Lease Accounting

12 Months Ended

Dec. 31, 2024

Lessee Arrangements

We lease a variety of transportation equipment (primarily railcars and vessels), terminals, land and facilities, and office space and equipment. Lease terms vary and can range from short-term (not greater than 12 months) to long-term (greater than 12 months). A majority of our leases contain options to extend the life of the lease at our sole discretion. We considered these options when determining the lease terms used to derive our right of use asset and associated lease liability. Leases with a term of 12 months or less are not recorded on our Consolidated Balance Sheets and we recognize lease expense for these leases on a straight-line basis over the lease term.

Certain lease agreements include lease and non-lease components. We have elected to combine lease and non-lease components for all of our underlying assets for the purpose of deriving our right of use asset and lease liability. Additionally, certain lease payments are driven by variable factors, such as plant production or indexing rates. Variable costs are expensed as incurred and are not included in our determination of our lease liability and right of use asset.

As a lessee, we do not have any finance leases and none of our leases contain material residual value guarantees or material restrictive covenants. In addition, most of our leases do not provide an implicit rate, and as such, we determined our incremental borrowing rate based on the information available at the inception of the lease in determining the present value of lease payments.

Our lease portfolio consists of operating leases within three major categories: Transportation Equipment, Office Space and Equipment, and Facilities and Equipment. These values are recorded within “Right of use assets, net” on the Consolidated Balance Sheets. Current and non-current lease liabilities are recorded within “Accrued liabilities” and “Other long-term liabilities”, respectively, on the Consolidated Balance Sheets. Refer to the table below for our lease balances as of December 31, 2024 and December 31, 2023.


Leases	Classification	Financial Statement Caption	December 31, 2024		December 31, 2023
Assets
	Transportation Equipment	Right of use assets, net	$	105,181	$	115,689
	Office Space & Equipment	Right of use assets, net	8,925		9,014
	Facilities and Equipment	Right of use assets, net	114,080		115,638
Total Right of use assets, net			$	228,186	$	240,341

Liabilities
Current		Accrued liabilities	27,558		29,869
Non-Current		Other long-term liabilities	204,932		214,946
Total Lease Liability			$	232,490	$	244,815

Our “Right of use assets, net” balance includes our unamortized initial direct costs associated with certain of our transportation equipment and facilities and equipment leases. Additionally, it includes our unamortized prepaid rents, our deferred rents, and our previously classified intangible asset associated with a favorable lease.

We recorded total operating lease expense of $32.9 million, $41.4 million, and $13.6 million for the years ended December 31, 2024, 2023, and 2022, respectively. The total operating lease expense is net of the variable railcar mileage credits we receive in our Alkali Business of $25.1 million, $22.5 million and $22.4 million for the years ended December 31, 2024, 2023, and 2022, respectively. Total lease operating expense for the years ended December 31, 2024 and 2023 include amounts related to leases associated with ANSAC (see further discussion regarding the consolidation of ANSAC in Note 4). The total operating cost includes the amounts associated with our existing lease liabilities, along with both short term lease and variable lease costs incurred during the period which are not significant to the operating lease cost individually, or in the aggregate.

The following table presents the maturities of our operating lease liabilities as of December 31, 2024 on an undiscounted cash flow basis reconciled to the present value recorded on our Consolidated Balance Sheet:


Maturity of Lease Liabilities	Transportation Equipment		Office Space and Equipment		Facilities and Equipment		Operating Leases
2025	$	26,677	$	3,205	$	16,325	$	46,207
2026	19,524		2,895		16,377		38,796
2027	15,788		2,603		16,435		34,826
2028	12,246		2,165		16,495		30,906
2029	10,214		2,029		16,509		28,752
Thereafter	84,470		7,764		141,568		233,802
Total Lease Payments	168,919		20,661		223,709		413,289
Less: Interest	(69,513)		(5,054)		(106,232)		(180,799)
Present value of operating lease liabilities	$	99,406	$	15,607	$	117,477	$	232,490

The following table presents the weighted average remaining terms and discount rates related to our right of use assets:

Lease Term and Discount Rate

December 31, 2024

December 31, 2023

Weighted-average remaining lease term

13.09 years

13.18 years

Weighted-average discount rate

8.42%

8.35%

The following table provides information regarding the cash paid and right of use assets obtained related to our operating leases:


	Year Ended December 31,
Cash Flows Information	2024		2023		2022
Cash paid for amounts included in the measurement of lease liabilities	$	52,326	$	58,979	$	28,576
Leased assets obtained in exchange for new operating lease liabilities	18,622		150,917		9,443

For the years ended December 31, 2024 and 2023, cash paid for amounts included in the measurement of lease liabilities and leased assets obtained in exchange for new operating lease liabilities includes those amounts related to leases associated with our January 1, 2023 consolidation of ANSAC. See further discussion regarding the consolidation of ANSAC in Note 4.

Lessor Arrangements

We have certain contracts discussed below in which we act as a lessor.

Operating Leases

During the years ended December 31, 2024, 2023, and 2022, we acted as a lessor in our revenue contracts associated with our 330,00 barrel-capacity ocean going tanker, the M/T American Phoenix, included in our marine transportation segment. Our lease revenues for this arrangement were $28.2 million, $23.6 million and $16.4 million for the years ended December 31, 2024, 2023 and 2022, respectively.

The M/T American Phoenix is under contract through mid-2027. For 2025, 2026, and through the expiration of the contract in 2027, we expect to receive undiscounted cash flows from fixed lease payments of $29.6 million, $30.7 million, and $15.2 million respectively. Our agreements generally contain clauses that may limit the use of the asset or require certain actions be taken by the lessee to maintain the asset for future performance.