LEASES
We lease certain office space and equipment for use in our operations. We assess each of these contracts to determine whether the arrangement contains a lease as defined by ASC 842, Leases ("ASC 842"). In order to meet the definition of a lease under ASC 842, the contractual arrangement must convey to us the right to control the use of an identifiable asset for a period of time in exchange for consideration. We recognize lease expense for these leases on a straight-line basis over the lease term and combine lease and non-lease components for all leases. Some of our leases contain renewal options and in accordance with ASC 842, our lease terms include those renewals only to the extent that they are reasonably certain to be exercised. The exercise of these lease renewal options is generally at our discretion. In accordance with ASC 842, the lease liability is equal to the present value of the remaining lease payments while the right-of-use ("ROU") asset is based on the lease liability, subject to adjustment, such as for lease incentives. Our leases do not provide a readily determinable implicit interest rate and therefore, we must estimate our incremental borrowing rate. In determining our incremental borrowing rate, we consider the lease period, market interest rates, current interest rates on our senior notes and the effects of collateralization.
Our lease population at December 31, 2025 is comprised of operating leases where we are the lessee and these leases are primarily for office space for our corporate and division offices, in addition to leases of certain equipment. As allowed by ASC 842, we do not record leases with lease terms of twelve months or less on the consolidated balance sheets.
Lease cost included in our consolidated income statements in General and administrative expenses is in the table below (in thousands). Our short-term lease costs and sublease income are de minimis.
| | | | | | | | | | | | |
| | Years Ended December 31, |
| | 2025 | | 2024 |
| Operating lease expense | | $ | 10,567 | | | $ | 9,834 | |
| Non-cash lease expense | | $ | 6,413 | | | $ | 6,080 | |
| Cash payments on lease liabilities | | $ | 9,818 | | | $ | 9,568 | |
| ROU assets obtained in exchange for new operating lease obligations | | $ | 12,547 | | | $ | 9,476 | |
ROU assets are classified within Prepaids, other assets and goodwill on our consolidated balance sheets, while lease liabilities are classified within Accrued liabilities on our consolidated balance sheets. The following table contains additional information about our leases (dollars in thousands): | | | | | | | | | | | |
| At December 31, |
| 2025 | | 2024 |
| ROU assets | $ | 56,985 | | $ | 52,941 |
| Lease liabilities | $ | 60,470 | | $ | 55,825 |
| Weighted-average remaining lease term | 7.3 years | | 8.2 years |
| Weighted-average discount rate (incremental borrowing rate) | 3.53 | % | | 3.57 | % |
Maturities of our operating lease liabilities as of December 31, 2025 are as follows (in thousands): | | | | | |
| Year ended December 31, | |
| 2026 | $ | 10,518 | |
| 2027 | 10,478 | |
| 2028 | 9,905 | |
| 2029 | 9,009 | |
| 2030 | 7,230 | |
| Thereafter | 21,466 | |
| Total payments | 68,606 | |
| Less: imputed interest | (8,136) | |
| Present value of lease liabilities | $ | 60,470 | |
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.