ESS (NYSE: GWH) says it drove costs out of its novel long-duration energy storage device and conserved cash in 2023 — a 15% trimming of its employment ranks contributed there. But the Wilsonville company fell short of a modest revenue goal due to "frustrating" delays.
The performance in its second full year as a public company — after raising more than $250 million in a SPAC IPO — largely left unanswered the question of whether ESS' iron-flow battery will gain market traction against lithium-ion hegemony.
CEO Eric Dresselhuys suggested that several deals-that-could-get-bigger that the company has announced will indeed get bigger given just a little more time.
ESS expects growth in 2024
In a discussion of the company's results last week, Dresselhuys told analyts "we expect to grow substantially in 2024, driven by an inflection point in the second half."
That said, "The variability with our customers deployment activity" prompted him to avoid formal guidance.
Similarly, he cited "unforeseen customer delays" as a reason for revenue coming in at $7.5 million in 2023, missing a $9 million target.
At the bottom line, ESS lost $77.6 million in 2023, nearly unchanged from the $78 million it shed in 2022. But a $23 million drop in its gain on revaluation of stock warrant liabilities, the product of a fall in its share price, made the 2023 picture look worse than it was: The company actually trimmed losses from operations by $20 million.
The workforce shrank from 271 to 231 due to what a spokesperson called "a strategic evaluation of the organization to improve internal efficiency and ensure we have the right people in the right roles." But ESS said that was temporary reduction. "We anticipate hiring through 2024 as we increase production and deliveries," the spokesperson added.
The biggest accomplishment in 2023, Dresselhuys said, was whacking the cost of building the Energy Warehouse by 60%, partly by slashing the number of hours it takes to put together a unit.
CFO feels good about cash position
The Energy Warehouse is the version of the ESS battery mainly aimed at commercial deployments ("behind the meter," in the parlance). The grid-scale Energy Center has long been in the works and ESS expects to begin sending it out to customers later this year. That development and the cost reductions undergirded Dressehlhuys' "inflection point" forecast.
With $108 million on hand at the end of the 2023, ESS figures it has funds to sustain operations "well into the first half of 2025." It expects a turnaround in its weak stock price — mired under $1, prompting a delisting warning — and that would help its prospects of raising money, which it will look to do.
"While not pressing, we expect to continue to opportunistically look to strengthen our balance sheet through dilutive and non-dilutive means to provide the necessary capital to give us operational flexibility to respond to market demands," CFO Tony Rabb said. "We feel very good about our current cash position and liquidity and the extended runway we now have to push towards our longer-term goal of getting to cash flow break-even."
