Alcoa Corp Leases Disclosure
T. Leasing
The Company records a right-of-use asset and lease liability for several types of operating leases, including land and buildings, plant equipment, vehicles, maritime vessels, and computer equipment. These amounts are equivalent to the aggregate future lease payments on a discounted basis. The leases have remaining terms of less than to 57 years. The discount rate applied in determining the present value of lease payments is the Company’s incremental borrowing rate at the lease commencement date, unless there is a rate implicit in the lease agreement. The Company does not have material financing leases.
Lease expense and operating cash flows include:
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Costs from operating leases |
|
$ |
78 |
|
|
$ |
54 |
|
|
$ |
53 |
|
Variable lease payments |
|
|
25 |
|
|
|
42 |
|
|
|
25 |
|
Short-term rental expense |
|
|
4 |
|
|
|
7 |
|
|
|
11 |
|
The weighted average lease term and weighted average discount rate were as follows:
December 31, |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Weighted average lease term for operating leases (years) |
|
10.6 |
|
|
10.7 |
|
|
12.9 |
|
|||
Weighted average discount rate for operating leases |
|
|
7.0 |
% |
|
|
6.8 |
% |
|
|
6.7 |
% |
The following represents the aggregate right-of-use assets and related lease obligations recognized in the accompanying Consolidated Balance Sheet:
December 31, |
|
2025 |
|
|
2024 |
|
||
|
$ |
313 |
|
|
$ |
259 |
|
|
|
|
|
|
|
|
|
||
|
|
49 |
|
|
|
38 |
|
|
|
|
259 |
|
|
|
223 |
|
|
Total operating lease liabilities |
|
$ |
308 |
|
|
$ |
261 |
|
New leases of $90, $163, and $76 were added during the years ended December 31, 2025, 2024, and 2023 respectively.
The future cash flows related to the operating lease obligations as of December 31, 2025 were as follows:
Year Ending December 31, |
|
|
|
|
2026 |
|
$ |
69 |
|
2027 |
|
|
58 |
|
2028 |
|
|
50 |
|
2029 |
|
|
43 |
|
2030 |
|
|
35 |
|
Thereafter |
|
|
227 |
|
Total lease payments (undiscounted) |
|
|
482 |
|
Less: discount to net present value |
|
|
(174 |
) |
Total |
|
$ |
308 |
|
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.