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Leases (Notes) | 9 Months Ended
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Sep. 30, 2024
Leases [Abstract] |
Finance Leases | LEASES As Lessee We lease real estate and equipment under operating and finance leases. Our real estate operating leases include operating centers, distribution warehouses, offices, and drop yards. Our non-real estate operating and finance leases include transportation, office, yard, warehouse, and other equipment, in addition to truck washes. Most leases include an option to extend the lease, and a small number include an option to terminate the lease early, which may include a termination payment. In conjunction with our acquisition of M&M, the Company entered into nine related party leases. The leases are for the use of shop, warehouse, office, and drop yard locations throughout the country. The leases run through 2026, and the related lease payments are not material. Additional information related to our leases is as follows:
|  | Nine Months Ended September 30,
(in millions) |  | 2024 |  | 2023
Cash paid for amounts included in the measurement of lease liabilities |  |  |  |
Operating cash flows for operating leases |  | $ | 29.4 |  |  | $ | 27.0 |
Operating cash flows for finance leases |  | 0.4 |  |  | 0.3 |
Financing cash flows for finance leases |  | 3.4 |  |  | 2.8 |
Right-of-use assets obtained in exchange for new lease liabilities |  |  |  |
Operating leases |  | $ | 19.2 |  |  | $ | 38.6 |
Finance leases |  | 0.1 |  |  | 5.7 |
As of September 30, 2024, we had two signed leases that had not yet commenced totaling $0.2 million. The leases will commence in October 2024 and have a lease term of one to three years. As Lessor We finance various types of transportation-related equipment for independent third parties under lease contracts, which are generally for one to three years and are accounted for as sales-type leases with fully guaranteed residual values. Our leases contain an option for the lessee to return, extend, or purchase the equipment at the end of the lease term for the guaranteed contract residual amount. This contract residual amount is estimated to approximate the fair value of the equipment. Lease payments primarily include base rentals and guaranteed residual values. As of September 30, 2024 and December 31, 2023, investments in lease receivables were as follows:
(in millions) |  | September 30, 2024 |  | December 31, 2023
Future minimum payments to be received on leases |  | $ | 177.6 |  |  | $ | 161.8 |
Guaranteed residual lease values |  | 101.1 |  |  | 103.9 |
Total minimum lease payments to be received |  | 278.7 |  |  | 265.7 |
Unearned income |  | (47.9) |  |  | (42.2) |
Net investment in leases |  | $ | 230.8 |  |  | $ | 223.5 |
Prior to entering a lease contract, we assess the credit quality of the potential lessee using credit checks and other relevant factors, ensuring that the inherent credit risk is consistent with our existing lease portfolio. Given our leases have fully guaranteed residual values and we can take possession of the transportation-related equipment in the event of default, we do not categorize net investment in leases by different credit quality indicators upon origination. We monitor our lease portfolio weekly by tracking amounts past due, days past due, and outstanding maintenance account balances, including performing subsequent credit checks as needed. Our net investment in leases with any portion past due as of September 30, 2024 was $70.3 million, which includes both current and future lease payments. Lease payments on our lease receivables are generally due on a weekly basis and are classified as past due when the weekly payment is not received by its due date. As of September 30, 2024, our lease payments past due were $3.0 million. The table below provides additional information on our sales-type leases. Revenue and cost of goods sold are recorded in operating revenues and operating supplies and expenses—net in the consolidated statements of comprehensive income, respectively.
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(in millions) |  | 2024 |  | 2023 |  | 2024 |  | 2023
Revenue |  | $ | 70.2 |  |  | $ | 50.7 |  |  | $ | 188.2 |  |  | $ | 161.3 |
Cost of goods sold |  | (63.5) |  |  | (43.0) |  |  | (168.5) |  |  | (136.4) |
Operating profit |  | $ | 6.7 |  |  | $ | 7.7 |  |  | $ | 19.7 |  |  | $ | 24.9 |
Interest income on lease receivable |  | $ | 8.1 |  |  | $ | 9.0 |  |  | $ | 23.7 |  |  | $ | 27.7 |
Operating Leases | LEASES As Lessee We lease real estate and equipment under operating and finance leases. Our real estate operating leases include operating centers, distribution warehouses, offices, and drop yards. Our non-real estate operating and finance leases include transportation, office, yard, warehouse, and other equipment, in addition to truck washes. Most leases include an option to extend the lease, and a small number include an option to terminate the lease early, which may include a termination payment. In conjunction with our acquisition of M&M, the Company entered into nine related party leases. The leases are for the use of shop, warehouse, office, and drop yard locations throughout the country. The leases run through 2026, and the related lease payments are not material. Additional information related to our leases is as follows:
|  | Nine Months Ended September 30,
(in millions) |  | 2024 |  | 2023
Cash paid for amounts included in the measurement of lease liabilities |  |  |  |
Operating cash flows for operating leases |  | $ | 29.4 |  |  | $ | 27.0 |
Operating cash flows for finance leases |  | 0.4 |  |  | 0.3 |
Financing cash flows for finance leases |  | 3.4 |  |  | 2.8 |
Right-of-use assets obtained in exchange for new lease liabilities |  |  |  |
Operating leases |  | $ | 19.2 |  |  | $ | 38.6 |
Finance leases |  | 0.1 |  |  | 5.7 |
As of September 30, 2024, we had two signed leases that had not yet commenced totaling $0.2 million. The leases will commence in October 2024 and have a lease term of one to three years. As Lessor We finance various types of transportation-related equipment for independent third parties under lease contracts, which are generally for one to three years and are accounted for as sales-type leases with fully guaranteed residual values. Our leases contain an option for the lessee to return, extend, or purchase the equipment at the end of the lease term for the guaranteed contract residual amount. This contract residual amount is estimated to approximate the fair value of the equipment. Lease payments primarily include base rentals and guaranteed residual values. As of September 30, 2024 and December 31, 2023, investments in lease receivables were as follows:
(in millions) |  | September 30, 2024 |  | December 31, 2023
Future minimum payments to be received on leases |  | $ | 177.6 |  |  | $ | 161.8 |
Guaranteed residual lease values |  | 101.1 |  |  | 103.9 |
Total minimum lease payments to be received |  | 278.7 |  |  | 265.7 |
Unearned income |  | (47.9) |  |  | (42.2) |
Net investment in leases |  | $ | 230.8 |  |  | $ | 223.5 |
Prior to entering a lease contract, we assess the credit quality of the potential lessee using credit checks and other relevant factors, ensuring that the inherent credit risk is consistent with our existing lease portfolio. Given our leases have fully guaranteed residual values and we can take possession of the transportation-related equipment in the event of default, we do not categorize net investment in leases by different credit quality indicators upon origination. We monitor our lease portfolio weekly by tracking amounts past due, days past due, and outstanding maintenance account balances, including performing subsequent credit checks as needed. Our net investment in leases with any portion past due as of September 30, 2024 was $70.3 million, which includes both current and future lease payments. Lease payments on our lease receivables are generally due on a weekly basis and are classified as past due when the weekly payment is not received by its due date. As of September 30, 2024, our lease payments past due were $3.0 million. The table below provides additional information on our sales-type leases. Revenue and cost of goods sold are recorded in operating revenues and operating supplies and expenses—net in the consolidated statements of comprehensive income, respectively.
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(in millions) |  | 2024 |  | 2023 |  | 2024 |  | 2023
Revenue |  | $ | 70.2 |  |  | $ | 50.7 |  |  | $ | 188.2 |  |  | $ | 161.3 |
Cost of goods sold |  | (63.5) |  |  | (43.0) |  |  | (168.5) |  |  | (136.4) |
Operating profit |  | $ | 6.7 |  |  | $ | 7.7 |  |  | $ | 19.7 |  |  | $ | 24.9 |
Interest income on lease receivable |  | $ | 8.1 |  |  | $ | 9.0 |  |  | $ | 23.7 |  |  | $ | 27.7 |
Sales-type Leases | LEASES As Lessee We lease real estate and equipment under operating and finance leases. Our real estate operating leases include operating centers, distribution warehouses, offices, and drop yards. Our non-real estate operating and finance leases include transportation, office, yard, warehouse, and other equipment, in addition to truck washes. Most leases include an option to extend the lease, and a small number include an option to terminate the lease early, which may include a termination payment. In conjunction with our acquisition of M&M, the Company entered into nine related party leases. The leases are for the use of shop, warehouse, office, and drop yard locations throughout the country. The leases run through 2026, and the related lease payments are not material. Additional information related to our leases is as follows:
|  | Nine Months Ended September 30,
(in millions) |  | 2024 |  | 2023
Cash paid for amounts included in the measurement of lease liabilities |  |  |  |
Operating cash flows for operating leases |  | $ | 29.4 |  |  | $ | 27.0 |
Operating cash flows for finance leases |  | 0.4 |  |  | 0.3 |
Financing cash flows for finance leases |  | 3.4 |  |  | 2.8 |
Right-of-use assets obtained in exchange for new lease liabilities |  |  |  |
Operating leases |  | $ | 19.2 |  |  | $ | 38.6 |
Finance leases |  | 0.1 |  |  | 5.7 |
As of September 30, 2024, we had two signed leases that had not yet commenced totaling $0.2 million. The leases will commence in October 2024 and have a lease term of one to three years. As Lessor We finance various types of transportation-related equipment for independent third parties under lease contracts, which are generally for one to three years and are accounted for as sales-type leases with fully guaranteed residual values. Our leases contain an option for the lessee to return, extend, or purchase the equipment at the end of the lease term for the guaranteed contract residual amount. This contract residual amount is estimated to approximate the fair value of the equipment. Lease payments primarily include base rentals and guaranteed residual values. As of September 30, 2024 and December 31, 2023, investments in lease receivables were as follows:
(in millions) |  | September 30, 2024 |  | December 31, 2023
Future minimum payments to be received on leases |  | $ | 177.6 |  |  | $ | 161.8 |
Guaranteed residual lease values |  | 101.1 |  |  | 103.9 |
Total minimum lease payments to be received |  | 278.7 |  |  | 265.7 |
Unearned income |  | (47.9) |  |  | (42.2) |
Net investment in leases |  | $ | 230.8 |  |  | $ | 223.5 |
Prior to entering a lease contract, we assess the credit quality of the potential lessee using credit checks and other relevant factors, ensuring that the inherent credit risk is consistent with our existing lease portfolio. Given our leases have fully guaranteed residual values and we can take possession of the transportation-related equipment in the event of default, we do not categorize net investment in leases by different credit quality indicators upon origination. We monitor our lease portfolio weekly by tracking amounts past due, days past due, and outstanding maintenance account balances, including performing subsequent credit checks as needed. Our net investment in leases with any portion past due as of September 30, 2024 was $70.3 million, which includes both current and future lease payments. Lease payments on our lease receivables are generally due on a weekly basis and are classified as past due when the weekly payment is not received by its due date. As of September 30, 2024, our lease payments past due were $3.0 million. The table below provides additional information on our sales-type leases. Revenue and cost of goods sold are recorded in operating revenues and operating supplies and expenses—net in the consolidated statements of comprehensive income, respectively.
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(in millions) |  | 2024 |  | 2023 |  | 2024 |  | 2023
Revenue |  | $ | 70.2 |  |  | $ | 50.7 |  |  | $ | 188.2 |  |  | $ | 161.3 |
Cost of goods sold |  | (63.5) |  |  | (43.0) |  |  | (168.5) |  |  | (136.4) |
Operating profit |  | $ | 6.7 |  |  | $ | 7.7 |  |  | $ | 19.7 |  |  | $ | 24.9 |
Interest income on lease receivable |  | $ | 8.1 |  |  | $ | 9.0 |  |  | $ | 23.7 |  |  | $ | 27.7 |

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