Announced Strategic Partnership with
Honeywell
ESS Tech, Inc. (“ESS,” “ESS, Inc.” or the “Company”) (NYSE:
GWH), a leading manufacturer of long-duration energy storage
systems for commercial and utility-scale applications, today
announced financial results for its third quarter ended September
30, 2023.
“In the third quarter, ESS again made significant progress
executing on improving our internal operations, commissioning units
at existing customer sites, strengthening our balance sheet, and
broadening customer traction. This progress with our customers and
operations is reflected in our year to date revenue of $4.7
million, which is an increase of nearly 700% from last year. I’m
also pleased to share that we successfully completed commissioning
of a number of Energy Warehouses, including the six we delivered to
Sacramento Municipal Utility District last quarter,” said Eric
Dresselhuys, CEO of ESS.
“Worldwide demand for reliable, safe, energy storage technology
is growing rapidly and is reflected in the solid customer demand
we’re seeing in the market. We continue to expect a material
increase in revenue in the fourth quarter, which should lead to $9
million in revenue for the full year. Furthermore, our
transformative partnership with Honeywell serves as a tremendous
validation of the unique value proposition of our iron flow battery
and our position in the market. The collaboration between ESS and
Honeywell will not only strengthen our technology, operations and
go-to-market, but the cash infusion from Honeywell also bolsters
our balance sheet and extends our cash runway well into 2025. In
addition, we’re well underway in building our first Energy Center
with Portland General Electric and expect it to be operational this
year, which should translate to shipping commercial units in the
second half of 2024. Combined, these drivers in our business
positions ESS for long-term growth and profitability
expansion.”
Recent Business Highlights
- In September 2023, ESS entered into a strategic collaboration
with Honeywell to advance technology development and market
adoption of iron flow battery energy storage systems. Honeywell has
made an investment in ESS as part of this collaboration, adding
$42.5 million to our balance sheet, and will incorporate ESS
technology in their clean energy go-to-market efforts, with an
initial target to purchase $300 million of ESS product in the
coming years. ESS will also integrate Honeywell’s flow-battery IP
with its own extensive IP portfolio.
- ESS is finalizing its agreement with LEAG, a major German
energy provider, for the first phase of their multi-year project
targeting commissioning in 2027 to build a 500 MWh iron flow
battery system at the LEAG Boxberg Power Plant site in Germany.
This installation, when complete, will create a repeatable building
block to support LEAG’s objective to create up to 20 GWh of storage
to be paired with solar and local hydrogen production, creating the
largest green-energy hub in Europe.
- In Q3, ESS completed commissioning of six Energy Warehouse™
systems that were delivered to the Sacramento Municipal Utility
District (SMUD) last quarter for the first phase of our
relationship to support SMUD’s 2030 Zero Carbon Plan. As previously
announced, ESS has agreed to supply up to 2 GWh of long-duration
energy storage over the next four years in the form of Energy
Warehouses™ and Energy Centers™. As part of this multi-year
agreement, ESS also intends to set up facilities for battery system
assembly, operations and maintenance support and project delivery
in Sacramento, creating local, high-paying jobs. In addition, ESS
and SMUD plan to team up with local colleges and universities to
establish a Center of Excellence to expand and train the workforce
that will be needed to support long-duration energy storage
technology.
- In September 2023, ESS was awarded an Export Achievement
Certificate by the United States Department of Commerce for
expanding global deployment of its American-made, innovative
long-duration energy storage technology. The Export Achievement
Certificate is presented by the U.S. Department of Commerce to
American companies making significant contributions to exports.
Exports of ESS’ iron flow battery systems have increased
significantly over the past year as global demand for long-duration
energy storage continues to grow.
- In August 2023, Stanwell Corporation, a major electricity
generator owned by the Queensland government, and Energy Storage
Industries Asia Pacific (ESI), our Australian partner, unveiled an
initial iron flow battery energy storage system pilot project at
the Stanwell Power Station. Subsequently, in October, the Premier
of Queensland announced that the state government plans to expand
this project to a 150 MW installation and Stanwell has taken an
option to purchase up to 200 MW of storage per year
thereafter.
- On August 17, 2023, Jeff Loebbaka was named Chief Commercial
Officer of ESS.
- On August 29, 2023, ESS announced the appointment of Harry
Quarls to its Board of Directors as Chairman. Michael Niggli, the
ESS Founding Board Chairman, will remain on the board to assist
with this transition. Harry Quarls has over four decades of energy
experience and brings considerable strategic, financial,
transactional, and energy investing experience to ESS.
Conference Call Details
ESS will hold a webcast conference call on Tuesday, November 7,
2023 at 5:00 p.m. EST to discuss financial results for its third
quarter 2023 ended September 30, 2023. Interested parties may join
the conference call beginning at 5:00 p.m. EST on Tuesday, November
7, 2023 via telephone by calling (833) 927-1758 in the U.S., or for
international callers, by calling +1 (929) 526-1599 and entering
conference ID 307911. A telephone replay will be available until
November 14, 2023, by dialing (866) 813-9403 in the U.S., or for
international callers, +44 (204) 525-0658 with conference ID
679393. 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.
At ESS (NYSE: GWH), our mission is to accelerate global
decarbonization by providing safe, sustainable, long-duration
energy storage that powers people, communities and businesses with
clean, renewable energy anytime and anywhere it’s needed. As more
renewable energy is added to the grid, long-duration energy storage
is essential to providing the reliability and resiliency we need
when the sun is not shining and the wind is not blowing.
Our technology uses earth-abundant iron, salt and water to
deliver environmentally safe solutions capable of providing up to
12 hours of flexible energy capacity for commercial and
utility-scale energy storage applications. Established in 2011, ESS
enables project developers, independent power producers, utilities
and other large energy users to deploy reliable, sustainable
long-duration energy storage solutions. For more information visit
www.essinc.com.
Energy Warehouses and Energy Centers are trademarks of ESS Tech,
Inc. Any third-party trademarks are property of their respective
owners and any usage herein does not suggest or imply any
relationship between ESS and the third party unless expressly
stated.
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 Securities and Exchange Commission
(“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 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 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”
“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 revenue
expectations, 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, and the
Company’s partnerships with third parties such as Honeywell, LEAG,
ESI and Sacramento Municipal Utility District. 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’s 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; and the
Company’s need to achieve significant business growth to achieve
sustained, long-term profitability; as well as those risks and
uncertainties set forth in the section entitled “Risk Factors” in
the Company’s Quarterly Report on Form 10-Q for the nine months
ended September 30, 2023, to be filed with the SEC on November 14,
2023, and its other filings filed with the SEC. 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.
Source: ESS Tech, Inc.
ESS Tech, Inc.
Condensed Consolidated
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,
2023
2022
2023
2022
Revenue:
Revenue
$
1,544
$
191
$
4,741
$
595
Revenue - related parties
1
1
3
$
283
Total revenue
1,545
192
4,744
$
878
Cost of revenue
10,183
—
10,183
—
Gross profit (loss)
(8,638
)
192
(5,439
)
878
Operating expenses:
Research and development
1,609
20,127
38,790
49,190
Sales and marketing
2,056
1,815
5,648
5,217
General and administrative
5,831
5,981
16,963
20,567
Total operating expenses
9,496
27,923
61,401
74,974
Loss from operations
(18,134
)
(27,731
)
(66,840
)
(74,096
)
Other income (expenses), net:
Interest income, net
1,155
781
3,737
999
Gain (loss) on revaluation of common stock
warrant liabilities
344
(4,585
)
917
20,515
Other income (expense), net
17
(62
)
738
(312
)
Total other income (expenses), net
1,516
(3,866
)
5,392
21,202
Net loss and comprehensive loss to
common stockholders
$
(16,618
)
$
(31,597
)
$
(61,448
)
$
(52,894
)
Net loss per share - basic and
diluted
$
(0.11
)
$
(0.21
)
$
(0.40
)
$
(0.35
)
Weighted-average shares used in per
share calculation - basic and diluted
157,076,260
152,861,300
155,377,648
152,427,346
ESS Tech, Inc.
Condensed Consolidated Balance
Sheets
(unaudited)
(in thousands, except share
data)
September 30, 2023
December 31, 2022
Assets
Current assets:
Cash and cash equivalents
$
37,173
$
34,767
Restricted cash, current
1,373
1,213
Accounts receivable, net
1,265
4,952
Short-term investments
87,329
105,047
Inventory
2,256
—
Prepaid expenses and other current
assets
2,035
5,657
Total current assets
131,431
151,636
Property and equipment, net
17,986
17,570
Intangible assets, net
4,990
—
Operating lease right-of-use assets
2,485
3,401
Restricted cash, non-current
945
675
Other non-current assets
824
271
Total assets
$
158,661
$
173,553
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable
$
3,192
$
3,036
Accrued and other current liabilities
9,846
14,125
Accrued product warranties
2,636
1,643
Operating lease liabilities, current
1,541
1,421
Deferred revenue
1,424
6,168
Notes payable, current
—
1,600
Total current liabilities
18,639
27,993
Notes payable, non-current
—
315
Operating lease liabilities,
non-current
1,365
2,535
Deferred revenue, non-current
19,905
2,442
Common stock warrant liabilities
2,292
3,209
Other non-current liabilities
—
85
Total liabilities
42,201
36,579
Stockholders' equity:
Preferred stock ($0.0001 par value;
200,000,000 shares authorized, none issued and outstanding as of
September 30, 2023 and December 31, 2022)
—
—
Common stock ($0.0001 par value;
2,000,000,000 shares authorized, 173,007,592 and 153,821,339 shares
issued and outstanding as of September 30, 2023 and December 31,
2022, respectively)
18
16
Additional paid-in capital
796,469
755,537
Accumulated deficit
(680,027
)
(618,579
)
Total stockholders' equity
116,460
136,974
Total liabilities and stockholders'
equity
$
158,661
$
173,553
ESS Tech, Inc.
Condensed Consolidated
Statements of Cash Flows
(unaudited)
(in thousands)
Nine Months Ended September
30,
2023
2022
Cash flows from operating
activities:
Net loss
$
(61,448
)
$
(52,894
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
3,187
828
Non-cash interest income
(2,438
)
(527
)
Non-cash lease expense
916
841
Stock-based compensation expense
7,673
8,703
Inventory write-downs and losses on
noncancellable purchase commitments
11,422
—
Change in fair value of common stock
warrant liabilities
(917
)
(20,515
)
Other non-cash (income) expenses, net
(34
)
306
Changes in operating assets and
liabilities:
Accounts receivable, net
3,874
437
Inventory
(13,132
)
—
Prepaid expenses and other assets
3,701
1,497
Accounts payable
275
(1,604
)
Accrued and other current liabilities
(4,305
)
5,525
Accrued product warranties
993
1,148
Deferred revenue
12,532
(117
)
Operating lease liabilities
(1,050
)
(248
)
Net cash used in operating
activities
(38,751
)
(56,620
)
Cash flows from investing
activities:
Purchases of property and equipment
(4,209
)
(11,186
)
Maturities and purchases of short-term
investments, net
20,208
(123,467
)
Net cash provided by (used in)
investing activities
15,999
(134,653
)
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
)
(1,500
)
Proceeds from stock options exercised
236
102
Proceeds from contributions to Employee
Stock Purchase Plan
332
—
Repurchase of shares from employees for
income tax withholding purposes
(165
)
(2,808
)
Other, net
(214
)
(15
)
Net cash provided by (used in)
financing activities
25,588
(4,221
)
Net change in cash, cash equivalents
and restricted cash
2,836
(195,494
)
Cash, cash equivalents and restricted
cash, beginning of period
36,655
240,232
Cash, cash equivalents and restricted
cash, end of period
$
39,491
$
44,738
ESS Tech, Inc.
Condensed Consolidated
Statements of Cash Flows (continued)
(unaudited)
(in thousands)
Nine Months Ended September
30,
2023
2022
Supplemental disclosures of cash flow
information:
Cash paid for operating leases included in
cash used in operating activities
$
1,246
$
1,213
Non-cash investing and financing
transactions:
Purchase of property and equipment
included in accounts payable and accrued and other current
liabilities
747
1,718
Right-of-use operating lease assets
obtained in exchange for lease obligations
—
4,534
Right-of-use finance lease assets obtained
in exchange for lease obligations
—
123
Common stock warrants issued for the
acquisition of intangible assets
4,990
—
Cash and cash equivalents
$
37,173
$
42,896
Restricted cash, current
1,373
1,167
Restricted cash, non-current
945
675
Total cash, cash equivalents and
restricted cash shown in the condensed consolidated statements of
cash flows
$
39,491
$
44,738
ESS Tech, Inc.
Reconciliation of GAAP to
Non-GAAP Operating Expenses
(unaudited)
(in thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Research and development
$
1,609
$
20,127
$
38,790
$
49,190
Less: stock-based compensation
(278
)
(767
)
(2,401
)
(1,941
)
Non-GAAP research and development
$
1,331
$
19,360
$
36,389
$
47,249
Sales and marketing
$
2,056
1,815
$
5,648
$
5,217
Less: stock-based compensation
(211
)
(127
)
(526
)
(306
)
Non-GAAP sales and marketing
$
1,845
$
1,688
$
5,122
$
4,911
General and administrative
$
5,831
$
5,981
$
16,963
$
20,567
Less: stock-based compensation
(1,522
)
(2,104
)
(3,868
)
(6,456
)
Non-GAAP general and administrative
$
4,309
$
3,877
$
13,095
$
14,111
Total operating expenses
$
9,496
$
27,923
$
61,401
$
74,974
Less: stock-based compensation
(2,011
)
(2,998
)
(6,795
)
(8,703
)
Non-GAAP total operating expenses
$
7,485
$
24,925
$
54,606
$
66,271
ESS Tech, Inc.
Reconciliation of GAAP Net
Loss to Adjusted EBITDA
(unaudited)
(in thousands)
Three Months Ended September
30, 2023
Nine Months Ended September
30, 2023
Net loss
$
(16,618
)
$
(61,448
)
Interest income, net
(1,155
)
(3,737
)
Stock-based compensation
2,889
7,673
Depreciation
1,082
3,180
Gain (loss) on revaluation of common stock
warrant liabilities
(344
)
(917
)
Other income (expense), net
(17
)
(738
)
Adjusted EBITDA
$
(14,163
)
$
(55,987
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231107728055/en/
Investors: Erik Bylin investors@essinc.com
Media: Morgan Pitts +1 (503) 568-0755
Morgan.Pitts@essinc.com
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