Installed and Commissioned Second Energy
Center
ESS Tech, Inc. (“ESS,” “ESS, Inc.” or the “Company”) (NYSE:
GWH), a leading manufacturer of long-duration energy storage
systems (LDES) for commercial and utility-scale applications, today
announced financial results for its third quarter ended September
30, 2024.
“The core investment thesis for ESS remains as strong as ever –
we have a massive and important emerging market opportunity in
front of us, a top tier, forward-thinking customer base, and a
differentiated, IP-protected, scalable technology tailor made to
serve them. We continue to make strong progress on our key
operational initiatives, but have faced challenges that have
delayed our revenue ramp. Our Australian partner has had great
success signing contracts with major utilities and securing funding
to build a factory to help meet the high demand for long-duration
energy storage in Queensland. However, delays in completion of this
funding affected our ability to ship and recognize revenue in Q3
for units that were already built. We are receiving payments and
are shipping units now so we are optimistic we will get this over
the finish line in the fourth quarter and that, coupled with EC
product shipments, should lead to $9 to $11 million in revenue for
the year, leading to meaningful year-on-year growth,” said Eric
Dresselhuys, CEO of ESS. “On the operational side, our first Energy
Center for Portland General Electric has been operating with high
reliability and availability and we successfully built and are
testing our second EC product on the same site. We’ve been gleaning
valuable insights from these units – from build to test to
operation – to further improve our processes and design as we
prepare for the ramp of our EC products. Optimized for larger scale
deployments to meet the needs of the broader utility industry, our
EC products can provide double the capacity of our Energy
Warehouses with the same footprint. We continue to aggressively
execute on our cost reduction activities as we scale our
operations, efficiently manage our resources and drive to
profitability.”
Recent Business Highlights
- On November 1, ESS executed the credit agreement with the
Export-Import Bank of the United States, or EXIM, for the first $20
million tranche of the $50 million funding package previously
announced, becoming the first energy storage manufacturer to be
supported by the Make More in America Initiative of EXIM. This
funding is long-term, low interest, and non-dilutive capital to
finance expanding manufacturing capacity. For further details, see
the Company’s Current Report on Form 8-K filed with the Securities
and Exchange Commission (“SEC”) on November 5, 2024.
- We have built and installed the second Energy Center for
Portland General Electric and are now in testing. Final hand-off to
PGE is expected in Q4. We've started building and expect to start
shipping our first commercial EC products in the fourth quarter of
2024.
- On August 23, 2024, ESS executed a 1-for-15 reverse split,
following a listing notice from the NYSE received in March,
bringing the Company back into compliance with the listing
requirements and enabling continued operations as a publicly-listed
company.
Conference Call Details
ESS will hold a conference call on Wednesday, November 13, 2024
at 5:00 p.m. EST to discuss financial results for its third quarter
ended September 30, 2024. Interested parties may join the
conference call beginning at 5:00 p.m. EST on Wednesday, November
13, 2024 via telephone by calling (833) 470-1428 in the U.S., or
for international callers, by calling +1 (404) 975-4839 and
entering conference ID 385282. A telephone replay will be available
until November 20, 2024, by dialing (866) 813-9403 in the U.S., or
for international callers, +1 (929) 458-6194 with conference ID
356245. A live webcast of the conference call will be available on
ESS’ Investor Relations website at
http://investors.essinc.com/.
A replay of the call will be available via the web at
http://investors.essinc.com/.
About ESS, Inc.
ESS Inc. (NYSE: GWH) is the leading manufacturer of
long-duration iron flow energy storage solutions. ESS was
established in 2011 with a mission to accelerate decarbonization
safely and sustainably through longer lasting energy storage. Using
easy-to-source iron, salt, and water, ESS iron flow technology
enables energy security, reliability and resilience. We build
flexible storage solutions that allow our customers to meet
increasing energy demand without power disruptions and maximize the
value potential of excess energy. For more information visit
www.essinc.com.
Use of Non-GAAP Financial Measures
In this press release and the accompanying earnings call, the
Company includes Non-GAAP Operating Expenses and Adjusted EBITDA,
which are non-GAAP performance measures that the Company uses to
supplement its results presented in accordance with U.S. GAAP. As
required by the rules of the SEC, the Company has provided herein a
reconciliation of the non-GAAP financial measures contained in this
press release and the accompanying earnings call to the most
directly comparable measures under GAAP. The Company’s management
believes Non-GAAP Operating Expenses and Adjusted EBITDA are useful
in evaluating its operating performance and are similar measures
reported by publicly-listed U.S. companies, and regularly used by
securities analysts, institutional investors, and other interested
parties in analyzing operating performance and prospects. By
providing these non-GAAP measures, the Company’s management intends
to provide investors with a meaningful, consistent comparison of
the Company’s profitability for the periods presented. Adjusted
EBITDA is not intended to be a substitute for net income/loss or
any U.S. GAAP financial measure and, as calculated, may not be
comparable to other similarly titled measures of performance of
other companies in other industries or within the same industry.
Further, Non-GAAP Operating Expenses are not intended to be a
substitute for GAAP Operating Expenses or any U.S. GAAP financial
measure and, as calculated, may not be comparable to other
similarly titled measures of performance of other companies in
other industries or within the same industry.
The Company defines and calculates Non-GAAP Gross Margin as
sales price less direct labor, direct materials, and other direct
costs and includes the benefits of the 45X Advanced Manufacturing
Production Tax Credit. The Company defines and calculates Non-GAAP
Operating Expenses as GAAP Operating Expenses adjusted for
stock-based compensation and other special items determined by
management as they are not indicative of business operations. The
Company defines and calculates Adjusted EBITDA as net loss before
interest, other non-operating expense or income, (benefit)
provision for income taxes, and depreciation and amortization, and
further adjusted for stock-based compensation and other special
items determined by management, including, but not limited to, fair
value adjustments for certain financial liabilities associated with
debt and equity transactions as they are not indicative of business
operations.
Forward-Looking Statements
This communication contains certain forward-looking statements,
including statements regarding ESS and its management team’s
expectations, hopes, beliefs, intentions or strategies regarding
the future. The words “anticipate”, “believe”, “continue”, “could”,
“estimate”, “expect”, “intends”, “may”, “might”, “plan”,
“possible”, “potential”, “predict”, “project”, “should”, “will” and
“would” and similar expressions may identify forward-looking
statements, but the absence of these words does not mean that a
statement is not forward-looking. Examples of forward-looking
statements include, among others, statements regarding the
Company’s manufacturing plans, the Company’s order and sales
pipeline, the Company’s ability to execute on orders, the Company’s
ability to effectively manage costs, the Company’s relationship
with its Australian partner and the development and
commercialization of the EC product. These forward-looking
statements are based on ESS’ current expectations and beliefs
concerning future developments and their potential effects on ESS.
Many factors could cause actual future events to differ materially
from the forward-looking statements in this communication. There
can be no assurance that the future developments affecting ESS will
be those that we have anticipated. These forward-looking statements
involve a number of risks, uncertainties (some of which are beyond
ESS' control) or other assumptions that may cause actual results or
performance to be materially different from those expressed or
implied by these forward-looking statements, which include, but are
not limited to, continuing supply chain issues; delays,
disruptions, or quality control problems in the Company’s
manufacturing operations; the Company’s ability to hire, train and
retain an adequate number of manufacturing employees; issues
related to the shipment and installation of the Company’s products;
issues related to customer acceptance of the Company’s products;
issues related to the Company’s partnerships with third parties;
inflationary pressures; risk of loss of government funding for
customer projects; issues related to raising additional capital;
and the Company’s need to achieve significant cost reductions and
business growth to achieve sustained, long-term profitability.
Except as required by law, ESS is not undertaking any obligation to
update or revise any forward-looking statements whether as a result
of new information, future events or otherwise.
ESS Tech, Inc.
Condensed Statements of
Operations and Comprehensive Loss
(unaudited)
(in thousands, except share
and per share data)
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Revenue:
Revenue
$
355
$
1,544
$
2,911
$
4,741
Revenue - related parties
4
1
534
$
3
Total revenue
359
1,545
3,445
$
4,744
Cost of revenue
12,741
10,183
35,615
10,183
Gross profit (loss)
(12,382
)
(8,638
)
(32,170
)
(5,439
)
Operating expenses
Research and development
2,684
1,609
9,066
38,790
Sales and marketing
2,529
2,056
7,274
5,648
General and administrative
6,087
5,831
17,791
16,963
Total operating expenses
11,300
9,496
34,131
61,401
Loss from operations
(23,682
)
(18,134
)
(66,301
)
(66,840
)
Other income, net
Interest income, net
807
1,155
3,097
3,737
Gain on revaluation of common stock
warrant liabilities
343
344
459
917
Other income, net
39
17
2
738
Total other income, net
1,189
1,516
3,558
5,392
Net loss and comprehensive loss to
common stockholders
$
(22,493
)
$
(16,618
)
$
(62,743
)
$
(61,448
)
Net loss per share - basic and
diluted
$
(1.90
)
$
(1.59
)
$
(5.35
)
$
(5.93
)
Weighted-average shares used in per
share calculation - basic and diluted
11,814,580
10,471,738
11,722,378
10,358,503
ESS Tech, Inc.
Condensed Balance
Sheets
(unaudited)
(in thousands, except share
data)
September 30, 2024
December 31, 2023
Assets
Current assets:
Cash and cash equivalents
$
12,822
$
20,165
Restricted cash, current
906
1,373
Accounts receivable, net
413
1,990
Short-term investments
42,292
87,899
Inventory
7,037
3,366
Prepaid expenses and other current
assets
5,084
3,305
Total current assets
68,554
118,098
Property and equipment, net
19,857
16,266
Intangible assets, net
4,723
4,923
Operating lease right-of-use assets
1,853
2,167
Restricted cash, non-current
947
945
Other non-current assets
763
833
Total assets
$
96,697
$
143,232
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable
$
10,937
$
2,755
Accrued and other current liabilities
10,178
10,755
Accrued product warranties
3,298
2,129
Operating lease liabilities, current
1,631
1,581
Deferred revenue, current
6,034
2,546
Total current liabilities
32,078
19,766
Operating lease liabilities,
non-current
451
957
Deferred revenue, non-current
—
3,835
Deferred revenue, non-current - related
parties
14,400
14,400
Common stock warrant liabilities
458
917
Other non-current liabilities
109
—
Total liabilities
47,496
39,875
Stockholders' equity:
Preferred stock ($0.0001 par value;
200,000,000 shares authorized, none issued and outstanding as of
September 30, 2024 and December 31, 2023)
—
—
Common stock ($0.0001 par value;
1,000,000,000 shares authorized, 11,882,581 and 11,614,127 shares
issued and outstanding as of September 30, 2024 and December 31,
2023, respectively)
1
1
Additional paid-in capital
808,100
799,513
Accumulated deficit
(758,900
)
(696,157
)
Total stockholders' equity
49,201
103,357
Total liabilities and stockholders'
equity
$
96,697
$
143,232
ESS Tech, Inc.
Condensed Statements of Cash
Flows
(unaudited)
(in thousands)
Nine Months Ended September
30,
2024
2023
Cash flows from operating
activities:
Net loss
$
(62,743
)
$
(61,448
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
3,302
3,187
Non-cash interest income
(2,094
)
(2,438
)
Non-cash lease expense
1,000
916
Stock-based compensation expense
8,538
7,673
Inventory write-down and losses on
noncancellable purchase commitments
5,170
11,422
Change in fair value of common stock
warrant liabilities
(459
)
(917
)
Other non-cash (income) expenses, net
311
(34
)
Changes in operating assets and
liabilities:
Accounts receivable, net
1,352
3,874
Inventory
(9,768
)
(13,132
)
Prepaid expenses and other assets
(1,709
)
3,701
Accounts payable
5,671
275
Accrued and other liabilities
(219
)
(4,305
)
Accrued product warranties
1,169
993
Deferred revenue
(122
)
12,532
Operating lease liabilities
(1,142
)
(1,050
)
Net cash used in operating
activities
(51,743
)
(38,751
)
Cash flows from investing
activities:
Purchases of property and equipment
(3,823
)
(4,209
)
Maturities and purchases of short-term
investments, net
47,709
20,208
Net cash provided by investing
activities
43,886
15,999
Cash flows from financing
activities:
Proceeds from issuance of common stock and
common stock warrants, net of issuance costs
—
27,132
Payments on notes payable
—
(1,733
)
Proceeds from stock options exercised
80
236
Proceeds from contributions to Employee
Stock Purchase Plan
214
332
Repurchase of shares from employees for
income tax withholding purposes
(245
)
(165
)
Other, net
—
(214
)
Net cash provided by financing
activities
49
25,588
Net change in cash, cash equivalents
and restricted cash
(7,808
)
2,836
Cash, cash equivalents and restricted
cash, beginning of period
22,483
36,655
Cash, cash equivalents and restricted
cash, end of period
$
14,675
$
39,491
ESS Tech, Inc.
Condensed Statements of Cash
Flows (continued)
(unaudited)
(in thousands)
Nine Months Ended September
30,
2024
2023
Supplemental disclosures of cash flow
information:
Cash paid for operating leases included in
cash used in operating activities
$
1,306
$
1,246
Non-cash investing and financing
transactions:
Purchase of property and equipment
included in accounts payable and accrued and other current
liabilities
2,844
747
Adjustment to right-of-use assets from
lease modification
686
—
Common stock warrants issued for the
acquisition of intangible assets
—
4,990
Transfers between inventory and property
and equipment, net
1,051
—
Cash and cash equivalents
$
12,822
$
37,173
Restricted cash, current
906
1,373
Restricted cash, non-current
947
945
Total cash, cash equivalents and
restricted cash shown in the condensed statements of cash flows
$
14,675
$
39,491
ESS Tech, Inc.
Reconciliation of GAAP to
Non-GAAP Operating Expenses
(unaudited)
(in thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Research and development
$
2,684
$
1,609
$
9,066
$
38,790
Less: stock-based compensation
(614
)
(278
)
(1,923
)
(2,401
)
Non-GAAP research and development
$
2,070
$
1,331
$
7,143
$
36,389
Sales and marketing
$
2,529
2,056
$
7,274
$
5,648
Less: stock-based compensation
(209
)
(211
)
(467
)
(526
)
Non-GAAP sales and marketing
$
2,320
$
1,845
$
6,807
$
5,122
General and administrative
$
6,087
$
5,831
$
17,791
$
16,963
Less: stock-based compensation
(1,306
)
(1,522
)
(4,280
)
(3,868
)
Non-GAAP general and administrative
$
4,781
$
4,309
$
13,511
$
13,095
Total operating expenses
$
11,300
$
9,496
$
34,131
$
61,401
Less: stock-based compensation
(2,129
)
(2,011
)
(6,670
)
(6,795
)
Non-GAAP total operating expenses
$
9,171
$
7,485
$
27,461
$
54,606
ESS Tech, Inc.
Reconciliation of GAAP Net
Loss to Adjusted EBITDA
(unaudited)
(in thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Net loss
$
(22,493
)
$
(16,618
)
$
(62,743
)
$
(61,448
)
Interest income, net
(807
)
(1,155
)
(3,097
)
(3,737
)
Stock-based compensation
2,658
2,889
8,538
7,673
Depreciation and amortization
781
1,082
3,302
3,187
Gain on revaluation of common stock
warrant liabilities
(343
)
(344
)
(459
)
(917
)
Environmental, Health & Safety
compliance estimate
390
—
390
—
Financing costs
983
—
983
—
Other income, net
(39
)
(17
)
(2
)
(738
)
Adjusted EBITDA
$
(18,870
)
$
(14,163
)
$
(53,088
)
$
(55,980
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241113260859/en/
Investors: Erik Bylin investors@essinc.com
Media: Morgan Pitts 503.568.0755
Morgan.Pitts@essinc.com
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