Leases

12 Months Ended

Dec. 31, 2025

The Company has operating and finance leases for service centers, warehouses, showrooms, and machinery and equipment. Certain of the Company’s leases include rental payments that will adjust periodically for inflation or certain adjustments based on step increases. An insignificant number of the Company’s leases contain residual value guarantees and none of the Company’s agreements contain material restrictive covenants.

The Company rents or subleases certain real estate to third parties. The Company’s sublease portfolio consists mainly of operating leases.

The components of lease costs for the twelve months ended December 31, 2025, 2024 and 2023, respectively, are as follows:


(In millions)
December 31, 2025	Cost of Goods Sold		Selling, General and Administrative Expenses	Total
Operating lease costs:
Fixed	$	56.4	95.5	151.9
Short-term	10.9		18.5	29.4
Variable	16.1		28.9	45.0
Sub-leases	(4.7)		(0.6)	(5.3)
Total operating lease costs	$	78.7	142.3	221.0

	Depreciation and Amortization		Interest	Total
Finance lease costs:
Amortization of leased assets	$	23.5	—	23.5
Interest on lease liabilities	—		3.2	3.2
Total finance lease costs	$	23.5	3.2	26.7
Total lease costs				$	247.7


December 31, 2024	Cost of Goods Sold		Selling, General and Administrative Expenses	Total
Operating lease costs:
Fixed	$	51.2	91.4	142.6
Short-term	11.6		19.6	31.2
Variable	15.9		31.1	47.0
Sub-leases	(3.5)		(0.9)	(4.4)
Total operating lease costs	$	75.2	141.2	216.4

	Depreciation and Amortization		Interest	Total
Finance lease costs:
Amortization of leased assets	$	20.6	—	20.6
Interest on lease liabilities	—		3.1	3.1
Total finance lease costs	$	20.6	3.1	23.7
Total lease costs				$	240.1


December 31, 2023	Cost of Goods Sold		Selling, General and Administrative Expenses	Total
Operating lease costs:
Fixed	$	30.0	109.7	139.7
Short-term	15.4		20.2	35.6
Variable	9.7		35.8	45.5
Sub-leases	(0.7)		(1.5)	(2.2)
Total operating lease costs	$	54.4	164.2	218.6

	Depreciation and Amortization		Interest	Total
Finance lease costs:
Amortization of leased assets	$	15.4	—	15.4
Interest on lease liabilities	—		1.9	1.9
Total finance lease costs	$	15.4	1.9	17.3
Total lease costs				$	235.9

Supplemental balance sheet information related to leases is as follows:


(In millions)	Classification	December 31, 2025		December 31, 2024
Assets
Operating Leases:
ROU operating lease assets	ROU operating lease assets	$	408.7	374.0
Finance Leases:
Property, plant and equipment, gross	Property, plant and equipment	170.0		141.4
Accumulated depreciation	Accumulated depreciation	(88.7)		(59.7)
Property, plant and equipment, net	Property, plant and equipment, net	81.3		81.7
Total lease assets		$	490.0	455.7

Liabilities
Operating Leases:
Other current	Current operating lease liabilities	$	122.4	108.5
Non-current	Non-current operating lease liabilities	304.4		283.0
Total operating liabilities		426.8		391.5
Finance Leases:
Short-term debt	Short-term debt and current portion of long-term debt	22.7		20.4
Long-term debt	Long-term debt, less current portion	60.1		61.8
Total finance liabilities		82.8		82.2
Total lease liabilities		$	509.6	473.7

Maturities of lease liabilities as of December 31, 2025, are as follows:


(In millions)
Year Ending December 31,	Finance Leases		Operating Leases	Total
2026	$	25.6	151.7	177.3
2027	21.8		117.9	139.7
2028	17.0		85.1	102.1
2029	11.0		49.3	60.3
2030	5.9		32.8	38.7
Thereafter	9.2		49.1	58.3
Total lease payments	90.5		485.9	576.4
Less: imputed interest	7.7		59.1	66.8
Present value, Total	$	82.8	426.8	509.6

The Company had approximately $2.9 million of leases that commenced after December 31, 2025, that created rights and obligations to the Company. These leases are not included in the above maturity schedule.

Lease term and discount rate are as follows:


	December 31, 2025		December 31, 2024
Weighted Average Remaining Lease Term:
Operating Leases	4.5 years		4.3 years
Finance Leases	4.7 years		5.0 years

Weighted Average Discount Rate:
Operating Leases	5.9	%	5.2	%
Finance Leases	3.7	%	3.7	%

Supplemental cash flow information related to leases was as follows:


	Twelve Months Ended
(In millions)	December 31, 2025		December 31, 2024	December 31, 2023
Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows from operating leases	$	149.2	142.3	135.2
Operating cash flows from finance leases	3.2		3.1	2.0
Financing cash flows from finance leases	22.9		19.8	14.6
ROU assets obtained in exchange for lease obligations:
Operating leases	148.9		77.7	160.8
Finance leases	16.7		29.5	31.6
Amortization:
Amortization of ROU operating lease assets (1)	126.7		121.6	120.4

(1) Amortization of ROU operating lease assets during the period is reflected in Other assets and prepaid expenses on the Consolidated Statements of Cash Flows.

Leases

MOHAWK INDUSTRIES INC 10-K