Operating and Finance Lease Liabilities

3 Months Ended

Mar. 31, 2021

Operating and Finance Lease Liabilities

Operating and Finance Lease Liabilities

17.  Operating and Finance Lease Liabilities

As of March 31, 2021, 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 20, “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.  The fair value of this finance obligation approximated the carrying value as of March 31, 2021.

Future minimum lease payments under operating and finance leases (with initial or remaining lease terms in excess of one year) as of March 31, 2021 were as follows (in thousands):

			Finance		Total
		Operating Lease	Lease		Lease
		Liability	Liability		Liabilities
Remainder of 2021	$	24,082	$	1,874	$	25,956
2022		29,050		2,471		31,521
2023		29,107		2,446		31,553
2024		29,097		2,529		31,626
2025 and thereafter		56,232		3,103		59,335
Total future minimum payments		167,568		12,423		179,991
Less imputed interest		(45,257)		(2,122)		(47,379)
Total	$	122,311	$	10,301	$	132,612

Rental expense for all operating leases was $8.0 million and $4.8 million for the three months ended March 31, 2021 and 2020, respectively.  

The gross profit on sale/leaseback transactions for all operating leases was $16.0 million and $5.3 million for the three months ended March 31, 2021 and 2020, respectively. Right of use assets for sale/leaseback transactions obtained in exchange for new operating lease liabilities was $11.9 million and $5.2 million for the three months ended March 31, 2021 and 2020, respectively.

At March 31, 2021 and December 31, 2020, the right of use assets associated with operating leases was $124.5 million and $117.0 million, respectively.  The accumulated depreciation for these right of use assets was $50.3 million and $48.6 million at March 31, 2021 and December 31, 2020, respectively.

At March 31, 2021 and December 31, 2020, the right of use assets associated with finance leases was $11.3 million and $5.7 million, respectively. The accumulated depreciation for these right of use assets was $143 thousand and $102 thousand at March 31, 2021 and December 31, 2020, respectively.  

At March 31, 2021 and December 31, 2020, security deposits associated with sale/leaseback transactions were $2.4 million and $5.8 million, respectively, and were included in other assets in the consolidated balance sheets.

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

		Three months ended		Three months ended
		March 31,2021		March 31, 2020
Cash payments (in thousands)	$	6,734	$	8,199
Weighted average remaining lease term (years)		5.77		4.22
Weighted average discount rate		11.6%		12.0%

Right of use assets obtained in exchange for new finance lease liabilities were $5.6 million and zero for the three months ended March 31, 2021 and 2020, respectively.

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

		Three months ended		Three months ended
		March 31, 2021		March 31, 2020
Cash payments (in thousands)	$	433	$	78
Weighted average remaining lease term (years)		5.1		7.51
Weighted average discount rate		7.2%		8.8%