Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ESS Tech Inc (GWHWS, Financial) is finalizing a transformative agreement with the Export-Import Bank of the United States for up to $50 million in funding, which will help maintain a strong balance sheet and expand operations.
- The company is experiencing regulatory momentum and direct funding announcements that are expected to accelerate the adoption and deployment of its long-duration energy storage technology.
- ESS Tech Inc (GWHWS) has successfully commissioned its first system at Schiphol Airport in Amsterdam, marking a significant validation of its technology's safety and versatility.
- The company has achieved important certifications, such as IEEE 693 and is expecting UL 9540, which are critical for deployment in various environments and enhance the credibility of its technology.
- ESS Tech Inc (GWHWS) is making significant progress in cost reduction initiatives, targeting a 40% reduction in the cost to build its Energy Warehouse this year, and expects to reach non-GAAP gross margin profitability by the end of the year.
Negative Points
- A key partner experienced delays in final approvals and funding, causing ESS Tech Inc (GWHWS) to miss expected shipments of approximately 12 additional units in the second quarter.
- The company reported a revenue of only $348,000 in the second quarter, with a high associated cost of revenue at $11.7 million, impacting profitability.
- ESS Tech Inc (GWHWS) is facing challenges with project timing, which can significantly impact quarterly results due to the early-stage nature of the business.
- The company is still experiencing negative adjusted EBITDA, reported at negative $18.8 million for the second quarter.
- ESS Tech Inc (GWHWS) has filed a proxy statement to execute a reverse stock split to address a listing notice from the New York Stock Exchange, indicating potential challenges in maintaining compliance with listing requirements.
Q & A Highlights
Q: Could you talk about the scale needed to achieve the $20 million per gigawatt hour capital requirement for ESS?
A: Eric Dresselhuys, CEO: The scale is on a per gigawatt hour basis. Each of our lines is less than that amount. Line 2 is about a half gigawatt hour of capacity.
Q: Can you discuss the growth in potential customers evaluating your field data and their movement through the sales funnel?
A: Tony Rabb, CFO: It's mixed. Behind-the-meter applications move quickly, while larger projects are planned for 2026-2027. Market activity has increased due to demand for green PPAs from large customers.
Q: Regarding your revenue target of 3 to 4 times in 2024, could you break down the expected revenue between Energy Centers and Energy Warehouses?
A: Eric Dresselhuys, CEO: The ramp-up for Energy Centers will start in Q4. Expect a split of two-thirds Energy Warehouses and one-third Energy Centers.
Q: Can you provide more details on the impact of AI and data centers on your growth?
A: Eric Dresselhuys, CEO: Data centers are planning massive growth due to generative AI, which is energy-intensive. Utilities are struggling to meet power demands, leading data centers to consider microgrids and renewable energy solutions.
Q: Could you elaborate on the Honeywell partnership and any new traction as a distribution channel?
A: Eric Dresselhuys, CEO: Momentum with Honeywell is growing. We are actively engaged in the market, and proposals are being made. We hope to announce live deals in the coming months.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
