Leases

9 Months Ended

Sep. 30, 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. These variable lease payment amounts include, but are not limited to, taxes, insurance, utilities, common area maintenance, and other operating costs.

The components of lease expense were as follows.

	Three Months Ended						Nine Months Ended
	September 30, 2025			September 30, 2024			September 30, 2025			September 30, 2024
	(In thousands)
Operating lease cost	$	12,350		$	10,362		$	36,124		$	30,578
Short-term lease cost		277			323			701			851
Variable lease cost		2,544			2,552			7,742			7,732
Sublease income		(109	)		(121	)		(326	)		(369	)
Total lease cost	$	15,062		$	13,116		$	44,241		$	38,792

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				Nine Months Ended
	September 30, 2025		September 30, 2024		September 30, 2025		September 30, 2024
	(In thousands)

Cash paid for amounts included in the measurement of operating lease liabilities	$	12,417	$	10,637	$	36,496	$	31,539

Right-of-use assets obtained in exchange for new operating lease liabilities	$	13,512	$	9,945	$	39,467	$	30,573

The aggregate future lease payments for operating leases as of September 30, 2025, were as follows.

	Amount
Fiscal Year	(In thousands)
2025 (excluding the nine months ended September 30, 2025)	$	12,552
2026		45,999
2027		36,658
2028		26,229
2029 and thereafter		44,438
Total lease payments	$	165,876
Less: imputed interest		17,738
Total operating lease liabilities	$	148,138

Average lease terms and discount rates were as follows.

The Company leases certain properties from Michael G. Mayrsohn (lessor), who is the President of Metro. Mr. Mayrsohn was also elected to the Board of Directors by the Company’s shareholders as of May 20, 2025. The two leases are classified as operating leases that expire on April 30, 2030, and December 31, 2031. For the nine months ended September 30, 2025, the Company paid a total of $0.4 million of lease payments to Mr. Mayrsohn. Metro has made leasehold improvements valued at $0.3 million as of September 30, 2025. The total of minimum future rental payments under these related party lease agreements is $2.8 million as of September 30, 2025.

September 30, 2025

September 30, 2024

Weighted-average remaining lease term - Operating leases

Weighted-average discount rate - Operating leases