Operating and Finance Lease Liabilities

12 Months Ended

Dec. 31, 2020

Operating and Finance Lease Liabilities

Operating and Finance Lease Liabilities

12. Operating and Finance Lease Liabilities, as restated  

As of December 31, 2020, 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 nine 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 22, “Commitments and contingencies, as restated,” 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.  The fair value of this finance obligation approximated the carrying value as of December 31, 2020.

Future minimum lease payments under operating and finance leases (with initial or remaining lease terms in excess of one year) as of December 31, 2020 were as follows (in thousands):

			Finance		Total
		Operating Lease	Lease		Lease
		Liability	Liability		Liabilities
2021	$	28,536	$	1,261	$	29,797
2022		27,138		1,234		28,372
2023		26,464		1,210		27,674
2024		25,947		1,293		27,240
2025 and thereafter		50,362		1,721		52,083
Total future minimum payments		158,447		6,719		165,166
Less imputed interest		(44,509)		(1,323)		(45,832)
Total	$	113,938	$	5,396	$	119,334

Rental expense for all operating leases was $22.3 million, $14.6 million and $10.2 million for the years ended December 31, 2020, 2019 and 2018, respectively.  

The gross profit on sale/leaseback transactions for all operating leases was $61.0 million, $26.2 million and $16.4 million for the years ended December 31, 2020, 2019 and 2018, respectively. Right of use assets obtained in exchange for new operating lease liabilities was $58.5 million and $37.7 million for the years ended December 31, 2020 and 2019, respectively.

At December 31, 2020 and 2019, the right of use assets associated with operating leases was $117.0 million and $63.3 million, respectively. The accumulated depreciation for these right of use assets was $48.6 million and $23.6 million at December 31, 2020 and 2019, respectively.

At December 31, 2020 and 2019, the right of use assets associated with finance leases was $5.7 million and $1.7 million, respectively. The accumulated depreciation for these right of use assets was $102 thousand and $32 thousand at December 31, 2020 and 2019, respectively.

At December 31, 2020 and 2019, security deposits associated with sale/leaseback transactions were $5.8 million and $6.0 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, 2020		December 31, 2019
Cash payments (in thousands)	$	22,626	$	14,055
Weighted average remaining lease term (years)		6.0		5.0
Weighted average discount rate		11.7%		12.1%

Finance lease costs include amortization of the right of use assets (i.e. depreciation expense) and interest on lease liabilities (i.e. interest and other expense, net in the consolidated statement of operations), and were immaterial for the years ended December 31, 2019 and 2018.  

Right of use assets obtained in exchange for new finance lease liabilities were $4.1 million and $0.1 million for the years ended December 31, 2020 and 2019, respectively.

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

		Year ended		Year ended
		December 31, 2020		December 31, 2019
Cash payments (in thousands)	$	471	$	255
Weighted average remaining lease term (years)		5.6		7.7
Weighted average discount rate		8.2%		8.8%