MATERION CorpMTRN

MATERION Corp Leases Disclosure

10-KFiled Feb 12, 20263 min read
Leasing Arrangements
The Company leases warehouse and manufacturing real estate, and manufacturing and computer equipment under operating leases with lease terms ranging up to 25 years. Several operating lease agreements contain options to extend the lease term and/or options for early termination. The lease term consists of the non-cancelable period of the lease, periods covered by options to extend the lease if the Company is reasonably certain to exercise the option, and periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise the option. As of December 31, 2025, we had no material leases that had yet to commence.
The discount rate implicit within the leases is generally not determinable, and, therefore, the Company determines the discount rate based on its incremental borrowing rate. The incremental borrowing rate for leases is determined based on the lease term over which lease payments are made, adjusted for the impact of collateral.
The components of operating and finance lease cost for 2025 and 2024 were as follows:
(Thousands)20252024
Components of lease expense
Operating lease cost$15,173 $14,588 
Finance lease cost
Amortization of right-of-use assets1,253 1,162 
Interest on lease liabilities742 685 
Total lease cost$17,168 $16,435 
The Company straight-lines its expense of fixed payments for operating leases over the lease term and expenses the variable lease payments in the period incurred. These variable lease payments are not included in the calculation of right-of-use assets or lease liabilities.

Supplemental balance sheet information related to the Company's operating and finance leases as of December 31, 2025 and 2024 is as follows:

(Thousands, except lease term and discount rate)20252024
Supplemental balance sheet information
Operating Leases
Operating lease right-of-use assets
$62,036 $64,449 
Other liabilities and accrued items6,961 7,249 
Operating lease liabilities60,568 62,626 
Finance Leases
Property, plant, and equipment
$34,117 $31,292 
Allowances for depreciation, depletion, and amortization
(12,422)(10,036)
Finance lease assets, net$21,695 $21,256 
Other liabilities and accrued items$622 $552 
Finance lease liabilities13,384 12,404 
Total principal payable on finance leases$14,006 $12,956 
Weighted Average Remaining Lease Term
Operating leases
11.1611.83
Finance leases
16.7317.54
Weighted Average Discount Rate
Operating leases
6.38%6.34%
Finance leases
5.31%5.25%

Future maturities of the Company's lease liabilities as of December 31, 2025 are as follows:
FinanceOperating
(Thousands)LeasesLeases
20261,336 11,015 
20271,336 9,002 
20281,288 8,884 
20291,222 8,123 
20301,222 7,742 
2031 and thereafter 14,661 49,957 
Total lease payments21,065 94,723 
Less amount of lease payment representing interest7,059 27,194 
Total present value of lease payments$14,006 $67,529 
Supplemental cash flow information related to leases was as follows:
(Thousands)20252024
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$20,711 $19,842 
Operating cash flows from finance leases742 685 
Financing cash flows from finance leases604 683 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases4,942 20,740 
Finance leases— — 

Historical Timeline

Fiscal YearFiled
2025Feb 12, 2026Showing above
2024Feb 19, 2025
2023Feb 15, 2024
2022Feb 16, 2023
2021Feb 17, 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.

Other Available Disclosures

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