LEASES

12 Months Ended

Dec. 31, 2023

Leases [Abstract]

LEASES

LEASES

OPERATING LEASES.

As a lessee, the Company leases certain logistics, office, and manufacturing facilities, as well as vehicles and other equipment. Certain of the Company’s leases may include options to extend. Our ROU operating lease assets are recognized within Property, plant, and equipment – net in the Consolidated and Combined Statements of Financial Position. Our operating lease liabilities are recognized within All other current liabilities and All other liabilities in the Consolidated and Combined Statements of Financial Position, as detailed below.

Operating Lease Assets and Liabilities
	As of
	December 31, 2023		December 31, 2022
Operating lease ROU assets	$	356	$	313
Current operating lease liabilities	110		104
Non-current operating lease liabilities	273		243
Total operating lease liabilities	$	383	$	347

Operating Lease Expense
	For the years ended December 31
	2023		2022		2021
Long-term (fixed)	$	121	$	115	$	114
Long-term (variable)	106		98		67
Short-term	2		4		4
Total operating lease expense	$	229	$	217	$	185

Maturity of Lease Liabilities
	2024		2025		2026		2027		2028		Thereafter		Total
Undiscounted lease payments	$	124	$	100	$	79	$	48	$	23	$	52	$	426
Less: imputed interest													43
Total lease liability as of December 31, 2023													$	383

Supplemental Information Related to Operating Leases
	For the years ended December 31
	2023			2022			2021
Operating cash flows used for operating leases	$	130		$	113		$	128
Right-of-use assets obtained in exchange for new lease liabilities	154			98			94
Weighted-average remaining lease term (in years)	4.7			4.4			4.7
Weighted-average discount rate	4.4		%	3.8		%	3.3		%

FINANCE LEASES.

The Company leases equipment manufactured or sold by the Company to customers through sales-type leases. Sales-type leases are included in financing receivables and are recognized within All other current assets and All other assets in the Consolidated and Combined Statements of Financial Position.

Finance lease income was $13 million, $12 million, and $16 million for the years ended December 31, 2023, 2022, and 2021, respectively, and is recognized within Other (income) expense – net in the Consolidated and Combined Statements of Income.

Net Investment in Financing Leases
	As of
	December 31, 2023		December 31, 2022
Total minimum lease payments receivable	$	236	$	248
Less: deferred income	(30)		(30)
Discounted lease receivable	206		218
Estimated unguaranteed residual value of leased assets, net of deferred income	11		12
Investment in financing leases, net of deferred income	$	217	$	230

Contractual Maturities
Due In	2024		2025		2026		2027		2028		Thereafter		Total
Net minimum lease payments receivable	$	80	$	61	$	41	$	25	$	15	$	14	$	236

We expect actual maturities to differ from contractual maturities, primarily as a result of prepayments.

LEASES

LEASES

OPERATING LEASES.

As a lessee, the Company leases certain logistics, office, and manufacturing facilities, as well as vehicles and other equipment. Certain of the Company’s leases may include options to extend. Our ROU operating lease assets are recognized within Property, plant, and equipment – net in the Consolidated and Combined Statements of Financial Position. Our operating lease liabilities are recognized within All other current liabilities and All other liabilities in the Consolidated and Combined Statements of Financial Position, as detailed below.

Operating Lease Assets and Liabilities
	As of
	December 31, 2023		December 31, 2022
Operating lease ROU assets	$	356	$	313
Current operating lease liabilities	110		104
Non-current operating lease liabilities	273		243
Total operating lease liabilities	$	383	$	347

Operating Lease Expense
	For the years ended December 31
	2023		2022		2021
Long-term (fixed)	$	121	$	115	$	114
Long-term (variable)	106		98		67
Short-term	2		4		4
Total operating lease expense	$	229	$	217	$	185

Maturity of Lease Liabilities
	2024		2025		2026		2027		2028		Thereafter		Total
Undiscounted lease payments	$	124	$	100	$	79	$	48	$	23	$	52	$	426
Less: imputed interest													43
Total lease liability as of December 31, 2023													$	383

Supplemental Information Related to Operating Leases
	For the years ended December 31
	2023			2022			2021
Operating cash flows used for operating leases	$	130		$	113		$	128
Right-of-use assets obtained in exchange for new lease liabilities	154			98			94
Weighted-average remaining lease term (in years)	4.7			4.4			4.7
Weighted-average discount rate	4.4		%	3.8		%	3.3		%

FINANCE LEASES.

The Company leases equipment manufactured or sold by the Company to customers through sales-type leases. Sales-type leases are included in financing receivables and are recognized within All other current assets and All other assets in the Consolidated and Combined Statements of Financial Position.

Finance lease income was $13 million, $12 million, and $16 million for the years ended December 31, 2023, 2022, and 2021, respectively, and is recognized within Other (income) expense – net in the Consolidated and Combined Statements of Income.

Net Investment in Financing Leases
	As of
	December 31, 2023		December 31, 2022
Total minimum lease payments receivable	$	236	$	248
Less: deferred income	(30)		(30)
Discounted lease receivable	206		218
Estimated unguaranteed residual value of leased assets, net of deferred income	11		12
Investment in financing leases, net of deferred income	$	217	$	230

Contractual Maturities
Due In	2024		2025		2026		2027		2028		Thereafter		Total
Net minimum lease payments receivable	$	80	$	61	$	41	$	25	$	15	$	14	$	236

We expect actual maturities to differ from contractual maturities, primarily as a result of prepayments.