Announces Partnership with Coldwell Solar
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 first quarter of 2023 ended March 31, 2023.
“ESS built nine Energy Warehouses in Q1, continuing our strong
pace of production from Q4 and proving out the improved scale of
our production capacity. While we continue to make progress
operationally, ESS faced certain challenges in the first quarter
that limited shipments and revenue recognition, including project
delays at a customer site. Although unfortunate, project delays at
energy infrastructure companies are common so we remain confident
that this timing issue will be resolved,” said Eric Dresselhuys,
CEO of ESS. “Significant market tailwinds are building momentum for
the long-duration energy storage market and, as the Inflation
Reduction Act makes its way through the IRS, we continue to see
accelerating traction with customers as we look to forge great
partnerships. Our operational initiatives for 2023 to optimize our
manufacturing supply base and processes, drive down costs to
improve leverage, and conserve our cash balance remain on track and
we are poised to play a vital part in meeting the energy storage
demands of a zero carbon energy grid.”
Recent Business Highlights
- ESS LDES units received certification to the Underwriters
Laboratories’ (UL) 1973 standard, an industry standard for
stationary energy storage systems. This certification underscores
our tech's resilience, safety and quality in a variety of
environments and conditions.
- Entered into a partnership with Coldwell Solar, a major
developer and builder of renewable energy projects for California’s
commercial, agricultural and utility sectors. ESS is installing
three Energy Warehouses in a microgrid to power three wineries in
Mendocino County, CA, to help manage demand charges and ensure
resilient operations. This microgrid is expected to be operational
in late 2023.
- ESS has been awarded over 20 additional patents for its iron
flow battery technology since the beginning of 2022, further
reinforcing its position as an industry leader in the long-duration
energy storage market. This brings the total number of patents held
by the company to 62 worldwide as of March 31, 2023, with a further
225 applications filed.
Conference Call Details
ESS will hold a webcast conference call on Tuesday, May 9, 2023
at 4:30 p.m. EDT to discuss financial results for its first quarter
2023 ended March 31, 2023, and provide an operational update.
A live webcast of the conference call will be available here and on
ESS’ Investor Relations website at http://investors.essinc.com/.
Interested parties may join the conference call beginning at 4:30
p.m. EDT on Tuesday, May 9, 2023 via telephone by calling (888)
272-2741 in the U.S., or for international callers, by calling +1
(848) 280-6390.
A replay of the webcast 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
Tech, Inc. 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.
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 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 and its current
customers resolving delays with respect to projects and the
Company’s partnerships with third parties such as Coldwell Solar.
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. 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 Consolidated
Statements of Operations and Comprehensive Loss
(Unaudited, in thousands,
except share and per share data)
Three Months Ended March
31,
2023
2022
Revenue:
Revenue
$
371
$
—
Revenue - related parties
1
—
Total revenue
372
—
Operating expenses:
Research and development
17,732
12,898
Sales and marketing
1,852
1,501
General and administrative
5,287
7,789
Total operating expenses
24,871
22,188
Loss from operations
(24,499
)
(22,188
)
Other income (expense):
Interest income (expense), net
1,252
(29
)
Gain on revaluation of common stock
warrant liabilities
688
16,504
Other income (expense), net
658
4
Total other income (expense)
2,598
16,479
Net loss and comprehensive loss to
common stockholders
$
(21,901
)
$
(5,709
)
Net loss per share - basic and diluted
$
(0.14
)
$
(0.04
)
Weighted average shares used in per share
calculation - basic and diluted
154,123,911
151,683,819
ESS Tech, Inc.
Condensed Consolidated Balance
Sheets
(Unaudited, in thousands,
except share data)
March 31, 2023
December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
87,811
$
34,767
Restricted cash, current
1,413
1,213
Accounts receivable, net
689
4,952
Short-term investments
31,196
105,047
Prepaid expenses and other current
assets
3,952
5,657
Total current assets
125,061
151,636
Property and equipment, net
18,373
17,570
Operating lease right-of-use assets
3,102
3,401
Restricted cash, non-current
676
675
Other non-current assets
239
271
Total assets
$
147,451
$
173,553
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
2,699
$
3,036
Accrued and other current liabilities
8,533
14,125
Accrued product warranties
2,874
1,643
Operating lease liabilities, current
1,464
1,421
Deferred revenue
5,929
6,168
Notes payable, current
1,522
1,600
Total current liabilities
23,021
27,993
Notes payable, non-current
—
315
Deferred revenue, non-current
2,442
2,442
Operating lease liabilities,
non-current
2,151
2,535
Common stock warrant liabilities
2,521
3,209
Other non-current liabilities
80
85
Total liabilities
30,215
36,579
Stockholders’ equity:
Preferred stock ($0.0001 par value;
200,000,000 shares authorized, none issued and outstanding as of
March 31, 2023 and December 31, 2022)
—
—
Common stock ($0.0001 par value;
2,000,000,000 shares authorized, 154,344,930 and 153,821,339 shares
issued and outstanding as of March 31, 2023 and December 31, 2022,
respectively)
16
16
Additional paid-in capital
757,700
755,537
Accumulated deficit
(640,480
)
(618,579
)
Total stockholders’ equity
117,236
136,974
Total liabilities and stockholders’
equity
$
147,451
$
173,553
ESS Tech, Inc.
Condensed Consolidated
Statements of Cash Flows
(Unaudited, in
thousands)
Three Months Ended March
31,
2023
2022
Cash flows from operating
activities:
Net loss
$
(21,901
)
$
(5,709
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
1,077
196
Non-cash interest (income) expense
(762
)
14
Non-cash lease expense
299
275
Stock-based compensation expense
2,059
2,760
Change in fair value of common stock
warrant liabilities
(688
)
(16,504
)
Other non-cash income and expenses,
net
(48
)
—
Changes in operating assets and
liabilities:
Accounts receivable
4,330
785
Prepaid expenses and other assets
1,731
405
Accounts payable
(529
)
(1,852
)
Accrued and other current liabilities
(4,657
)
421
Accrued product warranties
1,231
—
Deferred revenue
(306
)
—
Operating lease liabilities
(346
)
(165
)
Net cash used in operating
activities
(18,510
)
(19,374
)
Cash flows from investing
activities:
Purchases of property and equipment
(2,610
)
(4,041
)
Maturities and purchases of short-term
investments, net
74,668
—
Net cash provided by (used in)
investing activities
72,058
(4,041
)
Cash flows from financing
activities:
Payments on notes payable
(400
)
(483
)
Proceeds from stock options exercised
104
47
Repurchase of shares from employees for
income tax withholding purposes
—
(2,808
)
Other, net
(7
)
—
Net cash used in financing
activities
(303
)
(3,244
)
Net change in cash, cash equivalents
and restricted cash
53,245
(26,659
)
Cash, cash equivalents and restricted
cash, beginning of period
36,655
240,232
Cash, cash equivalents and restricted
cash, end of period
$
89,900
$
213,573
ESS Tech, Inc.
Condensed Consolidated
Statements of Cash Flows (continued)
(Unaudited, in
thousands)
Three Months Ended March
31,
2023
2022
Supplemental disclosures of cash flow
information:
Cash paid for operating leases included in
cash used in operating activities
$
413
$
403
Non-cash investing and financing
transactions:
Purchase of property and equipment
included in accounts payable and accrued and other current
liabilities
623
2,235
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
Cash and cash equivalents
$
87,811
$
212,331
Restricted cash, current
1,413
1,167
Restricted cash, non-current
676
75
Total cash, cash equivalents and
restricted cash shown in the condensed consolidated statements of
cash flows
$
89,900
$
213,573
ESS Tech, Inc.
Reconciliation of GAAP to
Non-GAAP Operating Expenses
(Unaudited, in
thousands)
Three Months Ended March
31,
2023
Research and development
$
17,732
Less: stock-based compensation
(993
)
Non-GAAP research and development
$
16,739
Sales and marketing
$
1,852
Less: stock-based compensation
(150
)
Non-GAAP sales and marketing
$
1,702
General and administrative
$
5,287
Less: stock-based compensation
(916
)
Non-GAAP general and administrative
$
4,371
Total operating expenses
$
24,871
Less: stock-based compensation
(2,059
)
Non-GAAP total operating expenses
$
22,812
ESS Tech, Inc.
Reconciliation of GAAP Net
Loss to Adjusted EBITDA
(Unaudited, in
thousands)
Three Months Ended March
31,
2023
Net loss
$
(21,901
)
Interest income (expense), net
(1,252
)
Stock-based compensation
2,059
Depreciation
1,071
Gain on revaluation of common stock
warrant liabilities
(688
)
Other income (expense), net
(658
)
Adjusted EBITDA
$
(21,369
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230509005686/en/
Investors: Erik Bylin investors@essinc.com
Media: Morgan Pitts +1 (503) 568-0755
Morgan.Pitts@essinc.com
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