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, |
| 2025 | | 2024 |
| Operating lease ROU assets | $ | 18,847 | | | $ | 16,056 | |
| Finance lease ROU assets | 32 | | | 92 | |
| Total ROU assets | $ | 18,879 | | | $ | 16,148 | |
| | | |
| Operating lease liabilities - current | $ | 5,005 | | | $ | 4,165 | |
| Finance lease liabilities - current | 32 | | | 61 | |
| Total lease liabilities - current | $ | 5,037 | | | $ | 4,226 | |
| | | |
| Operating lease liabilities - long-term | $ | 13,988 | | | $ | 12,398 | |
| Finance lease liabilities - long-term | 2 | | | 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, |
| 2025 | | 2024 | | 2023 |
| Lease Cost: | | | | | |
| Finance lease cost: | | | | | |
| Amortization of right of use assets | $ | 60 | | | $ | 86 | | | $ | 60 | |
| Interest on lease liabilities | 2 | | | 5 | | | 4 | |
| Operating lease cost | 4,993 | | | 3,851 | | | 3,132 | |
| Variable lease cost | 711 | | | 329 | | | 324 | |
| Short-term lease cost | 201 | | | 190 | | | 68 | |
| Total lease cost | $ | 5,967 | | | $ | 4,461 | | | $ | 3,588 | |
| | | | | |
| Weighted-average remaining lease term (years): | | | | | |
| Finance | 1.05 | | 1.54 | | 2.54 |
| Operating | 5.75 | | 4.27 | | 4.42 |
| Weighted-average discount rate: | | | | | |
| Finance | 2.18 | % | | 2.12 | % | | 2.11 | % |
| Operating | 5.51 | % | | 4.97 | % | | 3.42 | % |
The components of lease income were as follows:
| | | | | | | | | | | | | | | | | |
| Year Ended
December 31, |
| 2025 | | 2024 | | 2023 |
| 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, |
| 2025 | | 2024 | | 2023 |
| 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 leases | 63 | | | 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 |
| Operating | | Finance | | Operating |
| 2026 | $ | 5,132 | | | $ | 29 | | | $ | 354 | |
| 2027 | 5,113 | | | 6 | | | 363 | |
| 2028 | 3,973 | | | — | | | 372 | |
| 2029 | 3,041 | | | — | | | — | |
| 2030 | 1,676 | | | — | | | — | |
| Thereafter | 3,059 | | | — | | | — | |
| Total lease payments | 21,994 | | | 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.