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Operating Leases
12 Months Ended
Dec. 31, 2024
Leases [Abstract]  
Operating Leases

Note 13. OPERATING LEASES

Operating Leases of Sites as Lessee

We lease 434 sites from third parties under certain non-cancelable operating leases that expire from time to time through 2044. The weighted-average remaining lease term was 3.9 years as of December 31, 2024.

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

 

 

 

Year Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

Cost of sales

 

$

20,651

 

 

$

22,338

 

 

$

23,457

 

Operating expenses

 

 

17,440

 

 

 

15,460

 

 

 

15,254

 

General and administrative expenses

 

 

1,179

 

 

 

995

 

 

 

931

 

Total

 

$

39,270

 

 

$

38,793

 

 

$

39,642

 

 

Variable lease payments based on inflation or fuel volume included in the table above totaled $4.6 million, $4.6 million and $4.4 million for 2024, 2023 and 2022, respectively. Short-term lease payments included in the table above that are excluded from the lease liability amounted to $0.3 million, $0.2 million and $0.2 million for 2024, 2023 and 2022, respectively. Cash paid for amounts included in the measurement of lease liabilities under operating leases totaled $34.4 million, $34.0 million and $35.0 million for 2024, 2023 and 2022, respectively.

As of December 31, 2024, 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, 2024 and 2023 was 5.8%.

 

 

Third Parties

 

 

Related Parties

 

 

Total

 

2025

 

$

26,059

 

 

$

10,163

 

 

$

36,222

 

2026

 

 

23,060

 

 

 

10,254

 

 

 

33,314

 

2027

 

 

18,853

 

 

 

8,810

 

 

 

27,663

 

2028

 

 

14,513

 

 

 

8,237

 

 

 

22,750

 

2029

 

 

11,902

 

 

 

7,327

 

 

 

19,229

 

Thereafter

 

 

27,335

 

 

 

1,838

 

 

 

29,173

 

Total future payments

 

$

121,722

 

 

$

46,629

 

 

 

168,351

 

Less impact of discounting

 

 

 

 

 

 

 

 

26,990

 

 

 

 

 

 

 

 

 

 

141,361

 

Current portion

 

 

 

 

 

 

 

 

35,065

 

Long-term portion

 

 

 

 

 

 

 

$

106,296

 

 

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 152 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 $31.3 million, $35.3 million and $35.4 million for 2024, 2023 and 2022, respectively.

Operating Leases of Sites as Lessor

Motor fuel stations are leased to tenants under operating leases with various expiration dates ranging through 2041. 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, 2024 were as follows (in thousands):

 

2025

 

$

35,082

 

2026

 

 

26,004

 

2027

 

 

15,428

 

2028

 

 

9,066

 

2029

 

 

7,294

 

Thereafter

 

 

17,160

 

Total future minimum lease payments

 

$

110,034

 

 

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 $2.6 million and $5.0 million at December 31, 2024 and 2023, respectively.