Quarterly report [Sections 13 or 15(d)]

Leases

v3.25.1
Leases
 3 Months Ended
Mar. 31, 2025
Leases [Abstract]  
Leases Leases
Lessee Accounting

The Company recognizes a lease liability equal to the present value of the lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term for all leases with a term in excess of 12 months. For operating leases, lease expense for lease payments is recognized on a straight-line basis over the lease term, while financing leases include both an operating expense and an interest expense component. For all leases with a term of 12 months or less, the Company has elected the practical expedient to not recognize lease assets and liabilities and recognizes lease expense for these short-term leases on a straight-line basis over the lease term.

The Company’s operating leases are primarily for rail cars, real estate, and equipment and its financing leases are primarily for machinery and equipment. Generally, the Company does not include renewal or termination options in its assessment of the leases unless extension or termination of certain assets is deemed to be reasonably certain. The accounting for some of the Company’s leases may require significant judgment, which includes determining whether a contract contains a lease, determining the incremental borrowing rates to utilize in the net present value calculation of lease payments for lease agreements which do not provide an implicit rate and assessing the likelihood of renewal or termination options. Lease agreements that contain a lease and non-lease component are generally accounted for as a single lease component. 

The rate implicit in the Company’s leases is not readily determinable. Therefore, the Company uses its incremental borrowing rate based on information available at the commencement date of its leases in determining the present value of lease payments. The Company’s incremental borrowing rate reflects the estimated rate of interest that it would pay to
borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

Lease expense consisted of the following for the three months ended March 31, 2025 and 2024 (in thousands):
Three Months Ended March 31,
2025 2024
Operating lease expense $ 1,702  $ 1,849 
Short-term lease expense —  14 
Financing lease expense:
Amortization of right-of-use assets 602  435 
Interest on lease liabilities 189  54 
Total lease expense $ 2,493  $ 2,352 

Right of use assets and liabilities related to financing leases are recorded in the following line items on the unaudited condensed consolidated balance sheets at March 31, 2025 and December 31, 2024 (in thousands):

March 31, December 31,
2025 2024
Property, plant and equipment, net $ 9,634  $ 8,731 
Accrued expenses and other current liabilities 2,307  2,068 
Other liabilities 7,251  6,521 

Other supplemental information related to leases for the three months ended March 31, 2025 and 2024 and at March 31, 2025 and December 31, 2024 is as follows (in thousands):

Three Months Ended March 31,
2025 2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 1,674  $ 1,766 
Operating cash flows from financing leases 189  54 
Financing cash flows from financing leases 538  494 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases $ 261  $ 111 
Financing leases 1,815  106 

March 31, December 31,
2025 2024
Weighted-average remaining lease term:
Operating leases 3.2 years 3.1 years
Financing leases 3.5 years 3.8 years
Weighted-average discount rate:
Operating leases 9.5  % 9.5  %
Financing leases 9.0  % 9.0  %
Maturities of lease liabilities at March 31, 2025 are as follows (in thousands):
Operating Leases Financing Leases
Remainder of 2025 $ 2,841  $ 2,317 
2026 1,610  3,396 
2027 698  2,387 
2028 447  1,763 
2029 282  890 
Thereafter 488  638 
Total lease payments 6,366  11,391 
Less: Present value discount 969  1,833 
Present value of lease payments $ 5,397  $ 9,558 

Lessor Accounting

Certain of the Company’s agreements with its customers for equipment rental services, aviation services and remote accommodations services contain an operating lease component under ASC 842 because (i) there are identified assets, (ii) the customer obtains substantially all of the economic benefits of the identified assets throughout the period of use and (iii) the customer directs the use of the identified assets throughout the period of use. The Company has elected to apply the practical expedient provided to lessors to combine the lease and non-lease components of a contract where the revenue recognition pattern is the same and where the lease component, when accounted for separately, would be considered an operating lease. The practical expedient also allows a lessor to account for the combined lease and non-lease components under ASC 606, Revenue from Contracts with Customers, when the non-lease component is the predominant element of the combined component.
    
The Company’s lease agreements are generally short-term in nature and lease revenue is recognized over time based on a monthly, daily or hourly rate basis. The Company does not provide an option for the lessee to purchase the rented assets at the end of the lease and the lessees do not provide residual value guarantees on the rented assets. The Company recognized lease revenue of $0.2 million and $0.7 million during the three months ended March 31, 2025 and 2024, respectively, which is included in “services revenue” and “services revenue - related parties” on the unaudited condensed consolidated statements of operations and comprehensive income (loss).
Leases Leases
Lessee Accounting

The Company recognizes a lease liability equal to the present value of the lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term for all leases with a term in excess of 12 months. For operating leases, lease expense for lease payments is recognized on a straight-line basis over the lease term, while financing leases include both an operating expense and an interest expense component. For all leases with a term of 12 months or less, the Company has elected the practical expedient to not recognize lease assets and liabilities and recognizes lease expense for these short-term leases on a straight-line basis over the lease term.

The Company’s operating leases are primarily for rail cars, real estate, and equipment and its financing leases are primarily for machinery and equipment. Generally, the Company does not include renewal or termination options in its assessment of the leases unless extension or termination of certain assets is deemed to be reasonably certain. The accounting for some of the Company’s leases may require significant judgment, which includes determining whether a contract contains a lease, determining the incremental borrowing rates to utilize in the net present value calculation of lease payments for lease agreements which do not provide an implicit rate and assessing the likelihood of renewal or termination options. Lease agreements that contain a lease and non-lease component are generally accounted for as a single lease component. 

The rate implicit in the Company’s leases is not readily determinable. Therefore, the Company uses its incremental borrowing rate based on information available at the commencement date of its leases in determining the present value of lease payments. The Company’s incremental borrowing rate reflects the estimated rate of interest that it would pay to
borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

Lease expense consisted of the following for the three months ended March 31, 2025 and 2024 (in thousands):
Three Months Ended March 31,
2025 2024
Operating lease expense $ 1,702  $ 1,849 
Short-term lease expense —  14 
Financing lease expense:
Amortization of right-of-use assets 602  435 
Interest on lease liabilities 189  54 
Total lease expense $ 2,493  $ 2,352 

Right of use assets and liabilities related to financing leases are recorded in the following line items on the unaudited condensed consolidated balance sheets at March 31, 2025 and December 31, 2024 (in thousands):

March 31, December 31,
2025 2024
Property, plant and equipment, net $ 9,634  $ 8,731 
Accrued expenses and other current liabilities 2,307  2,068 
Other liabilities 7,251  6,521 

Other supplemental information related to leases for the three months ended March 31, 2025 and 2024 and at March 31, 2025 and December 31, 2024 is as follows (in thousands):

Three Months Ended March 31,
2025 2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 1,674  $ 1,766 
Operating cash flows from financing leases 189  54 
Financing cash flows from financing leases 538  494 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases $ 261  $ 111 
Financing leases 1,815  106 

March 31, December 31,
2025 2024
Weighted-average remaining lease term:
Operating leases 3.2 years 3.1 years
Financing leases 3.5 years 3.8 years
Weighted-average discount rate:
Operating leases 9.5  % 9.5  %
Financing leases 9.0  % 9.0  %
Maturities of lease liabilities at March 31, 2025 are as follows (in thousands):
Operating Leases Financing Leases
Remainder of 2025 $ 2,841  $ 2,317 
2026 1,610  3,396 
2027 698  2,387 
2028 447  1,763 
2029 282  890 
Thereafter 488  638 
Total lease payments 6,366  11,391 
Less: Present value discount 969  1,833 
Present value of lease payments $ 5,397  $ 9,558 

Lessor Accounting

Certain of the Company’s agreements with its customers for equipment rental services, aviation services and remote accommodations services contain an operating lease component under ASC 842 because (i) there are identified assets, (ii) the customer obtains substantially all of the economic benefits of the identified assets throughout the period of use and (iii) the customer directs the use of the identified assets throughout the period of use. The Company has elected to apply the practical expedient provided to lessors to combine the lease and non-lease components of a contract where the revenue recognition pattern is the same and where the lease component, when accounted for separately, would be considered an operating lease. The practical expedient also allows a lessor to account for the combined lease and non-lease components under ASC 606, Revenue from Contracts with Customers, when the non-lease component is the predominant element of the combined component.
    
The Company’s lease agreements are generally short-term in nature and lease revenue is recognized over time based on a monthly, daily or hourly rate basis. The Company does not provide an option for the lessee to purchase the rented assets at the end of the lease and the lessees do not provide residual value guarantees on the rented assets. The Company recognized lease revenue of $0.2 million and $0.7 million during the three months ended March 31, 2025 and 2024, respectively, which is included in “services revenue” and “services revenue - related parties” on the unaudited condensed consolidated statements of operations and comprehensive income (loss).
Leases Leases
Lessee Accounting

The Company recognizes a lease liability equal to the present value of the lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term for all leases with a term in excess of 12 months. For operating leases, lease expense for lease payments is recognized on a straight-line basis over the lease term, while financing leases include both an operating expense and an interest expense component. For all leases with a term of 12 months or less, the Company has elected the practical expedient to not recognize lease assets and liabilities and recognizes lease expense for these short-term leases on a straight-line basis over the lease term.

The Company’s operating leases are primarily for rail cars, real estate, and equipment and its financing leases are primarily for machinery and equipment. Generally, the Company does not include renewal or termination options in its assessment of the leases unless extension or termination of certain assets is deemed to be reasonably certain. The accounting for some of the Company’s leases may require significant judgment, which includes determining whether a contract contains a lease, determining the incremental borrowing rates to utilize in the net present value calculation of lease payments for lease agreements which do not provide an implicit rate and assessing the likelihood of renewal or termination options. Lease agreements that contain a lease and non-lease component are generally accounted for as a single lease component. 

The rate implicit in the Company’s leases is not readily determinable. Therefore, the Company uses its incremental borrowing rate based on information available at the commencement date of its leases in determining the present value of lease payments. The Company’s incremental borrowing rate reflects the estimated rate of interest that it would pay to
borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

Lease expense consisted of the following for the three months ended March 31, 2025 and 2024 (in thousands):
Three Months Ended March 31,
2025 2024
Operating lease expense $ 1,702  $ 1,849 
Short-term lease expense —  14 
Financing lease expense:
Amortization of right-of-use assets 602  435 
Interest on lease liabilities 189  54 
Total lease expense $ 2,493  $ 2,352 

Right of use assets and liabilities related to financing leases are recorded in the following line items on the unaudited condensed consolidated balance sheets at March 31, 2025 and December 31, 2024 (in thousands):

March 31, December 31,
2025 2024
Property, plant and equipment, net $ 9,634  $ 8,731 
Accrued expenses and other current liabilities 2,307  2,068 
Other liabilities 7,251  6,521 

Other supplemental information related to leases for the three months ended March 31, 2025 and 2024 and at March 31, 2025 and December 31, 2024 is as follows (in thousands):

Three Months Ended March 31,
2025 2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 1,674  $ 1,766 
Operating cash flows from financing leases 189  54 
Financing cash flows from financing leases 538  494 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases $ 261  $ 111 
Financing leases 1,815  106 

March 31, December 31,
2025 2024
Weighted-average remaining lease term:
Operating leases 3.2 years 3.1 years
Financing leases 3.5 years 3.8 years
Weighted-average discount rate:
Operating leases 9.5  % 9.5  %
Financing leases 9.0  % 9.0  %
Maturities of lease liabilities at March 31, 2025 are as follows (in thousands):
Operating Leases Financing Leases
Remainder of 2025 $ 2,841  $ 2,317 
2026 1,610  3,396 
2027 698  2,387 
2028 447  1,763 
2029 282  890 
Thereafter 488  638 
Total lease payments 6,366  11,391 
Less: Present value discount 969  1,833 
Present value of lease payments $ 5,397  $ 9,558 

Lessor Accounting

Certain of the Company’s agreements with its customers for equipment rental services, aviation services and remote accommodations services contain an operating lease component under ASC 842 because (i) there are identified assets, (ii) the customer obtains substantially all of the economic benefits of the identified assets throughout the period of use and (iii) the customer directs the use of the identified assets throughout the period of use. The Company has elected to apply the practical expedient provided to lessors to combine the lease and non-lease components of a contract where the revenue recognition pattern is the same and where the lease component, when accounted for separately, would be considered an operating lease. The practical expedient also allows a lessor to account for the combined lease and non-lease components under ASC 606, Revenue from Contracts with Customers, when the non-lease component is the predominant element of the combined component.
    
The Company’s lease agreements are generally short-term in nature and lease revenue is recognized over time based on a monthly, daily or hourly rate basis. The Company does not provide an option for the lessee to purchase the rented assets at the end of the lease and the lessees do not provide residual value guarantees on the rented assets. The Company recognized lease revenue of $0.2 million and $0.7 million during the three months ended March 31, 2025 and 2024, respectively, which is included in “services revenue” and “services revenue - related parties” on the unaudited condensed consolidated statements of operations and comprehensive income (loss).