LEASES
The Partnership has numerous operating leases primarily for terminal facilities and transportation and other equipment. The leases generally provide that all expenses related to the equipment are to be paid by the lessee.
Operating lease right of use ("ROU") assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Because most of the Partnership's leases do not provide an implicit rate of return, the Partnership uses its imputed collateralized rate based on the information available at commencement date in determining the present value of lease payments. The estimated rate is based on a risk-free rate plus a risk-adjusted margin.
The Partnership's leases have remaining lease terms of 1 year to 11 years, some of which include options to extend the leases for up to 5 years, and some of which include options to terminate the leases within 1 year. The Partnership includes extension periods and excludes termination periods from its lease term if, at commencement, it is reasonably likely that the Partnership will exercise the option.
The components of lease expense for the years ended December 31, 2025, 2024, and 2023 were as follows:
| | | | | | | | | | | | | | | | | |
| 2025 | | 2024 | | 2023 |
| Operating lease cost | $ | 26,747 | | | $ | 22,256 | | | $ | 16,198 | |
| Finance lease cost: | | | | | |
| Amortization of right-of-use assets | 15 | | | 11 | | | 6 | |
| Interest on lease liabilities | 4 | | | 3 | | | — | |
| Short-term lease cost | 5,691 | | | 4,748 | | | 5,415 | |
| Variable lease cost | 100 | | | 163 | | | 191 | |
| Total lease cost | $ | 32,557 | | | $ | 27,181 | | | $ | 21,810 | |
Supplemental cash flow information for the years ended December 31, 2025, 2024, and 2023 related to leases were as follows:
| | | | | | | | | | | | | | | | | |
| 2025 | | 2024 | | 2023 |
| Cash paid for amounts included in the measurement of lease liabilities: | | | | | |
| Operating cash flows from operating leases | $ | 48,374 | | | $ | 39,763 | | | $ | 29,820 | |
| Operating cash flows from finance leases | 4 | | | 3 | | | — | |
| Financing cash flows from finance leases | 14 | | | 9 | | | 9 | |
| | | | | |
| Right-of-use assets obtained in exchange for lease obligations: | | | | | |
| Operating leases | $ | 23,402 | | | $ | 21,133 | | | $ | 38,935 | |
| Finance leases | — | | | 77 | | | — | |
Supplemental balance sheet information related to leases was as follows at December 31, 2025 and 2024: | | | | | | | | | | | |
| 2025 | | 2024 |
| Operating Leases | | | |
| Operating lease right-of-use assets | $ | 69,938 | | | $ | 67,140 | |
| | | |
| Current portion of operating lease liabilities included in "Other accrued liabilities" | $ | 22,043 | | | $ | 19,707 | |
| Operating lease liabilities | 48,353 | | | 47,815 | |
| Total operating lease liabilities | $ | 70,396 | | | $ | 67,522 | |
| | | |
| Finance Leases | | | |
| Property, plant and equipment, at cost | $ | 77 | | | $ | 77 | |
| Accumulated depreciation | (26) | | | (10) | |
| Property, plant and equipment, net | $ | 51 | | | $ | 67 | |
| | | |
| Current installments of finance lease obligations | $ | 15 | | | $ | 14 | |
| Finance lease obligations | $ | 39 | | | $ | 55 | |
| Total finance lease obligations | $ | 54 | | | $ | 69 | |
| | | |
| Weighted Average Remaining Lease Term (years) | | | |
| Operating leases | 3.79 | | 4.07 |
| Finance leases | 3.32 | | 4.32 |
| Weighted Average Discount Rate | | | |
| Operating leases | 7.56 | % | | 7.28 | % |
| Finance leases | 7.00 | % | | 7.00 | % |
The Partnership’s future minimum lease obligations as of December 31, 2025 consist of the following:
| | | | | | | | | | | |
| Operating Leases | | Finance Leases |
| Year 1 | $ | 28,017 | | | $ | 18 | |
| Year 2 | 22,881 | | | 18 | |
| Year 3 | 15,882 | | | 18 | |
| Year 4 | 9,482 | | | 6 | |
| Year 5 | 4,743 | | | — | |
| Thereafter | 2,991 | | | — | |
| Total | 83,996 | | | 60 | |
| Less amounts representing interest costs | (13,600) | | | (6) | |
| Total lease liability | $ | 70,396 | | | $ | 54 | |
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.