Note 11 - Equity Method Investment

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Equity Method Investment [Text Block]

11. EQUITY METHOD INVESTMENT

We own a 49.0% interest in TEL, a tractor and trailer equipment leasing company and used equipment reseller. There is no loss limitation on our 49.0% interest in TEL. We have not guaranteed any of TEL's debt and have no obligation to provide funding, services, or assets. There are no current put rights to purchase or sell with any owners. TEL’s majority owners are generally restricted from transferring their interests in TEL, other than to certain permitted transferees, without our consent. There are no third party liquidity arrangements, guarantees, and/or other commitments that may affect the fair value or risk of our interest in TEL. For the years ended December 31, 2021 and 2020, we sold tractors and trailers to TEL for $0.3 million and $2.1 million, respectively, and received $0.9 million and $6.6 million, respectively, for providing various maintenance services, certain back-office functions, and for miscellaneous equipment. We did not purchase any equipment from TEL in 2021 or 2020. Additionally, we paid $0.6 million and $0.6 million to TEL for leases of revenue equipment in 2021 and 2020, respectively. We recorded net deferred gains of $0.1 million and $0.0 million for the years ended  December 31, 2021 and 2020, respectively, representing 49% of the gains on tractors and trailers sold to TEL less any gains previously deferred and recognized when the equipment was sold to a third party. Deferred gains totaling $0.2 million at December 31, 2021 and 2020, respectively, are being carried as a reduction in our investment in TEL. 

We have accounted for our investment in TEL using the equity method of accounting and thus our financial results include our proportionate share of TEL's net income, which amounted to $14.8 million in 2021 and $3.9 million in 2020. We received an equity distribution from TEL for $4.9 million, and $1.5 million in 2021 and 2020, which was distributed to each member based on its respective ownership percentage. 

Our accounts receivable from TEL and investment in TEL as of  December 31, 2021 and 2020, are as follows:

Description:	Balance Sheet Line Item:	2021		2020
Accounts receivable from TEL	Driver advances and other receivables	$	802	$	661
Investment in TEL	Other assets	$	44,196	$	34,365

Our accounts receivable from TEL related to cash disbursements made pursuant to our performance of certain back-office and maintenance functions on TEL's behalf. Our investment in TEL is comprised of $4.9 million cash investment and our equity in TEL's earnings since our investment, partially offset by dividends received since our investment for minimum tax withholdings as noted above and the abovementioned deferred gains on sales of equipment to TEL.

See TEL's summarized financial information below.

(in thousands)	As of the years ended December 31,
	2021		2020
Current Assets	$	32,948	$	27,167
Non-current Assets		313,270		283,913
Current Liabilities		63,330		66,495
Non-current Liabilities		201,618		183,393
Total Equity	$	81,270	$	61,192

(in thousands)	As of the years ended December 31,
	2021		2020
Revenue	$	104,873	$	95,016
Cost of Sales		8,876		11,617
Operating Expenses		58,627		64,581
Operating Income		37,370		18,818
Net Income	$	30,078	$	8,344