Leases

12 Months Ended

Dec. 31, 2023

Arrangements that explicitly or implicitly relate to property, plant and equipment are assessed at inception to determine if the arrangement is or contains a lease. Generally, we enter into operating leases as the lessee and recognize right-of-use assets and lease liabilities based on the present value of future lease payments over the lease term.

We lease certain vehicles, equipment, manufacturing facilities, and non-manufacturing facilities. We have leases with both lease components and non-lease components, such as common area maintenance, utilities, or other repairs and maintenance. For all asset classes, we applied the practical expedient to account for each separate lease component and its associated non-lease component(s) as a single lease component.

We identify variable lease payments, such as maintenance payments based on actual activities performed or costs incurred, at lease commencement by assessing the nature of the payment provisions, including whether the payments are subject to a minimum.

Certain leases include options to renew for an additional term or company-controlled options to terminate. We generally determine it is not reasonably certain to assume the exercise of renewal options because there is no economic incentive to renew. As termination options often include penalties, we generally determine it is reasonably certain that termination options will not be exercised because there is an economic incentive not to terminate. Therefore, these options generally do not impact the lease term or the determination or classification of the right-of-use asset and lease liability.

We do not enter arrangements where restrictions or covenants are imposed by the lessor that, for example, relate to incurring additional financial obligations. Furthermore, we also have not entered into any significant sublease arrangements.

We use our collateralized incremental borrowing rate based on the information available at commencement date to determine the present value of future payments and the appropriate lease classification. The rate implicit in the lease is generally unknown, as we generally operate in the capacity of the lessee.

Our Consolidated and Combined Balance Sheets include the following related to leases:


(in millions) December 31,	Classification	2023		2022
Assets
Operating right-of-use assets	Other assets	$	47.8	$	34.0
Liabilities
Current lease liabilities	Accrued liabilities	$	7.2	$	7.4
Long-term lease liabilities	Other liabilities	42.6		29.0
Total lease liabilities		$	49.8	$	36.4

The components of lease cost were as follows:


(in millions) December 31,	2023		2022		2021
Operating lease cost	$	11.0	$	10.9	$	12.2
Variable lease cost	1.8		2.3		1.6
Total lease cost	$	12.8	$	13.2	$	13.8

The weighted average remaining lease terms and discount rates for our operating leases were as follows:


December 31,	2023		2022
Weighted-average remaining lease term (in years) - operating leases	16.3		17.9
Weighted-average discount rate - operating leases	5.0	%	4.5	%

Supplemental cash flow information related to our operating leases were as follows:


(in millions) December 31,	2023		2022		2021
Cash paid for amounts included in measurement of operating lease liabilities - operating cash flows	$	8.2	$	9.2	$	9.8
Right-of-use assets obtained in exchange for new operating lease liabilities	$	16.5	$	13.4	$	1.5

Future minimum operating lease payments are as follows:


(in millions)	December 31, 2023
2024	$	9.4
2025	7.8
2026	5.9
2027	4.8
2028	4.5
Thereafter	47.2
Total future minimum operating lease payments	$	79.6
Imputed interest	29.8
Present value of lease liabilities reported	$	49.8