ESS Tech, Inc. Announces Third Quarter 2024 Financial Results

Installed and Commissioned Second Energy Center

ESS Tech, Inc. (“ESS,” “ESS, Inc.” or the “Company”) (NYSE: GWH), a leading manufacturer of long-duration energy storage systems (LDES) for commercial and utility-scale applications, today announced financial results for its third quarter ended September 30, 2024.

“The core investment thesis for ESS remains as strong as ever – we have a massive and important emerging market opportunity in front of us, a top tier, forward-thinking customer base, and a differentiated, IP-protected, scalable technology tailor made to serve them. We continue to make strong progress on our key operational initiatives, but have faced challenges that have delayed our revenue ramp. Our Australian partner has had great success signing contracts with major utilities and securing funding to build a factory to help meet the high demand for long-duration energy storage in Queensland. However, delays in completion of this funding affected our ability to ship and recognize revenue in Q3 for units that were already built. We are receiving payments and are shipping units now so we are optimistic we will get this over the finish line in the fourth quarter and that, coupled with EC product shipments, should lead to $9 to $11 million in revenue for the year, leading to meaningful year-on-year growth,” said Eric Dresselhuys, CEO of ESS. “On the operational side, our first Energy Center for Portland General Electric has been operating with high reliability and availability and we successfully built and are testing our second EC product on the same site. We’ve been gleaning valuable insights from these units – from build to test to operation – to further improve our processes and design as we prepare for the ramp of our EC products. Optimized for larger scale deployments to meet the needs of the broader utility industry, our EC products can provide double the capacity of our Energy Warehouses with the same footprint. We continue to aggressively execute on our cost reduction activities as we scale our operations, efficiently manage our resources and drive to profitability.”

Recent Business Highlights

• On November 1, ESS executed the credit agreement with the Export-Import Bank of the United States, or EXIM, for the first $20 million tranche of the $50 million funding package previously announced, becoming the first energy storage manufacturer to be supported by the Make More in America Initiative of EXIM. This funding is long-term, low interest, and non-dilutive capital to finance expanding manufacturing capacity. For further details, see the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) on November 5, 2024.
• We have built and installed the second Energy Center for Portland General Electric and are now in testing. Final hand-off to PGE is expected in Q4. We've started building and expect to start shipping our first commercial EC products in the fourth quarter of 2024.
• On August 23, 2024, ESS executed a 1-for-15 reverse split, following a listing notice from the NYSE received in March, bringing the Company back into compliance with the listing requirements and enabling continued operations as a publicly-listed company.

Conference Call Details

ESS will hold a conference call on Wednesday, November 13, 2024 at 5:00 p.m. EST to discuss financial results for its third quarter ended September 30, 2024. Interested parties may join the conference call beginning at 5:00 p.m. EST on Wednesday, November 13, 2024 via telephone by calling (833) 470-1428 in the U.S., or for international callers, by calling +1 (404) 975-4839 and entering conference ID 385282. A telephone replay will be available until November 20, 2024, by dialing (866) 813-9403 in the U.S., or for international callers, +1 (929) 458-6194 with conference ID 356245. 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.

ESS Inc. (NYSE: GWH) is the leading manufacturer of long-duration iron flow energy storage solutions. ESS was established in 2011 with a mission to accelerate decarbonization safely and sustainably through longer lasting energy storage. Using easy-to-source iron, salt, and water, ESS iron flow technology enables energy security, reliability and resilience. We build flexible storage solutions that allow our customers to meet increasing energy demand without power disruptions and maximize the value potential of excess energy. 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 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 Gross Margin as sales price less direct labor, direct materials, and other direct costs and includes the benefits of the 45X Advanced Manufacturing Production Tax Credit. 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 amortization, 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” and “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’s relationship with its Australian partner and the development and commercialization of the EC product. 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' 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; issues related to raising additional capital; and the Company’s need to achieve significant cost reductions and 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241113260859/en/