Leases
We have operating leases for certain property and equipment under various noncancelable agreements, the most significant of which are rail car leases and barge tow charters for the distribution of our products. The rail car leases currently have minimum terms ranging from one to eleven years and the barge tow charter commitments range from one to six years. Our rail car leases and barge tow charters commonly contain provisions for automatic renewal that can extend the lease term unless cancelled by either party. We also have operating leases for terminal and warehouse storage for our distribution system, some of which contain minimum throughput requirements. The storage agreements contain minimum terms generally ranging from one to four years and commonly contain provisions for automatic renewal thereafter unless cancelled by either party. The renewal provisions for our rail car leases, barge tow charters and terminal and warehouse storage agreements are not reasonably certain to be exercised.
The components of lease costs were as follows:
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| Year ended December 31, |
| | 2025 | | 2024 | | 2023 |
| | (in millions) |
| Operating lease cost | $ | 126 | | | $ | 112 | | | $ | 113 | |
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| Short-term lease cost | 31 | | | 40 | | | 30 | |
| Variable lease cost | 4 | | | 5 | | | 4 | |
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| Total lease cost | $ | 161 | | | $ | 157 | | | $ | 147 | |
Supplemental cash flow information related to leases was as follows:
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| Year ended December 31, |
| | 2025 | | 2024 | | 2023 |
| | (in millions) |
| | | | | |
| Operating cash flows - cash paid for amounts included in the measurement of operating lease liabilities | $ | 118 | | | $ | 98 | | | $ | 107 | |
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| Right-of-use (ROU) assets obtained in exchange for operating lease obligations | 252 | | | 107 | | | 103 | |
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Supplemental balance sheet information related to leases was as follows:
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| December 31, |
| | 2025 | | 2024 |
| | (in millions) |
| Operating lease ROU assets | $ | 410 | | | $ | 266 | |
| | | |
| Current operating lease liabilities | $ | 110 | | | $ | 86 | |
| Operating lease liabilities | 311 | | | 189 | |
| Total operating lease liabilities | $ | 421 | | | $ | 275 | |
Other information related to leases was as follows:
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| December 31, |
| | 2025 | | 2024 |
| Operating leases | | | |
| Weighted-average remaining lease term | 5 years | | 5 years |
| Weighted-average discount rate | 5.1 | % | | 5.0 | % |
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The following table reconciles the undiscounted cash flows for our operating leases to the operating lease liabilities recorded on our consolidated balance sheet as of December 31, 2025:
| | | | | | | |
| | Operating
lease payments | | |
| | (in millions) |
| 2026 | $ | 128 | | | |
| 2027 | 105 | | | |
| 2028 | 90 | | | |
| 2029 | 70 | | | |
| 2030 | 37 | | | |
| Thereafter | 55 | | | |
| Total lease payments | 485 | | | |
| Less: imputed interest | (64) | | | |
| | | |
| Present value of lease liabilities | 421 | | | |
| Less: Current operating lease liabilities | (110) | | | |
| Operating lease liabilities | $ | 311 | | | |
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.