ESS Tech Q2 2024 Earnings Call Transcript

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August 14, 2024

There are 10 speakers on the call.

Operator

Ladies and gentlemen, thank you for standing by. At this time, all participants are in a listen only mode. Later, we will conduct a Q and A session. I would now like to turn the conference over to our host, Eric Weiline. Please go ahead, sir.

Speaker 1

Welcome to ESS' Q2 of fiscal year 2024 financial results conference call. Joining me on the call today from ESS are Eric Dresselhaus, CEO and Tony Robb, CFO. Following management's prepared remarks, we will hold a Q and A session. Earlier today, ESS released financial results for the Q2 of fiscal year 2024. The earnings release is available in the Investor Relations section of the company's website.

Speaker 1

As a reminder, the information presented today will include forward looking statements, including without limitation, statements about our growth prospects, partnerships, financial performance and strategy for 2024 and beyond. The forward looking statements are also subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those projected or implied during this call. In particular those described in our risk factors set forth in more detail in our most recent periodic filings filed with the Securities and Exchange Commission, as well as the current uncertainty and unpredictability in our business, issues with our partnerships, the markets, the economy and the current geopolitical situation. You should not rely on our forward looking statements as predictions of future events. All forward looking statements that we make on this call today are based on assumptions and beliefs as of the date hereof, and we disclaim any obligation to update any forward looking statements except as required by law.

Speaker 1

During the call, we will also present certain financial information on a non GAAP basis. Management believes that non GAAP financial measures, taken in conjunction with U. S. GAAP Financial Measures, provide useful information for both management and investors by excluding certain items that are not indicative of our core operating results. Management uses non GAAP measures internally to understand, manage and evaluate our business and make operating decisions.

Speaker 1

Reconciliations between U. S. GAAP and non GAAP results are presented within our earnings release. With that, I'll turn the call over to ESS's CEO, Eric Dusselhaus.

Speaker 2

Welcome, and thanks for joining us today. Momentum continues to build for our business and for the larger long duration energy storage market. In the last quarter, we've seen continued regulatory momentum to grow deployments of 8 + hour duration storage and direct funding announcements to projects that will accelerate adoption and continued deployments of our technology, reinforcing our position as a leader in the field. In the Q2, we had expected to ship more units, but a key partner experienced a delay in final approvals and funding. We have built and had anticipated shipping approximately 12 additional EWs last quarter in support of those projects, but unfortunately they slipped.

Speaker 2

Based on the current information provided by the partner MDN customer, we now expect to ship and recognize revenue for those units in the 3rd quarter, So stay tuned for further announcements. These delays are frustrating and given our early stage, any shift in project timing has a meaningful impact on the results within any given quarter. In any case, we continue to execute on our strategy and expect to ramp revenue in the back half of the year as we lower cost and increase our capacity. I'm thrilled to announce that we are finalizing the details to close a transformative agreement with the Export Import Bank of the United States or EXIM for up to $50,000,000 in funding to help ESS continue to maintain our strong balance sheet while expanding our operations. Provided by the Make More in America initiative, this funding is long term, low interest, non dilutive capital to finance expanding manufacturing capacity.

Speaker 2

We can use it immediately to add to our cash position, borrowing about $10,000,000 this year, including on a look back basis for previously installed capacity and for the addition of Line 2, which is expected to triple our production capacity to over 1 gigawatt hour of battery capacity annually. Just last week, we were joined by Senator Ron Wyden and Ex I'm Vice Chair, Judith Pryor and numerous other dignitaries here in Wilsonville to hold a ribbon cutting to celebrate our growing manufacturing capacity. This groundbreaking followed a visit from the conservative climate caucus, a group of congresspeople that works to reduce emissions by educating House Republicans on climate policies and legislation consistent with conservative values, proving that lowering our carbon footprint through American made long duration energy storage is a bipartisan imperative, something we can all agree upon. We're honored to have gained their support and humbled to hear their praise for what ESS is doing to build storage in the U. S.

Speaker 2

This support for scaling is important because we're going to need a lot of long duration energy storage. As many of you know, electricity demand in the U. S. And around the world is beginning to increase dramatically as we work to electrify everything and support the massive demand from technologies such as generative AI. After decades of essentially no load growth, the Federal Energy Regulatory Commission or FERC now shows that U.

Speaker 2

S. Electricity demand is expected to grow by 4.7% annually. That translates to 38 gigawatts of growth by 2028. And large customers are expecting it to be clean, driving the demand for green energy PPAs and clean baseload power. Legislators and regulators are hearing the call, resulting in new mandates for long duration energy storage in California, Michigan, New York and other states and across the globe.

Speaker 2

Ensuring a reliable, cost effective, decarbonized electricity system is our mission here at EFS, and we were pleased to be included in a recent New York Times discussion on the need to ensure the reliability of the grid. Our customers are leading the industry to the future and their work demonstrates the progress we're making in the market, helping position our Iron Flow technology as the most proven long duration energy storage technology available. These proof points are critical as they demonstrate the value of our solutions across a variety of use cases, unlock future projects with these customers and serve as a critical catalyst to building on an over $1,500,000,000 and potential projects with our current customers. Earlier this year, we successfully commissioned our first system at Schiphol Airport in Amsterdam, which is installed on the tarmac to phase out diesel ground power units or GPUs that supply electrical power to aircraft while they're parked at the gates. I'm pleased to share that in Q2, we went into operation at the airport and are charging GPUs.

Speaker 2

This is an extremely meaningful validation of the safety of our technology given the strict standards in commercial aviation, while also proving out the functionality and versatility of our batteries. And yet another sign of the imperative behind California's drive to decarbonize and increase resiliency of the electricity system, in July, the California Energy Commission or CEC awarded a $10,000,000 grant to our long duration battery storage project in partnership with Sacramento Municipal Utility District or SMUD. As a reminder, SMUD signed a 2 gigawatt hour framework agreement with ESS and we have already delivered and commissioned the first phase of this agreement. The CEC funding along with incremental investments in SMUD will be used to fund Phase 2, a 3.6 Megawatt 8 hour iron flow battery implementation. With SMUD transitioning to a carbon free power portfolio by 2,030, a goal which is now a mere 5.5 years away, they are clearly taking meaningful steps towards achieving the 13.6 gigawatts of energy storage the California Public Utility Commission believes California will need by 2,032.

Speaker 2

At the end of May, Burbank Water and Power held their ribbon cutting with local elected officials to commemorate the commissioning of their ESS Energy Warehouse, their first long duration energy storage system. BWP is another progressive California utility that recognizes the necessity of pairing Eldes with renewables to achieve their aggressive decarbonization goals. Our energy warehouse is now integrated into BWP's eco campus and connected to a 2 65 kilowatt solar array capable of powering about 300 homes. Their forward thinking approach to decarbonization will help them increase their use of renewable energy and propel them towards their goal of achieving 100% carbon free power by 2,040. I'm pleased that ESS will play such an integral part in this journey and it is gratifying to see the Burbank team so eager to publicize their project, including their planned VIP tour in September.

Speaker 2

We were pleased to announce that Indian Energy, a Native American owned microgrid developer and integrator, the CEC and the Department of Defense together selected ESS's iron flow batteries to demonstrate the diverse capabilities of LDES technologies for utility scale resilient micro grids. The program is a valuable step forward in proving that LDES can deliver energy security to remote communities like tribal nations and military bases. Over the coming months, our project partners expect to demonstrate a variety of use cases for the California energy market, including solar peak shifting and grid ancillary services, after which time it will be placed into commercial operation. And now I'll touch on our progress with the energy center project we're developing with Portland General Electric and the transition to production manufacturing. Importantly, as we've shared in the past, we completed production and testing of the inaugural EC and have been cycling it to home the operations while subjecting it to varied operating demands to characterize and validate its operational performance.

Speaker 2

As part of this, we continue to conduct additional durability cycling against both the PNNL and ENGIE-nineteen testing regimes. It's great to see the unit performing well and we have transacted more than 140 megawatt hours of energy through this one unit over the last couple of months. Importantly, we're thrilled to see our Iron Flow technology transition quickly to a scaled up form factor through the great work of our engineering and production teams. Building the units is only one part of making a new battery ready for market. In our business, certifications are imperative to our customers.

Speaker 2

Ensuring our solutions are safe and can withstand the harsh environments in which they operate is critical to enabling adoption. We mentioned last quarter that we were the 1st non lithium grid battery that for both the EW and EC achieved IEEE 693 certification, a seismic rating that qualifies these systems for deployment as critical infrastructure across the United States. This is an essential certification for LVES deployment in California and in the near term, we expect to achieve UL 9540 for the EC, a safety standard for energy storage systems and equipment for fire prevention. Achieving both IEEE 693 and the UL 9540 certification is critical for utilities given the ongoing lithium storage incidents in California and elsewhere, and an important step in demonstrating the viability of our EC for frictionless deployment across broad use cases and a variety of environments. Given our progress, we incorporated a number of design optimizations from our first EC to enhance manufacturability and begin production of our second unit for PGE in July.

Speaker 2

We expect this unit to be completed by our next earnings call with grid interconnection and handover to PGE expected to take place soon after. In conjunction with that, we are nicely positioned to begin building the 1st ECs for commercial deliveries in August. In preparation for our planned shipments to Tampa Electric followed by SMUD, we have bolstered our operations and assembly lines to accommodate the EC manufacturing requirements and volume expectations. As we've discussed on previous calls, our plan for 2024 was to moderate our builds and shipments in the first half and scale them in the second half after we make progress on our cost reduction initiatives. That plan remains intact and we expect to begin increasing our shipments in the coming quarters, driven by a combination of EWs and initial shipments of our EC.

Speaker 2

As you have likely seen from many companies in the energy transition space, project timing can be difficult to predict and we've certainly had our share of delays. That said, we continue to see ramping 2024 revenue to multiples of what it was in 2023, which sets us up nicely to achieve our broader expansion plans for 2025 and beyond. So we'll continue to work to keep these projects on track. And with that, I'll turn it over to Tony.

Speaker 3

Thanks, Eric. Let's otherwise note is all numbers we discuss today will be on a non GAAP basis. You'll find the reconciliation of GAAP to the non GAAP financial measures in our earnings release, which is posted on our Investor Relations website. We reported revenue of $348,000 in the 2nd quarter with the associated cost of revenue reported at $11,700,000 As previously shared, the transition from R and D accounting to inventory accounting results in an LC and RV adjustment that dramatically impacts our current COGS results. This will not be a material contributor to our financials as we reach scale.

Speaker 3

We continue to make progress towards profitability. However, our COGS results will not fully reflect our cost reduction initiatives benefits, thereby making it difficult to assess our progress through our current financial statements. We're making great progress with incremental cost reduction initiatives through value engineering, supply chain optimizations and process improvements for both the Energy Warehouse and Energy Center. As we've previously mentioned, during 2023, we lowered the cost to build an EW by 60% and we're targeting another 40% reduction this year. With the improvements we're realizing on the cost reductions in 2024, we still expect to reach non GAAP gross margin profitability on the Energy Warehouse by the end of this year.

Speaker 3

Our non GAAP operating expenses for Q2 were in line with our expectations at $9,100,000 Non GAAP R and D came in at $1,900,000 which we believe reflects the company's run rate and continued investment in our cost out initiatives and product roadmap improvements on reliability, durability and the efficiency of the EW and the EC. With that, we reported Q2 adjusted EBITDA of negative $18,800,000 Turning to cash flow and liquidity. We ended the Q2 with $74,400,000 in cash and short term investments. We remain focused on managing our cash burn rate, including driving ongoing efforts to optimize working capital. As Eric mentioned, this quarter, we expect to close on the 1st tranche of an up to $50,000,000 financing facility from Exim.

Speaker 3

And from this, we intend to add about $10,000,000 of cash to our balance sheet this year with extended repayment terms and very competitive interest rates. We have invested in another automated line that is planned to come online early next year to produce power modules that should greatly enhance our ability to ramp up in 2025. That capacity expansion comes at a dramatic improvement in cost per megawatt, roughly half the cost we previously expected. And with the Exim agreement, we expect to fully fund this and future production capacity expansion. We're extremely well positioned to continue to expand our production capacity through this Exim financing facility, effectively funding all of our production capacity CapEx needs through 2025 and into 2026.

Speaker 3

This transformative agreement bolsters our liquidity levels and we expect should support our business cash needs well into 2025. We continue to opportunistically look to strengthen our balance sheet through dilutive and non dilutive financing alternatives to provide the necessary capital to give us operational flexibility to respond to market demand. Our Exim financing is a great example of a non dilutive solution to bolstering our cash position. Additionally, with such strong market tailwinds, we continue to see considerable investor interest in investing in long duration energy storage and we remain very confident in our ability to raise the necessary capital to fund us through the cash flow breakeven. And finally, as you may have seen, we filed a proxy statement with the SEC to execute a reverse split of our stock to address the listing notice from the New York Stock Exchange.

Speaker 3

Once executed, we expect to be in compliance with the listing requirements and continue our operations as a publicly listed company. The current ratio of shares has yet to be determined, but we expect to complete the split in late August. And with that, I'll open it up for questions.

Operator

Your first question comes from Colin Rusch. Your line is now open.

Speaker 4

Hi, this is Lydia on for Colin. Thanks for taking our questions. First, we noticed on Slide 20 of the investor presentation that the capital required to produce for ESS is around $20,000,000 per gigawatt hour. Could you maybe tell us about what scale you would need to achieve that number?

Speaker 5

You mean the scale to that's on a per gigawatt hour basis in terms of the capacity that we need to add. So each of our lines is substantially less than that amount.

Speaker 2

So we can build in increments smaller than a gigawatt. I think Line 2 is about a half, a little bigger than a half gigawatt hour of capacity.

Speaker 3

That's correct.

Speaker 4

Got it. Got it. Okay. And then maybe for a follow-up, could you speak to the growth in potential customers evaluating your field data and how quickly those customers are moving through your field funnel?

Speaker 2

Sure. Erica, I'll take that. It's a mixed bag as you would expect. We're seeing 2 things. We're seeing some of the behind the meter applications where customers have kind of follow on applications.

Speaker 2

They tend to move through more quickly. They'll often want to run for a year, but sometimes less. And for other customers, we have a multi phased approach where we're going through it kind of in order. So we'd expect as we said, if you look at SMUD to having deployed the first phase, complete the work on that and start moving on to the 2nd phase, which will be an EC phase product. But the 3rd piece that we found is that a lot of the market activity these days from an RFP, RFI perspective are all targeting larger projects that will be 2627 projects.

Speaker 2

One of the things about our industry that people who follow other companies would certainly be aware is that the lead times for planning are quite long and that can be influenced by interconnect queues and site preparations as well. So we have a lot of folks that are looking at current customers and visiting them, getting feedback on the product as they're making their plans for very large projects that happen in the out years. And that activity has increased quite a bit, in part as I mentioned due to things like the need for green PPAs from hyperscalers and folks like that.

Operator

Your next question comes from Corrine Blanchard. Your line is now

Speaker 6

open. Thank you. This is actually Mike Stulte on for Corrine. Hey, or Taytoni. My question has

Speaker 7

to do

Speaker 2

with your Hi, Corrine.

Speaker 6

Good. Thank you. My question has to do with your revenue target of 3 to 4 times in 2024. So this is implying $23,000,000 in the second half of the midpoint. Could you maybe break that down between energy centers and energy warehouses?

Speaker 2

Yes. It's I think that the ramp up on the energy centers we've talked about in the past will start in the not until the Q4. So it's going to be, I'd say, I don't know, maybe a split of 2 thirds EWs and a third ECs. As we said in our in the prepared comments, with not just what we've seen, but with other people have seen, we get very anxious about the timing of one project versus another. If there's any slippage or movement in timing, because our numbers are comparatively small number of projects that can make a pretty big difference.

Speaker 2

So I wouldn't want to hang my hat too hard on exact mixes, but that would roughly be the layout.

Speaker 6

Okay. Thank you. That's very helpful. And then my follow-up has to do with the growth tied to AI and data centers. You mentioned it in your prepared remarks.

Speaker 6

I was wondering if you could give a little bit more color around what you're hearing from potential customers in that space?

Speaker 2

Sure. Yes. So the step back is really on

Speaker 8

the broader

Speaker 2

category of data centers. 1 of the increasingly loud screams we're hearing from the market, both from end users, but also from developers who serve that market is that the data center operators have very ambitious plans for building out in support of what they expect to be massive growth in generative AI. And that's got 2 problems. 1, it's just regular use, but generative AI is depending on who you talk to kind of 8 to 10 times more energy consuming than say a typical Google search. So people are anticipating that demand.

Speaker 2

And what's happening is they're going to utilities, not just here in the U. S, but around the world saying, hey, I'd like to build a data center of this size and I need the power of a certain level. And it's they're getting the answer back from the utilities and say, I'm sorry, I just can't support that. It's just too much energy. So this is becoming kind of an economic limiter for the people in the business of hosting data centers to say where can I go put a data center that can supply the power I need?

Speaker 2

In some markets like Ireland as an example, Ireland they've come out and just told data center people we'd love to have you, but you're totally responsible for coming up with your own power. So with that it's a little bit long winded background. What we're finding is that people are looking at saying, can I do this as a micro grid? Can I buy my own renewables, pair it with storage and create a 20 fourseven green energy system? And do that without having a heavy reliance, maybe not no reliance, but without as heavy a reliance on the grid operator that I normally would have thought about doing.

Speaker 2

It's early days of this, but it's, it's a topic at every conference that happens in the energy industry these days. And there have been quite a few big public announcements from Google, Microsoft and AWS. They're trying to procure their own green PPAs to get out of the way to not have the reliance on the utility operators.

Speaker 6

Thank you. That's very helpful.

Operator

Our next question today comes from Justin Clare. Your line is now open.

Speaker 9

Hi, good afternoon. So, I wanted to start with the manufacturing after noon. Wanted to start with the manufacturing here. So the second automated line, I think that's expected to come online next year. I was wondering if you could talk about the ramp there.

Speaker 9

So you talked about getting to 1 gigawatt hour. When could you achieve that run rate? And what does the timeline look in terms of the ramp up of that second line?

Speaker 5

Yes. This is Tony. So the second line we anticipate should be online in the first half or by the end of the first half of next year. And so the way to think about that is that we'll have 1 gigawatt hour approximately of production capacity going forward from that point. So we'll get about a half year's worth of that capacity in 2025.

Speaker 9

Okay, got it. Okay, got it. And then just on the manufacturing CapEx, I was wondering when we think about the financing from export import bank, dollars 10,000,000 this year and then $10,000,000 to $15,000,000 I think you anticipate next year. Is all of that capital expected to be devoted toward the CapEx spend for that second automated line? And then just wondering how you're thinking about the remaining capital that might be available to you and whether that could be used for a 3rd automated line or what you're contemplating there?

Speaker 5

Yes, exactly. So the large portion of the first $10,000,000 that we're drawing down is associated with Line 1 and the production capacity CapEx that we incurred to put that in place. So that's that look back component that Eric had mentioned. And then Line 2 will be financed with the remaining parts of the credit facility. And as we mentioned, the CapEx that we need to implement these lines is substantially less than Line 1.

Speaker 5

So we should be able to add multiple lines with this credit facility well beyond Line 2 and into the capacity that we need into 2026.

Speaker 9

Okay. Okay. That's helpful. And then one more just on margin profile. So it sounds like you're on track to reach non GAAP profitability for the EW toward the end of this year.

Speaker 9

Wondering what the impact could be on the profitability for that product as that second automated line ramps up. Like would you produce EWs on that line and would you expect a margin boost at that point in time?

Speaker 5

Well, what gets produced on those battery stacks lines, those go into both EWs and ECs. It's the exact same product. So it doesn't matter what the mix of product is that we are shipping. Those production lines, the core components and the battery powertrain that goes into the EC is the exact same product. So as we scale up to produce and sell ECs, that's all going to be happening on Line 1.

Speaker 5

And then as we run out of capacity on Line 1, we'll start producing on Line 2.

Speaker 9

Okay, got it. All right, appreciate it. Thank you.

Operator

Your next question today comes from David Sunderland. Your line is now open.

Speaker 8

Eric, Tony, good afternoon guys. Thank you for the time. Thanks for taking my questions.

Speaker 2

Good morning.

Speaker 8

Wanted to ask you to talk a bit more about the Honeywell partnership. Maybe if there's any new traction you can speak to as a distribution channel, maybe if there's any possibility to execute more, I guess, I'll call them individual asset sales rather than your typical kind of framework partnerships you have with, say, Smad or the Ag or some of the other larger partners? Just anything that's opened up from the Honeywell? And then I have one follow-up.

Speaker 2

Yes, sure. So, well, things are starting to really get some great momentum with Honeywell. We were very fortunate to host Vimal Kumar, the CEO of Honeywell, all of Honeywell came out just last week to visit us and I'm sorry, 2 weeks ago, I want to be accurate, came out to visit us here in Wilsonville and spend a day with us, which he's a busy guy. So I think that's a great sign for the importance that he's putting on the relationship in the space. And we had a great series of conversations across both go to market and on some of the joint development activities that we've taken on together to do some things to add new features, functions and performance.

Speaker 2

But a lot of it has been driven by just getting to scale more and driving costs out of the system. Honeywell certainly has a great appreciation as we do for the market environment and the mandate to get down the cost curve as fast as possible. So we're at the stage now where the go to market teams have been organized. They've been off actively engaged in the marketplace. And I think the hope would be we'd have announcements to make.

Speaker 2

We're putting proposals out to people. And our hope would be that we'll be able to translate that into live announcements with people here over the coming months.

Speaker 8

That's super helpful. Thank you. And then my follow-up is just on raw material costs. And I know there's some one offs this quarter and probably the rest of this year with LC and RV and the accounting of the higher cost. But just wanted to ask if you guys are suffering from the so called startup premium or if suppliers have been able to renegotiate with you guys as you're getting more units out in the field now or just anything you can speak to on that would be great.

Speaker 8

Thank you.

Speaker 5

Yes. Hey, this is Tommy. So we're not seeing any negative impacts from our suppliers in terms of raw materials cost. Most of the efforts that we are seeing is we're either negotiating with our vendors for reduced cost or negotiating and qualifying new vendors for the same materials for lower costs. So that tends to be the primary focus of what we tend to be experiencing with respect to raw materials.

Speaker 8

Great. Thank you.

Operator

Your next question today comes from Thomas Boyce. Your line is now open.

Speaker 7

Just two quick ones. Do you have a sense on maybe what the financing issues were that caused the delay in EWs this quarter? The reason I ask is we saw something similar in the solar complex where adjustments to the domestic content adder caused some companies to kind of pause for a second, reassess, figure out under the new kind of schedule that was put out there, what the ramifications are? Is that something that you're seeing? Or could you give any commentary there?

Speaker 2

Yes. We haven't seen that specific case. Although, like you, we've been noting a lot of the announcements made by others on project delays either from site delays or other third party equipment delays. We've been fortunate. We've avoided those for this quarter.

Speaker 2

This specific case was the project is specifically dependent on a government grant. So government funding that was expected to happen before the end of the quarter that would have freed everything up. And the government just didn't move fast. This government entity just didn't move fast enough to get it done. So we've talked to the part both our partner and the folks at the utility and the government funders.

Speaker 2

Everybody assures us that they're moving through and getting it done and it's just taken longer than they had hoped. But unfortunately, in this case, it was enough of a timing slip that it held us back from shipping the product.

Speaker 7

Understood. Do you know if that was the PACE program or the New Era financing vehicles?

Speaker 2

No, this was just a directed investment. So it wasn't under any sort of a broader program or anything that we'd see be more methodical.

Speaker 7

Got it. And then for my follow-up, just it's good to see the project with India Energy. We've talked about some of the traction you've seen for military applications. I'm trying to get a sense of maybe what the size of the resiliency market would be for tribal lands. Is that a significant large opportunity?

Speaker 7

How do you think about addressing that longer term?

Speaker 2

Yes. I think it's I don't know that I can give you a number specifically for tribal lands, but certainly resiliency as a market resiliency micro grids, we see as a multi $1,000,000,000 U. S. Market in between now and 2,030. And it ties back a little bit to the earlier question on data centers, although that is certainly data centers are a very unique use case with some very unique requirements.

Speaker 2

But it ties into this broader theme of people wanting to have not just green energy networks that they're supplying their own electricity, but they're really starting to shift to see this as a resiliency play where you're obviously going green and hopefully trying to drive costs out, but you're worried about your ability to access electricity, on a regular basis. And so microgrids for military bases or indigenous communities are great examples of where they frankly have in the past either had an underserved community where the electricity distribution isn't good enough or where the cost of having a power outage is so severe, it's beyond the cost of electricity, right? There's operational or application impacts to losing electricity. And we like those markets because those markets also tend to have, put a big premium on both American made products and on safe products, right? They wanted their there's a lot of concern about lithium and some of the problems that lithium batteries have had.

Speaker 2

And so there's a kind of a predisposition, if you will, towards buying a U. S. Product or buying a product that is not lithium in design.

Speaker 7

Got it. No, that's very helpful. I'll hop back in the queue. Thanks again.

Speaker 8

Sure.

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Key Takeaways

  • ESS reported Q2 FY2024 revenue of $0.35 million with a Q2 adjusted EBITDA loss of $18.8 million and expects 3–4× revenue growth in H2 as cost reductions drive margins toward profitability.
  • A key partner’s funding delay pushed ~12 Energy Warehouse shipments from Q2 into Q3, highlighting the impact of project timing on the early-stage business.
  • ESS is finalizing an agreement with the Export-Import Bank for up to $50 million in low-interest, non-dilutive capital to finance manufacturing expansion, including Line 2 that will triple annual battery capacity to over 1 GWh.
  • The company achieved IEEE 693 seismic certification for both its Energy Warehouse and Energy Center systems, with UL 9540 fire-prevention certification expected soon, supporting frictionless deployment of its non-lithium technology.
  • Recent deployments and partnerships include commissioning at Schiphol Airport, a $10 million California Energy Commission grant for SMUD’s 3.6 MW/8 hr project, an Energy Warehouse at Burbank Water & Power, and a military and tribal microgrid demo with Indian Energy.
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Earnings Conference Call
ESS Tech Q2 2024
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