Annual report pursuant to Section 13 and 15(d)

Leases

Leases

12 Months Ended

Mar. 31, 2024

13. Leases

Lessor

The Company rents microturbine equipment to its customers for terms up to thirty-six months with an extension option, which may impact the lease term. Monthly rental payments are fixed; however, the leases may include variable payments for fuel, excess labor, additional equipment, or technician labor and engineering support. As further described below, the Company rents certain microturbine equipment back from customers and subleases this equipment to end users as a part of its Energy-as-a-Service business.

At March 31, 2024, the Company’s minimum rental revenue to be received was as follows (in thousands):


	Leased		Owned and
Year Ending March 31,	Assets		Financed Assets
2025	$	2,827	$	8,620
2026		1,345		3,998
2027		—		653
2028		—		533
2029		—		279
Thereafter		—		792
Total minimum rental revenue	$	4,172	$	14,875

Lessee

The Company leases facilities and equipment under various non-cancelable operating and finance leases expiring at various times through Fiscal 2037. All of the leases require the Company to pay maintenance, insurance and property taxes. The lease agreements for primary office and manufacturing facilities provide for rent escalation over the lease term and renewal options for five-year periods. Lease expense is recognized on a straight-line basis over the term of the lease, which may include extension periods.

During Fiscal 2024, the Company entered into eight rental agreements to rent used microturbine equipment from customers where that equipment was not currently in use. The existing rental agreements provide the Company an option to extend the lease, however, the Company is not likely to exercise these options and therefore not included in the determination of the lease term. As of March 31, 2024, lease commitments totaled approximately 18.4 MW of microturbines and have an average term of 36 months and a total commitment value of approximately $18.7 million.

The components of lease expense were as follows (in thousands):


	Year Ended March 31,
	2024		2023
Finance lease costs (1)	$	804	$	697
Operating lease costs		4,948		2,291
Total lease costs	$	5,752	$	2,988

(1)	Interest expense is included in finance lease costs.

Supplemental balance sheet information related to the leases was as follows (in thousands):


	March 31, 2024		March 31, 2023
Finance lease right-of-use assets	$	4,391	$	4,529
Operating lease right-of-use assets		12,279		8,808
Total right-of-use assets	$	16,670	$	13,337

Finance lease liability, current	$	964	$	773
Operating lease liability, current		4,041		2,492
Finance lease liability, non-current		2,300		2,903
Operating lease liability, non-current		8,527		6,588
Total lease liabilities	$	15,832	$	12,756

Finance leases:
Weighted average remaining lease life		1.41 years		2.27 years
Weighted average discount rate		13.00%		13.00%
Operating leases:
Weighted average remaining lease life		4.48 years		4.86 years
Weighted average discount rate		13.00%		12.00%

Supplemental cash flow information related to the leases was as follows (in thousands):


	Year Ended March 31,
	2024		2023
Cash paid for amounts included in the measurement of lease liabilities
Finance cash flows from finance leases	$	173	$	803
Operating cash flows from finance leases	$	42	$	45
Operating cash flows from operating leases	$	4,930	$	2,258
Right-of-use assets obtained in exchange for lease obligations
Finance leases	$	447	$	3,991
Operating leases	$	6,901	$	4,179

At March 31, 2024, the Company’s minimum commitments under non-cancelable operating and finance leases were as follows (in thousands):


	Finance		Operating
Year Ending March 31,	Leases		Leases
2025	$	1,108	$	5,380
2026		2,059		4,368
2027		252		1,747
2028		—		1,636
2029		—		1,337
Thereafter		—		1,882
Total lease payments	$	3,419	$	16,350
Less: imputed interest		(155)		(3,782)
Present value of lease liabilities	$	3,264	$	12,568