Otter Tail CorpOTTR

Otter Tail Corp Leases Disclosure

10-KFiled Feb 18, 20262 min read
Leases 
We lease rail cars, warehouse and office space, land, and certain office, manufacturing, material handling and other equipment under varying terms and conditions. All leases are classified as operating leases.
The components of lease cost and lease cash flows for the years ended December 31, 2025, 2024, and 2023 are as follows:
(in thousands)202520242023
Lease Cost
Operating Lease Cost$6,722 $6,688 $6,309 
Variable Lease Cost1,315 1,460 1,433 
Short-Term Lease Cost2,532 2,746 2,525 
Total Lease Cost$10,569 $10,894 $10,267 
Lease Cash Flows
Operating Cash Flows from Operating Leases$6,499 $6,762 $6,424 
A summary of operating lease right-of-use lease assets and lease liabilities as of December 31, 2025 and 2024 is as follows: 
(in thousands)20252024
Right of Use Lease Assets1
$26,612 $28,179 
Lease Liabilities
Current2
5,042 4,776 
Long-Term3
21,849 23,567 
Total Lease Liabilities$26,891 $28,343 
1Included in Other Noncurrent Assets in the consolidated balance sheets.
2Included in Other Current Liabilities in the consolidated balance sheets.
3Included in Other Noncurrent Liabilities in the consolidated balance sheets.
Operating lease assets obtained in exchange for new operating lease liabilities amounted to $3.6 million and $17.6 million for the years ended December 31, 2025 and 2024.
Maturities of lease liabilities as of December 31, 2025 for each of the next five years and in the aggregate thereafter are as follows:
(in thousands)Operating Leases
2026$6,557 
20275,732 
20284,479 
20293,248 
20302,579 
Thereafter10,877 
Total Lease Payments33,472 
Less: Interest6,581 
Present Value of Lease Liabilities$26,891 
The weighted-average remaining lease term and the weighted-average discount rate as of December 31, 2025 and 2024 are as follows:
20252024
Weighted-Average Remaining Lease Term (in years)7.27.9
Weighted-Average Discount Rate6.47 %6.37 %

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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