What Eos Energy Enterprises (EOSE) Said on Its Q3 Earnings Call

Key Points

• Revenue reached a record $82.7 million, up 171% year over year, and Eos reaffirmed its full-year outlook of $300 million to $325 million.
• Gross margins improved, with the company forecasting an adjusted gross margin of negative 25% to negative 20% for Q4. However, adjusted EBITDA remained deeply negative at $63.8 million; reported net income reflected non-cash accounting adjustments.
• Backlog fell to $765 million from $807 million in Q2 as shipments outpaced bookings, while more than half of 3.5 GWh of late-stage opportunities are still awaiting financing.

Eos Energy Enterprises NASDAQ: EOSE reported record third-quarter revenue and a narrower gross margin loss as battery shipments increased, while its backlog declined from the prior quarter and the company continued consolidating manufacturing at its Thorn Hill facility.

Revenue rose 171% from a year earlier to $82.7 million, up 20% from the second quarter. The energy storage company reaffirmed its full-year revenue outlook of $300 million to $325 million and projected further margin improvement in the fourth quarter.

Chief Financial Officer Alessandro Lagi said higher volume drove the latest revenue increase. Cube shipments rose 23% sequentially, although pricing was lower because of project mix. He said average selling prices are expected to return to first-half 2026 levels in the fourth quarter.

Margins improve, but operating losses persist

Eos reported a third-quarter gross loss of $44.2 million. Its gross margin improved by 18 percentage points from the second quarter and 58 points from a year earlier. On an adjusted basis, gross loss was $36.8 million, with the adjusted gross margin also improving 18 points sequentially.

The company posted net income of $125 million, which Lagi attributed to non-cash fair value adjustments related to warrants and debt rather than operating performance. Adjusted EBITDA was a loss of $63.8 million, with an adjusted EBITDA margin of negative 77%.

For the fourth quarter, Eos expects adjusted gross margin of negative 25% to negative 20%, an improvement of 19 to 24 percentage points from the third quarter. Management cited higher expected selling prices, material purchasing savings, automation and the manufacturing consolidation among the drivers.

CEO Joe Mastrangelo said Eos also expects to incur costs over the next two to three quarters as it upgrades installed systems to its DawnOS controls. Asked whether warranty costs were weighing on gross margin, he said the field costs were associated with those upgrades rather than warranties.

Factory consolidation and cash outlook

Chief Operating Officer John Mahaz said battery production increased 25% from the second quarter. Line 2, at Thorn Hill, accounted for 17% of battery output in its first full quarter of commercial operation, compared with about 1% in the prior quarter.

Eos is moving equipment and personnel from Turtle Creek to Thorn Hill to reduce overhead and conversion costs. Mahaz said the first relocated bipolar lines are targeted to begin production in the fourth quarter, while the relocated battery line is expected to return to production near the end of the first quarter of 2027. Line 2 will carry production in the meantime, he said.

The company ended the third quarter with $344 million in total cash, including $271 million in unrestricted cash. Lagi said Eos used $106 million of net cash during the quarter, offset in part by $87 million in Department of Energy reimbursement. Working capital was essentially flat, supported by customer deposits and project milestone payments, he said.

Lagi said capital spending should begin to moderate as major investments in Line 2 and Thorn Hill near completion. He also identified potential liquidity sources of $20 million under the DOE’s second tranche, approximately $24 million in Pennsylvania grant reimbursement and roughly $39 million of net production tax credits.

Asked about the company’s cash runway, Lagi said management was comfortable with available cash and other potential sources until Eos becomes profitable. Executives declined to provide a quarterly capital spending figure for 2027, saying more detail would come on the next earnings call.

Backlog slips as projects await financing

Eos ended the quarter with $765 million in backlog, representing about 3.2 gigawatt-hours of storage. That was up 19% from a year earlier but down from $807 million at the end of the second quarter. Mastrangelo attributed the sequential decline to shipments exceeding bookings and described it as a matter of project timing rather than a fundamental change in demand.

The company is working on 3.5 gigawatt-hours of late-stage opportunities, more than half of which are awaiting financing, Mastrangelo said. The remainder are in contract negotiations.

Frontier Power USA represented about 43% of backlog. Related-party revenue accounted for 83% of quarterly volume, including two projects originally developed by independent third parties and later acquired by Frontier Power USA. Lagi said the related-party share is expected to decline in the fourth quarter and move closer to the backlog mix over time.

Mastrangelo said Eos closed orders with six customers during the quarter, four of them new. He also noted that no Eos projects were selected in the first round of New York’s bulk storage program; those projects can reapply in a subsequent round expected by year-end.

About Eos Energy Enterprises (NASDAQ:EOSE)

Eos Energy Enterprises, Inc develops and manufactures long-duration energy storage systems designed to help utilities, renewable energy developers, and commercial and industrial customers store electricity for use when demand is high or renewable generation is unavailable. The company's technology is based on aqueous zinc battery chemistry, which it markets as a non-lithium alternative for stationary energy storage applications.

Eos' product portfolio includes the Eos Z3 battery system and related generations of its zinc-based storage technology.

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