On January 31, 2020, Orion entered into the current lease for its primary manufacturing and distribution facility in Manitowoc, Wisconsin, the term of which lease ends January 31, 2030. Orion is responsible for the costs of insurance and utilities for the facility. These costs are considered variable lease costs. The agreement is classified as an operating lease.

In February 2014, Orion entered into a multi-year lease agreement for use of office space in a multi-use office building in Jacksonville, Florida. The lease has since been extended, most recently during the first quarter of fiscal 2027, and presently terminates on June 30, 2029. The agreement is classified as an operating lease.

We lease office space in Lawrence, Massachusetts. The lease presently terminates in August 2026. The agreement is classified as an operating lease.

Additionally, we had a lease in Pewaukee, Wisconsin that was terminated early in August of fiscal 2025. The agreement was classified as an operating lease. Additional details regarding the early termination can be seen in Note 18 - Restructuring.

Orion has leased other assets from third parties, principally office and production equipment. The terms of our other leases vary from contract to contract and expire at various dates in the next five years.

The weighted average discount rate for Orion’s lease obligations as of March 31, 2026 and 2025 is 6.9% and 6.8%, respectively. The weighted average remaining lease term as of March 31, 2026 and 2025 is 3.7 years and 4.5 years, respectively.

A summary of Orion’s assets leased from third parties follows (dollars in thousands):


	Balance sheet classification	March 31, 2026		March 31, 2025
Assets
Operating lease assets	Other long-term assets, net	$	2,673	$	3,456
Liabilities
Current liabilities
Operating lease liabilities	Accrued expenses and other		715		794
Non-current liabilities
Operating lease liabilities	Other long-term liabilities		2,115		2,829
Total lease liabilities		$	2,830	$	3,623

Orion had operating lease costs of $1.2 million, $1.2 million, and $1.9 million for the years ended March 31, 2026, 2025, and 2024, respectively. This includes short-term leases and variable lease costs, which are immaterial.

The estimated maturity of lease liabilities for each of the future years is shown below (dollars in thousands):


Maturity of Lease Liabilities	Operating Leases
Fiscal 2027	$	886
Fiscal 2028		803
Fiscal 2029		828
Fiscal 2030		707
Total lease payments	$	3,224
Less: Interest		(394	)
Present value of lease liabilities	$	2,830

Orion provides long-term financing to one customer who frequently engages Orion in large turnkey projects that span between three and nine months. The customer executes an agreement providing for monthly payments, at a fixed monthly amount, of the contract price, plus interest, over typically a five-year period. The total transaction price in these contracts is allocated between product and services in the same manner as all other turnkey projects. The portion of the transaction associated with the installation is accounted for consistently with all other installation related performance obligations under ASC 606.

While Orion retains ownership of the light fixtures during the financing period, the transaction terms and the underlying economics associated with used lighting fixtures results in Orion essentially ceding ownership of the lighting fixtures to the customer after completion of the agreement. Therefore, the portions of the transaction associated with the sale of the multiple individual light fixtures is accounted for as a sales-type lease under ASC 842.

Revenues, and production and acquisition costs, associated with sales-type leases are included in Product revenue and Costs of product revenues in the consolidated statement of operations. These amounts are recorded for each fixture separately based on the customer’s monthly acknowledgment that specified fixtures have been installed and are operating as specified. The execution of the acknowledgment is considered the commencement date as defined in ASC 842.

The following chart shows the amount of revenue and cost of sales arising from sales-type leases during the year ended March 31, 2026, 2025 and 2024 (dollars in thousands):


	March 31, 2026		March 31, 2025		March 31, 2024
Product revenue	$	393	$	781	$	—
Cost of product revenue		316		785		—

The consolidated balance sheet as of March 31, 2026 and 2025 includes a net investment of $0 million and $0.4 million, respectively, in sales-type leases as all amounts due from the customer associated with lighting fixtures that were acknowledged to be installed and working correctly prior to period end were not transferred to the financing institution prior to the balance sheet date. During fiscal 2026, Orion sold receivables having an aggregate face value of $1.1 million to the financing institution in exchange for cash proceeds of $1.1 million. Related servicing fees for the period were immaterial.

Orion has leased unused portions of its corporate headquarters to third parties. The length and payment terms of the leases vary from contract to contract and, in some cases, include options for the tenants to extend the lease terms. Annual lease payments are recorded as a reduction in administrative operating expenses and were not material in the years ended March 31, 2026, 2025 and 2024. Orion has accounted for these transactions as operating leases.