Operating and Finance Lease Liabilities

12 Months Ended

Dec. 31, 2023

Operating and Finance Lease Liabilities

Operating and Finance Lease Liabilities

12. Operating and Finance Lease Liabilities

As of December 31, 2023, the Company had operating leases, as lessee, primarily associated with sale/leaseback transactions that are partially secured by restricted cash, security deposits and pledged escrows (see also Note 1, “Nature of Operations”) as summarized below. These leases expire over the next one to seven years. Minimum rent payments under operating leases are recognized on a straight-line basis over the term of the lease.

Leases contain termination clauses with associated penalties, the amount of which cause the likelihood of cancellation to be remote. At the end of the lease term, the leased assets may be returned to the lessor by the Company, the Company may negotiate with the lessor to purchase the assets at fair market value, or the Company may negotiate with the lessor to renew the lease at market rental rates. No residual value guarantees are contained in the leases. No financial covenants are contained within the lease, however there are customary operational covenants such as assurance the Company properly maintains the leased assets and carries appropriate insurance, etc. The leases include credit support in the form of either cash, collateral or letters of credit. See Note 21, “Commitments and Contingencies”, for a description of cash held as security associated with the leases.

The Company has finance leases associated with its property and equipment in Latham, New York and at fueling customer locations.

Future minimum lease payments under operating and finance leases (with initial or remaining lease terms in excess of one year) as of December 31, 2023 were as follows (in thousands):

			Finance		Total
	Operating Lease		Lease		Lease
	Liability		Liability		Liabilities
2024	$	99,356	$	12,117	$	111,473
2025		94,569		15,033		109,602
2026		85,693		12,175		97,868
2027		71,414		8,485		79,899
2028		49,477		1,896		51,373
2029 and thereafter		145,875		3,247		149,122
Total future minimum payments		546,384		52,953		599,337
Less imputed interest		(190,691)		(7,379)		(198,070)
Total	$	355,693	$	45,574	$	401,267

Rental expense for all operating leases was $95.0 million, $67.6 million, and $38.6 million for the years ended December 31, 2023, 2022 and 2021, respectively.

At December 31, 2023 and 2022, security deposits associated with sale/leaseback transactions were $7.4 million and $5.8 million, respectively, and were included in other assets in the consolidated balance sheet.

Other information related to the operating leases are presented in the following table:

	Year ended		Year ended
	December 31, 2023		December 31, 2022
Cash payments - operating cash flows (in thousands)	$	91,637	$	63,214
Weighted average remaining lease term (years)		5.76		6.52
Weighted average discount rate		11.3%		11.2%

Finance lease costs include amortization of the right of use assets (i.e., depreciation expense) and interest on lease liabilities (i.e., interest expense in the consolidated statement of operations), and were $7.5 million and $6.2 million for the years ended December 31, 2023 and 2022, respectively.

At December 31, 2023 and 2022, the right of use assets associated with finance leases, net was $57.3 million and $53.7 million, respectively. The accumulated depreciation for these right of use assets was $9.0 million and $4.7 million at December 31, 2023 and 2022, respectively.

Other information related to the finance leases are presented in the following table:

	Year ended		Year ended
	December 31, 2023		December 31, 2022
Cash payments - operating cash flows (in thousands)	$	3,059	$	2,447
Cash payments - financing cash flows (in thousands)	$	8,638	$	6,586
Weighted average remaining lease term (years)		3.87		3.92
Weighted average discount rate		6.8%		6.7%

The Company has outstanding obligations to Wells Fargo under several Master Lease Agreements totaling $171.3 million and $159.5 million for the years ended December 31, 2023 and 2022, respectively. These outstanding obligations are included in operating lease liabilities and finance obligations on the consolidated balance sheets.