4. LEASES
Tredegar has various operating lease agreements with remaining terms up to 18 years, including leases of real estate, office equipment and vehicles. As of December 31, 2025 and 2024, the Company had no finance lease agreements. Some leases include options to purchase the leased asset, terminate the agreement or extend the term of the agreement for one or more years. These options are included in the lease term when it is reasonably certain that the option will be exercised.
The following table presents a maturity analysis of the Company’s operating leases as of December 31, 2025:
| | | | | | | | | |
| (In thousands) | | | |
| Future Lease Payments | |
| 2026 | | $ | 2,833 | | |
| 2027 | | 2,430 | | |
| 2028 | | 2,196 | | |
| 2029 | | 2,205 | | |
| 2030 | | 2,223 | | |
| Thereafter | | 3,481 | | |
| Total undiscounted operating lease payments | | 15,368 | | |
| Less: Imputed interest | | 2,145 | | |
| Present value of operating lease liabilities | | $ | 13,223 | | |
The following table summarizes lease costs and other information for the years ended December 31, 2025 and 2024. These costs are primarily related to long-term operating leases but also include amounts for variable leases and short-term leases.
| | | | | | | | | | | |
| (In thousands) | 2025 | | 2024 |
| Operating lease expense | $ | 2,855 | | | $ | 4,350 | |
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| Other Information: | | | |
| Weighted-average remaining lease term for operating leases | 9 years | | 10 years |
| Weighted-average discount rate for operating leases | 4.81 | % | | 4.77 | % |
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.