HYDROFARM HOLDINGS GROUP, INC.HYFM
HYDROFARM HOLDINGS GROUP, INC. Leases Disclosure
LEASES
The Company leases its distribution centers and manufacturing facilities from third parties under various non-cancelable lease agreements expiring at various dates through 2038. Also, the Company leases some property, plant and equipment under finance leases. Certain leases contain escalation provisions and/or renewal options, giving the Company the right to extend the leases by up to 20 years. However, these options are generally not reflected in the calculation of the ROU assets and lease liabilities due to uncertainty surrounding the likelihood of renewal. The Company recognizes operating lease costs over the respective lease periods, including short-term and month-to-month leases. The Company incurred operating lease costs of $9,565 and $10,195 during the years ended December 31, 2025, and 2024, respectively. These costs are included primarily within SG&A in the consolidated statements of operations and do not include lease termination costs associated with the IGE Asset Sale. Refer to Note 4 – Restructuring and Asset Sales for further details.
The Company has operating subleases and logistics agreements which have been accounted for by reference to the underlying asset subject to the lease, primarily as an offset to rent expense within SG&A.
Total ROU assets, finance lease assets, and lease liabilities were as follows:
| December 31, | |||||||||||||||||
| Balance Sheet Classification | 2025 | 2024 | |||||||||||||||
| Lease assets | |||||||||||||||||
| Operating lease assets | Operating lease right-of-use assets | $ | 37,765 | $ | 42,869 | ||||||||||||
| Property, plant and equipment, net | 6,575 | 7,279 | |||||||||||||||
| Total lease assets | $ | 44,340 | $ | 50,148 | |||||||||||||
| Lease liabilities | |||||||||||||||||
| Current: | |||||||||||||||||
| Operating leases | Current portion of operating lease liabilities | $ | 7,543 | $ | 7,731 | ||||||||||||
| Finance leases | Current portion of finance lease liabilities | 455 | 459 | ||||||||||||||
| Noncurrent: | |||||||||||||||||
| Operating leases | Long-term operating lease liabilities | 32,800 | 37,553 | ||||||||||||||
| Finance leases | Long-term finance lease liabilities | 7,381 | 7,830 | ||||||||||||||
| Total lease liabilities | $ | 48,179 | $ | 53,573 | |||||||||||||
Total lease costs and sublease and logistics income were as follows:
| Years ended December 31, | |||||||||||||||||
| Classification | 2025 | 2024 | |||||||||||||||
| Operating lease costs | Selling, general and administrative(1) | $ | 9,565 | $ | 10,195 | ||||||||||||
| Finance lease costs: | |||||||||||||||||
| Amortization of lease assets | Selling, general and administrative | 698 | 734 | ||||||||||||||
| Amortization of lease assets | Cost of goods sold | — | 137 | ||||||||||||||
| Interest on lease liabilities | Interest expense | 421 | 459 | ||||||||||||||
| Sublease and logistics income | Selling, general and administrative | (4,797) | (3,851) | ||||||||||||||
(1) Operating lease costs are primarily recorded in SG&A.
In addition to the operating lease costs above, short-term and month-to-month lease expense was zero and $61 for the years ended December 31, 2025, and 2024, respectively, and other costs associated with operating leases were $3,461 and $3,207, respectively, for non-lease components such as common area maintenance and other miscellaneous items. These costs were included primarily within SG&A in the consolidated statements of operations.
The aggregate future minimum lease payments under long-term non-cancelable operating and finance leases with remaining terms greater than one year as of December 31, 2025, are as follows:
| Year ending December 31, | Operating | Finance | ||||||||||||
| 2026 | $ | 9,044 | $ | 850 | ||||||||||
| 2027 | 9,266 | 852 | ||||||||||||
| 2028 | 8,728 | 806 | ||||||||||||
| 2029 | 5,862 | 822 | ||||||||||||
| 2030 | 4,742 | 838 | ||||||||||||
| Thereafter | 7,846 | 6,379 | ||||||||||||
| Total lease payments | 45,488 | 10,547 | ||||||||||||
| Less portion representing interest | 5,145 | 2,711 | ||||||||||||
| Total principal | 40,343 | 7,836 | ||||||||||||
| Less current portion | 7,543 | 455 | ||||||||||||
| Long-term portion | $ | 32,800 | $ | 7,381 | ||||||||||
The following table summarizes the weighted-average remaining lease term as well as the weighted average discount rate as of December 31, 2025, and 2024:
| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Weighted-average remaining lease term in years: | ||||||||||||||
| Operating leases | 5.4 | 6.0 | ||||||||||||
| Finance leases | 11.9 | 12.9 | ||||||||||||
| Weighted-average discount rate: | ||||||||||||||
| Operating leases | 4.33 | % | 4.12 | % | ||||||||||
| Finance leases | 5.43 | % | 5.39 | % | ||||||||||
Cash paid for amounts included in lease liabilities for the years ended December 31, 2025, and 2024, were:
| Years ended December 31, | ||||||||||||||
| Cash paid for amounts included in lease liabilities: | 2025 | 2024 | ||||||||||||
| Operating cash flows from operating leases | $ | (9,452) | $ | (9,653) | ||||||||||
| Operating cash flows from finance leases | (421) | (459) | ||||||||||||
| Financing cash flows from finance leases | (463) | (680) | ||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 27, 2026 | Showing above |
| 2024 | Mar 5, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Mar 9, 2023 | |
| 2021 | Mar 1, 2022 | |
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.