O REILLY AUTOMOTIVE INC Leases Disclosure
NOTE 6 – LEASES
Operating Lease Commitments:
The following table summarizes Total lease cost for the years ended December 31, 2025, 2024, and 2023, which was primarily included in “Selling, general and administrative expenses” on the accompanying Consolidated Statements of Income (in thousands):
For the Year Ended | |||||||||
December 31, | |||||||||
| 2025 | 2024 | 2023 | ||||||
Operating lease cost | $ | 457,952 | $ | 425,481 | $ | 398,537 | |||
Short-term operating lease cost |
| 8,187 |
| 8,206 |
| 9,508 | |||
Variable operating lease cost |
| 130,778 |
| 114,634 |
| 99,911 | |||
Sublease income |
| (4,796) |
| (4,826) |
| (4,805) | |||
Total lease cost | $ | 592,121 | $ | 543,495 | $ | 503,151 | |||
The following table summarizes other lease related information for the years ended December 31, 2025 and 2024 (in thousands):
| For the Year Ended | ||||||
December 31, | |||||||
2025 | 2024 | ||||||
Cash paid for amounts included in the measurement of operating lease liabilities: |
| | |||||
Operating cash flows from operating leases | $ | 453,544 | $ | 416,714 | |||
Right-of-use assets obtained in exchange for new operating lease liabilities | 375,163 | 423,196 | |||||
The following table identifies the future minimum lease payments under all of the Company’s operating leases for each of the next five years, and in the aggregate thereafter, and reconciles to the present value of the “Operating lease liabilities, less current portion” included in the accompanying Consolidated Balance Sheet as of December 31, 2025 (in thousands):
December 31, 2025 | |||||||||
| Related Parties | | Non-Related Parties | | Total | ||||
2026 | $ | 4,188 | $ | 442,624 | $ | 446,812 | |||
2027 | 3,370 | 410,365 | 413,735 | ||||||
2028 |
| 3,182 |
| 360,190 |
| 363,372 | |||
2029 |
| 1,119 |
| 312,368 |
| 313,487 | |||
2030 |
| 336 |
| 268,913 |
| 269,249 | |||
Thereafter |
| 25 |
| 1,213,576 |
| 1,213,601 | |||
Total operating lease payments |
| 12,220 |
| 3,008,036 |
| 3,020,256 | |||
Less: present value discount |
| 897 |
| 544,764 |
| 545,661 | |||
Total operating lease liabilities |
| 11,323 |
| 2,463,272 |
| 2,474,595 | |||
Less: current portion of operating lease liabilities |
| 4,188 |
| 435,719 |
| 439,907 | |||
Operating lease liabilities, less current portion | $ | 7,135 | $ | 2,027,553 | $ | 2,034,688 | |||
See Note 16 for further information concerning the Company’s related party operating leases.
The future minimum lease payments under the Company’s operating leases, in the table above, do not include potential amounts for percentage rent and other variable operating lease related costs and have not been reduced by expected future minimum sublease income under non-cancelable subleases, which was approximately $8.8 million as of December 31, 2025. The weighted-average remaining lease term and weighted-average discount rate for the Company’s operating leases was 8.9 years and 4.6%, respectively, as of December 31, 2025.
The present value discount component of the future minimum lease payments under the Company’s operating leases, in the table above, was primarily calculated using the Company’s incremental borrowing rate based on information available at the lease commencement or modification date. Inputs for the calculation of the Company’s incremental borrowing rate include valuations and yields of U.S. domestic investment grade corporate bonds and the applicable credit spread over comparable U.S. Treasury rates, adjusted to a collateralized basis by estimating the credit spread improvement that would result from an upgrade of one ratings classification. When the implicit rate of a lease is available, the implicit rate is used in the calculation and not the Company’s incremental borrowing rate.
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 28, 2020 | |
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.