Leases

12 Months Ended

Dec. 31, 2024

NOTE 11. Leases

In accordance with ASC 842, “Leases,” (“ASC 842”) which requires lessees to recognize a right-of-use asset (“ROU”) and a lease obligation for all leases, we made an accounting policy election to not recognize an asset and liability for leases with a term of twelve months or less.

As of December 31, 2024, we recorded $234.7 million of ROU assets and $244.1 million of lease liabilities on our consolidated balance sheet. As of December 31, 2023, we recorded $213.3 million of ROU assets and $224.8 million of lease liabilities on our consolidated balance sheet. The lease liabilities recognized are measured based upon the present value of minimum future payments. The ROU assets are equal to lease liabilities upon initial recording, adjusted for prepaid and accrued rent balances which are recorded in the Consolidated Balance Sheets.

We currently do not have any variable lease payments that depend on an index or a rate (such as the Consumer Price Index or a market interest rate). Some leases have options to extend or terminate the agreement, which management assesses in determining the estimated lease term. If any of the options to extend a lease are exercised, this change will be reflected as a remeasurement of the ROU asset and lease liability accordingly. As of December 31, 2024, the ROU asset and lease liabilities do not reflect any options to extend or terminate a lease as management is not reasonably certain it will exercise any of these options. Also, current leases do not contain any restrictions or covenants imposed by the leases or residual value guarantees.

As of December 31, 2024, we signed new property lease contracts which had not commenced. Based on the present value of the lease payments, the estimated ROU assets and lease liabilities related to these contracts will total approximately $2.8 million.

Discount rates are not specified on the individual lease contracts at the commencement date. To determine the present value of the lease payments, we used our incremental borrowing rate which was determined based on our credit standing and factoring in the current 12-month SOFR rate published at the time of the lease commencement. This incremental borrowing rate represents the rate of interest that we would have to pay to borrow on a collateralized basis over a similar term and amounts equal to the lease payments in a similar economic environment.

The following table summarizes the lease costs (in thousands), which are included in transportation costs and general and administrative costs in the accompanying Consolidated Statement of Income:


	Years Ended December 31,
	2024			2023			2022

Amortization of finance right-of-use assets	$	1,701		$	2,650		$	2,075
Interest on finance lease liabilities		70			194			13
Finance lease cost		1,771			2,844			2,088

Operating lease cost		60,821			48,868			21,232
Short-term lease cost		1,471			300			379
Sublease income		(1,283	)		(1,051	)		(251	)
Total lease cost	$	62,780		$	50,961		$	23,448

The following table represents the maturity of operating and finance lease liabilities (in thousands):


	December 31, 2024
	Operating Leases		Finance Leases		Total
Year 1	$	58,769	$	689	$	59,458
Year 2		55,418		303		55,721
Year 3		47,061		32		47,093
Year 4		39,991		-		39,991
Year 5		35,804		-		35,804
Thereafter		50,132		-		50,132
Total		287,175		1,024		288,199
Imputed interest		44,019		31		44,050
Present value of lease payments		243,156		993		244,149
Less: current lease liabilities		45,492		663		46,155
Long-term lease liabilities	$	197,664	$	330	$	197,994


	December 31, 2023
	Operating Leases		Finance Leases		Total
Year 1	$	55,516	$	1,619	$	57,135
Year 2		49,997		558		50,555
Year 3		41,650		303		41,953
Year 4		33,067		32		33,099
Year 5		26,363		-		26,363
Thereafter		54,863		-		54,863
Total		261,456		2,512		263,968
Imputed interest		39,067		68		39,135
Present value of lease payments		222,389		2,444		224,833
Less: current lease liabilities		44,690		1,579		46,269
Long-term lease liabilities	$	177,699	$	865	$	178,564

The following table presents supplemental cash flow and noncash information related to leases:


	Years Ended December 31,
	2024			2023			2022
Operating cash flows from operating leases	$	44,163		$	36,073		$	19,135
Financing cash flows from finance leases		1,693			2,708			2,093
Operating cash flows from finance leases		70			194			13
Cash paid for lease liabilities	$	45,926		$	38,975		$	21,241

Right-of-use assets obtained in exchange for new	$	(240	)	$	(3,978	)	$	(2,017	)
financing lease liabilities (net of disposals)
Rights-of-use assets obtained in exchange for new	$	70,525		$	133,358		$	77,178
operating lease liabilities (net of disposals)

The weighted average remaining lease term and discount rates as of December 31, are as follows (in thousands):


	December 31, 2024	December 31, 2023
Weighted average remaining lease term — finance leases	2.17 years	2.14 years
Weighted average remaining lease term — operating leases	5.38 years	5.66 years

Weighted average discount rate — finance leases	3.83%	4.29%
Weighted average discount rate — operating leases	5.86%	5.47%