Leases

12 Months Ended

Dec. 31, 2023

As of December 31, 2023, we had operating leases primarily related to land, buildings, and machinery and equipment, with lease terms through 2047. Certain of our operating 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. We had no material finance leases as of December 31, 2023. We had no finance leases as of December 31, 2022.

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 operating 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 operating 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 operating 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)	2023		2022		2021
Operating lease cost	$	20.3	$	15.5	$	12.7
Short-term lease cost	6.1		1.3		1.3
Variable lease cost	5.5		6.8		4.8
Total lease cost	$	31.9	$	23.6	$	18.8

Supplemental information related to leases was as follows:


($ in millions)	2023		2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	19.1	$	13.3	$	12.1

Right-of-use assets obtained in exchange for new operating lease liabilities	$	10.7	$	47.6	$	13.3

As of December 31, 2023 and December 31, 2022, the weighted average remaining lease term for operating leases was 9.8 years and 9.3 years and the weighted average discount rate was 3.55% and 3.25%, respectively.

Maturities of lease liabilities as of December 31, 2023 were as follows:


($ in millions)	Operating
Year	Leases
2024	$	20.9
2025	18.7
2026	15.7
2027	11.2
2028	9.5
Thereafter	42.1
	118.1
Less: imputed lease interest	(15.9)
Total lease liabilities	$	102.2

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 operating lease right-of-use assets and operating 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.