Leases as Lessee

6 Months Ended

Jun. 30, 2026

Note 12. Leases as Lessee

Operating Leases

As of June 30, 2026, the Company had operating leases primarily for its various corporate offices, the manufacturing facilities of ESS Metron and E4A Solutions, and the Kentucky Facility, all of which expire on various dates through July 2035.

As of June 30, 2026 and December 31, 2025, operating lease right-of-use assets were $35.4 million and $26.7 million, respectively, and operating lease liabilities were $34.8 million and $26.0 million, respectively.

Finance Lease

In August 2025, the Company entered into a lease for equipment located at the Kentucky Facility. The lease expires on December 31, 2029, at which time title to the leased equipment will be transferred to the Company.

As of June 30, 2026, the finance lease right-of-use asset was $3.3 million and there was no remaining lease liability.

The following table presents the components of the Company’s lease expense. Ground and facilities lease expenses are included in Cost of revenue, office lease expenses are included in Selling, general, and administrative, and finance leases are amortized into Depreciation and amortization on the Condensed Consolidated Statements of Operations:


		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2026			2025			2026			2025
Finance lease cost:
Amortization of right-of-use assets		$	90		$	—		$	180		$	—
Operating lease cost			3,261			1,917			5,991			3,499
Variable lease cost			432			102			606			199
Total lease expense		$	3,783		$	2,019		$	6,777		$	3,698

The following table presents supplemental lease information:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2026			2025			2026			2025
Operating leases net operating cash outflows	$	3,428		$	2,779		$	5,910		$	4,038
Right-of-use assets exchanged for new operating lease liabilities	$	2,566		$	—		$	13,564		$	5,962
Weighted-average remaining lease term – operating leases		3.9			5.5			3.9			5.5
Weighted-average discount rate – operating leases		6.6	%		7.3	%		6.6	%		7.3	%

The following table presents the Company’s future minimum operating lease payments as of June 30, 2026:


Remainder of 2026	$	6,336
2027		10,816
2028		9,093
2029		6,751
2030		2,835
Thereafter		3,462
Total undiscounted lease payments		39,293
Less present value discount		(4,539)
Present value of lease liabilities	$	34,754