| LEASES |
17.LEASES The Company has operating leases for certain manufacturing and office space, retail locations, and equipment and finance leases for certain buildings and equipment. Lease assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The Company has elected the practical expedient and does not recognize a lease liability or right-of-use (“ROU”) asset for short-term leases (leases with a term of twelve months or less). The Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The Company’s incremental borrowing rate is the rate for collateralized borrowings based on the current economic environment, credit history, credit rating, value of leases, currency in which the lease obligation is satisfied, rate sensitivity, lease term and materiality. The amount of assets and liabilities related to our leases were as follows: | | | | | | | | | | | December 31, | | Balance Sheet Accounts | | 2025 | | 2024 | Assets: | | | | | | | | Operating lease assets | Operating lease assets | | $ | 19,778 | | $ | 15,454 | Finance lease assets | Property and equipment, net | | | 2,751 | | | — | Total lease assets | | | $ | 22,529 | | $ | 15,454 | | | | | | | | | Liabilities: | | | | | | | | Current: | | | | | | | | Operating lease liabilities | Accrued liabilities | | $ | 5,543 | | $ | 4,824 | Finance lease liabilities | Accrued liabilities | | | 277 | | | — | Long-term: | | | | | | | | Operating lease liabilities | Long-term operating lease liabilities | | | 15,039 | | | 10,733 | Finance lease liabilities | Other liabilities | | | 2,490 | | | — | Total lease liabilities | | | $ | 23,349 | | $ | 15,557 |
The components of lease expense are recorded to cost of sales and selling, general and administrative expenses in the consolidated statements of operations and comprehensive income. The components of lease expense were as follows: | | | | | | | | | | | | Year Ended December 31, | | | 2025 | | 2024 | | 2023 | Finance lease cost: | | | | | | | | | | Amortization of right-of-use assets | | $ | 169 | | $ | — | | $ | — | Interest on lease liabilities | | | 112 | | | — | | | — | Fixed operating lease costs(1) | | | 6,603 | | | 5,445 | | $ | 3,981 | Variable operating lease costs | | | 1,953 | | | 1,334 | | | 1,441 | Total lease cost | | $ | 8,837 | | $ | 6,779 | | $ | 5,422 |
(1) Includes short-term leases, which are immaterial. The weighted average remaining lease term and weighted average discount rate is as follows: | | | | | | | | | December 31, | | | 2025 | | 2024 | Weighted average remaining lease term (years): | | | | | | | Operating leases | | | 5.9 | | | 3.1 | Finance leases | | | 27.2 | | | — | | | | | | | | Weighted average discount rate: | | | | | | | Operating leases | | | 3.72% | | | 3.14% | Finance leases | | | 5.34% | | | — |
The estimated future minimum lease payments under leases as of December 31, 2025 is as follows: | | | | | | | | | Finance Leases | | Operating Leases | 2026 | | $ | 450 | | $ | 6,406 | 2027 | | | 396 | | | 5,038 | 2028 | | | 396 | | | 3,859 | 2029 | | | 367 | | | 2,783 | 2030 | | | 386 | | | 1,352 | Thereafter | | | 3,985 | | | 4,557 | Total future lease payments | | | 5,980 | | | 23,995 | Less: Amount representing interest | | | (3,213) | | | (3,413) | Present value of lease liabilities | | $ | 2,767 | | $ | 20,582 |
Supplemental cash flow information related to leases is as follows: | | | | | | | | | Year Ended December 31, | | | 2025 | | 2024 | Cash paid for amounts included in the measurement of lease liabilities: | | | | | | | Operating cash flows - operating leases | | $ | 6,845 | | $ | 5,266 | Financing cash flows - finance leases | | $ | 272 | | $ | — | | | | | | | | Right-of-use assets obtained in exchange for lease liabilities: | | | | | | | Operating leases | | $ | 11,371 | | $ | 10,044 | Finance leases | | $ | 2,873 | | $ | — |
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