Earnings call transcript Q4 2022

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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 question-and-answer session. [Operator Instructions].

I would now like to turn the conference over to Erik Bylin. sir. ahead, go Please

Erik Bylin

XXXX and ESS's Results Year Conference Call. Fourth to Full Quarter Financial Welcome

the ESS call CEO; on me Joining from Rabb, and are CFO. Tony Dresselhuys, Eric

today, hold Following quarter fourth website. Relations This available Q&A we section prepared is XXXX. financial will release the management's session. for remarks, of Earlier in ESS earnings the of released results company's a Investor the

and prospects, without information for performance As will including risks unknown about today could or differ beyond. to the and to forward-looking strategy actual from that cause statements, presented are limitation, a partnerships, implied those our The growth reminder, forward-looking include statements projected and subject this uncertainties during materially results financial to XXXX statements known call.

risk in and the more our issues filed our forth In with the periodic well reports in partnerships, described factors our markets, geopolitical the recent uncertainty inflation, particular, detail economy, SEC, as situation. current business, the our with current as in in most unpredictability set and those the

You as update we except All predictions date are required as And should the on make obligation we any assumptions of forward-looking statements, this based on of statements our statements that events. and forward-looking hereof. future any beliefs law. rely forward-looking disclaim to on not as call by

we operating both for certain of our taken conjunction information indicative with in investors call, financial results. information financial believes measures financial provide that on and present useful items the will During certain not by Management U.S. also non-GAAP a core non-GAAP are that basis. management measures excluding GAAP

GAAP our release. operating and and manage are evaluate presented decisions. within to business, earnings uses Management internally results non-GAAP Reconciliations U.S. between non-GAAP measures make and understand, our

will over CEO, I turn Dresselhuys. to that, ESS's call now With Eric the

Eric Dresselhuys

progress, full Rabb us joining and Erik Officer operational joint call. XXXX for his who call. earnings our wins ESS and as of the Act. I year he's our Thank Financial I'm and Tony fiscal joining Reduction first quarter Inflation joining earnings financial impact all will for results, review recent Chief the thank Today, for fourth us you, you recently and

QX this full EWs energy We see and record excited in extremely to a in delivered we're for warehouses XX The XX growth. year. ESS for QX XX and is the

a targeted, less reflects our in our it than the a drive we trajectory capacity. navigate higher upward Although ability supply end to bit environment is it had increasing challenging an production and

recognize cover let later the from QX I'll to expect the EWs And this substantially We XX that. all Tony of we delivered year. revenues in

operational We year initiatives. finished out the strong having on our progress made

module power the front. On

the a up line we getting help to of year of The job the at megawatt achieving and delivering target capacity. lines team across XXX and operational capacity. XXX all great to end three annual Our efficiencies And the achieve additional fully of hours hours was exceeded capacity. did us that annual megawatt automated

the time the fourth and we to easier that we initiatives finalized dramatically process. lowered number required processes the second-generation is quarter, better used able designs have a reduce manufacturability we our to to been EGW. testing During With successfully for that build also manufacture, of labor final design for a important

our Another more door products key facet getting of out quickly. the

one we That All effort with markets to and supply year take out environments coincided the of to the work. tightest costs and of difficult worst aim ever ambitions each of increase capacity. and We this labor the dramatically is aggressive has complicated unit labor as U.S. started unfortunately seen. build with we

our of and assemblies We redesigned expanded simplify within a and the number ESS persevered strengthened manufacturing. to EWs team. we

volume. While at looking and vendors onboard to reliably we that lower cost believe new could deliver higher

scratch customers from at and a their manufacturing team automated deploy our new trained sites. on brought built We we products to help processes,

increasing and improving XX%, energy has increased kilowatt team performance. density our of our by technology electrolyte cost the hour Our per

a accomplish this work, and a fast-growing But the reducing cost, patent that been as in leader progress Again, road demands and through customer this across challenge XXXX. made in bumps there a and had board. quality finance, solution. hard protected improving to market bring in technology legal scale key of a have operations, unique new been a company We engineering, the success experience we deep we've scaling has significant profitability. for across growth To the that

operators ESS. are seeing new the professional These are we're the accelerating leaders progress that

in is site, notable commissioning and for process great sign a success working making our accelerating the team our energy, the energy low Consumers implement example As as the customer customers to and progress six for ability technology on Energy. is process the collaboratively and deliver our Fahrenheit EW degrees temperatures warehouse as customer the with field site. customer able team manage test the team great the a to was at a Despite to

our delivery operations collaboration WILSONVILLE our customer Our from customer valuable feedback has internal team a between has sites and our on could to In this progress. to team our to the team speed changes commissioning. cycle, implement ops critical and role success success customer virtuous a packaging team provided in played they

improve Europe. Airport It's quarter, second also wins deal largest to I'd recently the In interesting see some with like the signed customer teams great secured. Schiphol the Mainland in share to in detail we we on Amsterdam, very fourth customer working the together to airport two experience. a

electricity. is is clean, to electric at by fully XXXX Triple this they're the will gates the while our that pilot to looking emission electricity power be airplanes and versions. In ground units EW to electric free with diesel charge units these driving program with provide renewable replace ground power

the and mid-February emissions chance team innovative thinking I airports. they at and believe. critical is storage implementation simple the to role technologies sustainable European accelerate will that play to had in with decarbonizing Forward of battery their the leads of also the with impressed a working tulips and airports, shipping to was vision reduce visit airports. airport consortium in

huge market across opportunity and unlock initial beyond. to a believe this installation potential We has Europe the

States. District, deal test a the also We the Irrigation EWs are District Turlock United Irrigation Nexus Turlock comments project conduct over its will canopies solar to panel signed first to installing to quaint deliver in irrigation

of expected occurs the is California. producing electricity irrigation double mitigating benefit well as create installation evaporation as in from needs to This critical canals that to the clean

In panels the be the this earlier cooling and by efficiency funded the effect the of completed The increase end fact, underway to actually of solar project by can expected of year. California. state next water pilot is year, the

nontoxic opportunity to batteries This could of gigawatts potential well. for project up creates over as be installed canals with that of to XX environmentally California's paired our an safe solar gigawatts X be

installation innovative approach to chosen That paired opportunity projects the our opportunities this unique and winds proud to are significant be duration grid. application to storage. revenue represents a from could about that have valuable We been for excited additional for energy of decarbonizing and long for generate these the Each ESS. with solar elicits

of compelling could go-to-market have market. burgeoning to unique to a ESS And critical shaped as to our market all leverage that ESS is we to a certainly address so not strategy begin its such technology fortunate and the applications broad such position imagine them today. in

proves and and We use applications are focused considerable the customer the for have on case that itself once the upside. potential relationships technology

I as our or market. IRA come the Reduction programs revisit are anticipated quickly about ESS that forward have in grid, would impact the many We strive will on like to and two Act look help we to to that the these the excited decarbonize Inflation

tax could We enact won't IRA credits, done. customers. impact them that are accelerating full so energy around for a that are be storage for production customer save with how discussions excited until IRS are per cost the But tax ESS. XX% to to $XX With investment known the programs rules, still kilowatt is the of product waiting we duration credit about off our coupled about with hour likely up long

States incentives of With IRA, project in example. battery utilities we're ideally investments, and about application likely issues solutions. I'll give getting deferral lot across has congestion the of The read any a suited from of for to grid the duration as stories an interest traditional viability storage for long storage a our around the world. storage use standalone economic improved. grid Everyone has recently dramatically one United

With to based iron, believe and abundant very to well we salt positioned and proprietary come. on remains capitalize opportunities ESS the technology inexpensive water, on

our making challenges largely supply penetration. We across hindered substantial aim XXXX. market operations balance capacity But to like during we the for on and XXXX, built we're progress plant. continuing manufacturing Moving potential we're across the to continue from our of plans achieving

Our in focus the coming is clear. year

strengthen of goods supply We while labor base are we our greater for aiming unit drive driving cost at and to profitability. costs toward timely down scale, as delivery across consistent

in also We responsible delivering find to operating XXXX. a approach the with landmark in deals coming as We take to costs. managing balance intend we product growth year

multiyear this have be potential considerable This now has to other entered completely by proceed X potential phase SMUD the booked the to given project with of deployment first of addition the and us for which we even in notice and that opportunities XXXX the upside, Firstly, the the buoyed IRA. for initial to gigawatt year in larger. impact numerous for ESIAP hours,

book deals out in capacity beyond. XXXX expect our to sign to We and

throughout will defer ramp ongoing continue about and at guidance the plan grow. for the the this the business provide we to tremendously to look to providing We installations further excited and how in Given uncertainties we deliveries prospects quarters. coming time, year, remain the updates

coming the specific guidance environment, year. best or from it believe giving Given the is current we refrain the to for quarters

to final our related the EW new and like in the that not being are I record a And seller The customer complete address released is that was ESIAP claims systems its I central report will our it that report of built. Tony, party straight. short to I'd ours, December. assembly to is in manufacturing that hand that want set future the before facility off the of

is simply true. not That

ESS direct clear, our interest you has to Let would in proof. filings me ownership we further zero, for be and SEC no ESI

facts members say statements the combination ESI short report The disparaging of hearsay, misleading of publicly, and progressing. to of is team. shared a already preparations our mostly the last year seller and As are broke we facility, of have about various statements new balance ground

contained clearly and opinions are Research all LLC, of quote, the and stated in author's Grizzly introduction, are the the statements report I not of and As this statements fact. herein

We explore vigorously options made will the defend report. short our claims seller the legal and against to in continue ourselves false

to it our that, cover turn Tony to With I'll results. over

Tony Rabb

about basis. today excited Eric. a you, be otherwise Thank team. I'm will on we Unless non-GAAP numbers talked be noted. to on All very the

You will a loss? energy Relations deliver in website. and title of there on release, passing non-GAAP met shared which including of the of risk Investor financial all find contractual customers, our which GAAP requirements is earnings warehouses our posted our Is reconciliation measures we to the

met occurs which shipping once of units, However, did the recognition take not had the are method. four GAAP control via the as customers been units revenue the under criteria not for transferred full

fourth the Revenue recognized based Unless in a result, specific customer unique will revenues quarter. we not terms As shipping did terms. exist. recognize material acceptance upon contractual be

We remained under development accounting rules in QX.

sold. the resulting overhead fall incurred labor delivered OpEx, products cost we goods producing and in zero costs in of So, material the we've into

Our expenses in expectations were line non-GAAP operating with million. in $XX.X QX at our

fourth reported standpoint leading and cash we expectations in million us XXXX. into We QX from million. short-term that puts our well investments, With EBITDA ended solid quarter a and above cash with prior $XXX.X negative footing on was adjusted liquidity $XX.X very the which and

take plan commitments prudent a operations a further with our are to sold. supply our this continues we reduce our ongoing our up to approach ramp to balancing to of be environment, and desire to in customer fiscal what our goods challenging cost plans We scale our year,

believe, plan our to year in the We XXXX. ample of this we balance execute we and the the through operate have coming year. business into As liquidity

And for questions. up with I'll open that, it

Operator

the Instructions] [Operator Your Cown. with from question Thomas of line first comes Boyes

Thomas Boyes

be energy I guidance us But my time. this profile some maybe taking what 'XX gross about maybe thinking warehouse, if for just the question. just there. could at Thanks wondering I the reasonable expectations appreciate any of would margin walk you you non-GAAP aren't giving Obviously, kind was margin through guys for

product? lines of manufacturing both now kind reduce how the for fully just semi-automated about and starting think And for up you we costs, that should have running, and initiatives design the that wondering to have automated you

Eric Dresselhuys

our also because in than think in, look more the total in at focused, you very jump We've bit year, unit out kind to joined that involved. of so costs it's costs, here I'll take made really there's year categories. we been history note it been in of a we've and four a on to driving Eric half. comes that progress, So, I've little substantial costs last have noted half I when Since important as and

If you the think implications. about GAAP

volumes. upgrades, there's course better improved course, out direct Of which we're materials, costs, driving designs, through and of vendor

manufacturability, and for And in we we've that we in And positive, as normal out of from improved that substantial course, putting there. progress taking taken scrap noted to out is labor labor production, direct which get comes reflects content and warranty, then, of We're up we've out quality. design those costs and operations, higher course, automation lines. take really production made

is last of costs, thing bit get is terms the it volume. complicated this supporting are facility, the building self-cures really that and the to higher allocated The as contribution, those there we a little indirect where and margin in higher the and gets teams

So, we're care talking of unit three, driving fourth the category knowing first to on the profitability takes volume. itself about with that

the it a we'll to in target, come on the much is specific very think XX unit company inflation way. but about I announced a would the It's hadn't way out, of long cross months cost the watching place the the set we're line that profitability focus side. maybe a think XX in along great with And on next to the we specific

for But or are piece subjected commodities high a product of or a very really things wild clear line any we of volatility, of cobalt, the lithium, into get since us We price have unit sight news to a of have lot that good doesn't have in profitability. or commodity don't nickel swings, to that our is, it.

Thomas Boyes

to about high-end maybe what you supply the the there there months? if a issues appreciate for around follow-up, think But just the can talked target issue? maybe highlight original units. supply of chain XX the type the I closer I the year, and was you challenges into specific kind that that semiconductor next end the have logistical ultimately was the shortages know, perennial some of or heading in the of resolve were challenges you manufacturing XX just EWs, know because been No, of chain believe you I then color I of challenges just themselves will wondering my were

Eric Dresselhuys

the balance most of Yeah, challenges have the sure been on that well, system.

that Battery So, it the it's it stack. things system, core of been and it, problematic around. have not and isn't part of stack the skipped the balance really is

So, chips, had that issue. challenges, supply electronics got pumps challenges about in we've resolved. are things with mostly smaller past, talked Anything think chain I power some has the we've an with as are like

into of we to was take move care of resolve issues through those systemic to Part then of hope laid was think then the we've I is problems quarter going forward, more and to we this as what didn't and chipping see that drag. anything kind quarter reliable, felt problem visibility tried at that a the going we components we to individual and that that upgraded of end more do, much vendors, the and in It's seemed we've we to going an better scalable the an away ongoing have felt be themselves. just or of enough

Operator

the Your next line Oppenheimer. Rusch question from comes with Colin of

now is open. line Your

Colin Rusch

are the with Colin, the rate for think? sense yields and of of like improvement I a looking on installation, give Andre what is you of completion far, can goes the that automated the This line so

Eric Dresselhuys

to specific because just number it a we early line. put the commissioned too think to I

up. Through So, helping are have from most still and commissioned we're ramping vendor the this was its up quarter, was us it which but partner carrying our in certainly sufficient that load it set of production. off line signed who semi-automated quality near-term, our the the team the officially we lines,

good about very Tom. feel we to So, the password

Colin Rusch

a as spending? sense Thanks. of you timelines follow-up, And just give OpEx a could us for

Tony Rabb

is this Hi, Tony.

any at a this We But take like going in terms haven't forward. level fourth where a think point, of fairly the might if in you adequate of we that's we at that look spending. what feel So, look quarter. I provided were guidance like

and a much fourth between third of change change too the there there. was quarter, so, And

looking So, we're maintain. at

Colin Rusch

much. Thank you, so

Operator

next Sunderland Your from of the comes question Davis Baird. line with

Your line is now open.

Davis Sunderland

the had Thanks for points, kind small challenges few with to those? have Amsterdam or you've an wanted proof in from demand like if technology question. have customers. I the any ask then if deals taking And about these airports to of my stemming seen bigger validating of you in may following been uptick that a

Eric Dresselhuys

Well, I'll pick that. Sure.

in of challenges to system, that of there's of we've a grid talked not the to had lot So, the but we've with field biggest the the products, through we've product the through kind but how been really third-party that course the working we core just interfaces our that is about complexity had our with of over year work the it interacts products. performance demonstrate people's how other or

through we we've than well. process chunkier a think been moved I pretty But that's So expected. it had

some And more shipped really as Australia here as units And units far in shipped have performed of time quite the remarks, as down has the well. to shorten. to, started states the alluded commissioning, folks in of have or the prepared in my in away that to I applications, particular recent commercial some we've even that to

fantastic. think, we that's So

The picked bit. a interest has quite

of it's the the a different duration an obvious people it where that like storage of for that seeing think frankly I storage. think I expected think comes some and Schiphol I a lot of the said, people don't into use combination of play. application long was and cases, for announcements and duration long Airport something

know of uniquely requirements that's technology When our and as what the airport application the environment, said they are, well, it suited makes is to in sense. response get safety, be that. we understand really an perfect its No, obvious. well because I reliability you didn't how

is full they're but of because are. the had conversations know IRS rules we're what we been final would I people, rules, the that the to the the last to has door, and Inflation administration a thing until it Act. get terms they earlier, some That hesitant into to in mentioned Reduction in But relative IRS to uptick as big say have projects, out commitment there those is I'd go interest great be planning getting

Davis Sunderland

your second took And when was are any IRA a on how follow bit you part benefits going but read a guess, might visibility know of have any you big what into ask or those incorporate benefits, those if to you I actually, or we direct for into there pay, away on contracts it's realize going future more? the up, to I when

Eric Dresselhuys

know, be be that end that you out indicated know the the will announcements is have the don't be rulings. at across will are have may And that I available, So, there here different come tell parts. March. that announcements two what I'll further of final indication we public that which it

reiterate, just two really the of were IRA most there parts that us. to are So to the impactful

as There benefits are important for. of investment production tax the credit most And then will tax customers a other are will qualify number well. the ones credit that we But qualify two for. that the our

On the doing we rules credit, for tax a high content ramp are years have this production those as we've we up. domestic straightforward. And requirement. And been pretty such feel now, we

that units accruing we're our So, have direct that will get any the pay because don't get, tax many and any keeping we that to that units and assumption for we we risk has track us how of shipped we production available credit there's clear now for are will been pretty right we've on that. how feel those the many units on on law built ship units we

like domestic are the content little a bit or been of errors What's more don't to some the IPC. add around the economic development rules complex things

or deployed load with solar batteries, now standalone batteries well XX%. So, does when the And they're wind. that about is of you include as the base recall IPC may as

redevelopment for and that XX% editor, the And zones. people rules are XX% XX%, or the qualifying on domestic content to because based goes or number curious and to new. are energy for then more they're economic those that the most That up

of isn't history So go to kind really point to. there as much

comfort that move those clarified, people will once the think help I rules forward. are So, to give

Davis Sunderland

Thank you.

Operator

of from Your the Osha question comes Joseph with next Guggenheim. line

is now line open. Your

Joseph Osha

Thank you, guys. for taking Thanks my question.

hours. that you're you expanding step, The expansion? assume we that megawatt manufacturing plan from Eric, continue the comments number, that year exiting I'm to had that the capacity talked and of pace first slow about might $XXX at curious going been the your tone previous to of a

Eric Dresselhuys

with relates have of a it a stack plenty Yeah, we've at least as bit I done of the now three good manufacturing, and job to lines for capacity time. think really

So, on build capacity focus more I out we'll think, that to systems. ensuring we've got

for a have and that, how to There the keep is to time lead addition is then track be of up. In you equipment automation a booking sensitive that backlog to.

automation you doesn't if So, up order day. the next you equipment, it can't, show new

really So, XX into pucks be on months the where planning the to you're future. going

And the so your put I to one that's caveat comment.

Joseph Osha

That’s helpful. Thank you.

drill units, to the down recognized comment The correct? are be is in those as second so question, to QX that about going revenue your just on XX

Tony Rabb

Tony. Yeah, hey, is this

going be recognized So to in those XXXX. are

They working So, the of terms, the year. customer risk been are of of at these units, contractual to of terms year. end recognized title as various that transfer, revenue types to met at occur aggressively to out under legal company's terms, different the those the get units loss timing We will the that the of end year. contractual when will exact the be in and

and the for And units customer. all once for to the basically, it point it the ship, could it those all us or arriving our where up on the gets or to the be from port truck at customer way fully those that recognize to the customer. the control dock way train, units, picks occurs when to must either However, pass revenue that the of

that it various when there's titles, XXXX. will be So, in recognized, will and impact that be revenue

Joseph Osha

those remind headed units you were And can for? me who

Tony Rabb

all I unit Schiphol been believe going think a that so And were prepped disclosed what so is that's that Airport. far to I and there's far. we ESI to

Joseph Osha

some as in unit, the which the part were was them And announced of of delivery? the units CMS QX also

Eric Dresselhuys

Correct.

Joseph Osha

like you've hearing been sounds queue, I the that's for sustainable, probably about of in me obviously given you if year. spent I'm and some back jump rate Okay. building stuff, burn of like since before you at quarter that look December And that's $XXX this year, down the it then what million not burn sounds slowing about it last the cash some, here, question last

that going rate you're cash attenuate of to So, to some take burn? steps we assume can that

Tony Rabb

this rework, lot and as cash and think manufacturing if of think, of yields that scrap, improve the that year reducing the going earlier scrap and costs reducing unit I cost units, the and objectives of And Look, business, to on about are with company those. to be rates. ramp our is our a use the that to ramped continuing associated warranty focus yields, and up material burn, up you

So obviously, with our be for us more of a point a big cat. efficient big is we of push be to will a manufacture, which how lot our usage big

Joseph Osha

Okay. Thank you.

Operator

the from with line is Hutton. question Chip EF of Moore Next

Your line is now open.

Chip Moore

I want tackling to follow-up on towards maybe of blocking on we and anything next it into should account? that, you that last talked I Or that about Maybe over you else take Is the just the talked think some one, to profitability, just of about? there? months. key just XX driving XX sort question, the expand things unit initiatives

Eric Dresselhuys

really It's some I think comes lot tackling. it think and is a of from it's I blocking of volume.

And comes improvements. some of from it the design

it each of hit the profitability the of over, implement of somewhere the and is which designs we gets bet story narrows now. balance from which gap, and we kind would cross And blocking So, loss tackling XX make those outside as is of unit improves manufacturable to and you months each it's the know, better, changes, upgraded those that more then balance, quality. implement

keep of point. story what margin costs taking ramp you there, the the but the as so, doesn't out, we company. we approach volume out then time I It and point end builds over And it's crossover as driving just And to should cliff. that's not up down keep driving a and ramps

Chip Moore

a And in funding talking the thought on do to read demonstration I some good maybe some guess think. the I was incentives, the one dynamics higher going about I'd there, I did for that specifically, projects you job space. DOE

a like not that think you you'd area is Is in be was you an that I or it for active guys? think relevant cost share. XX% as

Tony Rabb

in Yeah, I at would, well, some think those funding buckets. be looked way active would we of that we've we the

partner with together. an end be Our the user approach to would money for apply to

wouldn't ESS developer, an apply ESS not, of grant operated to there's owner a So, I an in a view, kind our be don't to since operator project. and we probably do in go we're project, owned for want

customer I project. would together incorporated a into look qualify when for with a is funding, that wouldn't and But grant would developer in be project and do municipal, technology where get the our involved commercial at

Chip Moore

of decision, he to, clarity sort stuff Back off, I you have that sort would the let's like to lead IRs some think overnight. takes on more some and a of or When that? decision say, demand on equipment, times we to mentioned, handicap any a way automation really nothing of make get six-month

Eric Dresselhuys

I things. The tend the of a way planning of lot good anyway. works, nine lot industry into is project all of that potential to six, profess, and mean, won't it's haven't, looked a to at of to news kinds out for of be haven't probably the least closer I the decision. a mechanisms And that XX months future I into I the nine-month acceleration expedition those a the

customer visibility do good into really shipment pretty deployment and get we plans the So, plans. the

be building the time based think fill And on that constraint the it won't it in of planning I terms industry. us out the capacity of a to the so, to time, horizons

Operator

question Kapsch Capital. Loop line next from the comes of with Chris Your

open. now is line Your

Chris Kapsch

follow-up some the here. items Mostly to afternoon. discussion Good of

have so shift cash be burn? know is capacity to it, be date or that's inventories, And manufacture that? that the I'm their Just call to will and getting to thing, for cash to, to how in the in curious spared, you GAAP those the crossover recognized I you you curious much burn thought basis? or as on just, will on will comments credits, a been assuming was on on as around production that or to you tax you've including anyway you diminish you're break quantify look yet, if color even. factoring Any

Tony Rabb

we get more matter details IRS the a is at great probably out, well, what of to point do So, so the I you've to And But matter. tell can they details the Chris, why most anxious what because know. hit IRS on you everybody places. the rules

So, rated for we us and that what a is production believe what we kilowatt what $XX tax is we capacity. hour about unit the expect, credit

our battery of battery bit point cells. the out, little applies production of the tax a each it's of in cell. case, our to And So, important to a credit, derivative

in for actual has And shipped is balance, what energy storage we the third-party. to So, plant sure a kilowatt matter. $XX it And a to know customer, that to doesn't that's unit this that a be shipped a is something case hour. it's

clock of this started year. on one that And

before, production there So, we of our build that we transaction should it we funny count if direct accounting towards will ship, that tax it, lines rules. and be to any takes the place, if the even the GAAP credit, after thing year we've that first believe the don't ship built I but

think very you that have I you to sold a third-party. a to prove But I think it that's category. different won't

Eric Dresselhuys

we cash that. into burn of that benefit factored have [indiscernible] some our

year us. So, anything that a we would positive net could realize this be for

Chris Kapsch

to with the you're or provide thing. respect the just it's guidance, I in of benefits in the cash sounds and okay, that the I terms momentum dynamics. had you from communicated position comfortable to the that's you're, to commercial burn a other the cadence right, the market’s follow-up I know, like, If had the upside great sort of So, this given understand curious, really IRA all behind was not on I development. that, And

with customers? quantify that's the how and of will, that talk market manifested the you discussions a characterize backlog anyway if But engagement can with engagement you or either of sort potential from or funnel just nature or in development, about customers that that

Eric Dresselhuys

certainly would a the shape, in nothing any it across guidance way, and up would really interest has Sour would it So, providing excitement point growing, in been the how I hope I is a is about at this ramp or diminishment that way everybody the that is appreciate guess about I enthusiasm, of our fantastic form board. because the market describe

And incentive anything. that seen the have have like Europe, think don't I remarks, In XX, XX made has prepared because days the progress an and a may incentive program. add, you IRA we program, I similar has should said in Australia been announced in last, to there

it'll same think Europe. in the I in directionally different is But the details. look

coming to tailwinds So, there that. is build a ton around momentum of in market

the on and it progressed things We process. a numbers more I'm Because that kind through frankly, crazy impact. those $X.XX more for kind in total dimensionalized haven't focused are get of pipeline of big the sales the

investment worth earlier, I is that you people What is out. not And with mentioned the have to sure I cases tell really calling up that cost thought be you're opening now effective. might I that the credit, use IRs, can think one new and tax for before

investment me, a investment. on We week batteries, operator or looking the the last at conversations using set weren't base at as the onto we the rate are ago, for go came tax a their a their because scene. TMD energy of IRA excuse grid hosted at which were Those deferral now panel And very TMD deferral a utilities into CAISO, storage, two were could on weeks where having conference ago, side. we're terms credit, before a towards of the that year favorable before, investments of where as California a just

process those the it's moving funnel keep magnitude So, to sales move in of growth maybe of And through to them move of have to in just use and to not terms growth, interest the multiples orders ultimately we to of deal. continue the cases. the it's but

Chris Kapsch

to Is what's to revenue different the recognition shift. am emerging to Thanks. in a prelude for 'XX from development that or considerations? mentioned I two going You accounting, completing calendar

Tony Rabb

recognize two remain Obviously, make criteria over as of you in Well, to are. yeah, transition. R&D it sort accounting, sense but they time, different doesn't revenue they're to

we're us together will the appropriate there's is to transition transition accounting still but from our transitioning be we determine So, an linked but not do R&D that this expectation to And more work year. this to expecting timing, they're year. for

Chris Kapsch

would Right. be the development Whether Thank as pro to forma really And a it happens as a fall. know in I good there at. when calendar what happens, happened, I forma don't sort accounting say the for of if this was reset a pro let's recast reset be basis? you. it just that post on then that's year And entire the

Tony Rabb

at still that's actually a of I reflected out transition. terms perspective. But will that think timing to through work on need that the be when a determination of in minimum Yeah, of is we what we depending

Operator

the [Operator you. over are to no Dresselhuys, at time. I pass further call Instructions] Mr. There this questions back

Eric Dresselhuys

thank on We Thank to you about joining forward updates our you And us be couldn't calls. further giving making the in the we more we're And the business. progress look for you. subsequent for excited all call.

Operator

This concludes today's call. conference

You may disconnect. now

ESS Tech (GWH) 1 Mar 232022 Q4 Earnings call transcript