We lease facilities for our corporate and administrative offices, sales centers and centralized shipping locations under operating leases that expire in various years through 2036. Most of our leases contain five-year terms with renewal options that allow us to extend the lease term beyond the initial period, subject to terms agreed upon at lease inception including rent increase provisions in some cases. Based on our leasing practices and contract negotiations, we determined that we are not reasonably certain to exercise the renewal options at lease commencement and, as such, we have not included optional renewal periods in our measurement of operating lease assets, liabilities and expected lease terms. We exclude short-term leases from our Consolidated Balance Sheets and combine lease and non-lease components.

For leases with step rent provisions whereby the rental payments increase incrementally over the life of the lease, we recognize expense on a straight-line basis determined by the total lease payments over the lease term. To the extent we determine that future obligations related to real estate taxes, insurance and other lease components are variable, we exclude them from the measurement of our operating lease assets and liabilities.

Some of our real estate agreements include rental payments adjusted periodically for inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The table below presents rent expense associated with facility and vehicle operating leases for the past three years (in thousands):


Lease Cost	Classification	2025		2024		2023
Operating lease cost (1)	Selling and administrative expenses	$	114,247	$	106,404	$	92,939
Variable lease cost	Selling and administrative expenses		29,036		27,474		24,535

(1)

Includes short-term lease cost, which is not material.

Based on our lease portfolio as of December 31, 2025, the table below sets forth the approximate future lease payments related to operating leases with initial terms of one year or more (in thousands):


2026	$	106,657
2027		91,856
2028		69,712
2029		50,581
2030		35,345
Thereafter		33,450
Total lease payments		387,601
Less: interest		52,023
Present value of lease liabilities	$	335,578

To calculate the present value of our lease liabilities, we determined our incremental borrowing rate based on the effective interest rate on our Credit Facility adjusted for a collateral feature similar to that of our leased properties, as we are unable to derive implicit rates from our existing leases.

The table below presents the weighted-average remaining lease term (years) of our operating leases and the weighted-average discount rate used in the above calculation:


	December 31,
Lease Term and Discount Rate for Operating Leases	2025	2024	2023
Weighted-average remaining lease term (years)	4.60	4.65	4.81
Weighted-average discount rate	4.66%	4.56%	4.04%

The table below presents the amount of cash paid for amounts included in the measurement of lease liabilities and lease assets obtained in exchange for lease obligations (in thousands):


	Year Ended December 31,
	2025		2024		2023
Operating cash flows for lease liabilities	$	103,246	$	96,267	$	84,703
Operating lease assets obtained in exchange for operating lease obligations		114,437		89,239		107,869

From time to time, we are subject to various claims and litigation arising in the ordinary course of business, including product liability, personal injury, commercial, contract and employment matters. Each quarter, we evaluate developments related to claims and litigation and record a liability if we deem a loss to be probable and estimable. When evaluating these matters for accrual and disclosure, we consider factors such as historical experience, specific facts and claims asserted, the likelihood we will prevail and the magnitude of any potential loss. The outcome of any litigation is inherently unpredictable. Based on currently available facts, we do not believe that the ultimate resolution of any of these claims and litigation matters will have a material adverse impact on our financial condition, results of operations or cash flows. We do not believe our exposure for any of these matters is material for disclosure, either individually or in the aggregate.