ESS Tech, Inc. Announces Fourth Quarter and Full Year 2023 Financial Results
Lowered Q4 Adjusted EBITDA loss by More Than 50% year over year
Exited 2023 with Cash and Short-Term Investments over
Delivered First Energy Warehouses to Honeywell
Target 40% 2024 EW Cost Reduction to Achieve non-GAAP Gross Margin Profitability
“During 2023 our team made significant progress towards our most important objectives, including securing transformative partnerships with LEAG and Honeywell, optimizing our internal operations, and pursuing design initiatives to lower production costs by improving manufacturability and scale. While we faced customer-related delays that impacted our financial results, the team’s work during the year laid a solid foundation for us to scale the business, launch the Energy Center and move toward unit profitability in 2024. In fact, our strategic decision to make fewer Energy Warehouses (EWs) and ship them to customers with the greatest long-term opportunity allowed us to conserve cash and exit the year with a cash and short-term investments balance over
Recent Business Highlights
-
Achieved record revenue of
$7.5M for FY 2023. -
Delivered first Energy Warehouses™ under the partnership with Honeywell in Q4 2023 and recently cleared previously announced customer delays in
Australia , which we expect will result in revenue of approximately$2 million in Q1 2024 which was originally anticipated in Q4 2023. -
At the end of 2023, ESS successfully “lifted” its first Energy Center™ (EC), a key milestone in the manufacturing process.
The EC is a utility-scale, front-of-the-meter long-duration energy storage product which provides up to eight hours of energy storage with a flexible, scalable platform to meet the LDES needs of utilities worldwide. We expect this inaugural EC system will be commissioned and delivered to Portland General Electric later this year. - Delivered an Energy Warehouse™ system to the Burbank Water and Power (BWP) EcoCampus, BWP’s first utility-scale battery storage project. This EW will be paired with an on-site solar array where ESS technology will demonstrate the critical role of LDES in a fully renewable grid.
-
Delivered two Energy Warehouses™ to
Turlock Irrigation District (TID) inCentral California to support TID’s Project Nexus. At TID, the EW will be paired with a proof of concept of solar panels over irrigation canals. which aims to conserve water resources by reducing evaporation while generating clean energy, reducing diesel generation and reducing energy costs. -
Completed commissioning of an Energy Warehouse™ system at the Contingency Base Integration Training Evaluation Center (CBITEC) operated by the
US Army Corps of Engineers Engineer Research and Development Center inFort Leonard Wood, Missouri . This EW has been incorporated into a tactical microgrid at CBITEC and will demonstrate the key role that LDES, specifically iron flow battery technology, can play to reduce fuel consumption at Contingency Bases such as Forward Operating Bases or other temporary use locations providing humanitarian assistance or disaster relief.
Conference Call Details
ESS will hold a conference call on
A replay of the call will be available via the web at http://investors.essinc.com/.
About
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,
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
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 and the Company’s partnerships with third parties such as Amsterdam Airport Schiphol, BWP, CMS, ESIAP, the
Statements of Operations and Comprehensive Loss
(Unaudited, in thousands, except share and per share data)
|
Three Months Ended |
||||||
|
|
2023 |
|
|
|
2022 |
|
Revenue: |
|
|
|
||||
Revenue |
$ |
2,796 |
|
|
$ |
15 |
|
Revenue - related parties |
|
— |
|
|
|
1 |
|
Total revenue |
|
2,796 |
|
|
|
16 |
|
Cost of revenue |
|
10,312 |
|
|
|
— |
|
Gross profit (loss) |
|
(7,516 |
) |
|
|
16 |
|
Operating expenses: |
|
|
|
||||
Research and development |
|
3,842 |
|
|
|
22,789 |
|
Sales and marketing |
|
2,096 |
|
|
|
1,721 |
|
General and administrative |
|
5,611 |
|
|
|
6,902 |
|
Total operating expenses |
|
11,549 |
|
|
|
31,412 |
|
Loss from operations |
|
(19,065 |
) |
|
|
(31,396 |
) |
Other income (expenses), net: |
|
|
|
||||
Interest income, net |
|
1,525 |
|
|
|
1,188 |
|
Gain on revaluation of common stock warrant liabilities |
|
1,375 |
|
|
|
5,273 |
|
Other income (expense), net |
|
35 |
|
|
|
(140 |
) |
Total other income, net |
|
2,935 |
|
|
|
6,321 |
|
Net loss and comprehensive loss to common stockholders |
$ |
(16,130 |
) |
|
$ |
(25,075 |
) |
|
|
|
|
||||
Net loss per share - basic and diluted |
$ |
(0.09 |
) |
|
$ |
(0.16 |
) |
|
|
|
|
||||
Weighted average shares used in per share calculation - basic and diluted |
|
173,552,254 |
|
|
|
153,414,471 |
|
Statements of Operations and Comprehensive Loss
(in thousands, except share and per share data)
|
Years Ended |
||||||
|
|
2023 |
|
|
|
2022 |
|
Revenue: |
|
|
|
||||
Revenue |
$ |
7,537 |
|
|
$ |
610 |
|
Revenue - related parties |
|
3 |
|
|
|
284 |
|
Total revenue |
|
7,540 |
|
|
|
894 |
|
Cost of revenue |
|
20,495 |
|
|
|
— |
|
Gross profit (loss) |
|
(12,955 |
) |
|
|
894 |
|
Operating expenses: |
|
|
|
||||
Research and development |
|
42,632 |
|
|
|
71,979 |
|
Sales and marketing |
|
7,744 |
|
|
|
6,938 |
|
General and administrative |
|
22,574 |
|
|
|
27,469 |
|
Total operating expenses |
|
72,950 |
|
|
|
106,386 |
|
Loss from operations |
|
(85,905 |
) |
|
|
(105,492 |
) |
Other income (expenses), net: |
|
|
|
||||
Interest income, net |
|
5,262 |
|
|
|
2,187 |
|
Gain on revaluation of common stock warrant liabilities |
|
2,292 |
|
|
|
25,788 |
|
Other income (expense), net |
|
773 |
|
|
|
(452 |
) |
Total other income, net |
|
8,327 |
|
|
|
27,523 |
|
Net loss and comprehensive loss to common stockholders |
$ |
(77,578 |
) |
|
$ |
(77,969 |
) |
|
|
|
|
||||
Net loss per share - basic and diluted |
$ |
(0.48 |
) |
|
$ |
(0.51 |
) |
|
|
|
|
||||
Weighted average shares used in per share calculation - basic and diluted |
|
159,958,645 |
|
|
|
152,676,155 |
|
Balance Sheets
(in thousands, except share data)
|
|
|
|
||||
Assets |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
20,165 |
|
|
$ |
34,767 |
|
Restricted cash, current |
|
1,373 |
|
|
|
1,213 |
|
Accounts receivable, net |
|
1,990 |
|
|
|
4,952 |
|
Short-term investments |
|
87,899 |
|
|
|
105,047 |
|
Inventory |
|
3,366 |
|
|
|
— |
|
Prepaid expenses and other current assets |
|
3,305 |
|
|
|
5,657 |
|
Total current assets |
|
118,098 |
|
|
|
151,636 |
|
Property and equipment, net |
|
16,266 |
|
|
|
17,570 |
|
Intangible assets, net |
|
4,923 |
|
|
|
— |
|
Operating lease right-of-use assets |
|
2,167 |
|
|
|
3,401 |
|
Restricted cash, non-current |
|
945 |
|
|
|
675 |
|
Other non-current assets |
|
833 |
|
|
|
271 |
|
Total assets |
$ |
143,232 |
|
|
$ |
173,553 |
|
Liabilities and Stockholders’ Equity |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable |
$ |
2,755 |
|
|
$ |
3,036 |
|
Accrued and other current liabilities |
|
10,755 |
|
|
|
14,125 |
|
Accrued product warranties |
|
2,129 |
|
|
|
1,643 |
|
Operating lease liabilities, current |
|
1,581 |
|
|
|
1,421 |
|
Deferred revenue, current |
|
2,546 |
|
|
|
6,168 |
|
Notes payable, current |
|
— |
|
|
|
1,600 |
|
Total current liabilities |
|
19,766 |
|
|
|
27,993 |
|
Notes payable, non-current |
|
— |
|
|
|
315 |
|
Operating lease liabilities, non-current |
|
957 |
|
|
|
2,535 |
|
Deferred revenue, non-current |
|
3,835 |
|
|
|
2,442 |
|
Deferred revenue, non-current - related parties |
|
14,400 |
|
|
|
— |
|
Common stock warrant liabilities |
|
917 |
|
|
|
3,209 |
|
Other non-current liabilities |
|
— |
|
|
|
85 |
|
Total liabilities |
|
39,875 |
|
|
|
36,579 |
|
Stockholders’ equity: |
|
|
|
||||
Preferred stock ( |
|
— |
|
|
|
— |
|
Common stock ( |
|
18 |
|
|
|
16 |
|
Additional paid-in capital |
|
799,496 |
|
|
|
755,537 |
|
Accumulated deficit |
|
(696,157 |
) |
|
|
(618,579 |
) |
Total stockholders’ equity |
|
103,357 |
|
|
|
136,974 |
|
Total liabilities and stockholders’ equity |
$ |
143,232 |
|
|
$ |
173,553 |
|
Consolidated Statements of Cash Flows
(in thousands)
|
Years Ended |
||||||
|
|
2023 |
|
|
|
2022 |
|
Cash flows from operating activities: |
|
|
|
||||
Net loss |
$ |
(77,578 |
) |
|
$ |
(77,969 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
||||
Depreciation and amortization |
|
6,513 |
|
|
|
1,523 |
|
Non-cash interest income |
|
(3,635 |
) |
|
|
(1,349 |
) |
Non-cash lease expense |
|
1,234 |
|
|
|
1,134 |
|
Stock-based compensation expense |
|
10,635 |
|
|
|
11,889 |
|
Inventory write-down and losses on noncancellable purchase commitments |
|
11,932 |
|
|
|
— |
|
Change in fair value of common stock warrant liabilities |
|
(2,292 |
) |
|
|
(25,788 |
) |
Other non-cash income and expenses, net |
|
(60 |
) |
|
|
483 |
|
Changes in operating assets and liabilities: |
|
|
|
||||
Accounts receivable, net |
|
3,633 |
|
|
|
(1,886 |
) |
Inventory |
|
(14,661 |
) |
|
|
— |
|
Prepaid expenses and other current assets |
|
2,422 |
|
|
|
(311 |
) |
Accounts payable |
|
(229 |
) |
|
|
1,464 |
|
Accrued and other current liabilities |
|
(3,378 |
) |
|
|
6,789 |
|
Accrued product warranties |
|
486 |
|
|
|
1,643 |
|
Deferred revenue |
|
11,500 |
|
|
|
1,881 |
|
Operating lease liabilities |
|
(1,418 |
) |
|
|
(1,123 |
) |
Net cash used in operating activities |
|
(54,896 |
) |
|
|
(81,620 |
) |
|
|
|
|
||||
Cash flows from investing activities: |
|
|
|
||||
Purchases of property and equipment |
|
(5,790 |
) |
|
|
(14,180 |
) |
Maturities and purchases of short-term investments, net |
|
20,861 |
|
|
|
(103,704 |
) |
Net cash provided by (used in) investing activities |
|
15,071 |
|
|
|
(117,884 |
) |
|
|
|
|
||||
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 |
) |
|
|
(1,900 |
) |
Proceeds from stock options exercised |
|
237 |
|
|
|
— |
|
Repurchase of shares from employees for income tax withholding purposes |
|
(310 |
) |
|
|
(2,808 |
) |
Proceeds from contributions to Employee Stock Purchase Plan |
|
541 |
|
|
|
492 |
|
Proceeds from warrants exercised |
|
— |
|
|
|
165 |
|
Other, net |
|
(214 |
) |
|
|
(22 |
) |
Net cash provided by (used in) financing activities |
|
25,653 |
|
|
|
(4,073 |
) |
|
|
|
|
||||
Net change in cash, cash equivalents and restricted cash |
|
(14,172 |
) |
|
|
(203,577 |
) |
Cash, cash equivalents and restricted cash, beginning of period |
|
36,655 |
|
|
|
240,232 |
|
Cash, cash equivalents and restricted cash, end of period |
$ |
22,483 |
|
|
$ |
36,655 |
|
Consolidated Statements of Cash Flows (continued)
(in thousands)
|
Years Ended |
||||
|
|
2023 |
|
|
2022 |
Supplemental disclosures of cash flow information: |
|
|
|
||
Cash paid for operating leases included in cash used in operating activities |
$ |
1,670 |
|
$ |
1,625 |
Cash paid for interest |
|
— |
|
|
154 |
Non-cash investing and financing transactions: |
|
|
|
||
Common stock warrants issued for the acquisition of intangible assets |
|
4,990 |
|
|
— |
Purchase of property and equipment included in accounts payable and accrued and other current liabilities |
|
704 |
|
|
1,358 |
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 |
Warrant vested under contracts with customers |
|
— |
|
|
46 |
|
|
|
|
||
Cash and cash equivalents |
$ |
20,165 |
|
$ |
34,767 |
Restricted cash, current |
|
1,373 |
|
|
1,213 |
Restricted cash, non-current |
|
945 |
|
|
675 |
Total cash, cash equivalents and restricted cash shown in the statements of cash flows |
$ |
22,483 |
|
$ |
36,655 |
Reconciliation of GAAP to Non-GAAP Operating Expenses
(Unaudited, in thousands)
|
Three Months Ended |
|
Twelve Months Ended |
||||
|
|
2023 |
|
|
|
2023 |
|
Research and development |
$ |
3,842 |
|
|
$ |
42,632 |
|
Less: stock-based compensation(1) |
|
(295 |
) |
|
|
(2,696 |
) |
Non-GAAP research and development |
$ |
3,547 |
|
|
$ |
39,936 |
|
|
|
|
|
||||
Sales and marketing |
$ |
2,096 |
|
|
$ |
7,744 |
|
Less: stock-based compensation(1) |
|
(290 |
) |
|
|
(816 |
) |
Non-GAAP sales and marketing |
$ |
1,806 |
|
|
$ |
6,928 |
|
|
|
|
|
||||
General and administrative |
$ |
5,611 |
|
|
$ |
22,574 |
|
Less: stock-based compensation(1) |
|
(1,502 |
) |
|
|
(5,370 |
) |
Non-GAAP general and administrative |
$ |
4,109 |
|
|
$ |
17,204 |
|
|
|
|
|
||||
Total operating expenses |
$ |
11,549 |
|
|
$ |
72,950 |
|
Less: stock-based compensation |
|
(2,087 |
) |
|
|
(8,882 |
) |
Non-GAAP total operating expenses |
$ |
9,462 |
|
|
$ |
64,068 |
|
(1) For purposes of calculating Non-GAAP total operating expenses, stock-based compensation is allocated on a departmental basis based on the classification of the award holder. |
Reconciliation of GAAP Net Loss to Adjusted EBITDA
(Unaudited, in thousands)
|
|
Three Months Ended |
|
Twelve Months Ended |
||||
|
|
|
2023 |
|
|
|
2023 |
|
Net loss |
|
$ |
(16,130 |
) |
|
$ |
(77,578 |
) |
Interest income, net |
|
|
(1,525 |
) |
|
|
(5,262 |
) |
Stock-based compensation |
|
|
2,962 |
|
|
|
10,635 |
|
Depreciation and amortization |
|
|
3,326 |
|
|
|
6,513 |
|
Gain on revaluation of warrant liabilities |
|
|
(1,375 |
) |
|
|
(2,292 |
) |
Other expense, net |
|
|
(35 |
) |
|
|
(773 |
) |
Adjusted EBITDA |
|
$ |
(12,777 |
) |
|
$ |
(68,757 |
) |
Source:
View source version on businesswire.com: https://www.businesswire.com/news/home/20240313875100/en/
Investors:
investors@essinc.com
Media:
503.568.0755
Morgan.Pitts@essinc.com
Source: