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Note 13 - Equity Method Investment | 12 Months Ended
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Dec. 31, 2024
Notes to Financial Statements |
Equity Method Investment [Text Block] |
13. | EQUITY METHOD INVESTMENT
We own a 49.0% interest in 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, similarly, we are generally restricted from transferring our interests in TEL, other than to certain permitted transferees, without their 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. For the year ended December 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. For the years ended December 31, 2023 and 2022 we sold no tractors and trailers to TEL. We received $1.1 million, $0.9 million, and $0.8 million respectively, for providing various maintenance services, certain back-office functions, and for miscellaneous equipment. We purchased equipment from TEL for $0.6 million, $4.1 million, and none in 2024, 2023, and 2022, respectively. Additionally, we paid $1.8 million, $6.8 million, and $6.1 million to TEL for leases of revenue equipment and maintenance in 2024, 2023, and 2022, respectively. We had operating lease liabilities with TEL of $10.1 million and $4.1 million at December 31, 2024 and 2023, respectively, for revenue equipment leased from TEL. We recorded net reversal of gains of less than $0.1 million for the years ended December 31, 2024, 2023, and 2022, representing 49% of the gains on tractors and trailers sold to TEL less any gains previously deferred and recognized when the equipment was sold to a third-party. Deferred gains totaling $0.2 million at December 31, 2024 and 2023, respectively, are being carried as a reduction in our investment in TEL. 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 net income, which amounted to $14.7 million in 2024, $21.4 million in 2023, and $25.2 million in 2022. We received an equity distribution from TEL for $3.7 million, $9.8 million, and $14.7 million in 2024, 2023, and 2022, respectively, which was distributed to each member based on its respective ownership percentage. Our accounts receivable and payable from TEL and investment in TEL as of December 31, 2024 and 2023, are as follows:
Description: | Balance Sheet Line Item: |  | 2024 |  |  | 2023 |
Accounts receivable from TEL | Driver advances and other receivables |  | $ | - |  |  | $ | 37 |
Accounts payable to TEL | Accrued expenses |  | $ | 275 |  |  | $ | 460 |
Investment in TEL | Other assets |  | $ | 77,405 |  |  | $ | 66,327 |
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. Our accounts payable to TEL related to operating lease payments owed to TEL. Our investment in TEL is comprised of $4.9 million cash investment and our equity in TEL's earnings since our investment, partially offset by dividends received since our investment for minimum tax withholdings as noted above. Additionally, the abovementioned deferred gains on sales of equipment to TEL are carried as a reduction in our investment in TEL. See TEL's summarized financial information below.
(in thousands) |  | As of the years ended December 31, |
|  | 2024 |  |  | 2023 |
Current Assets |  | $ | 84,677 |  |  | $ | 74,154 |
Non-current Assets |  |  | 575,786 |  |  |  | 518,870 |
Current Liabilities |  |  | 131,137 |  |  |  | 119,620 |
Non-current Liabilities |  |  | 378,933 |  |  |  | 347,121 |
Total Equity |  | $ | 150,393 |  |  | $ | 126,283 |
(in thousands) |  | As of the years ended December 31, |
|  | 2024 |  |  | 2023 |  |  | 2022 |
Revenue |  | $ | 150,538 |  |  | $ | 151,207 |  |  | $ | 149,347 |
Cost of Sales |  |  | 11,467 |  |  |  | 14,768 |  |  |  | 28,815 |
Operating Expenses |  |  | 89,575 |  |  |  | 79,596 |  |  |  | 60,861 |
Operating Income |  |  | 49,496 |  |  |  | 56,843 |  |  |  | 59,671 |
Net Income |  | $ | 31,610 |  |  | $ | 43,107 |  |  | $ | 51,907 |

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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. + References No definition available. + Details
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