RENTALS AND LEASES

12 Months Ended

Dec. 31, 2023

RENTALS AND LEASES

RENTAL AND LEASES

13. 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)	2023		2022		2021
Operating lease cost*		$215.4		$196.9		$179.4

*Includes immaterial short-term and variable lease costs

Future maturity of operating lease liabilities as of December 31, 2023 were as follows:

(millions)
2024	$147
2025	128
2026	101
2027	69
2028	39
Thereafter	148
Total lease payments	632
Less: imputed interest	80
Present value of lease liabilities	$552

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

	December 31			December 31			December 31
	2023			2022			2021
Weighted-average remaining lease terms (years)		6.44			6.71			5.99
Weighted-average discount rate		4.02	%		2.98	%		3.07	%

The Company’s other lease information was as follows:

	December 31		December 31		December 31
(millions)	2023		2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases		$170.6		$157.3		$157.0
Leased assets obtained in exchange for new operating lease liabilities		251.5		202.7		116.8

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 $1,397.5 million and $1,288.3 million, and related accumulated depreciation is $878.9 million and $811.2 million, as of December 31, 2023 and 2022, respectively.

The Company’s operating lease revenue was as follows:

(millions)	2023		2022		2021
Operating lease revenue*		$511.8		$466.7		$412.5

*Includes immaterial variable lease revenue

Future revenue from operating leases for existing contracts as of December 31, 2023 were as follows:

(millions)
2024	$424
2025	304
2026	243
2027	168
2028	84
Thereafter	49
Total lease revenue	$1,272

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.