We lease office and retail space, warehouse and distribution facilities, land, vehicles, and equipment. We determine if an agreement is or contains a lease at inception. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet.

Right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are based on the estimated present value of lease payments over the lease term and are recognized at the lease commencement date.

As most of our leases do not provide an implicit rate, we use our estimated incremental borrowing rate in determining the present value of lease payments. The estimated incremental borrowing rate is derived from information available at the lease commencement date.

Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. A limited number of our lease agreements include rental payments adjusted periodically for inflation. Our lease agreements generally do not contain residual value guarantees or material restrictive covenants.

For real estate, equipment and vehicles that support selling, marketing and general administrative activities, the Company accounts for the lease and non-lease components as a single lease component. These asset categories comprise the majority of our leases. The lease and non-lease components of real estate and equipment leases supporting production activities are not accounted for as a single lease component. Consideration for such contracts are allocated to the lease and non-lease components based upon relative standalone prices either observable or estimated if observable prices are not readily available.

The components of lease expense for the three months ended June 28, 2026 and June 29, 2025 were as follows:


		Three Months Ended
Lease expense	Classification	June 28, 2026		June 29, 2025
Operating lease cost	Cost of sales or SM&A (1)	$	16,264	$	15,815
Finance lease cost:
Amortization of ROU assets	Depreciation and amortization (1)	2,236		2,102
Interest on lease liabilities	Interest expense, net	1,171		1,115
Net lease cost (2)		$	19,671	$	19,032


		Six Months Ended
Lease expense	Classification	June 28, 2026		June 29, 2025
Operating lease cost	Cost of sales or SM&A (1)	$	32,646	$	30,026
Finance lease cost:
Amortization of ROU assets	Depreciation and amortization (1)	4,460		4,352
Interest on lease liabilities	Interest expense, net	2,340		2,249
Net lease cost (2)		$	39,446	$	36,627

Information regarding our lease terms and discount rates were as follows:


	June 28, 2026		December 31, 2025
Weighted-average remaining lease term (years)
Operating leases	10.2		10.2
Finance leases	24.2		25.2

Weighted-average discount rate
Operating leases	4.6	%	4.6	%
Finance leases	6.2	%	6.3	%

Supplemental balance sheet information related to leases were as follows:


Leases	Classification	June 28, 2026		December 31, 2025
Assets
Operating lease ROU assets	Other non-current assets	$	301,914	$	325,345

Finance lease ROU assets, at cost	Property, plant and equipment, gross	83,874		83,714
Accumulated amortization	Accumulated depreciation	(26,634)		(26,073)
Finance lease ROU assets, net	Property, plant and equipment, net	57,240		57,641

Total leased assets		$	359,154	$	382,986

Liabilities
Current
Operating	Accrued liabilities	$	50,790	$	49,583
Finance	Current portion of long-term debt	5,259		4,499
Non-current
Operating	Other long-term liabilities	261,842		285,925
Finance	Long-term debt	70,282		69,011
Total lease liabilities		$	388,173	$	409,018

The maturities of our lease liabilities as of June 28, 2026 were as follows:


	Operating leases		Finance leases		Total
2026 (rest of year)	$	32,138	$	5,121	$	37,259
2027	62,090		8,865		70,955
2028	42,832		7,314		50,146
2029	38,875		4,564		43,439
2030	32,139		4,377		36,516
Thereafter	190,559		129,339		319,898
Total lease payments	398,633		159,580		558,213
Less: Imputed interest	86,001		84,039		170,040
Total lease liabilities	$	312,632	$	75,541	$	388,173

Supplemental cash flow and other information related to leases were as follows:


	Six Months Ended
	June 28, 2026		June 29, 2025
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	32,181	$	28,831
Operating cash flows from finance leases	2,340		2,249
Financing cash flows from finance leases	3,250		3,286

ROU assets obtained in exchange for lease liabilities:
Operating leases	$	1,868	$	31,804
Finance leases	5,333		62