Quarterly report pursuant to Section 13 or 15(d)

Leases

v3.22.1
Leases
3 Months Ended
Mar. 31, 2022
Leases [Abstract]  
Leases

11. Leases

Balance sheet information related to leases consisted of the following for the periods presented:

 

 

 

 

 

As of

 

 

 

Classification

 

March 31, 2022

 

 

December 31, 2021

 

Assets

 

 

 

 

 

 

 

 

Operating

 

Operating lease right of use assets, net

 

$

716,745

 

 

$

718,533

 

Finance

 

Property and equipment, net

 

 

14,961

 

 

 

15,204

 

Total lease assets

 

 

 

$

731,706

 

 

$

733,737

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

 

Operating

 

Current maturities of operating lease liability

 

$

37,889

 

 

$

37,345

 

Finance

 

Current maturities of finance lease liability

 

 

577

 

 

 

559

 

Long-term

 

 

 

 

 

 

 

 

Operating

 

Operating lease liability

 

 

714,098

 

 

 

717,552

 

Finance

 

Financing lease liability

 

 

15,206

 

 

 

15,359

 

Total lease liabilities

 

 

 

$

767,770

 

 

$

770,815

 

 

 

Components of total lease cost, net, consisted of the following for the periods presented:

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

Operating lease expense(1)

 

$

21,204

 

 

$

19,125

 

Finance lease expense

 

 

 

 

 

 

Amortization of lease assets

 

 

242

 

 

 

242

 

Interest on lease liabilities

 

 

285

 

 

 

294

 

Short-term lease expense

 

 

8

 

 

 

4

 

Variable lease expense(2)

 

 

5,141

 

 

 

3,924

 

Total

 

$

26,880

 

 

$

23,589

 

(1)
Operating lease expense includes an immaterial amount of sublease income and is included in other store operating expenses and general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations and comprehensive income.
(2)
Variable lease costs consist of property taxes, property insurance, and common area or other maintenance costs for the Company’s leases of land and buildings and is included in other store operating expenses in the accompanying unaudited condensed consolidated statements of operations and comprehensive income.

The following includes supplemental information for the periods presented:

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

Operating cash flows from operating leases

 

$

21,461

 

 

$

19,527

 

Operating cash flows from finance leases

 

$

285

 

 

$

294

 

Financing cash flows from finance leases

 

$

134

 

 

$

119

 

 

 

 

 

 

 

 

Operating lease liabilities arising from obtaining ROU assets

 

$

7,818

 

 

$

9,357

 

Finance lease liabilities arising from obtaining ROU assets

 

$

-

 

 

$

-

 

 

 

 

 

 

 

 

Weighted-average remaining operating lease term

 

 

14.27

 

 

 

14.87

 

Weighted-average remaining finance lease term

 

 

17.08

 

 

 

17.95

 

 

 

 

 

 

 

 

Weighted-average operating lease discount rate

 

 

6.66

%

 

 

6.26

%

Weighted-average finance lease discount rate

 

 

7.33

%

 

 

7.33

%

 

As of March 31, 2022, lease obligation maturities were as follows:

 

Fiscal Year Ending:

 

Operating Leases

 

 

Finance Leases

 

2022 (remaining nine months)

 

$

64,609

 

 

$

1,264

 

2023

 

 

85,778

 

 

 

1,716

 

2024

 

 

85,212

 

 

 

1,741

 

2025

 

 

84,883

 

 

 

1,766

 

2026

 

 

83,877

 

 

 

1,792

 

Thereafter

 

 

781,873

 

 

 

22,090

 

Total future minimum obligations

 

$

1,186,232

 

 

$

30,369

 

Less: Present value discount

 

 

(434,245

)

 

 

(14,586

)

Present value of net future minimum lease obligations

 

$

751,987

 

 

$

15,783

 

Less: current portion

 

 

(37,889

)

 

 

(577

)

Long-term obligations

 

$

714,098

 

 

$

15,206

 

 

Forward-Starting Leases

As of March 31, 2022, the Company entered into six leases that had not yet commenced related to build-to-suit arrangements for car wash locations. These leases will commence in the remainder of 2022, or in 2023 or 2024 with initial lease terms of 15 to 20 years.

As of December 31, 2021, the Company entered into eight leases that had not yet commenced related to build-to-suit arrangements for car wash locations. These leases will commence in the remainder of 2022 or in 2023 with initial lease terms of five to 20 years.

Sale-Leaseback Transactions

During the three months ended March 31, 2022, the Company did not complete any sale-leaseback transactions.

During the three months ended March 31, 2021, the Company completed one sale-leaseback transaction related to a car wash location for $3,667, resulting in a net loss of $270, which was included in loss on sale of assets in the accompanying unaudited condensed

consolidated statements of operations and comprehensive income. Contemporaneously with the closing of this sale, the Company entered into a lease agreement for the land and buildings for an initial 20-year term. For the sale-leaseback transaction consummated in the three months ended March 31, 2021, the cumulative initial annual rent is approximately $228, subject to annual escalations. This lease is accounted for as an operating lease.