TEAM INCTISI

TEAM INC Leases Disclosure

10-KFiled Mar 12, 20263 min read
LEASES
We determine if an arrangement is a lease at inception. Operating leases are included in “Operating lease right-of-use (‘ROU’) assets”, “Current portion of operating lease obligations” and “Operating lease obligations” on our consolidated balance sheets. Finance leases are included in “Property, plant and equipment, net”, “Current portion of long-term debt and finance lease obligations” and “Long-term debt and finance lease obligations” on our consolidated balance sheets.
Lease ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Operating lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Variable lease payments and short-term lease payments (leases with initial terms less than twelve months) are expensed as incurred.
We have lease agreements with lease and non-lease components for certain equipment, office, and vehicle leases. We have elected the practical expedient to not separate lease and non-lease components and account for both as a single lease component.
We have operating and finance leases primarily for equipment, real estate, and vehicles. Some of our leases include options to extend the leases for up to 10 years, and some may include options to terminate the leases within 24 months.
The components of lease expense are as follows (in thousands):
December 31,
20252024
Operating lease costs$27,177 $24,512 
Variable lease costs5,857 5,345 
Finance lease costs:
Amortization of right-of-use assets1,697 1,099 
Interest on lease liabilities764 435 
Total lease cost$35,495 $31,391 

Other information related to leases is as follows (in thousands):
December 31,
20252024
Supplemental cash flow information:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases$23,672 $19,486 
Operating cash flows from finance leases725 444 
Financing cash flows from finance leases1,330 907 
Right-of-use assets obtained in exchange for lease obligations
Operating leases$14,386 $7,519 
Finance leases$5,274 $1,022 

Amounts recognized in the consolidated balance sheet are as follows (in thousands):
December 31,
20252024
Operating Leases:
Operating lease right-of-use assets$49,849 $40,407 
Current portion of operating lease obligations16,476 14,790 
Operating lease obligations (non-current)35,910 28,631 
Finance Leases:
Property, plant and equipment, net$8,189 $4,507 
Current portion of long-term debt and finance lease obligations1,689 819 
Long-term debt and finance lease obligations6,986 4,324 
Weighted average remaining lease term:
Operating leases4 years5 years
Finance leases5 years7 years
Weighted average discount rate:
Operating leases10.0 %9.0 %
Finance leases
10.0 %8.0 %
As of December 31, 2025, we have no material additional operating and finance leases that have not yet commenced.

As of December 31, 2025, future minimum lease payments under non-cancellable (excluding short-term leases) are as follows (in thousands):
Twelve Months Ended December 31,Operating LeasesFinance Leases
2026$20,099 $2,410 
202715,818 2,210 
20289,750 1,955 
20296,307 1,647 
20303,939 871 
Thereafter7,375 1,821 
Total future minimum lease payments$63,288 $10,914 
Less: Interest10,902 2,239 
Present value of lease liabilities$52,386 $8,675 
Total rent expense resulting from operating leases, including short-term leases, for the years ended December 31, 2025 and 2024 was $39.1 million and $36.9 million, respectively.

Historical Timeline

Fiscal YearFiled
2025Mar 12, 2026Showing above
2024Mar 19, 2025
2023Mar 7, 2024
2022Mar 14, 2023
2021Mar 16, 2022
2020Mar 12, 2021
2019Mar 16, 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.

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