UFP TECHNOLOGIES INCUFPT

UFP TECHNOLOGIES INC Leases Disclosure

10-KFiled Feb 27, 20263 min read
Leases
The Company has operating and finance leases for offices, manufacturing plants, vehicles and certain office and manufacturing equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company accounts for each separate lease component of a contract and its associated non-lease components as a single lease component, thus causing all fixed payments to be capitalized. Variable lease payment amounts that cannot be determined at the commencement of the lease such as increases in lease payments based on changes in index rates or usage, are not included in the right of use (“ROU”) assets or lease liabilities. These are expensed as incurred and recorded as variable lease expense. The Company determines if an arrangement is a lease at the inception of a contract. Operating and finance lease ROU assets and operating and finance lease liabilities are stated separately in the condensed consolidated balance sheet.
ROU assets represent the Company's right to use an underlying asset during the lease term and lease liabilities represent the Company's obligation to make lease payments pursuant to the lease. ROU assets and lease liabilities are recognized at commencement date based on the net present value of fixed lease payments over the lease term. The lease term assumed in the determination of the ROU assets and lease liabilities includes options to extend or
terminate the lease when it is reasonably certain that the Company will exercise that option. ROU assets are also adjusted for any deferred or accrued rent. As the Company's leases do not typically provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.
The Company leases one of its owned properties to a third party. The lease descriptions, terms, and variable lease payments are generally the same as those described above.
ROU assets and lease liabilities consist of the following (in thousands):    
December 31,
20252024
Operating lease ROU assets$18,847 $16,056 
Finance lease ROU assets32 92 
Total ROU assets$18,879 $16,148 
Operating lease liabilities - current$5,005 $4,165 
Finance lease liabilities - current32 61 
Total lease liabilities - current$5,037 $4,226 
Operating lease liabilities - long-term$13,988 $12,398 
Finance lease liabilities - long-term2 34 
Total lease liabilities - long-term$13,990 $12,432 
The components of lease costs consist of the following (in thousands):
Year Ended
December 31,
202520242023
Lease Cost:
Finance lease cost:
Amortization of right of use assets$60 $86 $60 
Interest on lease liabilities2 5 4 
Operating lease cost4,993 3,851 3,132 
Variable lease cost711 329 324 
Short-term lease cost201 190 68 
Total lease cost$5,967 $4,461 $3,588 
Weighted-average remaining lease term (years):
Finance1.051.542.54
Operating5.754.274.42
Weighted-average discount rate:
Finance2.18 %2.12 %2.11 %
Operating5.51 %4.97 %3.42 %
The components of lease income were as follows:
Year Ended
December 31,
202520242023
Lease income:
Operating lease income $342 $331 $317 
Total lease income$342 $331 $317 
The following table provides additional details of cash flow information related to the Company's leases (in thousands):
Year Ended
December 31,
202520242023
Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows from operating leases$5,355 $3,784 $2,979 
Financing cash flows from finance leases63 73 63 
ROU assets obtained in exchange for lease liabilities$6,575 $4,900 $2,492 
Maturities of lease liabilities and receipts as of December 31, 2025 were as follows (in thousands):
December 31, 2025
Lease Liabilities Lease Receipts
OperatingFinanceOperating
2026$5,132 $29 $354 
20275,113 6 363 
20283,973 — 372 
20293,041 — — 
20301,676 — — 
Thereafter3,059 — — 
Total lease payments21,994 34 $1,090 
Less: Interest(2,839)— 
Present value of lease liabilities$19,155 $34 
Rent expense amounted to approximately $5.0 million, $3.7 million, and $2.9 million in 2025, 2024, and 2023, respectively.
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Historical Timeline

Fiscal YearFiled
2025Feb 27, 2026Showing above
2021Mar 14, 2022
2020Mar 12, 2021
2019Mar 13, 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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