LEASES

3 Months Ended

Mar. 31, 2026

The Company has operating leases for corporate offices, distribution facilities, a manufacturing plant, and certain vehicles.

The components of lease expense for the three months ended March 31, 2026 and 2025 were as follows (in thousands):


	Three Months Ended March 31,
	2026		2025
Operating lease expenses(1):
Fixed lease expense	$	4,305	$	4,258
Variable lease expense	1,634		1,753
Total	$	5,939	$	6,011

(1) Expenses are recorded within distribution expenses and selling, general and administrative expenses on the unaudited condensed consolidated statement of operations.

Supplemental cash flow information for lease related liabilities and assets for the three months ended March 31, 2026 and 2025 were as follows (in thousands):


	Three Months Ended March 31,
	2026		2025
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	4,898	$	4,814


	Three Months Ended March 31,
	2026		2025
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	152	$	—

The aggregate future lease payments for operating leases as of March 31, 2026 were as follows (in thousands):


	Operating
2026 (excluding the three months ended March 31, 2026)	$	14,447
2027	15,116
2028	13,094
2029	6,796
2030	4,966
2031	3,083
Thereafter	6,026
Total lease payments	63,528
Less: Interest	(9,052)
Present value of lease payments	$	54,476

Average lease terms and discount rates were as follows:


	March 31, 2026
Operating leases:
Weighted-average remaining lease term (years)	4.5
Weighted-average discount rate	6.7	%

On January 23, 2025, the Company entered into a lease agreement for a new distribution center in Hagerstown, Maryland

(“Hagerstown Facility”). The lease term commenced on April 30, 2026, following the satisfaction of all commencement conditions. The term of the lease is 180 months following the commencement date. Base rent for the first year of the lease is $7.3 million, escalating by 3% annually. A portion of the base rent will be abated for the first 36 months of the lease term at the applicable annual base rent for a total base rent abatement of $7.2 million. The lease agreement also includes a total tenant improvement allowance of approximately $5.1 million.

LIFETIME BRANDS, INC 10-Q