LEASES

6 Months Ended

Jun. 30, 2025

The Company leases real properties for use in manufacturing and as administrative and sales offices, and leases automobiles and office equipment. The Company determines if a contract contains a lease arrangement at the inception of the contract. For leases in which the Company is the lessee, leases are classified as either finance or operating. Right-of-use (“ROU”) assets are initially measured at the present value of lease payments over the lease term plus initial direct costs, if any. If a lease does not provide a discount rate and the implicit rate cannot be readily determined, an incremental borrowing rate is used to determine the present value of future lease payments. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term within the Condensed Consolidated Statements of Operations. Lease and non-lease components within the Company’s lease agreements are accounted for together. Variable lease payments are recognized in the period in which the obligation is incurred.

Nearly all of the Company’s leasing arrangements are classified as operating leases. ROU asset and lease liability balances were as follows for the periods presented:


	June 30, 2025		December 31, 2024
ROU asset	$	37,808	$	42,164

Current lease liability	7,911		8,297
Long-term lease liability	33,792		37,150
Total lease liability	$	41,703	$	45,447

The ROU asset is reported in “Other assets” while the current lease liability is reported in “Other current liabilities” and the long-term lease liability is reported in “Other long-term liabilities” in the Company’s Condensed Consolidated Balance Sheets. Cash paid for operating lease liabilities is recorded as operating cash outflows in the Company’s Condensed Consolidated Statements of Cash Flows.

Arcadia Products leases certain office, manufacturing, distribution and warehouse facilities from entities affiliated with the redeemable noncontrolling interest holder and the president of Arcadia Products. There were eight such leases in effect as of June 30, 2025, with expiration dates ranging from calendar years 2025 to 2031, inclusive of the assumed exercise of applicable renewal options. As of June 30, 2025, the total ROU asset and related lease liability recognized for these leases was $19,921 and $21,065, respectively. During the three and six months ended June 30, 2025 and 2024, associated lease expense was $1,156 and $2,312, respectively, in each period, and is included in total operating lease expense.

For the three months ended June 30, 2025 and 2024, total operating lease expense was $3,114 and $3,377, respectively. For the six months ended June 30, 2025 and 2024, total operating lease expense was $6,246 and $6,725, respectively. Short term and variable lease costs were not significant for any period presented.