Leases

12 Months Ended

Dec. 31, 2024

We lease office space, vehicles and other equipment under non-cancellable leases with initial terms typically ranging from 1 to 20 years, with some leases having terms greater than 20 years. Our lease portfolio includes agreements with renewal options, purchase options and clauses for early termination based on the terms specific to the agreement.

At contract inception, we review the facts and circumstances of the arrangement to determine if the contract is a lease. We follow the guidance in ASC 842-10-15 and consider the following: whether the contract has an identified asset; if we have the right to obtain substantially all economic benefits from the asset; and if we have the right to direct the use of the underlying asset. All leased assets are classified as operating or finance under ASC 842.

To determine the present value of future minimum lease payments, we use the implicit rate when readily determinable or our incremental borrowing rate at the lease commencement date. When determining our incremental borrowing rate, we consider our centralized treasury function and our current credit profile. We then make adjustments to this rate for securitization, the length of the lease term, and leases denominated in foreign currencies. Minimum lease payments are expensed over the term of the lease on a straight-line basis. Some leases may require additional contingent or variable lease payments based on factors specific to the individual agreement. Variable lease payments for which we are typically responsible include payment of vehicle insurance, real estate taxes, and maintenance expenses.

Most leases within our portfolio are classified as operating leases under the new standard. Operating leases are included in "Other assets including long-term receivables, net", "Accrued and other liabilities", and "Other long-term liabilities" in our consolidated balance sheet. Operating lease right-of-use ("ROU") assets are subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of any lease incentives received. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Operating leases relate to office spaces, IT equipment, transportation equipment, machinery equipment, furniture and fixtures, and plant and facilities under non-cancellable lease agreements. Leases primarily have fixed rental periods, with many of the real estate leases requiring additional payments for property taxes and occupancy-related costs. Leases for real estate typically have initial terms ranging from 1 to 20 years, with some leases having terms greater than 20 years. Leases for non-real estate (transportation, IT) typically have initial terms ranging from 1 to 10 years. We have elected not to record short-term leases on the balance sheet whose term is 12 months or less and does not include a purchase option or extension that is reasonably certain to be exercised.

We rent or sublease a small number of assets including equipment and office space to third-party companies. These third-party arrangements include a small number of transition service arrangements from recent acquisitions. Rental income from all subleases is not material to our business.

The ROU asset and lease liability balances as of December 31, 2024 and 2023 were as follows:


(in Millions)	Classification	December 31, 2024		December 31, 2023
Assets

Operating lease ROU assets	Other assets including long-term receivables, net	$	110.4	$	121.8

Liabilities

Operating lease current liabilities	Accrued and other liabilities	$	24.5	$	24.4



Operating lease noncurrent liabilities	Other long-term liabilities	106.1		123.2

The components of lease expense for the year ended December 31, 2024, 2023, and 2022 were as follows:


(in Millions)	Lease Cost Classification	2024		2023		2022
Lease Cost
Operating lease cost	Costs of sales and services / Selling, general and administrative expenses	$	36.1	$	33.2	$	32.9




Variable lease cost	Costs of sales and services / Selling, general and administrative expenses	12.6		13.3		6.3

Total lease cost		$	48.7	$	46.5	$	39.2


	December 31, 2024
Operating Lease Term and Discount Rate
Weighted-average remaining lease term (years)	6.5


Weighted-average discount rate	4.8	%


(in Millions)	Year ended December 31, 2024		Year ended December 31, 2023
Other Information

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(41.2)	$	(35.9)


Supplemental non-cash information on lease liabilities arising from obtaining right-of-use assets:
Right-of-use assets obtained in exchange for new operating lease liabilities	$	14.2	$	21.4

The following table represents our future minimum operating lease payments as of, and subsequent to, December 31, 2024 under ASC 842:


(in Millions)	Operating Leases Total
Maturity of Lease Liabilities
2025	$	29.8
2026	25.3
2027	22.3
2028	18.6
2029	17.0
Thereafter	39.7
Total undiscounted lease payments	$	152.7
Less: Present value adjustment	(22.1)
Present value of lease liabilities	$	130.6