Leases

12 Months Ended

Dec. 31, 2023

7. Leases

The Company’s operating leases are primarily comprised of real estate, railcar, storage tank, warehouse, auto, trailer and manufacturing/office equipment leases. Real estate and railcars comprise approximately 52 percent and 33 percent, respectively, of the Company’s consolidated right of use (ROU) asset balance. Except for real estate, typical lease terms range from one to ten years. Real estate lease terms typically range from one to fifty years. The Company’s four principal real estate leases consist of the office lease for the corporate headquarters in Northbrook, Illinois and land leases in the Philippines, Singapore and Lake Providence, Louisiana. As of December 31, 2023, the Company had railcars leases valued at approximately $292,000, that had not commenced. These leases will commence during the first quarter of 2024 with lease term of seven years.

As most of the Company’s leases do not provide an implicit borrowing rate, the Company uses its incremental borrowing rate (IBR) based on the information available at the commencement date in determining the present value of lease payments. IBRs were specifically determined for the United States, Philippines, Singapore, Brazil and China, typically for five-year increments. The U.S. IBR was used for all other countries as the leases in these countries are not material. The total value of leases that reside in the five countries identified above represents approximately 98 percent of the Company’s consolidated ROU asset balance. Lease cost is recognized in both the Cost of Sales and Operating Expenses sections of the Consolidated Statements of Income.


(In thousands)	Year ended December 31, 2023		Year ended December 31, 2022

Lease Cost
Operating lease cost	$	17,820	$	16,042
Short-term lease cost		10,786		7,029
Variable lease cost		2,354		1,206
Total lease cost	$	30,960	$	24,277
Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flow from operating leases	$	17,838	$	15,963
Right-of-use assets obtained in exchange for new operating lease liabilities		12,134		7,588

The following table outlines maturities of lease liabilities as of December 31, 2023:


(In thousands)
Undiscounted Cash Flows:
2024	$	16,105
2025		11,988
2026		9,201
2027		7,002
2028		6,063
Subsequent to 2028		34,555
Total Undiscounted Cash Flows	$	84,914
Less: Imputed interest		(13,155	)
Present value	$	71,759
Current operating lease liabilities (1)		13,733
Non-current operating lease liabilities		58,026
Total lease liabilities	$	71,759

(1)

This item is included in Accrued liabilities line on the Company’s Consolidated Balance Sheet.


Weighted-average remaining lease term-operating leases		9 Years
Weighted-average discount rate-operating leases		3.8%