Leases

9 Months Ended

Sep. 30, 2023

Time charter-out contracts

Time charter-out contracts are accounted for as operating leases. The Company records revenue generated from time charter-out contracts on a straight-line basis over the term of the respective time charter agreements as Revenues, net in the Condensed Consolidated Statements of Operations. See Note 10. Revenue, for additional details.

A summary of lease payments expected to be received on fixed time charter-out contracts, net of commission, assuming no off-hire days, other than those related to scheduled interim or special surveys of the related vessel and excluding any voyage expenses associated with such contracts, as of September 30, 2023 is as follows:


Year:	Time Charter-Out Contracts
Remainder of 2023	$	12,006
2024	—
2025	—
2026	—
2027	—
Thereafter	—
	$	12,006

Time charter-in contracts

Time charter-in contracts are accounted for as operating leases. The Company records operating lease cost for time charter-in contracts as Charter hire expenses in the Condensed Consolidated Statements of Operations on a straight-line basis over the lease term. Due to the volatility of freight rates, the Company generally concludes that it is not reasonably certain to exercise any options to extend the lease term at lease commencement.

As of September 30, 2023, the Company chartered-in, on a long-term basis, four Ultramax vessels. Details of modifications of or new long-term time charter-in contracts for the nine months ended September 30, 2023 are as follows:

In October 2018, the Company entered into an agreement to charter-in a 62,487 dwt, 2016-built Ultramax vessel for two years. The hire rate for the first year was $14,250 per day and the hire rate for the second year was $15,250. The Company took delivery of the vessel in December 2018. In December 2019, the Company entered into a lease addendum which replaced the original lease’s second year’s hire rate with a new hire rate of $11,600 per day from March 1, 2020 through July 31, 2021 and added an option to extend the lease term for an additional year at a hire rate of $12,600 per day from August 1, 2021 through July 31, 2022. In May 2021, the Company exercised its option for the additional year. In March 2022, the Company entered into a lease addendum that extended the lease term at a hire rate of $23,888 per day from August 1, 2022 through June 1, 2023 and added an option to extend the lease term at a hire rate of $25,888 per day from June 2, 2023 through July 1, 2024. In March 2023, the Company entered into a lease addendum that replaced the hire rate from June 1, 2023 to May 1, 2024 from $25,888 per day to $17,500 per day and added an option to extend the lease term at a hire rate of $19,500 per day from May 1, 2024 to April 1, 2025. The lease is expected to terminate in May 2024.

In September 2021, the Company entered into an agreement to charter-in a 64,539 dwt, 2022-built Ultramax vessel for twelve months with an option to extend for an additional three months at a hire rate of $11,250 per day plus 57.5% of the BSI and an option to extend for an additional year at a hire rate of $10,750 per day plus 57.5% of the BSI. The Company took delivery of the vessel in May 2022. In March 2023, the Company entered into a lease addendum that extended the lease term for twelve months at a hire rate of $8,500 plus 57.5% of the BSI and added an option to extend the lease term for an additional twelve months at a hire rate of $9,500 plus 57.5% of the BSI. The lease is expected to terminate in April 2024.

In December 2020, the Company entered into an agreement to charter-in a 63,634 dwt, 2021-built Ultramax vessel for twelve months with an option to extend for an additional three months at a hire rate of $5,900 per day plus 57% of the BSI and an option to extend for an additional eleven to thirteen months at a hire rate of $6,500 per day plus 57% of the BSI. The Company took delivery of the vessel in July 2021. In May 2022, the Company exercised its option for the additional eleven to thirteen month period. In August 2023, the Company entered into a lease addendum that extended the lease term for ten to twelve months at a hire rate of $6,300 plus 58% of the BSI with an option to extend for an additional ten to twelve months at a hire rate of $7,500 plus 58% of the BSI. The lease is expected to terminate in July 2024.

Office leases

Office leases are accounted for as operating leases. The Company records operating lease cost for office leases as General and administrative expenses in the Condensed Consolidated Statements of Operations.

A summary of Operating lease right-of-use assets and operating lease liabilities balances, by asset type, and certain additional quantitative information related to the Company’s operating leases as of September 30, 2023 and December 31, 2022 is as follows:


	September 30, 2023			December 31, 2022
Operating lease right-of-use assets
Time charter-in contracts greater than 12 months	$	8,375		$	19,116
Office leases	2,517			3,890
	$	10,892		$	23,006
Current portion of operating lease liabilities
Time charter-in contracts greater than 12 months	$	9,497		$	21,328
Office leases	612			717
	$	10,109		$	22,045
Noncurrent portion of operating lease liabilities
Time charter-in contracts greater than 12 months	$	—		$	—
Office leases	2,766			3,173
	$	2,766		$	3,173
Weighted average remaining lease term (in years)
Time charter-in contracts greater than 12 months	0.6			0.6
Office leases	4.6			4.7
Weighted average discount rate
Time charter-in contracts greater than 12 months	6.6		%	6.0		%
Office leases	7.1		%	6.9		%

A summary of the components of the Company’s lease expenses and sub-lease income for the three and nine months ended September 30, 2023 and 2022 is as follows:


	Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Operating lease cost
Time charter-in contracts greater than 12 months	$	4,457	$	8,013	$	17,277	$	20,451
Office leases	183		216		613		625
Short-term lease cost
Time charter-in contracts less than 12 months	2,411		11,759		13,737		43,317
Total lease cost	$	7,051	$	19,988	$	31,627	$	64,393

Sublease income, gross
Time charter-in contracts greater than 12 months(1)	$	7,282	$	8,402	$	20,442	$	25,072

(1)Sublease income on time charter-in contracts is recorded in Revenues, net on the Condensed Consolidated Statements of Operations.

A summary of cash flow information related to the Company’s leases for the nine months ended September 30, 2023 and 2022 is as follows:


	Nine Months Ended
	September 30, 2023		September 30, 2022
Cash paid for operating leases with lease terms greater than 12 months	$	19,570	$	21,083

Non-cash activities
Operating lease right-of-use assets obtained in exchange for lease liabilities	$	11,685	$	38,956

A summary of total lease payments on an undiscounted basis for operating lease liabilities, by asset type, as of September 30, 2023 is as follows:


	Time charter-in contracts greater than 12 months		Office leases		Total Operating leases
Year:
Remainder of 2023	$	5,632	$	94	$	5,726
2024	5,412		896		6,308
2025	—		909		909
2026	—		922		922
2027	—		638		638
Thereafter	—		577		577
	11,044		4,036		15,080
Implied interest	(1,547)		(658)		(2,205)
Total operating lease liabilities	$	9,497	$	3,378	$	12,875