Page 145 - Martin Marietta - 2024 Proxy Statement

NOTES TO FINANCIAL STATEMENTS (Continued)

The components of lease cost are as follows:
years ended December 31
(in millions) 2023 2022 2021
Operating lease cost $ 76.5 $ 73.1 $ 72.9
Finance lease cost:
Amortization of right‐of‐use assets 21.2 18.3 14.3
Interest on lease liabilities 4.8 4.4 3.5
Variable lease cost 18.5 16.5 17.9
Short‐term lease cost 46.2 45.2 32.3
Total lease cost $ 167.2 $ 157.5 $ 140.9

The Company has royalty agreements that are prescriptively excluded from the scope of ASC 842 and generally require royalty
payments based on tons produced, tons sold or total sales dollars and also contain minimum payments. Royalty expense was $86.2
million, $78.2 million and $67.1 million for the years ended December 31, 2023, 2022 and 2021, respectively.

The balance sheet classifications of operating and finance leases are as follows:

December 31
(in millions) 2023 2022
Operating leases:
Operating lease right‐of‐use assets $ 371.6 $ 383.5

Current operating lease liabilities $ 53.3 $ 52.1
Noncurrent operating lease liabilities 326.7 335.9
Total operating lease liabilities $ 380.0 $ 388.0

Finance leases:
Property, plant and equipment $ 253.5 $ 236.9
Accumulated depreciation (58.8) (39.4)
Property, plant and equipment, net $ 194.7 $ 197.5

Other current liabilities $ 20.1 $ 17.8
Other noncurrent liabilities 179.5 182.1
Total finance lease liabilities $ 199.6 $ 199.9

The incremental borrowing rate ranged from 0.0% to 6.0% for the years ended December 31, 2023 and 2022. Weighted‐average
remaining lease terms and discount rates are as follows:
December 31 2023 2022
Weighted‐average remaining lease terms (years):
Operating leases 11.7 12.2
Finance leases 18.3 19.1
Weighted‐average discount rates:
Operating leases 4.3% 4.0%
Finance leases 2.6% 2.3%

23 Annual Report ♦ Page 43