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Note 11 - Equity Method Investment

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Equity Method Investment [Text Block]

Note 11. Equity Method Investment

We own a 49.0% interest in Transport Enterprise Leasing, LLC ("TEL"), a tractor and trailer equipment leasing company and used equipment reseller. There is no loss limitation on our 49.0% interest in TEL. We have not guaranteed any of TEL's debt and have no obligation to provide funding, services, or assets. There are no current put rights to purchase or sell with any owners. TEL’s majority owners are generally restricted from transferring their interests in TEL, other than to certain permitted transferees, without our consent. There are no third-party liquidity arrangements, guarantees, and/or other commitments that may affect the fair value or risk of our interest in TEL.

Transactions with TEL were not material for the three or six months ended June 30, 2023 and 2022.

We have accounted for our investment in TEL using the equity method of accounting, and thus our financial results include our proportionate share of TEL's 2023 net income through June 30, 2023, or $11.3 million.

Our accounts receivable from TEL, accounts payable to TEL, and investment in TEL as of  June 30, 2023 and December 31, 2022 are as follows (in thousands):

Description:	Balance Sheet Line Item:		June 30, 2023				December 31, 2022
Accounts receivable from TEL	Driver advances and other receivables		$	86			$	9
Accounts payable to TEL	Accrued expenses		$	413			$	763
Investment in TEL	Other assets		$	66,051			$	54,727
Operating lease obligations	Current and long-term portion of operating lease obligations		$	11,099			$	13,825

Our accounts receivable from TEL related to cash disbursements made pursuant to our performance of certain back-office and maintenance functions on TEL’s behalf.

See TEL's summarized financial information below:

(in thousands)		As of June 30,				As of December 31,
		2023				2022
Total Assets		$	599,243			$	480,724
Total Liabilities			473,747				377,548
Total Equity		$	125,496			$	103,177

(in thousands)		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2023				2022				2023				2022
Revenue		$	37,124			$	33,857			$	77,269			$	66,096
Cost of Sales			3,325				5,645				10,330				10,118
Operating Expenses			19,903				11,754				39,296				24,028
Operating Income			13,896				16,458				27,643				31,950
Net Income		$	10,873			$	14,728			$22,319				$	28,386

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- Definition

The entire disclosure for information about equity investment disclosure, including: (a) the name of each investee and percentage of ownership of common stock, (b) accounting policies for investments in common stock, (c) difference between the amount at which the investment is carried and the amount of underlying equity in net assets and the accounting treatment of the difference, (d) the total fair value of each identified investment for which a market value is available, (e) summarized information as to assets, liabilities, and results of operations of the investees (for investments in unconsolidated subsidiaries, common stock of joint ventures, or other investments using the equity method), and (f) material effects of possible conversions, exercises, or contingent issuances of the investee.

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