WEST PHARMACEUTICAL SERVICES INCWST
WEST PHARMACEUTICAL SERVICES INC Leases Disclosure
Leases
As of December 31, 2025, we had leases primarily related to land, buildings, and machinery and equipment, with lease terms through 2269. Certain of our leases provide us with an option, exercisable at our sole discretion, to terminate the lease or extend the lease term for one year or more. At this time, the Company is not able to assert whether any of these options will be exercised.
Judgments used in applying ASC 842 include determining: i) whether a contract is, or contains, a lease; ii) the discount rate to be used to discount the unpaid lease payments to present value; iii) the lease term; and iv) the lease payments. We determine if a contract is, or contains, a lease at contract inception. A lease exists when a contract conveys to the customer the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. The definition of a lease embodies two conditions: 1) there is an identified asset in the contract that is land or a depreciable asset (i.e., property, plant, and equipment); and 2) the customer has the right to control the use of the identified asset.
ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. As all of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Our incremental borrowing rate for a lease is the rate of interest we would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. The lease term for all of our leases includes the noncancellable period of the lease plus any additional periods covered by either a lessee option to extend (or not to terminate) the lease that the lessee is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor. Lease payments included in the measurement of the lease right-of-use assets and lease liabilities are comprised of fixed payments (including in-substance fixed payments), variable payments that depend on an index or rate, and the exercise price of a lessee option to purchase the underlying asset if the lessee is reasonably certain to exercise.
The components of lease expense were as follows:
| ($ in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Operating lease cost | $ | 26.5 | $ | 24.2 | $ | 20.3 | |||||||||||
| Finance lease - amortization of right-of-use (ROU) assets | 1.6 | 0.9 | — | ||||||||||||||
| Finance lease - interest on lease liabilities | 0.2 | 0.1 | — | ||||||||||||||
| Short-term lease cost | 3.5 | 2.5 | 6.1 | ||||||||||||||
| Variable lease cost | 10.1 | 9.0 | 5.5 | ||||||||||||||
| Total lease cost | $ | 41.9 | $ | 36.7 | $ | 31.9 | |||||||||||
The following table summarizes the finance lease amounts in the consolidated balance sheets as of December 31:
| ($ in millions) | Balance Sheet Classification | 2025 | 2024 | ||||||||||||||
| ROU assets, net | $ | 34.7 | $ | 29.7 | |||||||||||||
| Lease liabilities (current) | $ | 1.5 | $ | 0.9 | |||||||||||||
| Lease liabilities (noncurrent) | $ | 3.6 | $ | 2.1 | |||||||||||||
Supplemental information related to leases was as follows:
| ($ in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||||||||
| Operating cash flows from operating leases | $ | 25.5 | $ | 32.5 | $ | 19.1 | |||||||||||
| Operating cash flows from finance leases | $ | 0.2 | $ | 0.1 | $ | — | |||||||||||
| Financing cash flows from finance leases | $ | 1.1 | $ | 23.3 | $ | 0.1 | |||||||||||
| Right-of-use assets obtained in exchange for new lease liabilities: | |||||||||||||||||
| Operating leases | $ | 39.8 | $ | 41.2 | $ | 10.7 | |||||||||||
| Finance leases | $ | 2.9 | $ | 24.6 | $ | — | |||||||||||
The following table shows the weighted average remaining lease terms and discount rates for our operating and finance leases as of December 31:
| (in years) | 2025 | 2024 | |||||||||
| Weighted average remaining lease term: | |||||||||||
| Operating leases | 8.3 | 8.3 | |||||||||
| Finance leases | 4.4 | 6.3 | |||||||||
| Weighted average discount rate: | |||||||||||
| Operating leases | 4.67 | % | 3.99 | % | |||||||
| Finance leases | 4.15 | % | 4.80 | % | |||||||
Maturities of lease liabilities as of December 31, 2025 were as follows:
| ($ in millions) | Operating | Finance | |||||||||
| Year | Leases | Leases | |||||||||
| 2026 | $ | 27.4 | $ | 1.5 | |||||||
| 2027 | 21.0 | 1.5 | |||||||||
| 2028 | 20.1 | 1.1 | |||||||||
| 2029 | 14.8 | 0.5 | |||||||||
| 2030 | 10.3 | 0.4 | |||||||||
| Thereafter | 52.8 | 0.5 | |||||||||
| 146.4 | 5.5 | ||||||||||
| Less: imputed lease interest | (28.1) | (0.4) | |||||||||
| Total lease liabilities | $ | 118.3 | $ | 5.1 | |||||||
Practical Expedients and Exemptions
We have elected to adopt practical expedients around the combination of lease and non-lease components and the portfolio approach relating to discount rates. These practical expedients were applied consistently to all leases.
We have elected not to recognize lease right-of-use assets and lease liabilities for all short-term leases (leases with an initial lease term of 12 months or less). We recognize the lease payments associated with our short-term leases as an expense over the lease term.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 17, 2026 | Showing above |
| 2024 | Feb 18, 2025 | |
| 2023 | Feb 20, 2024 | |
| 2022 | Feb 21, 2023 | |
| 2021 | Feb 22, 2022 | |
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.