WATSCO INC Leases Disclosure
2. LEASES
The components of operating lease expense, which are included in selling, general and administrative expenses, were as follows:
Years Ended December 31, |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Lease cost |
|
$ |
137,668 |
|
|
$ |
124,800 |
|
|
$ |
112,195 |
|
Short-term lease cost |
|
|
10,944 |
|
|
|
10,869 |
|
|
|
10,102 |
|
Variable lease cost |
|
|
1,423 |
|
|
|
1,673 |
|
|
|
1,773 |
|
Sublease income |
|
|
(312 |
) |
|
|
(346 |
) |
|
|
(436 |
) |
|
|
$ |
149,723 |
|
|
$ |
136,996 |
|
|
$ |
123,634 |
|
Supplemental balance sheet information related to operating leases was as follows:
December 31, |
|
2025 |
|
|
2024 |
|
||
ROU assets |
|
$ |
452,547 |
|
|
$ |
419,138 |
|
|
|
|
|
|
|
|
||
|
$ |
112,260 |
|
|
$ |
103,978 |
|
|
Operating lease liabilities |
|
|
350,616 |
|
|
|
321,715 |
|
|
$ |
462,876 |
|
|
$ |
425,693 |
|
|
|
|
|
|
|
|
|
||
Weighted Average Remaining Lease Term |
|
4.9 years |
|
|
5.0 years |
|
||
Weighted Average Discount Rate |
|
|
5.60 |
% |
|
|
5.40 |
% |
Supplemental cash flow information related to operating leases was as follows:
Years Ended December 31, |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Operating cash flows for the measurement of |
|
$ |
135,591 |
|
|
$ |
121,528 |
|
|
$ |
110,614 |
|
Operating lease ROU assets obtained in exchange for |
|
$ |
147,623 |
|
|
$ |
155,223 |
|
|
$ |
148,196 |
|
At December 31, 2025, maturities of operating lease liabilities over each of the next five years and thereafter were as follows:
2026 |
|
$ |
135,252 |
|
2027 |
|
|
111,071 |
|
2028 |
|
|
91,389 |
|
2029 |
|
|
70,714 |
|
2030 |
|
|
47,615 |
|
Thereafter |
|
|
79,022 |
|
Total lease payments |
|
|
535,063 |
|
Less imputed interest |
|
|
72,187 |
|
Total lease liability |
|
$ |
462,876 |
|
At December 31, 2025, we had additional operating leases that had not yet commenced. Such leases had estimated future minimum rental commitments of approximately $37,000. These operating leases are expected to commence in 2026 with lease terms of 5-10 years. These undiscounted amounts are not included in the table above.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 28, 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.