GWH - Earnings call transcript Q3 2024

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Operator

Ladies and gentlemen, thank you for standing by. [Operator Instructions] I would now like to turn the conference over to Erik Bylin. Please go ahead.

Erik Bylin

Welcome to ESS' Third Quarter of Fiscal Year 2024 Financial Results Conference Call.

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

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

this as that subject a geopolitical risks and including, in limitation, call. cause financial partnerships, those from beyond. our statements the statements, and could unpredictability performance, The in As include current our raising, Exchange challenges and with and in prospects, also detail our without the periodic set forward-looking today economy, statements the implied information recent to current and will risk filed to uncertainty reminder, raising our results filings and factors strategy In unknown forward-looking differ with particular, business, capital, issues growth most the projected capital those about the our uncertainties during more well known partnerships, and presented for forth with the actual as in markets, situation. Securities described are XXXX materially Commission or

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

basis. to and results operating that, I Management between GAAP ESS' decisions. make our and over non-GAAP will Dresselhuys. Management our results. items evaluate useful indicative and GAAP non-GAAP management call, also U.S. are to manage, information excluding information that will CEO, uses with a present understand, believes core our we by certain both the and call non-GAAP measures financial investors release. And for the During turn provide non-GAAP of conjunction Eric not within taken certain financial Reconciliations measures, financial with U.S. measures presented earnings are internally that operating in on business

Eric Dresselhuys

massive opportunity, with Thank you truly great There here product a building global content. market emerging top-tier the today. reasons domestic for protected and differentiated ESS, customer and a future technology to are joining many Wilsonville, a in the call team great the feel a IP about at base,

However, of slow be funding. schedule specifically on factors. of due continues was the a stay compromised, the as in our of to revenue evidenced ramp customer further up to our by the timing external to in delays last quarter This ability was variety

Let me provide some detail. more

and funding support are state end complete time ability our the mentioned and funding the This September. storage QX, partners, totaled impacting the partner approval was units. started that our The for of key to for additional very last long-duration our for the and news unfortunately, AUD As is ready QX. recognize funding at private closed revenue product was before for to held for flowing, long-standing project I in to and announced mandate massive to great one of Queensland, go. public did payments contracts million end we've XX but close not the in a was these in signed, agreement at we quarter, was transactions are out Since of us ship it of in that up that ship

So we are optimistic quarter. demand the we'll revenue ship fourth to and recognize their in

to able the forward between look year, to the and updated growth. to meaningful representing revenues million for As $X million the are end recognize of full and year-on-year expect we guidance year, $XX provide we

EW the will previously include quarter initial of expect commercial planned the fourth systems product. EC shipments our We and

the EC The long-duration step which logical and we footprint. same EC of storage broader capacity next has energy building towards step to of clearly the than in hundreds delivery warehouse direction our the the product with coming support industry more gigawatt work headed. The As of utility as hours but you'll as product serves recall deployments, was the the designed need in years. from customers the large-scale the energy is the product, previous product EC the double next will is calls, market of products our our

of more newness ramp with the plan in defer units the and the X Given ship are to product will does to we reduction customers a ramp product. of place the already QX any moderate these deliveries, in as and challenges additional simply preparedness, New on-site systems reflect our facing contracts Year. and EC have new we not a in demand prudent product This for initial

working ramp a the we're to reality industry, get business. in delays mitigating our both frustrating, these are at and Although better and forecasting they are we as

EC Looking have our job and great systems operating internal for gaining Electric them. of has progress, at the building General Portland been a valuable team our experience done

availability. cases. incorporate in full and our to place The technology operating to needs. RG unit [ California great and of ] for value and manufacturability in has unit, since is a do than March, first variety to customers in and against operating the quarter. We've now demonstrating XX improvements second testing, have performance been That we addressing regimes proving our From beyond, expect this more allowed EC we storage today, and further wide experience energy PGE cycling handoff into iron customer been is standard supporting our the at and and units PNNL Amsterdam of customer team the and long-duration have seeing never we flow been design had use reliability which testing

They our Water on technology LinkedIn founding many being is highlighting may at you that ways retired & site and Chairman the executive, customer Some Power. of kicked deployed. off seen X, he have is posted and Board which being Niggli's Mike and our are utility Burbank tour,

partnership continues world. And at tuned customer have this that decarbonization stay delivered deployed. carbon-free he been shifting hitting pleased to being and as resiliency, infrastructure multiple the bulk its units is and So around journey, Honeywell's stride talking please this across of initial vectors. the importantly, I'm sites share are critical grid electricity,

further actively engaged Honeywell's our in conceived to flow and expertise leverage we've achieving focused is at of excited collaborating iron We're than development performance. on and broad the proposals that full date. to cost are technical to go-to-market agreement in activities, are lowering ever-improving capacity technology even greater configurations on joint anything technology look success swing, Our joint to

continues Our I broad market I events ESS opportunity to attended for for specifically. and X to opportunity growing grow. speak the recently really that LDES think

need. state focused to First, gigawatt to hours it gathering operators great grid implemented data the from at I expected center happen, faster the Stock panel making Texas having data Energy consumes, impact critical partners create of large center as the now Exchange's annually, panel I Boston we a transformational across With New entire Summit, consumption more was than will the AI Grid. the about fuel an Day, and move Technology electricity and XXX increase It National recognizing particularly well demand. I we the Sacramento in by These York be on highlighted England reliability the impending to grid importantly, also by was regulators need cleanly best, ensure to are in growth suited annual was usage. fulfilling is NextGrid a hosted as at XXXX LDES to way New consumption energy on joined a in case, at addressed all and led meet that to utilities, to operators for future. double Thought it to and meaningful on LDES Midwest is plus users, being of the the ESS. And transition Alliance to this use looking storage SMUD for this to cost-effective technology are reliably. that the clear this hear to key we to to Summit. the renewables the the carbon-free opportunities the our believe mandates is most regulatory our and demands many

to a their with impressed the relationship And path. other SMUD by ambitious the reliability participants, remain Our grid XXXX, of and remains Sacramento. of SMUD's affordability plan maintaining on like most by for great decarbonize people while I

the was and very of have demonstrate and ensure off hand a the to driving Chief with of members with with we relationship highlighted their Lora lucky fireside ESS Lau, such solution face close continues the Officer. SMUD opportunities addressing we Paul delivering to as creating in decarbonization, value of energy profitability But are they such and others, needed I'm towards job a a the the scaling both for to them. the of it fantastic laser-focused implementing are did I'll plan. very senior a and that, chat we reliability map progress repeatedly they along make transition. And face CEO, LDES did driving by Zero Our of at ambitious leaders, forefront certainly Anguay, road the are the in the and I team, with commercial and utilities to challenges. proud their Tony. an variety a in on remains Board Lora and project challenges our

Anthony Rabb

Unless we Thanks, on Eric. noted, discuss otherwise all basis. a today non-GAAP will numbers be

third the of website. We million. Relations of measures You'll reported which in of revenue reconciliation find GAAP Investor the financial in with posted our cost our earnings $XX.X is non-GAAP associated quarter on a release, $XXX,XXX revenue to the at

impact down LCNRV previously quarters. This continues to notwithstanding, profitability COGS unit producing where reduction the considerable As to continue products materials we're benefits NRV while future heading our subject especially adjustment as at normal and indicator we to is towards COGS for that reporting. our adjustment cost XX%, an about an purchasing which are progress that volumes sale significantly lower make continued more toward our we're we in see our to shared, and adjustment point results, initiatives

is year our a nearly with in reductions our reductions of EC manufacturability, third great of In the of in and product XXXX. cost for reduction on optimizing XX% growing cost total This this already for year initiatives. EC unit of leveraging the the the teams achieve to on design EW expertise product progress expect addition, we've production cost realized through along XX% the full quarter result

our Company's map initiatives product Our that, our we production up on reliability, tax the for to run from also reported rate feel we liquidity in negative reviewing the EC expenses road very production at adjusted of monetize able tax about came below of EW operating efficiency scale manufacturing credits. our Based again, monetize PTC, credits believe products. our ability in EBITDA $X.X $XX.X the QX and and which reflects sales. the to our the XXXX and both came were and and million, million. We to PTCs, are of we these realizing and and currently a P&L million. in on continued as good we improvements durability, all cash continue benefits non-GAAP R&D expectations $X.X Non-GAAP With to at QX a bids cost-out XXXX and of monetize standpoint investment

cash in million efforts our flow liquidity. short-term working remain cash and rate, our and optimizing burn continue third the ongoing to quarter $XX.X cash ended managing driving capital. including Turning on investments. We We with focused to

agreement recently While it we on Bank credit States, bit United a was as the signed was filing seen with of Export-Import our the or in delayed, X. EXIM, November our

became very of in interest manufacturing we With address to storage the XX-Q. payments the More past $XX the going the the with the of are America rate included first XXXX. I supported and to but the by package, like also EXIM. first battery detailed filing, XXXX expenditures million borrowed capacity concern by funds Make our energy and signing and can disclosure These in a in have interest-only conditions against Initiative middle our we to the financing recent tranche they be subject favorable of certain manufacturer of would future through repayment be capital

we our considerable our and to investor nondilutive raise and evaluating we our tightly manage and interest and how XXXX we securing beyond. necessary capital management through new market working and continued cash lowering to runway are are ESS working to towards efficient the both such in cash of possible capital resources to optimal to capital, focused to sheet actively operate and continue costs, storage, long-duration choose and to In strategic balance cash best us tailwinds, are path energy a consumption. With the we dilutive to means alternatives, of particular, runway through enable to see clearing to are While we cash variety flow financing continuing analysis, strong extending fund allocating our the our through our work breakeven. strengthen on we this are extend

allowed may us you completed a our compliance we have with Stock in Exchange has stock, of as August, listing split reverse regain requirements Finally, York New which X-for-XX seen, to the up raising our needs. And complete continue for company, a and open questions. listed capital in as to aiding while with operations our I'll publicly also it future that, identify our ability and

Operator

[Operator Clare first Justin today question Instructions] Capital comes ROTH from Our with Partners.

Justin Clare

customer experienced you customers out ] there site delays in think Wondering to about financing. It that waiting So about I like sounds were was had And the was I then waiting if QX. financing. were something just -- ESI preparation. it you start for also [ you talking for wanted other that mentioned here,

So more permitting are I'm for delays. get detail to or wondering reasons bit if if customers just the Maybe are you interconnection working constraints. little share the a could on there

Eric Dresselhuys

all out And Eric the made Justin, the was take public delay Sure, when limited closed was in that there to have QX sufficient quarter. may a not the projects I'll their specific was timing seen, was quite you The one here. It to it But in we in limited announcement that. Australia. mentioned to unfortunately, was customer. announced. big get funding

source the was that delay. that of So

delays, we certainly, experienced delays. As we queue have this point. the on site so customers interconnect there not been and more have experienced readiness much have But look at certain our broadly,

to to Sometimes on like as inverters cases, back in sometimes equipments or be transformers, that's due some site. construction ordered, due which you can know, days quite these third-party popular and are probably

around there's but work to an managing causes continue So we've and those that to at predicting get tried thing no better delays. issue, one and

Justin Clare

a And in ship in sense could the right. EC to full QX, field think then performance of here, units you then value of expect X when And have units mentioned in recognize be you those the heard I'm expect the QX QX? you do might I X operating to units? looking when for wondering those wondering, and if into of you I those units the

Eric Dresselhuys

Yes, I'll take that again.

performance, the to as the shipping and units outside vintage customer very same commercial of in we The think the good we're the model state. that currently X have are we same installed General On a have sense here of for we Oregon the performance. what the first Portland

the I will ship, think think be good 'XX. we that So units installation feel will will probably performance, I go-live about but And of QX the the in happen.

until based So we going the second field on won't see those the live. for operating in their schedule quarter

on yes, field So before any the think don't And I expect see this we revenue those to do recognize that. we expect results we'll units -- quarter.

Anthony Rabb

Yes.

as they the site, soon the that's recognize as we So reach when revenue. can

Justin Clare

Then ramp-up more. the on just one your of line. Wondering second automated

would would you the And first expectation of provide half year, believe be maybe line an your online, costs. just I enable the think lower but in next there. that then you I was could to update that

So comment maybe aspect you that could on of well. it as

Anthony Rabb

Tony. is This Yes.

So mid-year currently our be vendors. by that line at testing to is out assembled and that, still will going expectation testing It's in our site site start the of some doing year. at being operational be year. shipped next our will quarter the vendor first then we'll out be next And end then it to our year, reassembled, by here. of this We're

that have like mid-year. so up by feel and we we'll And operational

Operator

Bank. Our Blanchard Deutsche next with Corinne from question comes

Corinne Blanchard

the for million this not $XX lot, this. was you just year. brain to a and try around trying or full potential your share been to much timing, detail XQ. into maybe million has give just to But a because of we of maybe little terms talking something into on as or pushed going quite further in Maybe can color question go going to I'm what delays the the million to next higher? color we know year? delays give I you guidance expect kind you're revenue you up the and on decreased get but revenue can XXXX. about us much back can how Can also go bit of -- expect Can $XX guidance, $XX

Eric Dresselhuys

take it. I'll Corinne. Thanks, Yes.

right. at of the it a the you'll said guidance little units the year you this we'll But before. not up happening to the supposed have some think ramp-up the see see caught first get kind point. that shipped We're -- in ramp-up to the half -- giving will of out on And bit think year. continue get next for fourth I will were of I quarter

half for as us, the as think I now often is back is, volume we case loaded. the it see

ramp that would we Again, we up within see that and we'll in then QX without the go guidance, So a the you range about talk of QX. QX QX picks as numbers quite see are pace and and giving goes what possible.

Corinne Blanchard

question second balance on the sheet. the then maybe And

So talk any like on? financing? You I about the right? I a this? you on you -- can to financing, but is mean, missed you cash sorry like low, just had and the -- if talk balance remarks, expect let I Can on us it you draw know update think, Can prepared that you the it

Anthony Rabb

it's Yes, Tony.

loan So we agreement. EXIM did the sign

So and immediately. based that. there have And cash our we a on filing that draw do noting we today, not -- we was to on that closed need that, but balances

be draw when is will we draw need don't available like but we on it's on to on to So It able it that today. feel to draw necessary to we it. us,

But have operate sufficient to to draw having without is on there the it. news is today us. for we available it that and good capital So

Corinne Blanchard

need I maybe line? Just critical I would Is I can or think. just to you drawing $XX there to one. -- million, a draw? investment you're money or level which start add I on level of you million like everything, At the like like think to need that just feel, if the you from $XX something, where okay, up short-term you that follow-up Because feel if cash

Anthony Rabb

Yes, quarter. needing it to I this anticipate on don't draw

over look that we do us the on cash get well sufficient we have into at quarters, like last without our feel to drawing usage you XXXX. cash If of couple

in point need could some decide utilize that our we we 'XX depending cash to may facility. at so And on credit when needs be

Operator

from comes with question Colin Rusch next Oppenheimer. Our

Colin Rusch

are site looks might at at late-stage looking Just late-stage look many sense testing where the to at what or trying the data you selection technology? a folks perspective? and how pipeline earlier-stage customer of from use the a As looking like activity, sales they get

Eric Dresselhuys

Well, had briskly. in a lot I along The past long-duration think it's historically getting to of moving not storage talked that to is quite -- about the regulatory people act. -- something it's we've mandate compel has

So it. case around and to value changes We're it use starting proposition the demanded people because that. the see did

amount has RFPs, we've and states been Michigan but So have specific others, through with out, that moving and around of with both new states, a York activity, generated about fair going and and in them targets terms that new talked proposals like come issued proposals out and specific New out the long-duration, of process. have

we've very good to in don't So dollars certainly that put millions to in approval in proposals, I think going I know have seen of it's a siting, now cases, it, activity. exact an in of but through process. the regulatory some hundreds I number activities and of

penetration, So specific interesting, at we those very when markets to has that feel of are But good about and look we have in down -- data that renewable months, the the thing line in around to coming progression center wildcard, tend last detailed a of higher be terms been that further the that. It's the the say been I'd into requests projects designs. that's has X X one utilities.

panel is out figure to for load all NYSE. pile they're system So the starting utility it's we has meet amount rate, the I very that's real presentation that our requests this year. how been X.X%, understate, made And their to to a it remarks, that a the a low going to about lead customers demand. And time. friends people we load historically, looking The into creating growth X% at a in of challenge talk prepared comment hard and to we hear on when at helped

translating past. very been of where So in lot people coming into a hundreds it's are That's back the and projects they're 'XX range being time are lot a urgent starting in requests more and that that to for large the for megawatt the modest. than 'XX faster, That's it's asking -- frame. dramatically in very deliveries change

Colin Rusch

talked headwinds but I the you've in supply then cost Honeywell about the appreciate the supporting past, volumes And around on the side, chain.

ramp to terms of of see us been you give and activity of purchasing, design and we update that some of have cadence of if those curious as impact of when an Just the volumes? scale going begin the the you in through, that efforts might incremental you out to some cost can some guys start

Eric Dresselhuys

Sure. depends of The It the kicking off. projects on are product. nature the

chain faster. improvements happen, supply the can bit think, of little I a Some

benefits year, kind to year. longer see of next we'll part this a incubation and think end first bit Things tend more and little engineering I value of of time. that implementation kind driven of starting are engineering have

in think and see of kick benefits middle to So of as part those 'XX -- 'XX. the in some accelerate I I we don't get we'll towards start

Colin Rusch

involved facilitate it customers can time this do be like to And getting think long is of to financing terms you that start going equity to new them how to is type it's going like going it's take in a in finance you a take have -- a project? of long just tax something projects, because until I technology? a is think continuous do Just thing you a that you it's the projects? mean, to year? Or

Eric Dresselhuys

no negotiation But new the unique utilities. with on experience to quarter that. customer, we think is were that non-U.S. in they the the good I I one and in was owner the party, a government. in the there's answer of a it had side relatively think, third news that was, The

and are I was of So decision. capital entities of timing think, Obviously, was very people that the budget. with a and quite tend more is that Most it we government the paperwork very the our of be of funding deal out creditworthiness a like their unique large, customers particularly entity one, this to but municipalities normal deal. high, well-established

all. no there's So delay at

and those take part that for I the in definitely that 'XX our projects mentioned. There's things, agreements late you bigger longer. of reasons 'XX of bankability offtake into part we independent, to the and see a going tax of the that some can studies, as going and are think And change. work equity and into get all we be As business

into for count deals. near-term planning So that and we're our that trying on build not to

Colin Rusch

like discussions done a You that? than me prepared size remarks and about Eric, by or what tell meant to making going in you battery paraphrase, mentioned by something, I'm Could tell that you Honeywell you the like now. larger around, what early you've us meant even

Eric Dresselhuys

Sure.

mentioned no driven of I think the been have having just now, in I single-digit part megawatt projects, load as mid-tens size in very would the before. in across we now the previous to small the in dynamics energy are come So is of projects. And typically by we're market one the up that total question, seeing growth are the conversations people of questions larger XXX-megawatt, one projects XXX-megawatt-plus looking at system much

discussions. been we've so And in

One of building plant. the things really suited is we large-scale is think well Honeywell at very

in performance cost And how optimize some about very discussions we've so larger scale? So exciting. do it's we at been and

One definitely technology things larger benefited durations. our of it's it's we've benefited is by being years longer said the and about longer by and for

the and trend as great market for So trends to longer us. larger that's projects a durations,

Colin Rusch

project is seem like just clarifying configuration, was a you bigger it you're just you're size bigger may in difference saying I but I that size with helping there getting thought project. type -- because was they're and

Eric Dresselhuys

Yes.

and the get the balance what you of or how to people changes system XXX performance to would balance technology megawatts. really and core is proving of we out or megawatts the working at field cost technology we're of that's be highest and that So The are that plant megawatt X call same do in there effective now these configuration. projects configure yes, demonstrating it. most can the the out XX or of But core that

Colin Rusch

-- My you the down road last from additional one, mentioned the It something avenues are characterize could dilutive how it we Is to to Or like several it? X in different just unknown still how of is capital? on X, nondilutive. But there along that able far expect capital. sounded around is secure in you lot guys months? that being should a next you

Eric Dresselhuys

said timing think what's looking at quarters, but been -- and last we've been announce, the off options we of available. number I we've think Well, for we've have don't I any evaluating as to

no have when -- up up on pace this continue the would it. pace close. we picked that pick we'll think We'll the of But on point, to that at that. do I prediction

Operator

Gianarikas Our from George Canaccord Genuity. next question comes with

George Gianarikas

seeing lithium-ion pricing of Has question dramatic regard drop of that had as with at the discussions you're it solution? impact the pricing. of to is the that that the all pricing projects with with, My and relates to drop, in regards the to guided some your you've some

Eric Dresselhuys

is yes. cases certainly We're are technology where in have or our safety. use the the some pricing and to the people tend answer unique the some looking field. short lithium -- a although is around deploy The At to characteristics benchmark always duration level,

cost We a have kind to you track look lithium pricing. at to value on So it storage levelized of of perspective.

to life. And transact and the of operating So segments to that's story on address our at in we ensure those battery levelized our of you ownership that cost, And and and a cost good at kind call can a offering we tell. updating everybody look a about cost, is of storage we have the cost of over the people its lower levelized for on very you capital of through storage a even the total lower value product. cost when find number basis, hours watching something kilowatt lithium-ion But hours to very models certainly superior and constantly appealing proposition we're those that that are prices. pricing megawatt

happening a So absolutely real in it's the marketplace today. thing that's

Operator

other are in queue. questions There no

you Thank all call. your now conference participation, today's concludes and disconnect. for this may So you

ESS Tech (GWH) 13 Nov 242024 Q3 Earnings call transcript