Operating Leases (Notes)

3 Months Ended

Mar. 31, 2022

Operating LeasesThe Company has several operating leases for railcars. These leases have terms ranging from 3-18 years and most do not have renewal terms provided. The leases require the Company to maintain the condition of the railcars, restrict the use of the railcars to specified products, such as soybean meal, hulls or oil, limit usage to the continental United States, Canada or Mexico, require approval to sublease to other entities, and require the Company's submission of its financial statements. Lease expense for all railcars was $664,488 and $760,961 for the three months ended March 31, 2022 and 2021, respectively.

The following is a schedule of the Company's operating leases for railcars as of March 31, 2022:


Lessor	Quantity of Railcars	Commencement Date	Maturity Date	Monthly Payment

American Railcar Leasing	13	6/1/2021	5/31/2024	$	7,150
Andersons Railcar Leasing Co.	10	7/1/2018	6/30/2023	5,000
Andersons Railcar Leasing Co.	20	7/1/2019	6/30/2026	11,300
Andersons Railcar Leasing Co.	15	11/1/2021	10/31/2026	8,250
Farm Credit Leasing	87	9/1/2020	8/31/2032	34,929
Farm Credit Leasing	8	6/1/2021	5/31/2033	5,966
Farm Credit Leasing	9	10/1/2021	9/30/2033	4,624
GATX Corporation	14	7/1/2020	6/30/2024	4,200
Trinity Capital	29	11/1/2020	10/31/2023	17,255
Trinity Capital	20	11/1/2020	10/31/2023	11,900
Trinity Capital	2	6/1/2021	5/31/2026	980
Wells Fargo Rail	109	3/1/2022	2/28/2027	51,775
Wells Fargo Rail	107	1/1/2018	12/31/2022	35,845
Wells Fargo Rail	7	5/1/2022	4/30/2027	2,765
Wells Fargo Rail	15	5/1/2022	4/30/2027	5,925

	465			$	207,864

The Company also has a number of other operating leases for machinery and equipment. These leases have terms ranging from 3-7 years; however, most of these leases have automatic renewal terms. These leases require monthly payments of $3,779. Rental expense under these other operating leases was $46,416 and $9,741 for the three-month periods ended March 31, 2022 and 2021, respectively.

On March 19, 2020, the Company entered into an agreement with an entity in the western United States to provide storage and handling services for the Company's soybean meal. The Company paid the entity $3,300,000 after the entity's construction of additional storage and handling facilities. The agreement began May 1, 2021 and will mature on April 30, 2027 but includes an additional seven-year renewal period at the sole discretion of the Company. Rental expense under this agreement was $58,929 and $0 for the three months ended March 31, 2022 and 2021, respectively.

Operating leases are included in right-to-use lease assets, current operating lease liabilities, and long-term lease liabilities on the Company's condensed balance sheets. These assets and liabilities are recognized at the commencement date based on the present value of remaining lease payments over the lease term using the Company's secured incremental borrowing rates or implicit rates, when readily determinable. Short-term operating leases, which have an initial term of 12 months or less, are not recorded on the condensed balance sheet.

Lease expense for these operating leases is recognized on a straight-line basis over the lease terms. The components of lease costs recognized within our condensed statements of operations for the three-month periods ended March 31, 2022 and 2021 were as follows:



	2022		2021

Cost of revenues - Freight and rail	$	664,488	$	760,961
Cost of revenues - Production	40,085		7,608
Administration expenses	6,331		2,133

Total operating lease costs	$	710,904	$	770,702

The following summarizes the supplemental cash flow information for the three-month periods ended March 31, 2022 and 2021:



	2022		2021

Cash paid for amounts included in measurement of lease liabilities	$	749,933	$	762,199

Supplemental non-cash information:
Right-of-use assets obtained in exchange for lease liabilities	$	3,386,523	$	—

The following summarizes the weighted-average remaining lease term and weighted-average discount rate as of March 31, 2022:


Weighted-average remaining lease-term - operating leases (in years)	7.3

Weighted-average discount rate - operating leases	3.0	%

The following is a maturity analysis of the undiscounted cash flows of the operating lease liabilities as of March 31, 2022:


	Railcars		Other		Total
Twelve-month periods ended March 31:
2022	$	2,386,915	$	277,622	$	2,664,537
2023	1,873,449		266,167		2,139,616
2024	1,545,064		253,026		1,798,090
2025	1,518,164		237,778		1,755,942
2026	1,313,639		235,886		1,549,525
Thereafter	3,081,206		1,905,357		4,986,563
Total lease payments	11,718,437		3,175,836		14,894,273
Less amount of lease payments representing interest	(1,125,420)		(5,541)		(1,130,961)

Total present value of lease payments	$	10,593,017	$	3,170,295	$	13,763,312