Leases

12 Months Ended

Sep. 30, 2024

Leases [Abstract]

Leases

LEASES

Lessee Accounting

We are the lessee under various agreements for real estate, vehicles, aircraft, and other equipment that are accounted for as operating leases. Our finance leases principally relate to the right to use machinery and equipment and are not material.

Amounts associated with operating leases and their presentation on our consolidated balance sheets are as follows:

30 September	2024	2023
Operating lease right-of-use assets	$1,047.7	$974.0
Operating lease liabilities
Payables and accrued liabilities	100.3	94.7
Noncurrent operating lease liabilities	677.9	631.1
Total operating lease liabilities	$778.2	$725.8

30 September	2024		2023
Weighted-average remaining lease term in years(A)	20.0		19.9
Weighted-average discount rate(B)	2.9	%	2.6	%

(A)Calculated on the basis of the remaining lease term and the lease liability balance for each lease as of the reporting date.

(B)Calculated on the basis of the discount rate used to calculate the lease liability for each lease and the remaining balance of the lease payments for each lease as of the reporting date.

The following maturity analysis of our operating lease liabilities as of 30 September 2024 presents the undiscounted cash flows for each of the next five years and thereafter with a reconciliation to the lease liability recognized on our balance sheet:

	Operating Leases
2025	$118.9
2026	91.1
2027	67.0
2028	57.2
2029	48.9
Thereafter	695.9
Total undiscounted lease payments	1,079.0
Imputed interest	(300.8)
Present value of lease liability recognized on balance sheet	$778.2

Operating lease expense was $122.4, $109.9, and $105.3 for fiscal years 2024, 2023, and 2022, respectively. These amounts do not include short-term and variable lease expenses, which were not material. The impacts associated with our operating leases on the consolidated statements of cash flows are reflected within "Other adjustments" within operating activities. This includes the noncash operating lease expense as well as a use of cash of $154.6, $337.8, and $128.0 for payments on amounts included in the measurement of the lease liability for fiscal years 2024, 2023, and 2022, respectively. Payments in fiscal year 2023 included a lump-sum payment of $209 for a land lease associated with the NGHC joint venture. Refer to Note 3, Variable Interest Entities, for additional information.

We recorded noncash right-of-use asset additions of approximately $159, $150, and $252 in fiscal years 2024, 2023, and 2022, respectively.

Lessor Accounting

Certain contracts associated with facilities that are built to provide product to a specific customer have been accounted for as containing embedded leases. Refer to Note 1, Basis of Presentation and Major Accounting Policies, for a description of our accounting policy for arrangements in which we are the lessor.

"Lease receivables, net" relate to sales-type leases on certain on-site assets for which payments are collected over the contract term. The table below details balances associated with our lease receivables:

30 September	2024	2023
Current lease receivables, net(A)	$74.5	$78.0
Noncurrent lease receivables, net	392.1	494.7
Total lease receivables, net	$466.6	$572.7

(A)Presented within "Other receivables and current assets" on our consolidated balance sheets.

The majority of our leases are of high credit quality and were originated prior to fiscal year 2017. As of 30 September 2024 and 2023, the credit quality of lease receivables did not require a material allowance for credit losses.

The table below summarizes lease payments collected in fiscal years 2024, 2023, and 2022:

Fiscal Year Ended 30 September	2024	2023	2022
Payments that reduced the lease receivable balance	$122.1	$79.6	$94.0
Payments recognized as interest income	42.6	49.6	59.1
Total lease payments collected	$164.7	$129.2	$153.1

As of 30 September 2024, minimum lease payments expected to be collected were as follows:

2025	$110.3
2026	100.0
2027	86.5
2028	70.2
2029	67.2
Thereafter	203.0
Total	637.2
Unearned interest income	(170.6)
Lease receivables, net	$466.6

Our contracts generally do not have the option to extend or terminate the lease or provide the customer the right to purchase the asset at the end of the contract term. Instead, renewal of such contracts requires negotiation of mutually agreed terms by both parties. Unless the customer terminates within the required notice period, the contract will go into evergreen. Given the long-term duration of our contracts, there is no assumed residual value for the assets at the end of the lease term.

Leases

LEASES

Lessee Accounting

We are the lessee under various agreements for real estate, vehicles, aircraft, and other equipment that are accounted for as operating leases. Our finance leases principally relate to the right to use machinery and equipment and are not material.

Amounts associated with operating leases and their presentation on our consolidated balance sheets are as follows:

30 September	2024	2023
Operating lease right-of-use assets	$1,047.7	$974.0
Operating lease liabilities
Payables and accrued liabilities	100.3	94.7
Noncurrent operating lease liabilities	677.9	631.1
Total operating lease liabilities	$778.2	$725.8

30 September	2024		2023
Weighted-average remaining lease term in years(A)	20.0		19.9
Weighted-average discount rate(B)	2.9	%	2.6	%

(A)Calculated on the basis of the remaining lease term and the lease liability balance for each lease as of the reporting date.

(B)Calculated on the basis of the discount rate used to calculate the lease liability for each lease and the remaining balance of the lease payments for each lease as of the reporting date.

The following maturity analysis of our operating lease liabilities as of 30 September 2024 presents the undiscounted cash flows for each of the next five years and thereafter with a reconciliation to the lease liability recognized on our balance sheet:

	Operating Leases
2025	$118.9
2026	91.1
2027	67.0
2028	57.2
2029	48.9
Thereafter	695.9
Total undiscounted lease payments	1,079.0
Imputed interest	(300.8)
Present value of lease liability recognized on balance sheet	$778.2

Operating lease expense was $122.4, $109.9, and $105.3 for fiscal years 2024, 2023, and 2022, respectively. These amounts do not include short-term and variable lease expenses, which were not material. The impacts associated with our operating leases on the consolidated statements of cash flows are reflected within "Other adjustments" within operating activities. This includes the noncash operating lease expense as well as a use of cash of $154.6, $337.8, and $128.0 for payments on amounts included in the measurement of the lease liability for fiscal years 2024, 2023, and 2022, respectively. Payments in fiscal year 2023 included a lump-sum payment of $209 for a land lease associated with the NGHC joint venture. Refer to Note 3, Variable Interest Entities, for additional information.

We recorded noncash right-of-use asset additions of approximately $159, $150, and $252 in fiscal years 2024, 2023, and 2022, respectively.

Lessor Accounting

Certain contracts associated with facilities that are built to provide product to a specific customer have been accounted for as containing embedded leases. Refer to Note 1, Basis of Presentation and Major Accounting Policies, for a description of our accounting policy for arrangements in which we are the lessor.

"Lease receivables, net" relate to sales-type leases on certain on-site assets for which payments are collected over the contract term. The table below details balances associated with our lease receivables:

30 September	2024	2023
Current lease receivables, net(A)	$74.5	$78.0
Noncurrent lease receivables, net	392.1	494.7
Total lease receivables, net	$466.6	$572.7

(A)Presented within "Other receivables and current assets" on our consolidated balance sheets.

The majority of our leases are of high credit quality and were originated prior to fiscal year 2017. As of 30 September 2024 and 2023, the credit quality of lease receivables did not require a material allowance for credit losses.

The table below summarizes lease payments collected in fiscal years 2024, 2023, and 2022:

Fiscal Year Ended 30 September	2024	2023	2022
Payments that reduced the lease receivable balance	$122.1	$79.6	$94.0
Payments recognized as interest income	42.6	49.6	59.1
Total lease payments collected	$164.7	$129.2	$153.1

As of 30 September 2024, minimum lease payments expected to be collected were as follows:

2025	$110.3
2026	100.0
2027	86.5
2028	70.2
2029	67.2
Thereafter	203.0
Total	637.2
Unearned interest income	(170.6)
Lease receivables, net	$466.6

Our contracts generally do not have the option to extend or terminate the lease or provide the customer the right to purchase the asset at the end of the contract term. Instead, renewal of such contracts requires negotiation of mutually agreed terms by both parties. Unless the customer terminates within the required notice period, the contract will go into evergreen. Given the long-term duration of our contracts, there is no assumed residual value for the assets at the end of the lease term.