| LEASES |
7. LEASES
Lessor Arrangements
The Company’s lessor arrangements consist of sales-type and direct financing leases for equipment, including vehicles and machinery, with terms ranging from 17 months to 122 months. At December 31, 2025 and 2024, the carrying value of residual assets covered by residual value guarantees and residual value insurance was $122.4 million and $102.6 million, respectively.
Total net investment in sales-type and direct financing leases consisted of the following as of December 31, (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
2025 |
|
|
2024 |
Sales-type and direct financing leases: |
|
|
|
|
|
|
|
Lease receivables, net of unearned income and deferred selling profit |
|
$ |
614,543 |
|
|
$ |
529,657 |
Unguaranteed residual values, net of unearned income and deferred selling profit |
|
|
41,570 |
|
|
|
34,546 |
Total net investment in sales-type and direct financing leases |
|
$ |
656,113 |
|
|
$ |
564,203 |
Lessee Arrangements
The Company’s lessee arrangements consist of operating and finance leases; however, the majority of the leases have been classified as non-cancellable operating leases and are for real estate leases with remaining lease terms of up to 16 years.
The tables below provide information about the Company’s lessee lease portfolio and other supplemental lease information as of and for the years ended December 31, (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2025 |
|
|
|
2024 |
|
|
|
Operating |
|
|
Finance |
|
|
|
Operating |
|
|
Finance |
|
ROU assets |
|
$ |
98,073 |
|
|
$ |
9,191 |
|
|
|
$ |
74,782 |
|
|
$ |
3,751 |
|
Lease liabilities |
|
|
118,915 |
|
|
|
10,895 |
|
|
|
|
79,642 |
|
|
|
5,769 |
|
Lease Term and Discount Rate of Operating leases: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average remaining lease term (years) |
|
|
8.22 |
|
|
|
10.35 |
|
|
|
|
10.96 |
|
|
|
4.08 |
|
Weighted-average discount rate (1) |
|
|
5.69 |
% |
|
|
3.63 |
% |
|
|
|
6.24 |
% |
|
|
1.17 |
% |
(1) A lease implicit rate or an incremental borrowing rate is used based on information available at commencement date of lease or at remeasurement date.
|
|
|
|
|
|
|
|
|
2025 |
|
2024 |
Cash paid for amounts included in measurement of lease liabilities: |
|
|
|
|
|
|
Operating Cash Flows from Finance Leases |
|
$ |
133 |
|
$ |
74 |
Operating Cash Flows from Operating Leases |
|
|
23,194 |
|
|
14,529 |
Financing Cash Flows from Finance Leases |
|
|
1,333 |
|
|
1,283 |
ROU assets obtained in exchange for lease obligations: |
|
|
|
|
|
|
Operating leases |
|
$ |
17,515 |
|
$ |
5,548 |
Finance leases |
|
|
6,459 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
2025 |
|
|
2024 |
Net Operating Lease Cost |
|
|
$ |
21,825 |
|
$ |
13,473 |
Finance Lease Cost: |
|
|
|
|
|
|
|
Amortization of right-of-use assets |
|
|
|
1,019 |
|
|
919 |
Interest on lease liabilities |
|
|
|
133 |
|
|
74 |
Total Lease Cost |
|
|
$ |
22,977 |
|
$ |
14,466 |
The maturities of lessor and lessee arrangements outstanding as of December 31, 2025 are presented in the table below for the years ending, (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
Lessor |
|
Lessee |
|
|
|
Sales-type and Direct Financing |
|
Operating |
|
Finance |
2026 |
|
$ |
150,106 |
|
$ |
25,325 |
|
$ |
1,791 |
2027 |
|
|
146,493 |
|
|
23,034 |
|
|
2,027 |
2028 |
|
|
135,385 |
|
|
20,304 |
|
|
2,064 |
2029 |
|
|
102,301 |
|
|
16,007 |
|
|
692 |
2030 |
|
|
71,930 |
|
|
12,529 |
|
|
567 |
Thereafter |
|
|
106,578 |
|
|
58,652 |
|
|
6,721 |
Total undiscounted cash flows |
|
|
712,793 |
|
|
155,851 |
|
|
13,862 |
Less: Adjustments (1) |
|
|
98,250 |
|
|
36,936 |
|
|
2,967 |
Total (2) |
|
$ |
614,543 |
|
$ |
118,915 |
|
$ |
10,895 |
(1) Lessor – unearned income and unearned guaranteed residual value; Lessee – imputed interest.
(2) Represents lease receivables for lessor arrangements and lease liabilities for lessee arrangements.
|