Annual report pursuant to Section 13 and 15(d)

Leases

v3.22.4
Leases
12 Months Ended
Dec. 31, 2022
Leases [Abstract]  
Leases

Note 15. Leases

As of December 31, 2022, the Company had operating leases for its offices, manufacturing facilities of ESS Metron, and a ground lease for the Rockdale Facility, that expire on various dates through January 2032.

During the year ended December 31, 2022, the Company executed an amendment to the ground lease for the Rockdale Facility to add a second 100-acre tract of land, adjacent to the land subject to the original ground lease, for an additional $0.9 million in annual payments. The term of the amended lease is scheduled to expire on January 31, 2032, followed by three ten-year renewal periods at the Company’s option, unless terminated earlier. Concurrent with the amendment to the ground lease, the Company extended the term of its Water Reservation Agreement for the Rockdale Facility (see Note 19. Commitments and Contingencies).

As of December 31, 2022 and 2021, operating lease right of use assets were $21.7 million and $13.2 million, respectively, and operating lease liabilities were $22.3 million and $13.4 million, respectively.

The following table presents the components of the Company’s lease expense, which the ground and facilities’ leases are included in Cost of revenue and the office leases are included in Selling, general, and administrative on the Consolidated Statements of Operations:

    

Years Ended December 31, 

2022

    

2021

    

2020

Operating lease cost

$

3,193

$

678

$

1,240

Variable lease cost

 

182

 

51

 

1,040

Operating lease expense

 

3,375

 

729

 

2,280

Short-term lease rent expense

 

 

19

 

20

Total lease expense

$

3,375

$

748

$

2,300

The following table presents supplemental lease information:

Years Ended December 31, 

2022

    

2021

    

2020

Operating cash outflows for operating leases

$

2,789

$

435

$

1,207

Right of use assets exchanged for new operating lease liabilities

$

10,333

$

13,622

$

Weighted-average remaining lease term – operating leases

 

8.5

 

8.6

 

Weighted-average discount rate – operating leases

 

6.6

%  

 

5.8

%

 

%

The following table represents our future minimum operating lease payments as of December 31, 2022:

    

Ground lease

    

Office and other leases

    

Total

2023

$

1,939

$

1,487

$

3,426

2024

 

1,998

 

1,495

 

3,493

2025

2,058

1,182

3,240

2026

 

2,119

 

1,107

 

3,226

2027

 

2,183

 

1,134

 

3,317

Thereafter

 

9,618

 

3,222

 

12,840

Total undiscounted lease payments

 

19,915

 

9,627

 

29,542

Less present value discount

 

(5,720)

 

(1,571)

 

(7,291)

Present value of lease liabilities

$

14,195

$

8,056

$

22,251