Leases
The Company has operating leases primarily for corporate offices, technical and engineering centers, plants, vehicles, and certain equipment. As of December 31, 2025 and 2024 the Company had $7 million and $6 million of net assets recorded under finance leasing arrangements, respectively.
Certain of the Company's lease agreements include rental payments adjusted periodically primarily for inflation. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company subleases certain real estate to third parties primarily in the U.S., Germany, and Brazil.
For the years ended December 31, 2025 and 2024, the weighted average remaining lease term and discount rate for operating leases were 8 years years and 5.11% and 5 years and 4.90%, respectively. For the years ended December 31, 2025 and 2024, the weighted average remaining lease term and discount rate for financing leases were 38 years and 4.66% and 38 years and 4.65%, respectively.
The components of lease expense are as follows:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| (In millions) | 2025 | | 2024 | | 2023 |
| Operating lease expense (includes immaterial variable lease costs) | (34) | | | $ | (38) | | | $ | (38) | |
| Short-term lease expense | (2) | | | (2) | | | (2) | |
| Sublease income | 2 | | | 2 | | | 2 | |
| Total lease expense | $ | (34) | | | $ | (38) | | | $ | (38) | |
Other information related to leases is as follows:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| (In millions) | 2025 | | 2024 | | 2023 |
| Cash flows used for operating leases | 31 | | | $ | 36 | | | $ | 36 | |
| Right-of-use assets obtained in exchange for lease obligations | 46 | | | $ | 29 | | | $ | 11 | |
Future minimum lease payments under non-cancellable leases are as follows:
| | | | | |
| (In millions) | |
| 2026 | $ | 25 | |
| 2027 | 24 | |
| 2028 | 19 | |
| 2029 | 17 | |
| 2030 | 13 | |
| 2031 and thereafter | 73 | |
| Total future minimum lease payments | 171 | |
| Less imputed interest | (41) | |
| Total lease liabilities | $ | 130 | |
| |
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.