Leases

9 Months Ended

Sep. 30, 2023

Leases [Abstract]

Leases

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 2032. 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 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 right-of-use asset and lease obligation. In making 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 Cost

The table below comprises operating lease expenses for the periods ended September 30, 2023 and 2022:

	Three Months Ended September 30,				Nine Months Ended September 30,
Components of total lease cost:	2023		2022		2023		2022
Operating lease expense	$	697,050	$	626,188	$	2,319,282	$	1,517,541
Short-term lease expense	452,538		334,619		1,156,886		863,316
Total lease cost - operating leases	$	1,149,588	$	960,807	$	3,476,168	$	2,380,857

Lease Position as of September 30, 2023

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

	September 30, 2023		December 31, 2022
Assets
Lease right-of-use assets	$	9,420,525	$	9,074,277
Total lease assets	$	9,420,525	$	9,074,277
Liabilities
Current liabilities:
Lease liability - current portion	$	2,561,165	$	2,325,024
Noncurrent liabilities:
Lease liability, net of current portion	7,196,596		7,040,982
Total lease liability	$	9,757,761	$	9,366,006

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 September 30, 2023:

Weighted average remaining lease term (in years) - operating leases	4.36
Weighted average discount rate - operating leases	5.76	%

Undiscounted Cash Flows

Future minimum lease payments under the operating leases as of September 30, 2023 are as follows:

	Operating Leases
2023, remaining	$	813,120
2024	2,987,762
2025	2,982,487
2026	2,183,265
2027	1,090,802
Thereafter	862,023
Total future minimum lease payments	10,919,459
Less effects of discounting	(1,161,698)
Present value of future minimum lease payments	$	9,757,761

Operating lease expense was approximately $697,050 and $960,807 for the three months ended September 30, 2023 and 2022, respectively.

Operating lease expense was approximately $2,319,282 and $2,380,857 for the nine months ended September 30, 2023 and 2022, respectively.

For the three months ended September 30, 2023, the Company made $697,050 of fixed cash payments related to operating leases and $782,808 related to finance leases.

For the three months ended September 30, 2022, the Company made $626,188 of fixed cash payments related to operating leases and $672,975 related to finance leases.

For the nine months ended September 30, 2023, the Company made $2,319,282 of fixed cash payments related to operating leases and $2,293,330 related to finance leases.

For the nine months ended September 30, 2022, the Company made $1,517,541 of fixed cash payments related to operating leases and $2,146,587 related to finance leases.

Finance Leases

The Company leases vehicles under non-cancelable finance lease agreements with a liability of $8,664,108 and $8,646,803 as of September 30, 2023 and December 31, 2022, respectively. This includes accumulated depreciation expense of $10,701,206 and $7,096,966 as of September 30, 2023 and December 31, 2022, respectively.

Depreciation expense for the vehicles under non-cancelable lease agreements amounted to $1,195,719 and $873,713 for the three months ended September 30, 2023 and 2022, respectively.

Depreciation expense for the vehicles under non-cancelable lease agreements amounted to $2,822,982 and $2,391,989 for the nine months ended September 30, 2023 and 2022, 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 $1,400,000 recorded as gains from lease accounting on the unaudited Condensed Consolidated Statement of Operations and Comprehensive Income during the three months ended June 30, 2022.

Lease Cost

The table below presents lease payments for the periods ended September 30, 2023 and 2022:

	Three Months Ended September 30,				Nine Months Ended September 30,
Components of total lease cost:	2023		2022		2023		2022
Finance lease payment	$	782,808	$	672,975	$	2,293,330	$	2,146,857
Short-term lease payment	—		—		—		—
Total lease payments	$	782,808	$	672,975	$	2,293,330	$	2,146,857

Lease Position as of September 30, 2023

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

	September 30, 2023		December 31, 2022
Assets
Lease right-of-use assets	$	8,566,308	$	9,039,663
Total lease assets	$	8,566,308	$	9,039,663
Liabilities
Current liabilities:
Lease liability - current portion	$	2,733,332	$	2,732,639
Noncurrent liabilities:
Lease liability, net of current portion	5,930,776		5,914,164
Total lease liability	$	8,664,108	$	8,646,803

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 September 30, 2023:

Weighted average remaining lease term (in years) - finance leases	3.58
Weighted average discount rate - finance leases	5.96	%

Undiscounted Cash Flows

Future minimum lease payments under the finance leases as of September 30, 2023 are as follows:

	Finance Leases
2023, remaining	$	867,050
2024	3,018,851
2025	2,740,288
2026	1,969,492
2027	850,883
Thereafter	114,107
Total future minimum lease payments	9,560,671
Less effects of discounting	(896,563)
Present value of future minimum lease payments	$	8,664,108

Leases

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 2032. 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 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 right-of-use asset and lease obligation. In making 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 Cost

The table below comprises operating lease expenses for the periods ended September 30, 2023 and 2022:

	Three Months Ended September 30,				Nine Months Ended September 30,
Components of total lease cost:	2023		2022		2023		2022
Operating lease expense	$	697,050	$	626,188	$	2,319,282	$	1,517,541
Short-term lease expense	452,538		334,619		1,156,886		863,316
Total lease cost - operating leases	$	1,149,588	$	960,807	$	3,476,168	$	2,380,857

Lease Position as of September 30, 2023

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

	September 30, 2023		December 31, 2022
Assets
Lease right-of-use assets	$	9,420,525	$	9,074,277
Total lease assets	$	9,420,525	$	9,074,277
Liabilities
Current liabilities:
Lease liability - current portion	$	2,561,165	$	2,325,024
Noncurrent liabilities:
Lease liability, net of current portion	7,196,596		7,040,982
Total lease liability	$	9,757,761	$	9,366,006

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 September 30, 2023:

Weighted average remaining lease term (in years) - operating leases	4.36
Weighted average discount rate - operating leases	5.76	%

Undiscounted Cash Flows

Future minimum lease payments under the operating leases as of September 30, 2023 are as follows:

	Operating Leases
2023, remaining	$	813,120
2024	2,987,762
2025	2,982,487
2026	2,183,265
2027	1,090,802
Thereafter	862,023
Total future minimum lease payments	10,919,459
Less effects of discounting	(1,161,698)
Present value of future minimum lease payments	$	9,757,761

Operating lease expense was approximately $697,050 and $960,807 for the three months ended September 30, 2023 and 2022, respectively.

Operating lease expense was approximately $2,319,282 and $2,380,857 for the nine months ended September 30, 2023 and 2022, respectively.

For the three months ended September 30, 2023, the Company made $697,050 of fixed cash payments related to operating leases and $782,808 related to finance leases.

For the three months ended September 30, 2022, the Company made $626,188 of fixed cash payments related to operating leases and $672,975 related to finance leases.

For the nine months ended September 30, 2023, the Company made $2,319,282 of fixed cash payments related to operating leases and $2,293,330 related to finance leases.

For the nine months ended September 30, 2022, the Company made $1,517,541 of fixed cash payments related to operating leases and $2,146,587 related to finance leases.

Finance Leases

The Company leases vehicles under non-cancelable finance lease agreements with a liability of $8,664,108 and $8,646,803 as of September 30, 2023 and December 31, 2022, respectively. This includes accumulated depreciation expense of $10,701,206 and $7,096,966 as of September 30, 2023 and December 31, 2022, respectively.

Depreciation expense for the vehicles under non-cancelable lease agreements amounted to $1,195,719 and $873,713 for the three months ended September 30, 2023 and 2022, respectively.

Depreciation expense for the vehicles under non-cancelable lease agreements amounted to $2,822,982 and $2,391,989 for the nine months ended September 30, 2023 and 2022, 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 $1,400,000 recorded as gains from lease accounting on the unaudited Condensed Consolidated Statement of Operations and Comprehensive Income during the three months ended June 30, 2022.

Lease Cost

The table below presents lease payments for the periods ended September 30, 2023 and 2022:

	Three Months Ended September 30,				Nine Months Ended September 30,
Components of total lease cost:	2023		2022		2023		2022
Finance lease payment	$	782,808	$	672,975	$	2,293,330	$	2,146,857
Short-term lease payment	—		—		—		—
Total lease payments	$	782,808	$	672,975	$	2,293,330	$	2,146,857

Lease Position as of September 30, 2023

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

	September 30, 2023		December 31, 2022
Assets
Lease right-of-use assets	$	8,566,308	$	9,039,663
Total lease assets	$	8,566,308	$	9,039,663
Liabilities
Current liabilities:
Lease liability - current portion	$	2,733,332	$	2,732,639
Noncurrent liabilities:
Lease liability, net of current portion	5,930,776		5,914,164
Total lease liability	$	8,664,108	$	8,646,803

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 September 30, 2023:

Weighted average remaining lease term (in years) - finance leases	3.58
Weighted average discount rate - finance leases	5.96	%

Undiscounted Cash Flows

Future minimum lease payments under the finance leases as of September 30, 2023 are as follows:

	Finance Leases
2023, remaining	$	867,050
2024	3,018,851
2025	2,740,288
2026	1,969,492
2027	850,883
Thereafter	114,107
Total future minimum lease payments	9,560,671
Less effects of discounting	(896,563)
Present value of future minimum lease payments	$	8,664,108