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Leased Railcars | 12 Months Ended
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Dec. 31, 2021
Leased Railcars [Abstract] |
Leased Railcars | Note 7 – Leased Railcars Railcars available for lease at December 31, 2021 were $20,160 (cost of $23,717 and accumulated depreciation of $3,557) and at December 31, 2020 were $20,933 (cost of $24,054 and accumulated depreciation of $3,121). Depreciation expense on railcars available for lease was $646 and $1,015 for the years ended December 31, 2021 and 2020, respectively. Leased railcars are subject to lease agreements with external customers with remaining terms of up to three and a half years and are accounted for as operating leases. Future minimum rental revenues on leases at December 31, 2021 are as follows:
Year ending December 31, 2022 |  | $ | 2,769 |
Year ending December 31, 2023 |  |  | 1,385 |
Year ending December 31, 2024 |  |  | 334 |
Year ending December 31, 2025 |  |  | 100 |
Year ending December 31, 2026 |  |  | - |
Thereafter |  |  | - |
|  | $ | 4,588 |
During the fourth quarter of 2020, the oil and gas proppants (or “frac sand”) industry continued to experience economic pressure created by low oil prices, reduced fracking activity, and the ongoing economic impact of COVID-19. In particular, small cube covered hopper railcars are primarily used in North America to serve the frac sand industry. Given the decline in global oil prices, reduced fracking activity, and pressure on the oil and gas industry to maintain a low-cost structure, fracking operations, have increasingly shifted away from the use of Northern White sand and towards the use of in-basin sand, which can be sourced locally rather than transporting by rail. Consequently, the cash flows and profitability of the frac sand industry continued to decline during the fourth quarter. As a result, certain small cube covered hopper customers requested rent relief that were renegotiated. We believe that the events and circumstances that arose during the fourth quarter of 2020 constituted an impairment triggering event related to the small cube covered hopper car type in our leased railcar portfolio. We performed a cash flow recoverability test of our small cube covered hopper railcars and compared the undiscounted cash flows to the carrying value of the assets. This analysis indicated that the carrying value exceeded the estimated undiscounted cash flows, and therefore, we were required to measure the fair value of our fleet of small cube covered hopper railcars and determine the amount of an impairment loss, if any. The fair value of the asset group, which is part of the Company’s Manufacturing segment, was determined using both a market and cost approach, which we believe most accurately reflects a market participant's viewpoint in valuing these railcars. The results of our analysis indicated an estimated fair value of the asset group of approximately $13,175, in comparison to the asset group's carrying amount of $30,127. As a result, during the fourth quarter, we recorded a pre-tax non-cash impairment charge of $16,952 related to our small cube covered hopper railcars. Additionally, we evaluated the right-of-use asset associated with our leased railcar portfolio of small cube covered hopper railcars and determined that these assets were impaired based on consideration of an expected decline in future cash flows over the remaining lease term, which resulted in an additional pre-tax non-cash impairment charge of approximately $1,999. The aggregate impairment charge of $18,951 is reflected in the impairment of leased railcars line of our Consolidated Statements of Operations for the year ended December 31, 2020. Significant management judgment was used to determine the key assumptions utilized in our impairment analysis, the substantial majority of which represent unobservable (Level 3) inputs. These assumptions include, but are not limited to: estimates regarding the remaining useful life over which the railcars are expected to generate cash flows (37 years); average contractual lease rates; and discount rate (5.8%). Management selected these estimates and assumptions based on our railcar industry expertise. Although we believe the estimates utilized in our analysis were reasonable, any change in these estimates could materially affect the amount of the impairment charge.

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- Definition The entire disclosure for leased railcars including: 1. The Company's policy for (a) classifying leased railcars as Inventory on lease (current assets) or Railcars available for lease (long-term assets) (b)Recognizing and reporting revenue from the sale of railcars classified as Inventory on lease versus Railcars available for lease. 2. Lease fleet utilization rate 3. Future minimal rental revenues + References No definition available. + Details
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- References No definition available. + Details
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