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Leases | 12 Months Ended
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Dec. 31, 2022
Leases [Abstract] |
Leases | Leases We have both operating and finance leases, with the majority being operating lease agreements related to rail cars, tanks, equipment, and real estate. Supplemental consolidated balance sheet information related to our leases is as follows:
|  |  | December 31,
In millions | Financial Statement Caption |  | 2022 |  | 2021
Assets |  |  |  |  |
Operating lease assets, net (1) | Operating lease assets, net |  | $ | 56.6 |  |  | $ | 52.4 |
Finance lease assets, net (2) | Property, plant, and equipment, net |  | 60.1 |  |  | 53.9 |
Finance lease assets, net (2) | Other assets, net |  | 0.1 |  |  | 0.3 |
Total lease assets |  |  | $ | 116.8 |  |  | $ | 106.6 |
Liabilities |  |  |  |  |
Current |  |  |  |  |
Operating lease liabilities (3) | Current operating lease liabilities |  | $ | 16.5 |  |  | $ | 17.4 |
Finance lease liabilities | Notes payable and current maturities of long-term debt |  | 0.9 |  |  | 0.8 |
Noncurrent |  |  |  |  |
Operating lease liabilities | Noncurrent operating lease liabilities |  | 40.8 |  |  | 36.2 |
Finance lease liabilities | Long-term debt including finance lease obligations |  | 101.0 |  |  | 101.6 |
Total lease liabilities |  |  | $ | 159.2 |  |  | $ | 156.0 |
_______________ (1) Operating lease assets, net are recorded net of accumulated amortization of $40.8 million, and $35.5 million as of December 31, 2022, and 2021, respectively. (2) Finance lease assets, net are recorded net of accumulated amortization in Property, plant, and equipment, net and Other assets, net of $73.8 million and $1.4 million, as of December 31, 2022, and $69.6 million and $1.3 million, as of December 31, 2021. (3) Operating lease liabilities include $0.2 million, and $0.2 million of accrued interest, as of December 31, 2022 and 2021, respectively. Finance Leases Our finance lease obligations of $101.9 million, and $102.4 million at December 31, 2022 and 2021, respectively, primarily consist of three leases. The first obligation of $80.0 million, at December 31, 2022, is owed to the city of Wickliffe, Kentucky, associated with Performance Materials' Wickliffe, Kentucky, manufacturing site, which is due at maturity in 2027. The second obligation of $21.6 million, at December 31, 2022, is owed to the lessor of our corporate headquarters in North Charleston, South Carolina. The lease commenced in July 2020, with a term of 15 years. The third obligation of $0.3 million, at December 31, 2022, is owed to the Industrial Development Board of the city of Greenville, Alabama, associated with Performance Chemicals' Greenville, Alabama, manufacturing site, which is due to mature in 2028. We also have a finance lease obligation due in 2031 for certain assets located at our Performance Materials' Waynesboro, Georgia, manufacturing facility. The lease is with the Development Authority of Burke County (“Authority”). The Authority established the sale-leaseback of these assets by issuing an industrial development revenue bond. The bond was purchased by Ingevity and the obligations under the finance lease remain with Ingevity. Accordingly, we offset the finance lease obligation and bond on our consolidated balance sheets. Components of lease cost are as follows:
|  |  | Years Ended December 31,
In millions | Financial Statement Caption |  | 2022 |  | 2021 |  | 2020
Operating lease cost (1) | Cost of sales |  | $ | 19.9 |  |  | $ | 19.5 |  |  | $ | 19.4 |
| Selling, general, and administrative expenses |  | 1.4 |  |  | 1.4 |  |  | 1.9 |
Finance lease cost |  |  |  |  |  |  |
Amortization of leased assets | Cost of sales |  | $ | 3.0 |  |  | $ | 3.3 |  |  | $ | 2.6 |
| Selling, general, and administrative expenses |  | 1.6 |  |  | 1.6 |  |  | 0.8 |
Interest on lease liabilities | Interest expense, net |  | 7.5 |  |  | 7.5 |  |  | 6.8 |
Net lease cost (2) |  |  | $ | 33.4 |  |  | $ | 33.3 |  |  | $ | 31.5 |
_______________ (1) Includes short-term leases and variable lease costs, which are immaterial. (2) Only on the rare occasion do we sublease our leased assets; as a result, this amount excludes sublease income which is immaterial. Maturity of Lease Liabilities
| December 31, 2022
In millions | Operating leases |  | Finance leases |  | Total
2023 | $ | 18.8 |  |  | $ | 8.3 |  |  | $ | 27.1 |
2024 | 15.5 |  |  | 8.4 |  |  | 23.9 |
2025 | 11.8 |  |  | 8.4 |  |  | 20.2 |
2026 | 8.2 |  |  | 8.5 |  |  | 16.7 |
2027 | 5.8 |  |  | 85.5 |  |  | 91.3 |
2028 and thereafter | 3.9 |  |  | 19.6 |  |  | 23.5 |
Total lease payments | $ | 64.0 |  |  | $ | 138.7 |  |  | $ | 202.7 |
Less: Interest | 6.7 |  |  | 36.8 |  |  | 43.5 |
Present value of lease liabilities (1) | $ | 57.3 |  |  | $ | 101.9 |  |  | $ | 159.2 |
_______________ (1) As of December 31, 2022, we have zero operating lease commitments that have not yet commenced related to manufacturing and office equipment leases. Lease Term and Discount Rate
| December 31,
In millions, except percentages | 2022 |  | 2021
Weighted-average remaining lease term (years) |  |  |
Operating leases | 4.4 |  | 4.1
Finance leases | 12.4 |  | 6.9
Weighted-average discount rate |  |  |
Operating leases | 5.16 | % |  | 4.97 | %
Finance leases | 7.19 | % |  | 7.18 | %
Other Information
| Years Ended December 31,
In millions | 2022 |  | 2021 |  | 2020
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |
Operating cash flows from operating leases | $ | 18.8 |  |  | $ | 20.5 |  |  | $ | 18.5 |
Operating cash flows from finance leases | 7.5 |  |  | 7.5 |  |  | 6.8 |
Financing cash flows from finance leases | 0.9 |  |  | 0.7 |  |  | 0.7 |
Leases | Leases We have both operating and finance leases, with the majority being operating lease agreements related to rail cars, tanks, equipment, and real estate. Supplemental consolidated balance sheet information related to our leases is as follows:
|  |  | December 31,
In millions | Financial Statement Caption |  | 2022 |  | 2021
Assets |  |  |  |  |
Operating lease assets, net (1) | Operating lease assets, net |  | $ | 56.6 |  |  | $ | 52.4 |
Finance lease assets, net (2) | Property, plant, and equipment, net |  | 60.1 |  |  | 53.9 |
Finance lease assets, net (2) | Other assets, net |  | 0.1 |  |  | 0.3 |
Total lease assets |  |  | $ | 116.8 |  |  | $ | 106.6 |
Liabilities |  |  |  |  |
Current |  |  |  |  |
Operating lease liabilities (3) | Current operating lease liabilities |  | $ | 16.5 |  |  | $ | 17.4 |
Finance lease liabilities | Notes payable and current maturities of long-term debt |  | 0.9 |  |  | 0.8 |
Noncurrent |  |  |  |  |
Operating lease liabilities | Noncurrent operating lease liabilities |  | 40.8 |  |  | 36.2 |
Finance lease liabilities | Long-term debt including finance lease obligations |  | 101.0 |  |  | 101.6 |
Total lease liabilities |  |  | $ | 159.2 |  |  | $ | 156.0 |
_______________ (1) Operating lease assets, net are recorded net of accumulated amortization of $40.8 million, and $35.5 million as of December 31, 2022, and 2021, respectively. (2) Finance lease assets, net are recorded net of accumulated amortization in Property, plant, and equipment, net and Other assets, net of $73.8 million and $1.4 million, as of December 31, 2022, and $69.6 million and $1.3 million, as of December 31, 2021. (3) Operating lease liabilities include $0.2 million, and $0.2 million of accrued interest, as of December 31, 2022 and 2021, respectively. Finance Leases Our finance lease obligations of $101.9 million, and $102.4 million at December 31, 2022 and 2021, respectively, primarily consist of three leases. The first obligation of $80.0 million, at December 31, 2022, is owed to the city of Wickliffe, Kentucky, associated with Performance Materials' Wickliffe, Kentucky, manufacturing site, which is due at maturity in 2027. The second obligation of $21.6 million, at December 31, 2022, is owed to the lessor of our corporate headquarters in North Charleston, South Carolina. The lease commenced in July 2020, with a term of 15 years. The third obligation of $0.3 million, at December 31, 2022, is owed to the Industrial Development Board of the city of Greenville, Alabama, associated with Performance Chemicals' Greenville, Alabama, manufacturing site, which is due to mature in 2028. We also have a finance lease obligation due in 2031 for certain assets located at our Performance Materials' Waynesboro, Georgia, manufacturing facility. The lease is with the Development Authority of Burke County (“Authority”). The Authority established the sale-leaseback of these assets by issuing an industrial development revenue bond. The bond was purchased by Ingevity and the obligations under the finance lease remain with Ingevity. Accordingly, we offset the finance lease obligation and bond on our consolidated balance sheets. Components of lease cost are as follows:
|  |  | Years Ended December 31,
In millions | Financial Statement Caption |  | 2022 |  | 2021 |  | 2020
Operating lease cost (1) | Cost of sales |  | $ | 19.9 |  |  | $ | 19.5 |  |  | $ | 19.4 |
| Selling, general, and administrative expenses |  | 1.4 |  |  | 1.4 |  |  | 1.9 |
Finance lease cost |  |  |  |  |  |  |
Amortization of leased assets | Cost of sales |  | $ | 3.0 |  |  | $ | 3.3 |  |  | $ | 2.6 |
| Selling, general, and administrative expenses |  | 1.6 |  |  | 1.6 |  |  | 0.8 |
Interest on lease liabilities | Interest expense, net |  | 7.5 |  |  | 7.5 |  |  | 6.8 |
Net lease cost (2) |  |  | $ | 33.4 |  |  | $ | 33.3 |  |  | $ | 31.5 |
_______________ (1) Includes short-term leases and variable lease costs, which are immaterial. (2) Only on the rare occasion do we sublease our leased assets; as a result, this amount excludes sublease income which is immaterial. Maturity of Lease Liabilities
| December 31, 2022
In millions | Operating leases |  | Finance leases |  | Total
2023 | $ | 18.8 |  |  | $ | 8.3 |  |  | $ | 27.1 |
2024 | 15.5 |  |  | 8.4 |  |  | 23.9 |
2025 | 11.8 |  |  | 8.4 |  |  | 20.2 |
2026 | 8.2 |  |  | 8.5 |  |  | 16.7 |
2027 | 5.8 |  |  | 85.5 |  |  | 91.3 |
2028 and thereafter | 3.9 |  |  | 19.6 |  |  | 23.5 |
Total lease payments | $ | 64.0 |  |  | $ | 138.7 |  |  | $ | 202.7 |
Less: Interest | 6.7 |  |  | 36.8 |  |  | 43.5 |
Present value of lease liabilities (1) | $ | 57.3 |  |  | $ | 101.9 |  |  | $ | 159.2 |
_______________ (1) As of December 31, 2022, we have zero operating lease commitments that have not yet commenced related to manufacturing and office equipment leases. Lease Term and Discount Rate
| December 31,
In millions, except percentages | 2022 |  | 2021
Weighted-average remaining lease term (years) |  |  |
Operating leases | 4.4 |  | 4.1
Finance leases | 12.4 |  | 6.9
Weighted-average discount rate |  |  |
Operating leases | 5.16 | % |  | 4.97 | %
Finance leases | 7.19 | % |  | 7.18 | %
Other Information
| Years Ended December 31,
In millions | 2022 |  | 2021 |  | 2020
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |
Operating cash flows from operating leases | $ | 18.8 |  |  | $ | 20.5 |  |  | $ | 18.5 |
Operating cash flows from finance leases | 7.5 |  |  | 7.5 |  |  | 6.8 |
Financing cash flows from finance leases | 0.9 |  |  | 0.7 |  |  | 0.7 |

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