Leases

12 Months Ended

Dec. 31, 2023

Leases

Leases

Note 12. Leases

The company has operating leases relating principally to transportation and other equipment, and some real estate. The company determines if an arrangement contains a lease at inception, which generally occurs when the arrangement identifies a specific asset that the company has the right to direct the use of and obtain substantially all of the economic benefit from use of the identified asset. Certain of the lease agreements contain rent escalation clauses (including fixed and index-based escalations), and options to extend or terminate the lease. For purposes of calculating operating lease obligations, the company’s lease terms include options to extend the lease when it is reasonably certain that the company will exercise such option. The company uses its incremental borrowing rate at lease commencement to determine the present value of lease payments. The incremental borrowing rate is the rate of interest the company could borrow on a collateralized basis over a similar term with similar payments. Operating lease expense is recognized on a straight-line basis over the lease term.

Operating lease right-of-use assets and lease obligations included in the consolidated balance sheets at

December 31, are as follows (in thousands):

		2023		2022
Right-of-use assets under operating leases:
Other assets - noncurrent	$	127,499	$	110,638
Lease obligations under operating leases:
Accrued liabilities	$	21,003	$	18,850
Other liabilities - noncurrent		107,147		91,793
	$	128,150	$	110,643

The weighted average remaining lease term for our operating leases is nine and ten years, and the weighted-average discount rate is 4.31% and 3.86% as of December 31, 2023 and 2022, respectively. Future operating lease liabilities as of December 31, 2023, for the next five years and thereafter are as follows (in thousands):

2024	$	25,609
2025		21,599
2026		17,129
2027		15,055
2028		12,416
Thereafter		62,302
Total undiscounted cash flows		154,110
Less imputed interest		(25,960)
Lease obligations under operating leases	$	128,150

Note 12. Leases (Continued)

Operating lease expense included in the consolidated statements of income was $27.9 million, $23.7 million, and $22.5 million for the years ended December 31, 2023, 2022, and 2021, respectively. Cash paid related to operating lease obligations was $22.8 million, $20.1 million, and $19.0 million for the years ended December 31, 2023, 2022, and 2021, respectively. Variable lease costs were not material for the years ended December 31, 2023, 2022, and 2021. Short-term lease expense included in the consolidated statements of income was $40.4 million, $35.8 million, and $28.0 million for the years ended December 31, 2023, 2022, and 2021, respectively. Right-of-use assets obtained in exchange for new operating lease liabilities for the years ended December 31, 2023, 2022, and 2021 was $38.8 million, $30.9 million with addition of $16.8 million related to ROCA, and $28.6 million, respectively.