Operating and Finance Lease Liabilities

3 Months Ended

Mar. 31, 2024

Operating and Finance Lease Liabilities

Operating and Finance Lease Liabilities

16. Operating and Finance Lease Liabilities

As of March 31, 2024, the Company had operating leases, as lessee, primarily associated with sale/leaseback transactions that are partially secured by restricted cash and security deposits (see also Note 18, “Commitments and Contingencies”) as summarized below. These leases expire over the next one to seven 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, the lease contains customary operational covenants such as the requirement that the Company properly maintain the leased assets and carry appropriate insurance. The leases include

credit support in the form of either cash, collateral or letters of credit. See Note 18, “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.

Future minimum lease payments under operating and finance leases (with initial or remaining lease terms in excess of one year) as of March 31, 2024 were as follows (in thousands):

			Finance		Total
	Operating Lease		Lease		Lease
	Liability		Liability		Liabilities
Remainder of 2024	$	74,684	$	9,089	$	83,773
2025		94,822		15,030		109,852
2026		85,950		12,172		98,122
2027		72,561		8,482		81,043
2028		50,427		1,896		52,323
2029 and thereafter		147,725		3,243		150,968
Total future minimum payments		526,169		49,912		576,081
Less imputed interest		(182,699)		(6,637)		(189,336)
Total	$	343,470	$	43,275	$	386,745

Rental expense for all operating leases was $26.3 million and $21.9 million for the three months ended March 31, 2024 and 2023, respectively.

At both March 31, 2024 and December 31, 2023, security deposits associated with sale/leaseback transactions were $7.4 million, and were included in other assets in the unaudited interim condensed consolidated balance sheets.

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

	Three months ended		Three months ended
	March 31, 2024		March 31, 2023
Cash payments - operating cash flows (in thousands)	$	24,960	$	21,648
Weighted average remaining lease term (years)		7.21		2.66
Weighted average discount rate		11.5%		11.3%

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 unaudited interim condensed consolidated statement of operations), and were $1.9 million and $1.1 million for the three months ended March 31, 2024, and 2023, respectively.

At March 31, 2024 and December 31, 2023, the right of use assets associated with finance leases, net was $56.1 million and $57.3 million, respectively. The accumulated depreciation for these right of use assets was $10.1 million and $9.0 million at March 31, 2024 and December 31, 2023, respectively.

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

	Three months ended		Three months ended
	March 31, 2024		March 31, 2023
Cash payments - operating cash flows (in thousands)	$	764	$	766
Cash payments - financing cash flows (in thousands)	$	2,272	$	2,059
Weighted average remaining lease term (years)		3.66		3.78
Weighted average discount rate		6.8%		6.7%