Fluence Energy, Inc.FLNC
Fluence Energy, Inc. Leases Disclosure
Leases
ASC 842 requires lessees to recognize assets and liabilities for most leases. The Company determines if an arrangement is a lease at contract inception. A lease exists when a contract conveys to the customer the right to control the use of an identified asset for a period of time in exchange for consideration. The definition of a lease embodies two conditions: (1) there is an identified asset in the contract, and (2) the customer has the right to control the use of the identified asset. Lessees are required to classify leases as either finance or operating leases. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease.
The Company’s right-of-use assets and lease liabilities primarily relate to offices, warehouses, and U.S battery module production lines in Utah. On May 31, 2025, the Company entered into a finance lease agreement for the U.S. battery module production line in Utah. The production line is classified as a finance lease under ASC 842. The Company’s leases generally have remaining lease terms of one year to nine years. Certain of the Company’s leases contain renewal, extension, or termination options. The Company assesses each option on an individual basis and will only include options reasonably certain of exercise in the lease term. The Company generally considers the base term to be the term provided in the contract. None of the Company’s operating lease agreements contain material options to purchase the leased property, material residual value guarantees, or material restrictions or covenants.
The Company does not recognize a lease liability or right-of-use asset on the balance sheet for short-term leases. Instead, the Company recognizes short-term lease payments as an expense on a straight-line basis over the lease term. A short-term lease is defined as a lease that, at the commencement date, has a lease term of 12 months or less and does not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise. Leases (with terms greater than twelve months) are recorded on the consolidated balance sheets at the present value of the minimum lease payments not yet paid. As the Company’s leases do not provide an implicit rate, the Company generally uses its incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date to calculate the present value of future lease payments. Certain leases include payments that are based solely on an index or rate. These variable lease payments are included in the calculation of the ROU asset and lease liability and are initially measured using the index or rate at the lease commencement date. Other variable lease payments, such as payments based on use and for property taxes, insurance, or common area maintenance that are based on actual assessments are excluded from the ROU asset and lease liability and are expensed as incurred. In addition to the present value of the future lease payments, the calculation of the ROU asset also includes adjustments for lease incentives, deferred rent, lease prepayments and initial direct costs of obtaining the lease, such as commissions.
Certain lease contracts contain nonlease components such as maintenance and utilities. The Company has made an accounting policy election, as allowed under ASC 842-10-15-37, to capitalize both the lease component and nonlease components of its contracts as a single lease component for its right-of-use assets. This election applies at the asset class level.
The amounts of assets and liabilities and other information for our operating and finance leases are as follows:
| In thousands | September 30, | ||||||||||||||||
| Balance Sheet Caption | 2025 | 2024 | |||||||||||||||
Right-of-use assets: | |||||||||||||||||
Operating leases | $ | 11,256 | $ | 8,186 | |||||||||||||
Finance leases | 22,057 | — | |||||||||||||||
Total right-of-use assets | 33,313 | 8,186 | |||||||||||||||
Lease liabilities: | |||||||||||||||||
Operating leases | $ | 6,789 | $ | 3,064 | |||||||||||||
| 5,044 | 5,492 | ||||||||||||||||
Finance leases | 3,492 | — | |||||||||||||||
| — | — | ||||||||||||||||
| $ | 15,325 | $ | 8,556 | ||||||||||||||
Components of total lease cost for the fiscal years ended September 30, 2025, 2024, and 2023 were as follows:
in thousands | Fiscal Year Ended September 30, | ||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Lease cost | |||||||||||||||||
| Finance lease cost: | $ | 2,849 | $ | — | $ | — | |||||||||||
| Amortization of right-of-use assets | 2,757 | — | — | ||||||||||||||
| Interest on lease liabilities | 92 | — | — | ||||||||||||||
| Operating lease cost | 6,608 | 3,326 | 1,939 | ||||||||||||||
Short-term and variable lease cost | 6,169 | 3,789 | 17,123 | ||||||||||||||
| Sublease income | — | — | (194) | ||||||||||||||
| Total lease cost | $ | 15,626 | $ | 7,115 | $ | 18,868 | |||||||||||
Supplemental information related to the Company’s operating leases for the fiscal years ended September 30, 2025, 2024 and 2023 was as follows:
in thousands | Fiscal Year Ended September 30, | ||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Cash paid for amounts included in the measurements of lease liabilities | $ | 6,250 | $ | 3,003 | 2,246 | ||||||||||||
| Right-of-use assets obtained in exchange for new operating lease liabilities | $ | 8,642 | $ | 6,536 | 1,024 | ||||||||||||
Weighted average remaining lease term | 2.7 years | 4.0 years | 2.0 years | ||||||||||||||
Weighted average discount rate | 6.63 | % | 6.96 | % | 7.20 | % | |||||||||||
Supplemental information related to the Company’s finance lease executed during the fiscal year ended September 30, 2025 was as follows:
in thousands | Fiscal Year Ended September 30, | ||||
| 2025 | |||||
| Cash paid for amounts included in the measurements of lease liabilities | $ | 2,462 | |||
Operating cash flows | $ | 92 | |||
Financing cash flows | $ | 2,370 | |||
Right-of-use assets obtained in exchange for new finance lease liabilities | $ | 5,861 | |||
| Weighted average remaining lease term | 0.8 years | ||||
| Weighted average discount rate | 5.60 | % | |||
Total remaining lease payments under the Company’s leases for each of the succeeding years are as follows (in thousands):
| Year Ended September 30, | Operating Leases | Finance Leases | Total | ||||||||||||||
| 2026 | $ | 7,259 | $ | 3,576 | $ | 10,835 | |||||||||||
| 2027 | 2,977 | — | 2,977 | ||||||||||||||
| 2028 | 953 | — | 953 | ||||||||||||||
| 2029 | 590 | — | 590 | ||||||||||||||
2030 | 246 | — | 246 | ||||||||||||||
| Thereafter | 951 | — | 951 | ||||||||||||||
| Total lease payments | 12,976 | 3,576 | 16,552 | ||||||||||||||
| Less: Interest | (1,143) | (84) | (1,227) | ||||||||||||||
| Present value of lease liabilities | $ | 11,833 | $ | 3,492 | $ | 15,325 | |||||||||||
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Nov 25, 2025 | Showing above |
| 2024 | Nov 29, 2024 | |
| 2023 | Nov 29, 2023 | |
| 2022 | Dec 14, 2022 | |
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.