LEASES

12 Months Ended

Dec. 31, 2023

Leases [Abstract]

LEASES

NOTE 2 – LEASES

Lessee

The Company has operating and finance leases for various real estate including corporate offices, trucking facilities and terminals, warehouses, and tractor parking as well as various types of equipment including tractors, trailers, forklifts, and office equipment. New real estate lease agreements will typically have initial terms between 3 to 15 years and new equipment lease agreements will typically have initial terms of 3 to 9 years.

The Company follows ASC 360, Property, Plant, and Equipment, subsection Impairment or Disposal of Long-Lived Assets, to determine whether right-of-use assets relating to operating and finance leases are impaired. During our annual goodwill impairment test, we determined that the carrying value of one of our operating segments within our Specialized Solutions segment exceeded its estimated fair value, which indicated that the carrying amount of its long-lived assets may not be recoverable. As a result, the Company recorded impairment charges of $0.3 million to right-of-use assets relating to operating leases for the year ended December 31, 2023. There was no impairment recorded for the years ended December 31, 2022 and 2021.

The following table reflects the Company’s components of lease expense (in millions):

		Year Ended December 31,
	Classification	2023		2022		2021
Operating lease cost
Revenue equipment	Operations and maintenance	$	27.4	$	27.7	$	25.5
Real estate	Administrative		16.3		13.6		14.9
Variable lease cost	Operations and maintenance, and Administrative		2.0		1.3		0.9
Short-term lease cost	Operations and maintenance, and Administrative		1.6		1.2		0.9
Total operating lease cost		$	47.3	$	43.8	$	42.2
Finance lease cost
Amortization of right-of-use assets	Depreciation and amortization	$	6.5	$	6.4	$	6.7
Interest on lease liabilities	Interest expense		1.1		1.1		1.2
Total finance lease cost		$	7.6	$	7.5	$	7.9
Total lease cost		$	54.9	$	51.3	$	50.1

The components of assets and liabilities for operating and finance leases are as follows (in millions):

		December 31,
	Classification	2023		2022
Assets
Operating lease right-of-use assets	Right-of-use assets	$	98.9	$	107.6
Finance lease right-of-use assets	Property and equipment, net		22.0		26.0
Total lease assets		$	120.9	$	133.6
Liabilities
Operating lease liabilities:
Current	Current operating lease liabilities	$	29.9	$	34.4
Non-current	Non-current operating lease liabilities		75.5		79.6
Total operating lease liabilities		$	105.4	$	114.0
Finance lease liabilities:
Current	Current portion of long-term debt	$	6.6	$	8.7
Non-current	Long-term debt, net of current portion		12.3		16.3
Total finance lease liabilities		$	18.9	$	25.0
Total lease liabilities		$	124.3	$	139.0

The following table is a summary of supplemental cash flows related to leases (in millions):

	Year ended December 31,
	2023			2022			2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(43.7	)	$	(41.4	)	$	(41.6	)
Operating cash flows from finance leases		(1.1	)		(1.1	)		(1.2	)
Financing cash flows from finance leases		(10.4	)		(17.3	)		(9.6	)
Right-of-use assets obtained in exchange for lease obligations:
Operating lease right-of-use assets	$	31.5		$	36.0		$	23.6
Finance lease right-of-use assets		4.8			6.6			6.7

The following table is the future payments on leases as of December 31, 2023 (in millions):

	Operating			Finance
Year ending December 31,	leases			leases			Total
2024	$	34.8		$	7.9		$	42.7
2025		25.4			6.1			31.5
2026		20.0			3.9			23.9
2027		14.4			3.0			17.4
2028		8.3			—			8.3
Thereafter		17.9			—			17.9
Total lease payments		120.8			20.9			141.7
Less: interest		(15.4	)		(2.0	)		(17.4	)
Present value of lease liabilities	$	105.4		$	18.9		$	124.3

The following table is a summary of weighted average lease terms and discount rates for leases:

	December 31,
	2023			2022
Weighted-average remaining lease term (years)
Operating leases		5.2			5.4
Finance leases		2.5			2.8
Weighted-average discount rate
Operating leases		5.4	%		4.6	%
Finance leases		4.7	%		4.6	%

Lessor

The Company leases tractors and trailers to certain of its owner-operators and accounts for these transactions as operating leases. These leases typically have terms of 30 to 72 months and are collateralized by a security interest in the related revenue equipment. The Company recognizes income for these leases as payments are received over the lease term, which are reported in purchased freight on the consolidated statements of operations and comprehensive income (loss). The Company’s equipment leases may include options for the lessee to purchase the equipment at the end of the lease term or terminate the lease prior to the end of the lease term. When an asset reaches the end of its useful economic life, the Company disposes of the asset.

The Company recorded depreciation expense of $23.9 million, $25.1 million, and $21.5 million on its revenue equipment leased and available for lease to owner-operators under operating leases for the years ended December 31, 2023, 2022, and 2021, respectively. Lease income from lease payments related to the Company’s operating leases for the years ended December 31, 2023, 2022, and 2021, was $30.5 million, $32.4 million, and $28.2 million, respectively.

The following table is the future minimum receipts on leases as of December 31, 2023 (in millions):

Year ending December 31,	Amount
2024	$	34.0
2025		26.0
2026		14.3
2027		7.9
2028		3.9
Thereafter		0.1
Total minimum lease receipts	$	86.2