Leases

3 Months Ended

Mar. 31, 2025

11. Leases

The Company has operating leases for its corporate offices and operating facilities. The Company determines if an arrangement is a lease at the inception of a contract. Right-of-use assets represent the Company’s right to use an underlying asset during the lease term and operating lease liabilities represent net present value of the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and operating lease liabilities are recognized at commencement date based on the net present value of the fixed lease payments over the lease term. The Company’s operating lease terms are generally five years or less. The Company’s lease terms include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. As most of the Company’s operating leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Operating fixed lease expense is recognized on a straight-line basis over the lease term. Variable lease payment amounts that cannot be determined at the commencement of the lease such as increases in lease payments based on changes in index rates or usage are not included in the right-of-use assets or operating lease liabilities. These are expensed as incurred and recorded as variable lease expense.

The components of lease expense were as follows.

	Three Months Ended
	March 31, 2025			March 31, 2024
	(In thousands)
Operating lease cost	$	11,716		$	9,953
Short-term lease cost		296			265
Variable lease cost		2,517			2,483
Sublease income		(106	)		(114	)
Total lease cost	$	14,423		$	12,587

Lease costs are reflected in the consolidated statement of net income in the line item – rent, supplies, contract labor and other.

The supplemental cash flow information related to leases was as follows.

	Three Months Ended
	March 31, 2025		March 31, 2024
	(In thousands)
Cash paid for amounts included in the measurement of operating lease liabilities	$	11,891	$	10,338
Right-of-use assets obtained in exchange for new operating lease liabilities	$	10,755	$	7,727

The aggregate future lease payments for operating leases as of March 31, 2025, were as follows.

Fiscal Year	Amount (In thousands)
2025 (excluding the three months ended March 31, 2025)	$	34,886
2026		39,782
2027		30,338
2028		20,607
2029 and thereafter		31,286
Total lease payments	$	156,899
Less: imputed interest		16,087
Total operating lease liabilities	$	140,812

Average lease terms and discount rates were as follows.

	March 31, 2025		March 31, 2024
Weighted-average remaining lease term	4.49 years		3.9 years
Weighted-average discount rate		4.8%		4.2%

The Company leases certain properties from Michael G. Mayrsohn (lessor), who is the President of Metro and has been nominated by the Board of Directors to be elected as a director at the Annual Meeting of Shareholders to be held on May 20,2025. The two leases expire on April 30, 2030, and December 31, 2031. For the three months ended March 31, 2025, the Company paid a total of $0.1 million of lease payments to Mr. Mayrsohn. The total of minimum future rental payments under these related party lease agreements is $3.0 million as of March 31, 2025.