Leases

9 Months Ended

Sep. 30, 2025

We have entered into various operating lease agreements for automobiles, offices and manufacturing facilities throughout the world. At September 30, 2025, our operating leases had remaining lease terms of up to 35 years, including any reasonably probable extensions.

Lease balances within our consolidated balance sheets were as follows:


(In thousands)	September 30, 2025		December 31, 2024
Assets:
Operating lease right-of-use assets	$	11,003	$	14,322
Liabilities:
Other accrued liabilities	$	3,686	$	3,553
Long-term operating lease obligations	6,889		9,232
Total lease liabilities	$	10,575	$	12,785

Operating lease expense, operating lease cash flows and supplemental cash flow information were as follows:


(In thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Cost of sales	$	404	$	562	$	1,073	$	1,859
Selling, general and administrative expenses	2,451		1,112		4,721		3,365
Total operating lease expense	$	2,855	$	1,674	$	5,794	$	5,224

Operating lease expenses from variable and short-term lease costs	$	390	$	315	$	1,112	$	832
Operating cash outflows from operating leases	$	1,935	$	2,062	$	4,800	$	5,377
Operating lease right-of-use assets obtained in exchange for lease obligations	$	950	$	160	$	4,835	$	169

As part of our continued evaluation of our global manufacturing footprint and our overall cost optimization and return to profitability strategy, we made the decision to cease production activities and shut down our manufacturing facility in Mexico and to vacate and abandon our office space in Carlsbad, California. As a result of these actions, we reassessed our Mexico factory lease and recorded a decrease of $0.7 million and $0.8 million to our Mexico operating lease ROU asset and lease liability, respectively, during the three months ended September 30, 2025. In addition, the estimated useful lives of the Mexico and Carlsbad related ROU assets were revised to reflect shorter lease terms than those originally estimated at lease inception. A change in the estimated useful life of a long-lived asset represents a change in accounting estimate and is accounted for prospectively. The Mexico ROU asset is expected to be fully amortized by December 31, 2025. The Carlsbad ROU asset was fully amortized as of September 30, 2025 and we recognized accelerated amortization of $1.3 million during the three and nine months ended September 30, 2025.

The weighted average remaining lease liability term and the weighted average discount rate were as follows:


	September 30, 2025		December 31, 2024
Weighted average lease liability term (in years)	4.2		4.6
Weighted average discount rate	5.77	%	5.45	%

The following table reconciles the undiscounted cash flows for each of the first five years and thereafter to the operating lease liabilities recognized in our consolidated balance sheets at September 30, 2025. The reconciliation excludes short-term leases that are not recorded in our consolidated balance sheets.


(In thousands)	September 30, 2025
2025 (remaining 3 months)	$	826
2026	4,426
2027	2,971
2028	1,206
2029	581
Thereafter	2,139
Total lease payments	12,149
Less: imputed interest	(1,574)
Total lease liabilities	$	10,575

At September 30, 2025, we did not have any operating leases that had not yet commenced.