Record Revenue of $2.8 Million
Delivered Energy Warehouses™ to Four New
Customers
Announces Partnership with LEAG
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 second quarter ended June 30, 2023.
“I’m proud of the progress ESS made in the second quarter,
recognizing record revenue of $2.8 million and delivering nine
Energy Warehouses to four different customers. We’ve made
significant improvements across our internal operations which are
driving solid gains in manufacturing efficiency, greater
predictability in our ability to meet our customers' needs and more
streamlined revenue recognition,” said Eric Dresselhuys, CEO of
ESS. “Our innovative, sustainable iron flow battery technology
remains the key to our success and fuels our potential for
long-term growth and profitability. As the Inflation Reduction Act
continues to spark increased interest among customers seeking
low-cost ways to decarbonize and enable long-duration energy
storage in their grids, ESS remains well-positioned to capture
share in this rapidly expanding market, as evidenced by our
partnership with LEAG. With continually improving execution and
visibility across the business, we expect revenue for the next two
quarters to continue at approximately the same rate as the second
quarter. Our tightly-aligned team is poised to unlock even greater
efficiency improvements in the coming quarters while maintaining a
healthy cash balance.”
Recent Business Highlights
- Recognized $2.8 million in revenue and shipped nine Energy
Warehouses™ in the second quarter.
- Entered into a strategic partnership with LEAG, a major German
energy provider. LEAG and ESS plan to build a 500 MWh iron flow
battery system at the Boxberg Power Plant site in Germany, to help
manage demand charges and ensure resilient operations while
creating a template for further storage installations. The
execution of definitive agreements is expected in the third quarter
in anticipation of project financial close.
- Began shipments for the first phase of ESS’ relationship with
Sacramento Municipal Utility District (SMUD), 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.
- ESS Energy Warehouse units received certification to the
Underwriters Laboratories’ (UL) 9540 standard, an industry standard
for stationary energy storage systems. This certification
underscores our technology's resilience, safety and quality in a
variety of environments and conditions.
- ESS has been awarded 10 additional patents for its iron flow
battery technology in the second quarter, 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 70 worldwide and a total of 235 applications filed, as of June
30, 2023.
Conference Call Details
ESS will hold a webcast conference call on Tuesday, August 8,
2023 at 5:00 p.m. EDT to discuss financial results for its second
quarter 2023 ended June 30, 2023. Interested parties may join the
conference call beginning at 5:00 p.m. EDT on Tuesday, August 8,
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 025797. A telephone replay will be available until
August 15, 2023, by dialing (866) 813-9403 in the U.S., or for
international callers, +44 (204) 525-0658 with conference ID
253542. 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
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.
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 LEAG 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 six months ended June 30, 2023, to be filed with the
SEC on August 8, 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.
ESS Tech, Inc.
Condensed Consolidated
Statements of Operations and Comprehensive Loss
(unaudited)
(in thousands, except share
and per share data)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Revenue:
Revenue
$
2,826
$
404
$
3,197
$
404
Revenue - related parties
1
282
2
$
282
Total revenue
2,827
686
3,199
$
686
Operating expenses:
Research and development
19,450
16,165
37,181
29,063
Sales and marketing
1,739
1,900
3,592
3,402
General and administrative
5,845
6,797
11,132
14,586
Total operating expenses
27,034
24,862
51,905
47,051
Loss from operations
(24,207
)
(24,862
)
(48,706
)
(46,365
)
Other income (expenses), net:
Interest income, net
1,330
247
2,582
218
Gain (loss) on revaluation of common stock
warrant liabilities
(115
)
8,596
573
25,101
Other income (expense), net
63
(255
)
721
(251
)
Total other income (expenses), net
1,278
8,588
3,876
25,068
Net loss and comprehensive loss to
common stockholders
$
(22,929
)
$
(16,274
)
$
(44,830
)
$
(21,297
)
Net loss per share - basic and diluted
$
(0.15
)
$
(0.10
)
$
(0.29
)
$
(0.14
)
Weighted-average shares used in per share
calculation - basic and diluted
154,900,330
152,723,980
154,514,265
152,206,773
ESS Tech, Inc.
Condensed Consolidated Balance
Sheets
(unaudited)
(in thousands, except share
data)
June 30, 2023
December 31, 2022
Assets
Current assets:
Cash and cash equivalents
$
30,287
$
34,767
Restricted cash, current
1,373
1,213
Accounts receivable, net
1,393
4,952
Short-term investments
69,216
105,047
Prepaid expenses and other current
assets
3,148
5,657
Total current assets
105,417
151,636
Property and equipment, net
18,483
17,570
Operating lease right-of-use assets
2,797
3,401
Restricted cash, non-current
944
675
Other non-current assets
115
271
Total assets
$
127,756
$
173,553
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable
$
2,838
$
3,036
Accrued and other current liabilities
8,970
14,125
Accrued product warranties
5,103
1,643
Operating lease liabilities, current
1,500
1,421
Deferred revenue
3,167
6,168
Notes payable, current
1,127
1,600
Total current liabilities
22,705
27,993
Notes payable, non-current
—
315
Operating lease liabilities,
non-current
1,767
2,535
Deferred revenue, non-current
3,348
2,442
Common stock warrant liabilities
2,636
3,209
Other non-current liabilities
—
85
Total liabilities
30,456
36,579
Stockholders' equity:
Preferred stock ($0.0001 par value;
200,000,000 shares authorized, none issued and outstanding as of
June 30, 2023 and December 31, 2022)
—
—
Common stock ($0.0001 par value;
2,000,000,000 shares authorized, 155,570,588 and 153,821,339 shares
issued and outstanding as of June 30, 2023 and December 31, 2022,
respectively)
16
16
Additional paid-in capital
760,693
755,537
Accumulated deficit
(663,409
)
(618,579
)
Total stockholders' equity
97,300
136,974
Total liabilities and stockholders'
equity
$
127,756
$
173,553
ESS Tech, Inc.
Condensed Consolidated
Statements of Cash Flows
(unaudited)
(in thousands)
Six Months Ended June
30,
2023
2022
Cash flows from operating
activities:
Net loss
$
(44,830
)
$
(21,297
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
2,105
463
Non-cash interest (income) expense
(1,487
)
7
Non-cash lease expense
604
555
Stock-based compensation expense
4,784
5,705
Change in fair value of common stock
warrant liabilities
(573
)
(25,101
)
Other non-cash income and expenses,
net
(33
)
238
Changes in operating assets and
liabilities:
Accounts receivable, net
4,653
1,841
Prepaid expenses and other assets
2,561
1,336
Accounts payable
(664
)
(786
)
Accrued and other current liabilities
(4,234
)
1,961
Accrued product warranties
3,460
1,158
Deferred revenue
(3,189
)
(687
)
Operating lease liabilities
(689
)
74
Net cash used in operating
activities
(37,532
)
(34,533
)
Cash flows from investing
activities:
Purchases of property and equipment
(3,440
)
(8,463
)
Maturities and purchases of short-term
investments, net
37,363
(79,599
)
Net cash provided by (used in)
investing activities
33,923
(88,062
)
Cash flows from financing
activities:
Payments on notes payable
(800
)
(967
)
Proceeds from stock options exercised
122
95
Proceeds from contributions to Employee
Stock Purchase Plan
332
—
Repurchase of shares from employees for
income tax withholding purposes
(82
)
(2,808
)
Other, net
(14
)
(7
)
Net cash used in financing
activities
(442
)
(3,687
)
Net change in cash, cash equivalents
and restricted cash
(4,051
)
(126,282
)
Cash, cash equivalents and restricted
cash, beginning of period
36,655
240,232
Cash, cash equivalents and restricted
cash, end of period
$
32,604
$
113,950
ESS Tech, Inc.
Condensed Consolidated
Statements of Cash Flows (continued)
(unaudited)
(in thousands)
Six Months Ended June
30,
2023
2022
Supplemental disclosures of cash flow
information:
Cash paid for operating leases included in
cash used in operating activities
$
827
$
806
Non-cash investing and financing
transactions:
Purchase of property and equipment
included in accounts payable and accrued and other current
liabilities
931
556
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
$
30,287
$
112,708
Restricted cash, current
1,373
1,167
Restricted cash, non-current
944
75
Total cash, cash equivalents and
restricted cash shown in the condensed consolidated statements of
cash flows
$
32,604
$
113,950
ESS Tech, Inc.
Reconciliation of GAAP to
Non-GAAP Operating Expenses
(unaudited)
(in thousands)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Research and development
$
19,450
$
16,165
$
37,181
$
29,063
Less: stock-based compensation
(1,130
)
(587
)
(2,123
)
(1,173
)
Non-GAAP research and development
$
18,320
$
15,578
$
35,058
$
27,890
Sales and marketing
$
1,739
$
1,900
$
3,592
$
3,402
Less: stock-based compensation
(165
)
(125
)
(315
)
(179
)
Non-GAAP sales and marketing
$
1,574
$
1,775
$
3,277
$
3,223
General and administrative
$
5,845
$
6,797
$
11,132
$
14,586
Less: stock-based compensation
(1,430
)
(2,233
)
(2,346
)
(4,353
)
Non-GAAP general and administrative
$
4,415
$
4,564
$
8,786
$
10,233
Total operating expenses
$
27,034
$
24,862
$
51,905
$
47,051
Less: stock-based compensation
(2,725
)
(2,945
)
(4,784
)
(5,705
)
Non-GAAP total operating expenses
$
24,309
$
21,917
$
47,121
$
41,346
ESS Tech, Inc.
Reconciliation of GAAP Net
Loss to Adjusted EBITDA
(unaudited)
(in thousands)
Three Months Ended June
30,
Six Months Ended June 30,
2023
Net loss
$
(22,929
)
$
(44,830
)
Interest income, net
(1,330
)
(2,582
)
Stock-based compensation
2,725
4,784
Depreciation
1,027
2,098
Gain (loss) on revaluation of common stock
warrant liabilities
115
(573
)
Other income (expense), net
(63
)
(721
)
Adjusted EBITDA
$
(20,455
)
$
(41,824
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230808214025/en/
Investors: Erik Bylin investors@essinc.com
Media: Morgan Pitts +1 (503) 568-0755
Morgan.Pitts@essinc.com
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