Lease Accounting

12 Months Ended

Dec. 31, 2023

Leases [Abstract]

Lease Accounting

Lease Accounting

Arrangements wherein we are the lessee:

We have operating and finance leases for land, warehouses, offices, vehicles, and equipment with remaining lease terms ranging from 1 to 30 years. Many of our leases include one or more options to extend the lease term from 1 to 10 years that may be exercised at our sole discretion. Additionally, many of our leases for vehicles and equipment include options to purchase the underlying asset at or before expiration of the lease agreement. Rental payments are generally fixed over the term of the lease agreement with the exception of certain equipment leases for which the rental payment may vary based on usage of the asset. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

As of December 31, 2023, the rights and obligations with respect to leases which have been signed but have not yet commenced are not material to our financial position or results of operations.

The components of lease expense were as follows (in thousands):

	Years Ended December 31,
	2023		2022		2021
Components of lease expense:
Operating lease cost (a)	$	44,971	$	52,331	$	59,405
Financing lease cost:
Depreciation	26,129		25,687		29,743
Interest on lease liabilities	444		3,063		7,135
Sublease income	(5,856)		(7,991)		(3,785)
Net lease expense	$	65,688	$	73,090	$	92,498

(a) Includes short-term lease and variable lease costs, which are immaterial.

Other information related to leases is as follows:

	Years Ended December 31,
	2023			2022			2021
Supplemental Cash Flow Information (in thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	(35,510)		$	(42,949)		$	(52,226)
Financing cash flows from finance leases	$	(39,214)		$	(33,860)		$	(32,441)
Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	6,244		$	7,889		$	50,886
Finance leases	$	59,276		$	18,694		$	24,567
Weighted-average remaining lease term (years)
Operating leases	10.6			11.1			11.7
Finance leases	3.9			3.3			3.6
Weighted-average discount rate
Operating leases	2.8		%	2.8		%	2.7		%
Finance leases	3.9		%	3.2		%	3.4		%

Future minimum lease payments under non-cancellable leases as of December 31, 2023 were as follows (in thousands):

Years ending December 31,	Operating Lease Payments		Finance Lease Payments		Total Lease Payments
2024	$	35,335	$	36,917	$	72,252
2025	31,328		24,554		55,882
2026	27,506		19,776		47,282
2027	25,050		14,732		39,782
2028	23,710		8,294		32,004
Thereafter	135,588		2,062		137,650
Total future minimum lease payments	$	278,517	$	106,335	$	384,852
Less: Interest	(38,266)		(9,158)		(47,424)
Total future minimum lease payments less interest	$	240,251	$	97,177	$	337,428

Arrangements wherein we are the lessor:

We receive lease income as the lessor for certain buildings and warehouses or space within a warehouse. The remaining term on existing leases ranges from 1 to 15 years. Lease income is generally fixed over the duration of the contract and each lease contract contains clauses permitting extension or termination. Lease incentives and options for purchase of the leased asset by the lessee are generally not included.

The Company is party to operating leases only and currently does not have sales-type or direct financing leases. Lease income is included within “Rent, storage and warehouse services” in the accompanying Consolidated Statements of Operations as denoted in Note 22-Revenues from Contracts with Customers.

Property, buildings and equipment underlying operating leases is included in “Land” and “Buildings and improvements” on the accompanying Consolidated Balance Sheets. The portion of these assets that are applicable to the operating leases where we are the lessor totaled $115.2 million and $85.4 million, for Land and Buildings and improvements, on a gross and net basis, respectively, as of December 31, 2023. The portion of these assets that are applicable to the operating leases where we are the lessor totaled $118.5 million and $91.1 million, for

Land and Buildings and improvements, on a gross and net basis, respectively, as of December 31, 2022. Depreciation expense for such assets was $4.3 million, $4.2 million and $4.2 million for the years ended December 31, 2023, 2022 and 2021.

Future minimum lease payments due from our customers on leases as of December 31, 2023 were as follows (in thousands):

Year ending December 31,	Operating Leases
2024	$	47,849
2025	35,372
2026	30,209
2027	24,438
2028	21,121
Thereafter	53,616
Total	$	212,605

Lease Accounting

Lease Accounting

Arrangements wherein we are the lessee:

We have operating and finance leases for land, warehouses, offices, vehicles, and equipment with remaining lease terms ranging from 1 to 30 years. Many of our leases include one or more options to extend the lease term from 1 to 10 years that may be exercised at our sole discretion. Additionally, many of our leases for vehicles and equipment include options to purchase the underlying asset at or before expiration of the lease agreement. Rental payments are generally fixed over the term of the lease agreement with the exception of certain equipment leases for which the rental payment may vary based on usage of the asset. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

As of December 31, 2023, the rights and obligations with respect to leases which have been signed but have not yet commenced are not material to our financial position or results of operations.

The components of lease expense were as follows (in thousands):

	Years Ended December 31,
	2023		2022		2021
Components of lease expense:
Operating lease cost (a)	$	44,971	$	52,331	$	59,405
Financing lease cost:
Depreciation	26,129		25,687		29,743
Interest on lease liabilities	444		3,063		7,135
Sublease income	(5,856)		(7,991)		(3,785)
Net lease expense	$	65,688	$	73,090	$	92,498

(a) Includes short-term lease and variable lease costs, which are immaterial.

Other information related to leases is as follows:

	Years Ended December 31,
	2023			2022			2021
Supplemental Cash Flow Information (in thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	(35,510)		$	(42,949)		$	(52,226)
Financing cash flows from finance leases	$	(39,214)		$	(33,860)		$	(32,441)
Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	6,244		$	7,889		$	50,886
Finance leases	$	59,276		$	18,694		$	24,567
Weighted-average remaining lease term (years)
Operating leases	10.6			11.1			11.7
Finance leases	3.9			3.3			3.6
Weighted-average discount rate
Operating leases	2.8		%	2.8		%	2.7		%
Finance leases	3.9		%	3.2		%	3.4		%

Future minimum lease payments under non-cancellable leases as of December 31, 2023 were as follows (in thousands):

Years ending December 31,	Operating Lease Payments		Finance Lease Payments		Total Lease Payments
2024	$	35,335	$	36,917	$	72,252
2025	31,328		24,554		55,882
2026	27,506		19,776		47,282
2027	25,050		14,732		39,782
2028	23,710		8,294		32,004
Thereafter	135,588		2,062		137,650
Total future minimum lease payments	$	278,517	$	106,335	$	384,852
Less: Interest	(38,266)		(9,158)		(47,424)
Total future minimum lease payments less interest	$	240,251	$	97,177	$	337,428

Arrangements wherein we are the lessor:

We receive lease income as the lessor for certain buildings and warehouses or space within a warehouse. The remaining term on existing leases ranges from 1 to 15 years. Lease income is generally fixed over the duration of the contract and each lease contract contains clauses permitting extension or termination. Lease incentives and options for purchase of the leased asset by the lessee are generally not included.

The Company is party to operating leases only and currently does not have sales-type or direct financing leases. Lease income is included within “Rent, storage and warehouse services” in the accompanying Consolidated Statements of Operations as denoted in Note 22-Revenues from Contracts with Customers.

Property, buildings and equipment underlying operating leases is included in “Land” and “Buildings and improvements” on the accompanying Consolidated Balance Sheets. The portion of these assets that are applicable to the operating leases where we are the lessor totaled $115.2 million and $85.4 million, for Land and Buildings and improvements, on a gross and net basis, respectively, as of December 31, 2023. The portion of these assets that are applicable to the operating leases where we are the lessor totaled $118.5 million and $91.1 million, for

Land and Buildings and improvements, on a gross and net basis, respectively, as of December 31, 2022. Depreciation expense for such assets was $4.3 million, $4.2 million and $4.2 million for the years ended December 31, 2023, 2022 and 2021.

Future minimum lease payments due from our customers on leases as of December 31, 2023 were as follows (in thousands):

Year ending December 31,	Operating Leases
2024	$	47,849
2025	35,372
2026	30,209
2027	24,438
2028	21,121
Thereafter	53,616
Total	$	212,605

Lease Accounting

Lease Accounting

Arrangements wherein we are the lessee:

We have operating and finance leases for land, warehouses, offices, vehicles, and equipment with remaining lease terms ranging from 1 to 30 years. Many of our leases include one or more options to extend the lease term from 1 to 10 years that may be exercised at our sole discretion. Additionally, many of our leases for vehicles and equipment include options to purchase the underlying asset at or before expiration of the lease agreement. Rental payments are generally fixed over the term of the lease agreement with the exception of certain equipment leases for which the rental payment may vary based on usage of the asset. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

As of December 31, 2023, the rights and obligations with respect to leases which have been signed but have not yet commenced are not material to our financial position or results of operations.

The components of lease expense were as follows (in thousands):

	Years Ended December 31,
	2023		2022		2021
Components of lease expense:
Operating lease cost (a)	$	44,971	$	52,331	$	59,405
Financing lease cost:
Depreciation	26,129		25,687		29,743
Interest on lease liabilities	444		3,063		7,135
Sublease income	(5,856)		(7,991)		(3,785)
Net lease expense	$	65,688	$	73,090	$	92,498

(a) Includes short-term lease and variable lease costs, which are immaterial.

Other information related to leases is as follows:

	Years Ended December 31,
	2023			2022			2021
Supplemental Cash Flow Information (in thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	(35,510)		$	(42,949)		$	(52,226)
Financing cash flows from finance leases	$	(39,214)		$	(33,860)		$	(32,441)
Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	6,244		$	7,889		$	50,886
Finance leases	$	59,276		$	18,694		$	24,567
Weighted-average remaining lease term (years)
Operating leases	10.6			11.1			11.7
Finance leases	3.9			3.3			3.6
Weighted-average discount rate
Operating leases	2.8		%	2.8		%	2.7		%
Finance leases	3.9		%	3.2		%	3.4		%

Future minimum lease payments under non-cancellable leases as of December 31, 2023 were as follows (in thousands):

Years ending December 31,	Operating Lease Payments		Finance Lease Payments		Total Lease Payments
2024	$	35,335	$	36,917	$	72,252
2025	31,328		24,554		55,882
2026	27,506		19,776		47,282
2027	25,050		14,732		39,782
2028	23,710		8,294		32,004
Thereafter	135,588		2,062		137,650
Total future minimum lease payments	$	278,517	$	106,335	$	384,852
Less: Interest	(38,266)		(9,158)		(47,424)
Total future minimum lease payments less interest	$	240,251	$	97,177	$	337,428

Arrangements wherein we are the lessor:

We receive lease income as the lessor for certain buildings and warehouses or space within a warehouse. The remaining term on existing leases ranges from 1 to 15 years. Lease income is generally fixed over the duration of the contract and each lease contract contains clauses permitting extension or termination. Lease incentives and options for purchase of the leased asset by the lessee are generally not included.

The Company is party to operating leases only and currently does not have sales-type or direct financing leases. Lease income is included within “Rent, storage and warehouse services” in the accompanying Consolidated Statements of Operations as denoted in Note 22-Revenues from Contracts with Customers.

Property, buildings and equipment underlying operating leases is included in “Land” and “Buildings and improvements” on the accompanying Consolidated Balance Sheets. The portion of these assets that are applicable to the operating leases where we are the lessor totaled $115.2 million and $85.4 million, for Land and Buildings and improvements, on a gross and net basis, respectively, as of December 31, 2023. The portion of these assets that are applicable to the operating leases where we are the lessor totaled $118.5 million and $91.1 million, for

Land and Buildings and improvements, on a gross and net basis, respectively, as of December 31, 2022. Depreciation expense for such assets was $4.3 million, $4.2 million and $4.2 million for the years ended December 31, 2023, 2022 and 2021.

Future minimum lease payments due from our customers on leases as of December 31, 2023 were as follows (in thousands):

Year ending December 31,	Operating Leases
2024	$	47,849
2025	35,372
2026	30,209
2027	24,438
2028	21,121
Thereafter	53,616
Total	$	212,605