LEASES

9 Months Ended

Sep. 30, 2023

Note 2: Leases

Our portfolio of nonmineral leases is composed of leases for real estate (including office buildings, aggregates sales yards and terminals, and concrete and asphalt sites) and equipment (including railcars and rail track, barges, and office, plant and mobile equipment). Additionally, we entered into an agreement to lease a terminal in California. We expect to have all permits in place associated with all lease commencement options by early 2024.

Lease right-of-use (ROU) assets and liabilities and the weighted-average lease terms and discount rates are as follows:



		September 30	December 31	September 30
dollars in millions	Classification on the Balance Sheet	2023	2022	2022
Assets ¹
Operating lease ROU assets		$ 644.8	$ 665.4	$ 778.8
Accumulated amortization		(113.4)	(92.8)	(89.6)
Operating leases, net	Operating lease right-of-use assets, net	531.4	572.6	689.2
Finance lease ROU assets		85.8	93.2	111.2
Accumulated depreciation		(22.1)	(14.9)	(12.6)
Finance leases, net	Property, plant & equipment, net	63.7	78.3	98.6
Total lease assets		$ 595.1	$ 650.9	$ 787.8
Liabilities ¹
Current
Operating	Other current liabilities	$ 48.2	$ 48.1	$ 51.9
Finance	Other current liabilities	18.4	22.3	27.7
Noncurrent
Operating	Noncurrent operating lease liabilities	525.4	548.4	643.3
Finance	Other noncurrent liabilities	22.7	34.8	45.9
Total lease liabilities		$ 614.7	$ 653.6	$ 768.8
Lease Term and Discount Rate
Weighted-average remaining lease term (years)
Operating leases		19.4	19.7	20.1
Finance leases		2.5	3.0	3.1
Weighted-average discount rate
Operating leases		4.3%	3.9%	3.7%
Finance leases		2.0%	1.8%	1.6%

¹	Balances at September 30, 2023 and September 30, 2022 include lease assets and liabilities classified as held for sale as detailed in Note 16.

The decreases from September 30, 2022 in total lease assets and liabilities presented above primarily relate to the 2022 sale of concrete operations in New Jersey, New York and Pennsylvania (see Note 16 for additional information). Our lease agreements do not contain material residual value guarantees, restrictive covenants or early termination options.

The components of lease expense are as follows:



	Three Months Ended		Nine Months Ended
	September 30		September 30
in millions	2023	2022	2023	2022
Lease Cost
Finance lease cost
Depreciation of right-of-use assets	$ 3.3	$ 4.2	$ 10.1	$ 12.9
Interest on lease liabilities	0.2	0.2	0.7	0.9
Operating lease cost	19.1	21.7	58.3	65.6
Short-term lease cost ¹	14.8	12.3	38.5	32.8
Variable lease cost	4.9	4.7	15.0	8.9
Sublease income	(0.8)	(0.6)	(2.7)	(2.2)
Total lease cost	$ 41.5	$ 42.5	$ 119.9	$ 118.9


¹	Our short-term lease cost includes the cost of leases with an initial term of one year or less (including those with terms of one month or less).

Cash paid for operating leases was $55.0 million and $60.0 million for the nine months ended September 30, 2023 and 2022, respectively. Cash paid for finance leases (principal and interest) was $17.9 million and $28.0 million for the nine months ended September 30, 2023 and 2022, respectively.