Note 5 — LEASING ARRANGEMENTS

We lease certain manufacturing facilities, warehouse space, machinery and equipment, vehicles and information technology equipment under operating leases. The majority of our leases are operating leases. Finance leases are immaterial to our consolidated financial statements. Operating lease assets and obligations are reflected within Operating lease assets, net, Accrued expenses and other current liabilities, and Other non-current liabilities, respectively.

Lease expense for these leases is recognized on a straight-line basis over the lease term, with variable lease payments recognized in the period those payments are incurred. The components of lease cost recognized within our Consolidated Statements of Income for the years ended December 31, 2025, 2024 and 2023 were as follows:



(In millions)	2025		2024		2023
Cost of sales	$	21.3	$	20.8	$	19.7
Selling and administrative expense	14.5		11.2		11.6
Total operating lease cost	$	35.8	$	32.0	$	31.4

We often have options to renew lease terms for buildings and other assets. The exercise of lease renewal options are generally at our sole discretion. In addition, certain lease arrangements may be terminated prior to their original expiration date at our discretion. We evaluate renewal and termination options at the lease commencement date to determine if we are reasonably certain to exercise the option on the basis of economic factors. The weighted average remaining lease term for our operating leases as of December 31, 2025 and 2024 was 5.1 years and 5.6 years, respectively. The non-cash net increase in operating lease liabilities was $10.0 million, $37.3 million and $18.1 million for the years ended December 31, 2025, 2024 and 2023, respectively.

The discount rate implicit within our leases is generally not determinable and, therefore, the Company determines the discount rate based on its incremental borrowing rate. The incremental borrowing rate for our leases is determined based on lease term and currency in which lease payments are made, adjusted for impacts of collateral.

The weighted average discount rate used to measure our operating lease liabilities as of December 31, 2025 and 2024 were 5.7% and 6.0%, respectively.

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



(In millions)
2026	$	22.8
2027	19.1
2028	13.0
2029	7.9
2030	5.4
Thereafter	26.8
Total	$	95.0
Less amount of lease payment representing interest	(17.7)
Total present value of lease payments	$	77.3

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.

AVIENT CORP Leases Disclosure

About Leases Disclosures

Other Available Disclosures