flow information related to leases was as follows (in thousands):
| | | | | | | | | | | |
| Year Ended December 31, 2025 | | Year Ended December 31, 2024 |
| Cash paid for amounts included in the measurement of lease liabilities: | | | |
| Operating cash flows from operating leases | $ | 15,052 | | | $ | 11,881 | |
| Operating cash flows from finance leases | 141 | | | 132 | |
| Financing cash flows from finance leases | 1,965 | | | 1,969 | |
| Right-of-use assets obtained in exchange for lease obligations: | | | |
| Operating leases | $ | 7,601 | | | $ | 5,871 | |
| Finance leases | 3,171 | | | 1,046 | |
Supplemental balance sheet information related to leases as of December 31, 2025 was as follows (in thousands):
| | | | | | | | | | | |
| December 31, |
| 2025 | | 2024 |
| Operating leases | | | |
| Other non-current assets | $ | 54,242 | | | $ | 55,809 | |
| Accrued expenses and other liabilities | 10,048 | | | 8,673 | |
| Other non-current liabilities | 51,351 | | | 54,766 | |
| Total operating lease liabilities | 61,399 | | | 63,439 | |
| Finance leases | | | |
| Property, plant and equipment | 4,262 | | | 8,936 | |
| Accumulated depreciation | (588) | | | (2,892) | |
| Property, plant and equipment, net | 3,674 | | | 6,044 | |
| | | |
| Current maturities of long-term debt | 839 | | | 1,753 | |
| Long-term debt | 2,800 | | | 695 | |
| Total finance lease liabilities | $ | 3,639 | | | $ | 2,448 | |
Weighted average information:
| | | | | | | | | | | |
| December 31, |
| 2025 | | 2024 |
| Finance leases | | | |
| Remaining lease term (in years) | 4.13 | | 1.94 |
| Discount rate | 5.63 | % | | 4.68 | % |
| Operating leases | | | |
| Remaining lease term (in years) | 7.97 | | 8.90 |
| Discount rate | 4.80 | % | | 4.80 | % |
As of December 31, 2025, maturities of lease liabilities were as follows (in thousands):
| | | | | | | | | | | |
| Operating Leases | | Finance Leases |
| 2026 | $ | 12,750 | | | $ | 982 | |
| 2027 | 9,728 | | | 1,050 | |
| 2028 | 8,614 | | | 942 | |
| 2029 | 8,175 | | | 698 | |
| 2030 | 7,114 | | | 423 | |
| Thereafter | 27,455 | | | — | |
| Total lease payments | 73,836 | | | 4,095 | |
| Less: interest | (12,437) | | | (456) | |
| Total | $ | 61,399 | | | $ | 3,639 | |