Leases

12 Months Ended

Dec. 31, 2021

Note 10 – Leases

The Company determines if an arrangement is a lease at inception. The Company has various obligations under operating and finance lease arrangements related primarily to the rental of trucks and trailers, maintenance and support facilities, office space, and parking yards. Many of these leases include one or more options, at the Company’s discretion, to renew and extend the agreement beyond the current lease expiration date. These options are included in the calculation of the Company’s lease liability when it becomes reasonably certain the option will be exercised. The Company’s lease agreements typically do not include options to purchase the leased property, nor do they contain material residual value guarantees or material restrictive covenants. The Company elected the practical expedient related to treating lease and non-lease components as a single lease component for all leases, as well as electing a policy exclusion permitting leases with an original lease term of less than one year to be excluded from ROU assets and lease liabilities.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease, and are recognized at the lease commencement date based on the present value of the lease payments over the lease term. When available, the Company uses the rate implicit in the lease to discount lease payments; however, the implicit rate in the lease is not readily determinable for all the leases. In such cases, the Company uses an estimate of the incremental borrowing rate to discount lease payments based on information available at lease commencement.

Operating lease costs are recognized on a straight-line basis over the term of the lease within operating supplies and expenses, equipment rent expense, and general and administrative expense. Finance lease costs consist of amortization expense and interest expense. Finance lease right-of-use assets are amortized on a straight-line basis over the shorter of the expected useful life or the lease term to amortization expense, and the carrying amount of the lease liability is adjusted to reflect interest expense. Variable lease payments that are not based on an index or that result from changes to an index subsequent to the initial measurement of the corresponding lease liability are not included in the measurement of lease ROU assets or liabilities and instead are recognized in equipment rent in the period in which the obligation for those payments is incurred.

At December 31, 2021 and 2020, the Company had the following balances recorded in the consolidated balance sheets related to its lease arrangements:


($ in thousands)	Classification	December 31, 2021		December 31, 2020
Assets
Operating leases	Right-of-use-asset	$	7,155	$	10,473
Finance leases	Right-of-use-asset		24,391		27,913

Liabilities
Current:
Operating leases	Operating lease liabilities, current portion		3,045		3,801
Finance leases	Finance lease liabilities, current portion		4,448		4,597

Non-current:
Operating leases	Operating lease liabilities, less current portion		4,114		6,553
Finance leases	Finance lease liabilities, less current portion		21,790		24,884

Components of lease cost are as follows:


($ in thousands)	Year Ended December 31, 2021		Year Ended December 31, 2020
Finance lease costs:
Amortization of ROU assets	$	6,138	$	4,820
Interest on lease assets		2,798		2,318
Operating lease costs		4,434		5,784
Short-term lease costs		7,871		4,526
Variable lease costs		482		401
Total	$	21,723	$	17,849

Supplemental cash flow information and non-cash activity related to our leases are as follows:


($ in thousands)	Year Ended December 31, 2021		Year Ended December 31, 2020
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities:
Financing cash flows from finance leases	$	5,895	$	3,645
Operating cash flows from finance lease interest expense		2,798		2,318
Operating cash flows from operating leases		4,503		5,597

Non-cash activity
Right-of-use assets obtained in exchange for lease obligations:
Finance leases		2,890		24,931
Operating leases		1,807		3,531

Weighted-average remaining lease term and discount rate for our leases are as follows:


	December 31, 2021			December 31, 2020
Weighted-average remaining lease term (years)
Finance leases		3.8			5.1
Operating leases		3.5			3.9

Weighted-average discount rate
Finance leases		10	%		11	%
Operating leases		10	%		11	%

Maturities of lease liabilities by fiscal year for our leases are as follows:


($ in thousands)	Operating Leases			Finance Leases
2022	$	3,553		$	8,422
2023		2,079			8,306
2024		1,517			6,507
2025		413			5,753
2026		251			2,400
Thereafter		539			743
Total lease payments	$	8,352		$	32,131
Less: Imputed interest		(1,193	)		(5,893	)
Present value of lease liabilities	$	7,159		$	26,238

Related Party Leases

The Company has various lease obligations with related parties for trucks, office space and terminals expiring at various dates through January 2029. The Company incurred approximately $1.5 million and $1.6 million in lease costs with related parties during the years ended December 31, 2021 and 2020, respectively. At December 31, 2021 and 2020, the Company had the following balances recorded in the consolidated balance sheets related to its lease arrangements with related parties:


($ in thousands)	Classification	December 31, 2021		December 31, 2020
Assets
Operating leases	Right-of-use-asset	$	2,107	$	3,300
Finance leases	Right-of-use-asset		—		444

Liabilities
Current:
Operating leases	Operating lease liabilities, current portion		840		1,118
Finance leases	Finance lease liabilities, current portion		—		71

Non-current:
Operating leases	Operating lease liabilities, less current portion		1,125		1,956
Finance leases	Finance lease liabilities, less current portion		—		414