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Note 11 - Equity Method Investment

9 Months Ended

Sep. 30, 2024

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.

During the quarter ended March 31, 2024, we sold revenue equipment to TEL in exchange for the assumption of the related notes payable of $26.2 million and $0.5 million of cash. During the nine months ended September 30, 2024, we entered into revenue equipment operating leases with TEL, which resulted in an operating lease obligation to TEL of $10.7 million as of  September 30, 2024. No other transactions with TEL were material for the nine months ended September 30, 2024 and 2023.

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 2024 net income through September 30, 2024, or $11.8 million.

Our accounts receivable from TEL, accounts payable to TEL, and investment in TEL as of  September 30, 2024 and December 31, 2023 are as follows (in thousands):

Description:	Balance Sheet Line Item:		September 30, 2024				December 31, 2023
Accounts receivable from TEL	Driver advances and other receivables		$	24			$	37
Accounts payable to TEL	Accrued expenses		$	41			$	460
Investment in TEL	Other assets		$	74,444			$	66,327
Operating lease obligations	Current and long-term portion of operating lease obligations		$	10,662			$	4,100

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.

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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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