Leases
Lessee
The Company has various cancelable and noncancelable leased assets within all of our segments, which include certain properties, vehicles and equipment of which are all classified as operating leases. Payments for these leases are generally fixed; however, several of our leases are composed of variable lease payments including index-based payments or inflation-based payments based on a Consumer Price Index (“CPI”) or other escalators. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Under Leases (Topic 842), the Company determines an arrangement is a lease when we have the right to control the use of identified property, vehicle or equipment for a period of time in exchange for consideration. Other than the leases that we have already identified, we are not aware of any material leases that have not yet commenced. For leases that have a calculated lease term of 12 months or less and do not include an option to purchase the underlying asset which we are reasonably certain to exercise, the Company has made the policy election to not apply the recognition requirements in Leases (Topic 842). For these short-term leases, the Company recognizes the lease as a period expense on a straight-line basis over the lease term and variable lease payments in the period in which the obligation for those payments is incurred.
For the leases identified, right of use (“ROU”) assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, the Company used the calculated incremental borrowing rate based on the information available at the implementation date, and going forward at the commencement date, in determining the present value of lease payments. The Company will use the implicit rate when readily determinable. The ROU asset includes the carrying amount of the lease liability, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received. The Company’s lease terms may include options to extend or terminate the lease and such options are included in the lease term when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Lease expenses are recognized within COGS, SG&A and D&D costs in the consolidated statements of operations. The Company has made the policy election to account for lease and non-lease components as a single lease component for all of its leases.
The components of lease expense are as follows: | | | | | | | | | | | | | | |
| Year ended December 31, | | 2025 | | 2024 |
| Operating lease cost | | $ | 4,616 | | | $ | 4,296 | |
| Short-term lease cost | | 565 | | | 657 | |
| Variable lease cost | | 961 | | | 847 | |
| Total lease cost | | $ | 6,142 | | | $ | 5,800 | |
Balance sheet information related to leases is as follows: | | | | | | | | | | | | | | |
| As of December 31, | | 2025 | | 2024 |
| Assets: | | | | |
| Operating lease right-of-use assets | | $ | 12,513 | | | $ | 10,050 | |
| | | | |
| Liabilities: | | | | |
| Operating lease current liability, included in other current liabilities | | $ | 4,098 | | | $ | 3,992 | |
| Operating lease long-term liability | | 9,014 | | | 6,484 | |
| Total leased liabilities | | $ | 13,112 | | | $ | 10,476 | |
Maturities of operating lease liabilities are as follows: | | | | | |
| As of December 31, | 2025 |
| 2026 | $ | 4,532 | |
| 2027 | 3,455 | |
| 2028 | 3,261 | |
| 2029 | 2,768 | |
| 2030 | 723 | |
| Thereafter | 349 | |
| Total future minimum lease payments | $ | 15,088 | |
| Less: imputed interest | (1,976) | |
| Total lease liabilities | $ | 13,112 | |
Weighted-average remaining lease term and discount rate for operating leases is as follows: | | | | | | | | | | | |
| As of December 31, | 2025 | | 2024 |
| Weighted-average remaining lease term (in years) | 3.99 | | 3.75 |
| Weighted-average discount rate | 7.33 | % | | 6.77 | % |
Other information: | | | | | | | | | | | | | | |
| Year ended December 31, | | 2025 | | 2024 |
| Operating cash flows: | | | | |
| Cash paid related to operating lease obligations | | $ | 4,849 | | | $ | 4,548 | |
| Non-cash activity: | | | | |
| Right-of-use assets obtained in exchange for | | | | |
| operating lease obligations | | $ | 5,479 | | | $ | 3,302 | |
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.