Leases

12 Months Ended

Dec. 31, 2025

We lease certain buildings and plant and equipment. Our leases have reasonably assured remaining lease terms of up to 11 years. Certain leases include options to renew for up to 15 years. At lease inception, we determine the lease term by assuming the exercise of those renewal options that are reasonably certain. Some leases have variable payments, however, because they are not based on an index or rate, they are not included in the measurement of ROU assets and lease liabilities. Variable payments for real estate leases relate primarily to common area maintenance, insurance, taxes and utilities associated with the properties. Variable payments for equipment leases relate primarily to hours, miles, or other quantifiable usage factors, which are not determinable at the time of lease inception. These variable payments are expensed as incurred. The discount rate applied to our leases in determining the present value of lease payments is our incremental borrowing rate based on the information available at the commencement date. Leases with an initial term of 12 months or less are not recorded in our consolidated balance sheets and we recognize lease expense for these leases on a straight-line basis over the lease term.

Operating lease costs consisted of the following:


	As of December 31,
	2025		2024		2023
	(in millions)
Operating lease costs	$	29	$	23	$	18
Variable lease costs	—		—		1
Short-term lease costs	4		4		4
Total operating lease costs	$	33	$	27	$	23

Lease costs related to the amortization of finance lease assets and interest on finance lease liabilities were not material for the years ended December 31, 2025, 2024 and 2023.

Future lease payments under non-cancellable leases were as follows:


	As of December 31, 2025
	Operating Leases		Finance Leases		Total
	(in millions)
2026	$	28	$	2	$	30
2027	25		2		27
2028	21		2		23
2029	18		2		20
2030	14		2		16
Thereafter	11		8		19
Total undiscounted lease payments	117		18		135
Less: imputed interest	(13)		(4)		(17)
Present value of lease liabilities	$	104	$	14	$	118

As of December 31, 2025, we had no material commitments related to operating leases executed that have not yet commenced.

Lease liabilities and ROU assets included in our consolidated balance sheets were as follows:


		As of December 31,
		2025		2024
		(in millions)
Operating leases	Balance Sheet Classification
Right-of-use assets	Operating lease right-of-use assets	$	98	$	90
Current lease liabilities	Current operating lease liabilities	$	23	$	20
Non-current lease liabilities	Long-term operating lease liabilities	81		73
Total operating lease liabilities		$	104	$	93

Finance leases	Balance Sheet Classification
Right-of-use assets	Other assets	$	13	$	15
Current lease liabilities	Accrued and other current liabilities	$	1	$	1
Non-current lease liabilities	Other liabilities	13		14
Total finance lease liabilities		$	14	$	15

During the years ended December 31, 2025 and 2024, new leases and lease modifications resulted in the recognition of operating ROU assets and corresponding operating lease liabilities totaling $32 million and $53 million, respectively. New leases and lease modifications resulting in the recognition of finance lease ROU assets and corresponding finance lease liabilities were not material during the years ended December 31, 2025 and 2024.

During the years ended December 31, 2025, 2024 and 2023, cash flows from operating activities in the consolidated statements of cash flows reflected $27 million, $21 million and $18 million, respectively, of payments for operating lease liabilities. Payments for finance lease liabilities in the years ended December 31, 2025, 2024 and 2023 were not material.

The weighted average remaining lease term and weighted average discount rates were as follows:


	As of December 31, 2025
	Operating Leases		Finance Leases
Weighted-average remaining lease term (in years)	4.83		9.69
Weighted-average discount rate	4.96	%	5.52	%

Leases