Core Viewpoint - The market anticipates ESS Tech, Inc. (GWH) will report a year-over-year increase in earnings driven by higher revenues for the quarter ending December 2024, with actual results being crucial for stock price movement [1][2]. Earnings Expectations - The consensus estimate indicates a quarterly loss of $1.34 per share, reflecting a year-over-year change of +0.7%, while revenues are projected to be $4.96 million, representing a 77.1% increase from the previous year [3]. - The consensus EPS estimate has been revised 11.41% higher in the last 30 days, indicating a reassessment by analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that the Most Accurate Estimate aligns with the Zacks Consensus Estimate, resulting in an Earnings ESP of 0%, which complicates predictions of an earnings beat [10][11]. - The stock currently holds a Zacks Rank of 4, indicating a less favorable outlook for beating the consensus EPS estimate [11]. Historical Performance - In the last reported quarter, ESS Tech was expected to post a loss of $1.97 per share but delivered a loss of $1.90, resulting in a surprise of +3.55% [12]. - Over the past four quarters, the company has exceeded consensus EPS estimates three times [13]. Conclusion - While ESS Tech does not appear to be a strong candidate for an earnings beat, investors should consider other factors when making decisions regarding the stock ahead of the earnings release [16].

Financial Data and Key Metrics Changes - The company reported revenue of $359,000 in Q3 2024, with a cost of revenue of $12.7 million, indicating significant challenges in revenue generation [29] - Non-GAAP operating expenses for Q3 were $9.2 million, with R&D expenses at $2.1 million, reflecting ongoing investment in cost reduction initiatives [32] - Adjusted EBITDA for Q3 was negative $18.9 million, with cash and short-term investments totaling $55.1 million at the end of the quarter [33][34] Business Line Data and Key Metrics Changes - The company expects to recognize revenues between $9 million and $11 million for the full year, indicating meaningful year-on-year growth despite current challenges [11] - The EC product, which has more than double the capacity of the Energy Warehouse product, is set to begin initial commercial shipments in Q4 [12][13] - Unit cost reductions of 28% on EC production have been achieved through Q3, with expectations of nearly 50% total cost reductions for the full year 2024 [31] Market Data and Key Metrics Changes - The company is experiencing delays primarily due to customer funding issues, particularly with a long-standing partner in Australia [9][40] - There is a growing market opportunity for long-duration energy storage (LDES), driven by regulatory mandates and increasing demand from data center operators [21][24] Company Strategy and Development Direction - The company is focused on scaling its solutions and driving profitability while demonstrating the value of LDES in the energy transition [27] - A partnership with Honeywell is aimed at leveraging technical expertise to lower costs and improve performance, with discussions about larger scale projects underway [19][57] - The company is actively evaluating various strategic financing alternatives to strengthen its balance sheet and extend its cash runway [37] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that revenue ramp-up has been slow due to external factors, including delays in customer funding and site readiness [8][40] - The company is optimistic about recognizing revenue in Q4 and expects a ramp-up in shipments and performance in the first half of next year [49] - Management noted that the market is seeing increased activity due to regulatory changes and the urgent demand from data centers, which is expected to drive future growth [53] Other Important Information - The company completed a 1-for-15 reverse stock split to regain compliance with NYSE listing requirements [38] - The company signed a credit agreement with the Export-Import Bank of the United States for a $50 million financing package, which is available for future capital expenditures [35] Q&A Session Summary Question: Customer delays in Q3 - Management clarified that the delays were primarily related to one customer in Australia, with site readiness issues also contributing to the delays [40] Question: Q4 shipment expectations - The company expects to ship six EC units in Q4 and recognize revenue upon delivery to the site, with operational performance expected in Q2 2025 [41][42] Question: Update on the second automated line - The second automated line is expected to be operational by mid-2025, which will help lower costs [43][44] Question: Revenue guidance for 2025 - Management refrained from providing specific guidance but indicated a ramp-up in revenue is expected in the first half of next year [49] Question: Financing updates - The company has sufficient capital to operate without immediate draws on the EXIM loan agreement, but it is available for future needs [50][51] Question: Customer activity and sales pipeline - There is significant activity in the sales pipeline, with hundreds of millions of dollars in proposals and projects moving through regulatory processes [53] Question: Impact of lithium-ion pricing on pricing discussions - Management acknowledged that lithium pricing impacts pricing discussions, but the company offers a competitive value proposition based on total cost of ownership [62]

Company Performance - ESS Tech, Inc. reported a quarterly loss of $1.90 per share, which was better than the Zacks Consensus Estimate of a loss of $1.97, but worse than the loss of $1.65 per share from the previous year, indicating a 15.15% increase in loss year-over-year [1] - The company posted revenues of $0.36 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 92.53%, and down from $1.55 million in the same quarter last year [2] - Over the last four quarters, ESS Tech has surpassed consensus EPS estimates three times, but has not been able to beat consensus revenue estimates [2] Stock Performance - ESS Tech shares have declined approximately 46.8% since the beginning of the year, contrasting with the S&P 500's gain of 25.5% [3] - The current consensus EPS estimate for the upcoming quarter is -$1.51 on revenues of $11.91 million, and for the current fiscal year, it is -$6.72 on revenues of $19.85 million [7] Industry Outlook - The Zacks Industry Rank for Electronics - Miscellaneous Products is currently in the top 24% of over 250 Zacks industries, suggesting a favorable industry outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [5]

Financial Performance - Total revenue for Q3 2024 was $359,000, compared to $1,545,000 in Q3 2023, representing a decrease of approximately 76.8% year-over-year[14] - Gross loss for Q3 2024 was $(12,382,000), compared to a gross loss of $(8,638,000) in Q3 2023, indicating a worsening of 43.5%[14] - Net loss for Q3 2024 was $(22,493,000), compared to $(16,618,000) in Q3 2023, which is an increase in loss of 35.5%[14] - The net loss for the nine months ended September 30, 2024, was $62,743,000, compared to a net loss of $61,448,000 for the same period in 2023[20] - For the three months ended September 30, 2024, the net loss attributable to common stockholders was $22.5 million, compared to a net loss of $16.6 million for the same period in 2023, representing a 35.1% increase[67] Operating Expenses - Operating expenses for Q3 2024 totaled $11,300,000, up from $9,496,000 in Q3 2023, reflecting an increase of 19.0%[14] - Research and development expenses increased to $2,684,000 in Q3 2024 from $1,609,000 in Q3 2023, a rise of 66.7%[14] - Sales and marketing expenses rose by 23% to $2.5 million in Q3 2024 from $2.1 million in Q3 2023; for the nine months ended September 30, 2024, expenses increased by 29% to $7.3 million from $5.6 million in the same period last year[89] - General and administrative expenses increased by 4% to $6.1 million in Q3 2024 from $5.8 million in Q3 2023; for the nine months ended September 30, 2024, expenses rose by 5% to $17.8 million from $17.0 million in the same period last year[91] Cash Flow and Liquidity - Cash used in operating activities for the nine months ended September 30, 2024, was $51,743,000, an increase from $38,751,000 in the prior year[20] - The company had cash, cash equivalents, and restricted cash of $14,675,000 at the end of September 30, 2024, down from $39,491,000 at the end of September 30, 2023[22] - As of September 30, 2024, the company had unrestricted cash and cash equivalents of $12.8 million and short-term investments of $42.3 million, totaling $55.1 million in liquid assets[95] - The company incurred net cash used in operating activities of $51.7 million for the nine months ended September 30, 2024, compared to $38.8 million for the same period in 2023[98] Stockholders' Equity - The company reported a total stockholders' equity of $49,201,000 as of September 30, 2024, down from $103,357,000 at the end of 2023, a decrease of 52.3%[12] - As of September 30, 2023, ESS Tech, Inc. reported total stockholders' equity of $116,460,000, a decrease from $136,974,000 as of December 31, 2022[17] - As of March 31, 2024, the total stockholders' equity was $87,820,000, reflecting a decrease from $116,460,000 as of September 30, 2023[17] Inventory and Assets - The company's inventory as of September 30, 2024, was $7.0 million, reflecting a write-down of $16.3 million from its cost to net realizable value[29] - Total property and equipment, net, increased to $19.9 million as of September 30, 2024, up from $16.3 million as of December 31, 2023[31] - The total assets measured at fair value as of September 30, 2024, amounted to $54.830 million[54] Commitments and Agreements - The Company entered into a Joint Development Agreement with UOP, agreeing to reimburse a minimum of $8.0 million for R&D expenses through December 31, 2028[40] - The company is evaluating various strategies to obtain additional funding, which may include equity offerings or debt issuance[24] - The company is committed to reimburse UOP a minimum of $8.0 million for research and development expenses incurred through December 31, 2028 under the JDA[102] Future Outlook - Revenue is anticipated to be generated from Energy Centers, second-generation Energy Warehouses, and core technology component productization in the near to medium term[74] - The Inflation Reduction Act of 2022 is expected to positively impact the company's gross margins due to extended investment tax credits and production tax credits for energy storage products[76] - The company expects an increase in operating expenses as it ramps up manufacturing and sales activities, with indirect costs projected to rise compared to 2023[73] Research and Development - The company continues to perform research and development activities to expand its product roadmap despite a decrease in related expenses following the transition to commercial inventory accounting[79] - The company transitioned out of the research and development phase into commercial inventory accounting as of July 1, 2023[25]

Revenue Performance - Total revenue for Q3 2024 was $359,000, a decrease from $1,545,000 in Q3 2023, representing a year-over-year decline of approximately 77.8%[10] - The company expects to achieve revenue between $9 million and $11 million for the full year 2024, indicating significant year-on-year growth[1] - The company is optimistic about shipping units in Q4 2024, which should help improve revenue recognition[1] Cost and Expenses - The cost of revenue for Q3 2024 was $12,741,000, compared to $10,183,000 in Q3 2023, resulting in a gross loss of $12,382,000[10] - Research and development expenses increased to $2,684,000 in Q3 2024 from $1,609,000 in Q3 2023, reflecting a year-over-year increase of approximately 66.7%[10] - Research and development expenses for the three months ended September 30, 2024, were $2,684 million, up from $1,609 million in the same period in 2023, marking an increase of approximately 67%[14] - Non-GAAP total operating expenses for the nine months ended September 30, 2024, were $27,461 million, down from $54,606 million in the same period in 2023, reflecting a significant reduction[14] Net Loss and Financial Health - The company reported a net loss of $22,493,000 in Q3 2024, compared to a net loss of $16,618,000 in Q3 2023, indicating a worsening of approximately 35.5%[10] - Net loss for the nine months ended September 30, 2024, was $62,743 million, compared to a net loss of $61,448 million for the same period in 2023, indicating a slight increase in losses[12] - Adjusted EBITDA for the nine months ended September 30, 2024, was $(53,088) million, compared to $(55,980) million for the same period in 2023, showing an improvement in performance[15] Assets and Liabilities - Total current assets decreased from $118,098 million as of December 31, 2023, to $68,554 million as of September 30, 2024, representing a decline of approximately 42%[11] - Total liabilities increased from $39,875 million as of December 31, 2023, to $47,496 million as of September 30, 2024, reflecting an increase of approximately 19%[11] - Total stockholders' equity decreased from $103,357 million as of December 31, 2023, to $49,201 million as of September 30, 2024, a decline of approximately 52%[11] Cash Flow - Cash and cash equivalents decreased from $20,165 million to $12,822 million, a decline of about 36%[11] - Net cash used in operating activities for the nine months ended September 30, 2024, was $(51,743) million, compared to $(38,751) million for the same period in 2023, indicating a worsening cash flow situation[12] - Cash flows from investing activities provided $43,886 million for the nine months ended September 30, 2024, compared to $15,999 million for the same period in 2023, indicating a substantial increase in cash inflow from investments[12] Strategic Developments - The company executed a credit agreement with the Export-Import Bank of the United States for a $20 million tranche of a $50 million funding package to expand manufacturing capacity[2] - The second Energy Center for Portland General Electric has been built and is currently undergoing testing, with final hand-off expected in Q4 2024[2] - The company completed a 1-for-15 reverse stock split on August 23, 2024, to comply with NYSE listing requirements[2] - The company continues to focus on cost reduction activities as it scales operations and aims for profitability[1]

Financial Data and Key Metrics Changes - The company reported revenue of $348,000 in Q2 2024, with a cost of revenue of $11.7 million, reflecting challenges in transitioning from R&D to inventory accounting [13] - Non-GAAP operating expenses for Q2 were $9.1 million, with R&D expenses at $1.9 million, indicating ongoing investment in cost reduction initiatives [13] - The company ended Q2 with $74.4 million in cash and short-term investments, focusing on managing cash burn and optimizing working capital [14] Business Line Data and Key Metrics Changes - The company anticipated shipping approximately 12 additional Energy Warehouses (EWs) in Q2, but delays from a key partner pushed expected shipments to Q3 [5][6] - The company expects to achieve non-GAAP gross margin profitability on the Energy Warehouse by the end of 2024, with significant cost reductions targeted [13] Market Data and Key Metrics Changes - The Federal Energy Regulatory Commission (FERC) projects a 4.7% annual growth in US electricity demand, translating to 38 gigawatts of growth by 2028, driving demand for long-duration energy storage [7] - The California Energy Commission awarded a $10 million grant for a long-duration battery storage project, highlighting the increasing regulatory support for energy storage solutions [8] Company Strategy and Development Direction - The company is finalizing a transformative agreement with the Export-Import Bank of the United States for up to $50 million in funding to expand manufacturing capacity [6] - The company aims to ramp up revenue in the second half of the year while lowering costs and increasing production capacity [5][12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-duration energy storage market, citing regulatory momentum and increasing electricity demand as key growth drivers [5][7] - The company acknowledged challenges with project timing and delays but remains focused on achieving significant revenue growth in 2024 compared to 2023 [12] Other Important Information - The company is pursuing both dilutive and non-dilutive financing alternatives to strengthen its balance sheet and operational flexibility [15] - A reverse stock split is planned to comply with New York Stock Exchange listing requirements [15] Q&A Session Summary Question: Capital required to produce for ESS - Management clarified that the capital required is around $20 million per gigawatt hour, with each production line being less than that amount [17] Question: Growth in potential customers - Management noted a mixed response from customers, with some moving quickly through the sales funnel while others are targeting larger projects for 2026 and 2027 [18][19] Question: Revenue target breakdown for 2024 - Management indicated that the revenue ramp-up would be approximately two-thirds from Energy Warehouses and one-third from Energy Centers, with the latter expected to ramp up in Q4 [20] Question: Impact of AI and data centers on growth - Management highlighted that data center operators are seeking to build microgrids and procure their own renewable energy to meet increasing energy demands driven by generative AI [21] Question: Manufacturing ramp-up timeline - Management expects the second automated production line to be operational by the end of the first half of next year, achieving a total production capacity of 1 gigawatt hour [22] Question: Honeywell partnership traction - Management reported positive momentum with Honeywell, with ongoing discussions about joint development and market engagement [27] Question: Raw material costs - Management stated that they are not experiencing negative impacts from suppliers and are actively negotiating for reduced costs [29] Question: Financing issues causing delays - Management explained that delays were due to government funding not being processed in time, rather than broader market issues [31] Question: Resiliency market for tribal lands - Management indicated that the resiliency microgrid market is projected to be a multibillion-dollar opportunity by 2030, with a focus on green energy and reliability [32]

Group 1 - ESS Tech, Inc. reported a quarterly loss of $0.12 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.11, but an improvement from a loss of $0.15 per share a year ago, resulting in an earnings surprise of -9.09% [1] - The company posted revenues of $0.35 million for the quarter ended June 2024, missing the Zacks Consensus Estimate by 89.26%, and a significant decline from year-ago revenues of $2.83 million [2] - ESS Tech shares have decreased by approximately 41.5% since the beginning of the year, contrasting with the S&P 500's gain of 13.9% [3] Group 2 - The earnings outlook for ESS Tech is mixed, with the current consensus EPS estimate for the coming quarter at -$0.12 on revenues of $4.47 million, and -$0.42 on revenues of $23.62 million for the current fiscal year [7] - The Zacks Industry Rank for Electronics - Miscellaneous Products is currently in the top 32% of over 250 Zacks industries, indicating that the industry outlook can significantly impact stock performance [8]

Financial Performance - Total revenue for Q2 2024 was $348,000, a decrease of 87.7% compared to $2.83 million in Q2 2023[10] - The net loss for Q2 2024 was $21.94 million, compared to a net loss of $22.93 million in Q2 2023[10] - Net loss for the six months ended June 30, 2024, was $40,250 million, compared to a net loss of $44,830 million for the same period in 2023, showing an improvement of 10.5%[12] - Adjusted EBITDA for the six months ended June 30, 2024, was $(34,218) million, compared to $(41,817) million for the same period in 2023, indicating an improvement of 18.3%[15] Revenue Growth Expectations - The company expects to grow revenue by three to four times in 2024[1] Funding and Grants - ESS has secured a $10 million grant from the California Energy Commission for a long-duration battery storage project in partnership with SMUD[2] - The company is finalizing a funding agreement for up to $50 million with the Export-Import Bank of the United States to expand manufacturing capacity[2] Production and Capacity - ESS began production of its second Energy Center in July 2024, with expectations to connect to the grid by late 2024[1] - The company plans to add a second manufacturing line later this year, which is expected to triple production capacity[2] Cash and Investments - The company reported cash and short-term investments exceeding $74 million, expected to sustain operations into 2025[1] - Cash and cash equivalents increased from $20,165 million to $36,744 million, representing an increase of 82.0%[11] - Net cash used in operating activities for the six months ended June 30, 2024, was $(34,131) million, compared to $(37,532) million for the same period in 2023, reflecting a decrease of 9.6%[12] - Cash flows from investing activities provided $50,187 million for the six months ended June 30, 2024, compared to $33,923 million for the same period in 2023, an increase of 47.8%[12] Operating Expenses - Operating expenses for Q2 2024 were $11.73 million, down from $27.03 million in Q2 2023[10] - Total operating expenses for the six months ended June 30, 2024, were $22,831 million, down from $51,905 million in the same period of 2023, a decrease of approximately 56.1%[14] - Research and development expenses for the six months ended June 30, 2024, were $6,382 million, down from $37,181 million in the same period of 2023, a decrease of approximately 82.8%[14] Assets and Liabilities - Total current assets decreased from $118,098 million as of December 31, 2023, to $84,659 million as of June 30, 2024, a decline of approximately 28.4%[11] - Total liabilities increased from $39,875 million to $42,089 million, an increase of approximately 5.5%[11] - Total stockholders' equity decreased from $103,357 million as of December 31, 2023, to $69,044 million as of June 30, 2024, a decline of approximately 33.2%[11] Operational Milestones - The Energy Warehouse system at Schiphol Airport is the first operational long-duration energy storage at an airport[1]

ESS Tech, Inc. (GWH) is expected to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended June 2024. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price. The earnings report, which is expected to be released on August 14, 2024, might help the stock move higher if these key numbers are better than ...

Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION For the transition period from _______ to ________ Commission file number 001-39525 ESS Tech, Inc. (Exact name of registrant as specified in its charter) (State or other j ...