Note 2. Leases
The Company determines if an arrangement is a lease at inception. The Company has operating leases for premises, equipment, railcars and automobiles. Our leases have remaining lease terms of 1 year to 45 years, some of which may include options to extend the leases further. The Company considers these options in determining the lease term used to establish the right-of-use assets and lease liabilities. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based upon the information available at commencement date, in determining the present value of lease payments.
Leases with an initial term of 12 months or less are not recorded on the balance sheet. We recognize lease expense for these leases on a straight-line basis over the lease term. Certain lease agreements contain both lease and non-lease components. We account for lease components together with non-lease components.
Operating lease cost was $18.8 million, $17.3 million, and $16.8 million for the years ended December 31, 2025, 2024, and 2023, respectively. The components of lease costs are as follows:
| | | | | | | | | | | | |
| | | December 31, |
| (in millions of dollars) | | | 2025 | | | | 2024 | | | | 2023 | |
| Operating lease cost | | $ | 18.8 | | | $ | 17.3 | | | $ | 16.7 | |
| Short-term lease cost | | | - | | | | - | | | | 0.1 | |
| Total lease cost | | $ | 18.8 | | | $ | 17.3 | | | $ | 16.8 | |
Supplemental cash flow information and non-cash activity related to our leases are as follows:
| | | | |
| (in millions of dollars) | | | December 31, | |
| Operating cash flows information: | | | 2025 | |
| Cash paid for amounts included in the measurement of lease liabilities | | $ | 20.0 | |
| Non-cash activity: | | | | |
| Right-of-use assets obtained in the exchange for operating lease liabilities | | $ | 13.2 | |
Weighted average remaining lease term and weighted average discount rates related to the Company’s leases were as follows:
| | | | |
| Weighted-average remaining operating lease term (in years) | | | 4.88 | |
| Weighted-average operating leases discount rate | | | 6.1 | % |
The following table summarizes the Company’s outstanding lease assets and liabilities and their classification on the Consolidated Balance Sheets:
| | | | | | | | | | | | |
| | | | | | | December 31, |
| (in millions of dollars) | | Balance Sheet Classification | | | 2025 | | | | 2024 | |
| Right-of-use asset | | | | Other assets and deferred charges | | $ | 45.2 | | | $ | 46.9 | |
| Lease liability - current | | | | Other current liabilities | | | 16.5 | | | | 14.5 | |
| Lease liability - non-current | | | | Other non-current liabilities | | | 33.8 | | | | 38.7 | |
Future minimum lease payments under the Company’s leases as of December 31, 2025, were as follows:
| | | | |
| | | | December 31, | |
| (in millions of dollars) | | | 2025 | |
| 2026 | | $ | 19.0 | |
| 2027 | | | 14.1 | |
| 2028 | | | 10.8 | |
| 2029 | | | 4.9 | |
| 2030 | | | 3.4 | |
| Thereafter | | | 6.0 | |
| Total undiscounted lease payments | | | 58.2 | |
| Less: imputed interest | | | (7.9 | ) |
| Present Value of Lease Liability | | $ | 50.3 | |
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.