Leases

12 Months Ended

Dec. 31, 2022

Disclosure of Leases [Abstract]

Leases

15. Leases

Operating Leases

The Company is obligated to make rental payments under non-cancellable operating leases for office, dispatch station space, and transportation equipment, expiring at various dates through 2029. Under the terms of the leases, the Company is also obligated for its proportionate share of real estate taxes, insurance and maintenance costs of the property. The Company is required to hold certain funds in restricted cash and cash equivalents accounts under some of these agreements.

Certain leases for property and transportation equipment contain options to purchase, extend or terminate the lease. Determining the lease term and amount of lease payments to include in the calculation of the right-of-use (ROU) asset and lease obligations for leases containing options requires the use of judgment to determine whether the exercise of an option is reasonably certain and whether the optional period and payments should be included in the calculation of the associated ROU asset and lease obligation. In making the determination of such judgment, the Company considers all relevant economic factors that would require whether to exercise or not exercise the option.

The Company’s lease agreements generally do not provide an implicit borrowing rate. Therefore, the Company used a benchmark approach to derive an appropriate imputed discount rate. The Company benchmarked itself against other companies of similar credit ratings and comparable quality and derived imputed rates, which were used to discount its real estate lease liabilities. The Company used estimated borrowing rates of 6% on January 1, 2019, for all leases that commenced prior to that date, for office spaces and transportation equipment.

Lease Costs

The table below comprise lease expenses for the periods ended December 31, 2022 and 2021, respectively:  

Components of total lease cost:	December 31, 2022		December 31, 2021
Operating lease expense	$	2,294,636	$	1,993,984
Short-term lease expense		1,201,622		1,012,260
Total lease cost	$	3,496,258	$	3,006,244

Lease Position as of December 31, 2022

Right-of-use lease assets and lease liabilities for the Company’s operating leases were recorded in the Consolidated Balance Sheets as follows:

	December 31, 2022		December 31, 2021
Assets
Lease right-of-use assets	$	9,074,277	$	4,195,682
Total lease assets	$	9,074,277	$	4,195,682
Liabilities
Current liabilities:
Lease liability – current portion	$	2,325,024	$	1,461,335
Noncurrent liabilities:
Lease liability, net of current portion		7,040,982		2,980,946
Total lease liability	$	9,366,006	$	4,442,281

Lease Terms and Discount Rate

Weighted average remaining lease term (in years) – operating leases	5.57
Weighted average discount rate – operating leases	6.00	%

Undiscounted Cash Flows

Future minimum lease payments under the operating leases as of December 31, 2022 are as follows:

	Operating Leases
2023	$	2,788,584
2024		2,346,789
2025		2,345,424
2026		1,716,501
2027 and thereafter		1,440,116
Total future minimum lease payments		10,637,414
Less effects of discounting	$	(1,271,408	)
Present value of future minimum lease payments	$	9,366,006

Operating lease expenses approximated $2,294,636 and $1,993,984 for the years ended December 31, 2022 and 2021, respectively.

For the year ended December 31, 2022, the Company made $2,294,636 of fixed cash payments related to operating leases and $2,985,568 related to finance leases.

Finance Leases

The Company leases vehicles under a non-cancelable finance lease agreements with a liability of $8,646,803 and $10,139,410 for the periods ended December 31, 2022 and 2021, respectively (accumulated depreciation of $7,906,966 and $7,095,242 as of December 31, 2022 and 2021, respectively).

Depreciation expenses for the vehicles under non-cancelable lease agreements amounted to $3,236,418 and $2,913,925 for the years ended December 31, 2022 and 2021, respectively.

Gain on Lease Remeasurement

In June 2022, the Company reassessed its finance lease estimates relating to vehicle mileage and residual value. As a result, the Company determined to purchase the vehicles at the end of the leases which resulted in a gain of $1.4 million recorded as gains from lease accounting on the Consolidated Statements of Operations and Comprehensive Income.

Lease Payments

The table below comprise lease payments for the periods ended December 31, 2022 and 2021, respectively:  

Components of total lease payment:	December 31, 2022		December 31, 2021
Finance lease payment	$	2,985,568	$	2,741,784
Short-term lease payment		-		-
Total lease payments	$	2,985,568	$	2,741,784

Lease Position as of December 31, 2022

Right-of-use lease assets and lease liabilities for the Company’s finance leases were recorded in the Consolidated Balance Sheets as follows:

	December 31, 2022		December 31, 2021
Assets
Lease right-of-use assets	$	9,039,663	$	9,307,113
Total lease assets	$	9,039,663	$	9,307,113

Liabilities
Current liabilities:
Lease liability – current portion	$	2,732,639	$	3,271,990
Noncurrent liabilities:
Lease liability, net of current portion		5,914,164		6,867,420
Total lease liability	$	8,646,803	$	10,139,410

Lease Terms and Discount Rate

The table below presents certain information related to the weighted average remaining lease term and the weighted average discount rate for the Company’s finance leases as of December 31, 2022:  

Weighted average remaining lease term (in years) – finance leases	4
Weighted average discount rate – finance leases	6.0	%

Undiscounted Cash Flows

Future minimum lease payments under the finance leases as of December 31, 2022 are as follows:

	Finance Leases
2023	$	3,156,298
2024		2,438,224
2025		2,159,661
2026		1,377,432
2027 and thereafter		468,651
Total future minimum lease payments		9,600,266
Less effects of discounting	$	(953,463	)
Present value of future minimum lease payments	$	8,646,803