Leases
The Company leases real estate, office equipment and service vehicles. The Company's leases have remaining lease terms of up to 22 years, some of which include options to extend the leases for up to 25 years. The Company determines the lease term used to record each lease by including the initial lease term and, in the case where there are options to extend, will include the option to extend if it has determined that it reasonably certain that the Company would exercise those options.
The Company also leases certain equipment that it rents to its customers where the payments vary based upon the amount of time the equipment is on rent. There are no fixed payments on these leases and, therefore, no lease liability or ROU assets have been recorded. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense for these leases is recognized on a straight-line basis over the lease term.
The components of lease expense consist of the following (in millions):
| | | | | | | | | | | | | | | | | |
| | | Years Ended December 31, |
| Classification | | 2025 | | 2024 |
Operating lease cost(a) | Direct operating | | $ | 189 | | | $ | 158 | |
| Finance lease cost: | | | | | |
| Amortization of ROU assets | Depreciation and amortization | | 19 | | | 16 | |
| Interest on lease liabilities | Interest expense, net | | 3 | | | 3 | |
| Sublease income | Equipment rental revenue | | (65) | | | (77) | |
| Net lease cost | | $ | 146 | | | $ | 100 | |
(a) Includes short-term leases of $50 million and $62 million for the year ended December 31, 2025 and 2024, respectively, and variable lease costs of $9 million and $6 million for the year ended December 31, 2025 and 2024, respectively. Balance sheet information related to leases consists of the following (in millions):
| | | | | | | | | | | | | | | | | |
| Classification | | December 31, 2025 | | December 31, 2024 |
| Assets | | | | | |
| Operating lease ROU assets | Right-of-use assets | | $ | 1,489 | | | $ | 852 | |
| Finance lease ROU assets | Property and equipment, net(a) | | 77 | | | 74 | |
| Total leased assets | | $ | 1,566 | | | $ | 926 | |
| Liabilities | | | | | |
| Current: | | | | | |
| Operating | Current maturities of operating lease liabilities | | $ | 56 | | | $ | 39 | |
| Finance | Current maturities of long-term debt and financing obligations | | 19 | | | 17 | |
| Non-current: | | | | | |
| Operating | Operating lease liabilities | | 1,479 | | | 842 | |
| Finance | Long-term debt, net | | 62 | | | 60 | |
| Total lease liabilities | | $ | 1,616 | | | $ | 958 | |
(a) Finance lease right-of-use assets are recorded net of accumulated amortization of $70 million and $52 million for the years ended December 31, 2025 and 2024, respectively.
| | | | | | | | | | | |
| Years Ended December 31, |
| 2025 | | 2024 |
| Weighted average remaining lease term: | | | |
| Operating leases | 17.9 | | 17.1 |
| Finance leases | 5.7 | | 5.1 |
| Weighted average discount rate: | | | |
| Operating leases | 4.74 | % | | 4.31 | % |
| Finance leases | 4.51 | % | | 4.29 | % |
Cash flow information related to leases consists of the following (in millions):
| | | | | | | | | | | |
| Years Ended December 31, |
| 2025 | | 2024 |
| Cash paid for amounts included in the measurement of lease liabilities: | | | |
| Operating cash flows from operating leases | $ | 65 | | | $ | 51 | |
| Operating cash flows from finance leases | $ | 3 | | | $ | 3 | |
| Financing cash flows from finance leases | $ | 18 | | | $ | 16 | |
| Right-of-use assets obtained in exchange for lease obligations: | | | |
| Operating leases | $ | 317 | | | $ | 300 | |
| Finance leases | $ | 21 | | | $ | 17 | |
Maturities of lease liabilities are as follows (in millions):
| | | | | | | | | | | |
| Operating Leases | | Finance Leases |
| 2026 | $ | 128 | | | $ | 22 | |
| 2027 | 137 | | | 17 | |
| 2028 | 134 | | | 17 | |
| 2029 | 131 | | | 13 | |
| 2030 | 127 | | | 10 | |
| Thereafter | 1,725 | | | 14 | |
| Total lease payments | 2,382 | | | 93 | |
| Less: Interest | (847) | | | (12) | |
| Present value of lease liabilities | $ | 1,535 | | | $ | 81 | |
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.