XML 29 R19.htm IDEA: XBRL DOCUMENT

Note M - Leases

6 Months Ended

Jun. 30, 2022

NOTE M: LEASES

The Company currently leases shop, office and parking spaces in various locations in the United States and Mexico. The initial term for the majority of these leases is one year or less, with an option for early cancellation and an option to renew for subsequent one- month periods. These leases can be terminated by either party by providing notice to the other party of the intent to cancel or to not extend. Relatively short lease durations for these properties are intended to provide flexibility to the Company as changing operational needs and shifting opportunities often result in cancellation or non-renewal of these leases by the Company or the lessor.

The initial lease term for certain shop and office locations is for periods ranging from one to five years with early cancellation options. The Company prefers that leases include early cancellation provisions to prevent becoming locked into long-term leases that become operationally unjustified and to allow the flexibility to pursue more cost-effective options for similar properties if they become available. These leases often include the option to extend for additional periods, which may or may not be exercised. Based on historical experience, the Company does not always extend these leases, sometimes exercises the option to cancel leases early and sometimes lessors choose to cancel leases or not extend.

The Company leases trucks to owner-operators under our lease-to-own program. We also lease dock space to a related party at our Laredo, Texas terminal.

Right-of-Use Leases

The Company is party to operating leases which include initial terms ranging from three to five years and which do not include an option for early cancellation. In accordance with the provisions of ASC Topic 842, these leases resulted in the recognition of right-of-use assets and corresponding operating lease liabilities, respectively, valued at $0.7 million as of June 30, 2022. These assets and liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date, using the Company’s incremental borrowing rate as of the respective dates of lease inception, as the rate implicit in each lease is not readily determinable. The right-of-use assets are recorded in other assets, and the lease liability is recorded in accrued expenses and other liabilities and in other long-term liabilities on our condensed consolidated balance sheet. Lease expense is recorded on a straight-line basis over the lease term and is recorded in rent and purchased transportation in our condensed consolidated statements of operations. While these lease agreements may contain provisions to extend after the initial term for an additional five years, the Company is not reasonably certain these extension options will be exercised. Therefore, potential lease payments that might occur under this extension period are not included in amounts recorded in our condensed consolidated balance sheets as of June 30, 2022.

Scheduled amounts and timing of cash flows arising from future right-of-use operating lease payments at June 30, 2022, are:

Maturity of Lease Liabilities	(in thousands)
2022 (remaining)	$	215
2023		340
2024		114
2025 and thereafter		-
Total undiscounted operating lease payments	$	669
Less: Imputed interest		(20	)
Present value of operating lease liabilities	$	649

Balance Sheet Classification
Right-of-use assets (recorded in other non-current assets)	$	649

Current lease liabilities (recorded in other current liabilities)	$	384
Long-term lease liabilities (recorded in other long-term liabilities)		265
Total operating lease liabilities	$	649

Other Information
Weighted-average remaining lease term for operating leases (in years)	1.72
Weighted-average discount rate for operating leases		3.72	%

Cash Flows

No new right-of-use assets were recognized as a non-cash asset addition that resulted from new operating lease liabilities during the three and six months ended June 30, 2022. Cash paid for amounts included in the present value of operating lease liabilities was $0.2 million during the three months ended June 30, 2022 and is included in operating cash flows, within the condensed consolidated statement of cash flows. Cash paid for amounts included in the present value of operating lease liabilities was $0.3 million during the six months ended June 30, 2022 and is included in operating cash flows, within the condensed consolidated statement of cash flows.

Operating Lease Costs

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
	(in thousands)

Long-term	$	153	$	144	$	304	$	286
Short-term		565		533		1,111		1,069
Total	$	718	$	677	$	1,415	$	1,355

Lease Revenue

The Company's operating lease revenue is disclosed in the table below.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
	(in thousands)

Leased truck revenue (recorded in revenue, before fuel surcharge)	$	2,152	$	1,835	$	4,291	$	3,405
Leased building space revenue (recorded in non-operating income)		99		169		327		337
Total lease revenue	$	2,251	$	2,004	$	4,618	$	3,742

The Company leases trucks to owner-operators under operating leases, which generally have a term of up to five years and include options to purchase the truck at the end of the lease. In the event that an independent contractor defaults on their lease, the Company generally leases the truck to another independent contractor.

As of June 30, 2022, the gross carrying value of trucks underlying these leases was $55.9 million and accumulated depreciation was $34.2 million. Depreciation is calculated on a straight-line basis over the estimated useful life of the equipment, down to an estimated salvage value. In most cases, the Company has agreements in place with certain manufacturers whereby salvage values are guaranteed by the manufacturer. In other cases, where salvage values are not guaranteed, estimates of salvage value are based on the expected market values of equipment at the time of disposal. During the quarter ended June 30, 2022, the Company incurred $1.9 million of depreciation expense for these assets.

The Company leases dock space to a related party at our Laredo, Texas terminal and warehouse and office space to an unrelated lessee at a second Laredo, Texas terminal. The dock space and the warehouse and office space leased are depreciated in conjunction with the structures and improvements for the entire Laredo terminals on a straight-line basis over the estimated useful life of the assets. Lease income is recorded as a component of non-operating income in our condensed consolidated statements of operations.

Lease Receivables

Future minimum operating lease payments receivable at June 30, 2022:

	(in thousands)

2022 (remaining)	$	4,141
2023		6,213
2024		3,124
2025		94
2026 and thereafter		-
Total future minimum lease payments receivable	$	13,572