Leases
Lease cost for the year ended December 31, 2025, 2024 and 2023 was comprised of the following:
| | | | | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2025 | | 2024 | | 2023 |
| Operating lease cost | | $ | 47 | | | $ | 39 | | | $ | 37 | |
| | | | | | |
| Finance lease cost: | | | | | | |
| Amortization of right-of-use assets | | 7 | | | 6 | | | $ | 6 | |
| Interest on lease liabilities | | 5 | | | 5 | | | $ | 5 | |
| | | | | | |
| Short term lease cost | | 43 | | | 41 | | | $ | 36 | |
| Variable lease cost | | 10 | | | 8 | | | $ | 5 | |
| Total lease cost | | $ | 112 | | | $ | 99 | | | $ | 89 | |
The table below summarizes lease cost for the year ended December 31, 2025, 2024 and 2023 recorded in the specific line items, which are subsequently recorded in our Consolidated Statements of Operations:
| | | | | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2025 | | 2024 | | 2023 |
| Cost of goods sold | | $ | 97 | | | $ | 91 | | | $ | 82 | |
| Selling, general and administrative expenses | | 4 | | | 3 | | | 2 | |
| Interest expense | | 5 | | | 5 | | | 5 | |
Restructuring(1) | | $ | 6 | | | $ | — | | | $ | — | |
| Total | | $ | 112 | | | $ | 99 | | | $ | 89 | |
(1) Restructuring amounts relate to leased assets utilized at the Company's Netherlands plant after the March 2025 announcement to indefinitely close the facility. See Note 3.
The weighted-average remaining lease term in years and weighted-average discount rates at December 31, 2025 and 2024 were as follows:
| | | | | | | | | | | | | | |
| | December 31, 2025 | | December 31, 2024 |
| Weighted-average remaining lease term: | | | | |
| Operating leases | | 10.8 | | 11.3 |
| Finance leases | | 6.4 | | 6.95 |
| | | | |
| Weighted-average discount rate: | | | | |
| Operating leases | | 11.4 | % | | 11.5 | % |
| Finance leases | | 12.5 | % | | 12.0 | % |
The maturity analysis for operating leases and finance leases at December 31, 2025 were as follows:
| | | | | | | | | | | | | | |
| | Operating Leases | | Finance Leases |
| 2026 | | 38 | | | 10 | |
| 2027 | | 31 | | | 9 | |
| 2028 | | 28 | | | 9 | |
| 2029 | | 27 | | | 8 | |
| 2030 | | $ | 22 | | | $ | 8 | |
| Thereafter | | 152 | | | 14 | |
| Total lease payments | | 298 | | | 58 | |
| Less: imputed interest | | (128) | | | (19) | |
| Present value of lease payments | | $ | 170 | | | $ | 39 | |
Additional information relating to cash flows and ROU assets for the years then ended is as follows:
| | | | | | | | | | | | | | | | | | | | |
| | December 31, 2025 | | December 31, 2024 | | December 31, 2023 |
| Cash paid for amounts included in the measurement of lease liabilities: | | | | | | |
| Operating cash flows used for operating leases | | $ | 42 | | | $ | 38 | | | $ | 40 | |
| Operating cash flows used for finance leases | | $ | 5 | | | $ | 5 | | | $ | 5 | |
| Financing cash flows used for finance leases | | $ | 6 | | | $ | 5 | | | $ | 5 | |
Additional information relating to ROU assets for the year ended December 31, 2025 and 2024 is as follows:
| | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2025 | | 2024 |
| ROU assets obtained in exchange for lease obligations: | | | | |
| Operating leases obtained in the normal course of business | | $ | 64 | | | $ | 32 | |
| Finance leases obtained in the normal course of business | | $ | 3 | | | $ | 4 | |
As of December 31, 2025, we have ROU assets of $10 million for additional leases that have not yet commenced, as set forth below:
| | | | | | | | | | | | | | | | | | | | |
| | ROU Asset | | Commencement Period | | Lease Duration |
| Operating Leases for Buildings | | $ | 2 | | | 2026 | | 2 - 3 years |
| Finance Lease for Machinery & Equipment | | $ | 8 | | | 2026 | | 7 - 15 years |
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.