RENTALS AND LEASES

12 Months Ended

Dec. 31, 2022

RENTALS AND LEASES

RENTAL AND LEASES

14. RENTALS AND LEASES

Lessee

The Company leases sales and administrative office facilities, distribution centers, research and manufacturing facilities, as well as vehicles and other equipment under operating leases. Certain of the Company’s lease arrangements are finance leases, which are immaterial individually and in the aggregate.

The Company’s operating lease cost was as follows:

(millions)	2022		2021		2020
Operating lease cost*		$196.9		$179.4		$183.8

*Includes immaterial short-term and variable lease costs

Future maturity of operating lease liabilities as of December 31, 2022 were as follows:

(millions)
2023	$124
2024	98
2025	75
2026	53
2027	32
Thereafter	121
Total lease payments	503
Less: imputed interest	57
Present value of lease liabilities	$446

The Company’s operating leases term and discount rate were as follows:

	December 31		December 31		December 31
	2022		2021		2020
Weighted-average remaining lease terms (years)		6.71		5.99		5.52
Weighted-average discount rate		2.98%		3.07%		3.72%

The Company’s other lease information was as follows:

	December 31		December 31		December 31
(millions)	2022		2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases		$157.3		$157.0		$164.2
Leased assets obtained in exchange for new operating lease liabilities		202.7		116.8		60.4

Lessor

The Company leases warewashing and water treatment equipment to customers under operating leases.

Gross assets under operating leases recorded in Property, plant and equipment, net is $1,288.3 million and $1,223.3 million, and related accumulated depreciation is $811.2 million and $767.3 million, as of December 31, 2022 and 2021, respectively.

The Company’s operating lease revenue was as follows:

(millions)	2022		2021		2020
Operating lease revenue*		$466.7		$412.5		$356.3

*Includes immaterial variable lease revenue

Future revenue from operating leases for existing contracts as of December 31, 2022 were as follows:

(millions)
2023	$370
2024	269
2025	207
2026	140
2027	71
Thereafter	41
Total lease revenue	$1,098

The Company mitigates the risk of residual value subsequent to the lease term by redeploying assets. As such, the Company expects to receive revenue from the operating lease assets through the remaining useful life and therefore subsequent to the initial contract termination date.