Lease Obligations
Operating lease right-of-use assets associated with terminal leases and revenue equipment was $1.6 million and $7.9 million as of December 31, 2025 and 2024, respectively. The revenue equipment operating lease right-of-use assets are Smith Transport leases entered into before the May 31, 2022 acquisition. The equipment and property operating leases have a weighted average interest rate of 5.1% at December 31, 2025, due in monthly installments with final maturities at various dates ranging from January 2026 to April 2027 with the weighted average remaining lease term of 1.2 years. See Note 5 Long-Term Debt for additional details on the finance leases.
Operating lease cost is recorded in rent and purchased transportation, finance lease interest expense is recorded in interest expense, and finance lease equipment depreciation is recorded in depreciation and amortization within the consolidated statements of comprehensive income.
The components of the Company's lease cost were as follows:
| | | | | | | | | | | | | | | | | |
| 2025 | | 2024 | | 2023 |
| (in thousands) |
| Operating lease cost | $ | 6,371 | | | $ | 9,945 | | | $ | 12,903 | |
| | | | | |
| Finance lease interest expense | 350 | | | 746 | | | 1,048 | |
| Finance lease equipment depreciation | 1,050 | | | 3,310 | | | 8,825 | |
| Total finance lease cost | $ | 1,400 | | | $ | 4,056 | | | $ | 9,873 | |
| | | | | |
| Total operating and finance lease cost | $ | 7,771 | | | $ | 14,001 | | | $ | 22,776 | |
Our future minimum lease payments as of December 31, 2025, are summarized as follows by lease category:
| | | | | | | | | | | |
| (in thousands) | Operating | | Finance |
| 2026 | 1,381 | | | 3,840 | |
| 2027 | 320 | | | — | |
| 2028 | — | | | — | |
| 2029 | — | | | — | |
| 2030 | — | | | — | |
| Thereafter | — | | | — | |
| Total minimum lease payments | $ | 1,701 | | | $ | 3,840 | |
| Less: future payment amount for interest | 54 | | | 40 | |
| Present value of minimum lease payments | $ | 1,647 | | | $ | 3,800 | |
| Less: current portion | 1,330 | | | 3,800 | |
| Lease obligations, long-term | $ | 317 | | | $ | — | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.