Leases
We recognize lease obligations and associated right-of-use assets for existing non-cancelable leases. We have non-cancelable operating leases primarily associated with railcars, office and manufacturing facilities, storage tanks, ships, production equipment and vehicles. Many of our leases include both lease (e.g., fixed rent) and non-lease components (e.g., maintenance and services). For certain significant asset classes such as railcars, storage tanks, ships and vehicles, we have separated the lease and non-lease components based on the estimated stand-alone price for each component. For the remaining asset classes, we have elected to account for these components as a single lease component. In addition, we exclude leases expiring within twelve months from balance sheet recognition.
Many of our leases include one or more options to renew. We evaluate renewal options at the lease commencement date and regularly thereafter to determine if we are reasonably certain to exercise the option, in which case we include the renewal period in our lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on information available to determine the present value of the lease payments.
Lease expense for operating leases is recognized on a straight-line basis over the lease term. Variable lease expense is recognized in the period in which the obligation for those payments is incurred.
The following table presents operating lease costs, variable lease costs and supplemental cash flow information:
| | | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2025 | | 2024 | | 2023 |
| (Dollars in millions) | | | | | | |
| Operating lease costs | | $ | 35.6 | | | $ | 31.2 | | | $ | 28.7 | |
| Variable lease costs | | 3.3 | | | 3.7 | | | 4.0 | |
| Cash paid for amounts included in the measurement of lease liabilities: | | | | | | |
| Operating cash outflow from operating leases | | $ | 35.3 | | | $ | 31.0 | | | $ | 39.5 | |
The following table presents information about the amount and timing of cash flows arising from our operating leases as of December 31, 2025:
| | | | | | | | |
| (Dollars in millions) | | |
| 2026 | | $ | 32.9 | |
| 2027 | | 28.9 | |
| 2028 | | 20.3 | |
| 2029 | | 12.5 | |
| 2030 | | 7.0 | |
| Thereafter | | 24.4 | |
| Total lease payments | | 126.0 | |
| Less interest | | 22.7 | |
| Present value of lease liabilities | | $ | 103.3 | |
Supplemental information related to leases is as follows:
| | | | | | | | | | | | | | |
| | December 31, |
| | 2025 | | 2024 |
| Weighted average remaining lease term, in years | | 5.7 | | 4.2 |
| Weighted average discount rate | | 6.7 | % | | 6.8 | % |
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.