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Operating Leases
12 Months Ended
Dec. 31, 2022
Leases [Abstract]  
Operating Leases

Note 13. OPERATING LEASES

Operating Leases of Sites as Lessee

We lease 451 sites from third parties under certain non-cancelable operating leases that expire from time to time through 2041. The weighted-average remaining lease term was 5.0 years as of December 31, 2022.

Lease expense was classified in the consolidated statements of income as follows (in thousands):

 

 

 

Year Ended December 31,

 

 

 

2022

 

 

2021

 

 

2020

 

Cost of sales

 

$

23,457

 

 

$

23,765

 

 

$

25,214

 

Operating expenses

 

 

15,254

 

 

 

13,531

 

 

 

9,067

 

General and administrative expenses

 

 

931

 

 

 

1,331

 

 

 

1,081

 

Total

 

$

39,642

 

 

$

38,627

 

 

$

35,362

 

 

Variable lease payments based on inflation or fuel volume included in the table above totaled $4.4 million, $4.2 million and $3.8 million for 2022, 2021 and 2020, respectively. Short-term lease payments included in the table above that are excluded from the lease liability amounted to $0.2 million, $0.1 million and $0.8 million for 2022, 2021 and 2020, respectively. Cash paid for amounts included in the measurement of lease liabilities under operating leases totaled $35.0 million, $34.3 million and $30.8 million for 2022, 2021 and 2020, respectively.

As of December 31, 2022, future minimum rental payments under operating leases, excluding variable lease payments or short-term payments, were as follows (in thousands). The weighted-average discount rate as of December 31, 2022 and 2021 was 6.0% and 6.2%, respectively.

 

2023

 

 

36,548

 

2024

 

 

33,686

 

2025

 

 

31,559

 

2026

 

 

28,537

 

2027

 

 

22,780

 

Thereafter

 

 

78,985

 

Total future payments

 

 

232,095

 

Less impact of discounting

 

 

61,530

 

 

 

 

170,565

 

Current portion

 

 

35,345

 

Long-term portion

 

$

135,220

 

 

Most lease agreements include provisions for renewals. We generally do not include renewal options in our lease term for purposes of measuring our lease liabilities and right-of-use assets unless the sublease to our customer extends beyond the term of the head lease.

Of our leased sites, we operate 123 of them as company operated sites. Substantially all the remaining leased sites are subleased to lessee dealers or commission agents under leases with terms generally ranging from one to ten years and which may include renewal options. Sublease rental income amounted to $35.4 million, $34.5 million and $34.8 million for 2022, 2021 and 2020, respectively.

Operating Leases of Sites as Lessor

Motor fuel stations are leased to tenants under operating leases with various expiration dates ranging through 2037. Most lease agreements include provisions for renewals. We generally do not include renewal options in our lease term. Future minimum rental payments under non-cancelable operating leases with third parties as of December 31, 2022 were as follows (in thousands):

 

2023

 

 

47,675

 

2024

 

 

41,697

 

2025

 

 

32,815

 

2026

 

 

22,578

 

2027

 

 

14,534

 

Thereafter

 

 

22,865

 

Total future minimum lease payments

 

$

182,164

 

 

The future minimum rental payments presented above do not include contingent rent based on future inflation, future revenues or volumes of the lessee, or non-lease components for amounts that may be received as tenant reimbursements for certain operating costs.

 

Deferred rent income from straight-line rent relates to the cumulative amount by which straight-line rental income recorded to date exceeds cash rents billed to date under the lease agreement and totaled $5.1 million at both December 31, 2022 and 2021.