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LEASES | 9 Months Ended
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Sep. 30, 2024
Leases [Abstract] |
LEASES | LEASES Combined Luminant Lease Agreement The Company entered into a series of agreements with affiliates of Luminant, including the Lease Agreement dated June 29, 2021, with amendment and restatement on July 9, 2021 and August 23, 2023 (as amended and restated, the “Luminant Lease Agreement”). The Luminant Lease Agreement leases a plot of land to the Company for the data center, ancillary infrastructure and electrical system (the “Interconnection Electrical Facilities” or “substation”) of the Odessa Facility. The Company entered into the Luminant Lease Agreement and the Luminant Purchase and Sale Agreement to build the infrastructure necessary to support its Odessa Facility operations. The Company determined that the Luminant Lease Agreement and the Luminant Purchase and Sale Agreement should be combined for accounting purposes under ASC 842 (collectively, the “Combined Luminant Lease Agreement”) and that amounts exchanged under the combined contract should be allocated to the various components of the overall transaction based on relative fair values. The Combined Luminant Lease Agreement is classified as a finance lease. The Combined Luminant Lease Agreement commenced on November 22, 2022 and has an initial term of five years, with renewal provisions that are aligned with the Luminant Power Agreement. Financing for use of the land and substation is provided by Luminant affiliates. At the end of the lease term for the Interconnection Electrical Facilities, the substation will be sold back to Luminant’s affiliate, Vistra Operations Company, LLC at a price to be determined based upon bids obtained in the secondary market. Office leases The Company leases office space for its headquarters in New York, New York. During the second quarter of 2024, the Company modified this lease to substitute the leased space with a larger office in the same location. In July 2024, the Company also signed leases for office space in Charleston, South Carolina, and Denver, Colorado. All of the Company's office leases are classified as operating leases. Additional lease information Components of the Company’s lease expenses are as follows (in thousands):
| Three months ended September 30, |  | Nine months ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Finance leases: |  |  |  |  |  |  |
Amortization of ROU assets (1) | $ | 761 |  |  | $ | 1,481 |  |  | $ | 2,283 |  |  | $ | 3,297 |
Interest on lease liability | 346 |  |  | 600 |  |  | 1,108 |  |  | 1,478 |
Total finance lease expense | 1,107 |  |  | 2,081 |  |  | 3,391 |  |  | 4,775 |
Operating leases: |  |  |  |  |  |  |
Operating lease expense | 542 |  |  | 470 |  |  | 1,528 |  |  | 1,391 |
Total operating lease expense | 542 |  |  | 470 |  |  | 1,528 |  |  | 1,391 |
Total lease expense | $ | 1,649 |  |  | $ | 2,551 |  |  | $ | 4,919 |  |  | $ | 6,166 |
(1)Amortization of finance lease ROU asset is included within depreciation expense. The Company did not incur any variable lease costs during any of the periods presented. Other information related to the Company’s leases is shown below (dollar amounts in thousands):
| Three months ended September 30, |  | Nine months ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Operating cash flows - operating lease | $ | 480 |  |  | $ | 396 |  |  | $ | 1,320 |  |  | $ | 1,187 |
Right-of-use assets obtained in exchange for operating lease liabilities | $ | 961 |  |  | $ | — |  |  | $ | 4,375 |  |  | $ | — |
| September 30, 2024 |  | December 31, 2023
Weighted-average remaining lease term – finance lease (in years) | 2.9 |  | 3.7
Weighted-average remaining lease term – operating lease (in years) | 8.5 |  | 5.8
Weighted-average discount rate – finance lease | 11.0 | % |  | 11.0 | %
Weighted-average discount rate – operating lease | 7.9 | % |  | 10.0 | %
Finance lease ROU assets(1) | $ | 8,878 |  |  | $ | 11,160 |
(1)As of September 30, 2024, the Company recorded accumulated amortization of $2.3 million for the finance lease ROU asset. Finance lease ROU assets are recorded within property and equipment, net on the Company’s consolidated balance sheets. As of September 30, 2024, future minimum lease payments during the next five years are as follows (in thousands):
| Finance Lease |  | Operating Lease |  | Total
Year Ended December 31, 2024 | $ | 1,208 |  |  | $ | 723 |  |  | $ | 1,931 |
Year Ended December 31, 2025 | 4,834 |  |  | 3,811 |  |  | 8,645 |
Year Ended December 31, 2026 | 4,834 |  |  | 2,106 |  |  | 6,940 |
Year Ended December 31, 2027 | 3,223 |  |  | 2,112 |  |  | 5,335 |
Year Ended December 31, 2028 | - |  |  | 2,087 |  |  | 2,087 |
Thereafter | - |  |  | 3,427 |  |  | 3,427 |
Total lease payments | 14,099 |  |  | 14,266 |  |  | 28,365 |
Less present value discount | (2,085) |  |  | (3,124) |  |  | (5,209) |
Total | $ | 12,014 |  |  | $ | 11,142 |  |  | $ | 23,156 |
LEASES | LEASES Combined Luminant Lease Agreement The Company entered into a series of agreements with affiliates of Luminant, including the Lease Agreement dated June 29, 2021, with amendment and restatement on July 9, 2021 and August 23, 2023 (as amended and restated, the “Luminant Lease Agreement”). The Luminant Lease Agreement leases a plot of land to the Company for the data center, ancillary infrastructure and electrical system (the “Interconnection Electrical Facilities” or “substation”) of the Odessa Facility. The Company entered into the Luminant Lease Agreement and the Luminant Purchase and Sale Agreement to build the infrastructure necessary to support its Odessa Facility operations. The Company determined that the Luminant Lease Agreement and the Luminant Purchase and Sale Agreement should be combined for accounting purposes under ASC 842 (collectively, the “Combined Luminant Lease Agreement”) and that amounts exchanged under the combined contract should be allocated to the various components of the overall transaction based on relative fair values. The Combined Luminant Lease Agreement is classified as a finance lease. The Combined Luminant Lease Agreement commenced on November 22, 2022 and has an initial term of five years, with renewal provisions that are aligned with the Luminant Power Agreement. Financing for use of the land and substation is provided by Luminant affiliates. At the end of the lease term for the Interconnection Electrical Facilities, the substation will be sold back to Luminant’s affiliate, Vistra Operations Company, LLC at a price to be determined based upon bids obtained in the secondary market. Office leases The Company leases office space for its headquarters in New York, New York. During the second quarter of 2024, the Company modified this lease to substitute the leased space with a larger office in the same location. In July 2024, the Company also signed leases for office space in Charleston, South Carolina, and Denver, Colorado. All of the Company's office leases are classified as operating leases. Additional lease information Components of the Company’s lease expenses are as follows (in thousands):
| Three months ended September 30, |  | Nine months ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Finance leases: |  |  |  |  |  |  |
Amortization of ROU assets (1) | $ | 761 |  |  | $ | 1,481 |  |  | $ | 2,283 |  |  | $ | 3,297 |
Interest on lease liability | 346 |  |  | 600 |  |  | 1,108 |  |  | 1,478 |
Total finance lease expense | 1,107 |  |  | 2,081 |  |  | 3,391 |  |  | 4,775 |
Operating leases: |  |  |  |  |  |  |
Operating lease expense | 542 |  |  | 470 |  |  | 1,528 |  |  | 1,391 |
Total operating lease expense | 542 |  |  | 470 |  |  | 1,528 |  |  | 1,391 |
Total lease expense | $ | 1,649 |  |  | $ | 2,551 |  |  | $ | 4,919 |  |  | $ | 6,166 |
(1)Amortization of finance lease ROU asset is included within depreciation expense. The Company did not incur any variable lease costs during any of the periods presented. Other information related to the Company’s leases is shown below (dollar amounts in thousands):
| Three months ended September 30, |  | Nine months ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Operating cash flows - operating lease | $ | 480 |  |  | $ | 396 |  |  | $ | 1,320 |  |  | $ | 1,187 |
Right-of-use assets obtained in exchange for operating lease liabilities | $ | 961 |  |  | $ | — |  |  | $ | 4,375 |  |  | $ | — |
| September 30, 2024 |  | December 31, 2023
Weighted-average remaining lease term – finance lease (in years) | 2.9 |  | 3.7
Weighted-average remaining lease term – operating lease (in years) | 8.5 |  | 5.8
Weighted-average discount rate – finance lease | 11.0 | % |  | 11.0 | %
Weighted-average discount rate – operating lease | 7.9 | % |  | 10.0 | %
Finance lease ROU assets(1) | $ | 8,878 |  |  | $ | 11,160 |
(1)As of September 30, 2024, the Company recorded accumulated amortization of $2.3 million for the finance lease ROU asset. Finance lease ROU assets are recorded within property and equipment, net on the Company’s consolidated balance sheets. As of September 30, 2024, future minimum lease payments during the next five years are as follows (in thousands):
| Finance Lease |  | Operating Lease |  | Total
Year Ended December 31, 2024 | $ | 1,208 |  |  | $ | 723 |  |  | $ | 1,931 |
Year Ended December 31, 2025 | 4,834 |  |  | 3,811 |  |  | 8,645 |
Year Ended December 31, 2026 | 4,834 |  |  | 2,106 |  |  | 6,940 |
Year Ended December 31, 2027 | 3,223 |  |  | 2,112 |  |  | 5,335 |
Year Ended December 31, 2028 | - |  |  | 2,087 |  |  | 2,087 |
Thereafter | - |  |  | 3,427 |  |  | 3,427 |
Total lease payments | 14,099 |  |  | 14,266 |  |  | 28,365 |
Less present value discount | (2,085) |  |  | (3,124) |  |  | (5,209) |
Total | $ | 12,014 |  |  | $ | 11,142 |  |  | $ | 23,156 |

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- Definition The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/842-20/tableOfContent + Details
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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/842-20/tableOfContent + Details
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