Iron Flow Battery Maker ESS Tech Cuts Loss by 38% YoY
The company went public last year in a $1.07 billion deal
November 7, 2022
U.S.-based manufacturer of long-duration iron-flow batteries ESS Tech recorded a loss of $31.6 million in Q3 2022, a 38% year-over-year (YoY) improvement compared to a loss of $51.33 million in 2021.
The company’s revenue was recorded at $192,000 compared to zero revenue generation for the third quarter (Q3) the year before.
The company, which went public last year in a $1.07 billion deal, is a long-duration energy storage company specializing in iron flow battery technology that designs and produces batteries predominantly using earth-abundant materials.
The change in fair value of public and private warrant liabilities resulted in a loss of $4.35 million for Q3 in 2022, an increase of 47.45% compared to a loss of $2.95 million for the year before. Further, the change in the fair value of earnout liabilities resulted in a loss of $234,000 for the third quarter.
Research and development expenses increased by $12.46 million, or a YoY increase of 162% from $7.67 million. The increase resulted primarily from increased purchases of materials and supplies, including related freight costs, increased personnel-related expenses due to expanded headcount, and an increase in warranty-related costs.
The adjusted EBITDA for this quarter stood at a loss of $24.38 million.
Company CEO Eric Dresselhuys said: “In the third quarter, the team at ESS executed well and gained traction across multiple fronts of the business … significant improvements in operational efficiency speak volumes as to the strength of the team we are building at ESS.”
ESS Technology recorded a cumulative revenue of $878,000 for the nine months (9M) 2022 period compared to zero revenue generation for the same period in 2021. The change in fair value of public and private warrant liabilities resulted in the company recording a gain of $19.47 million compared to a loss of $17.75 million for 9M 2021.
The company’s research and development expenses increased by $29.64 million or 152% from $19.55 million in 2021 to $49,19 million for 9M in 2022. The increase resulted from increased purchases of materials and supplies, including freight costs, increased personnel-related expenses due to expanded headcount, and increased warranty-related costs.
The adjusted EBITDA for 9M 2022 stood at a loss of $64.58 million.
ESS commenced shipping their second-generation Energy Warehouses in the third quarter of 2021 and received final customer acceptance for the initial units shipped during the second quarter of 2022. It began installing its fully automated manufacturing line in the third quarter, which is expected to be operational before year-end, and increased its annual production capacity to over 750 MW.
The company said it is seeing accelerating customer demand. It has announced a deal with the Sacramento Municipal Utility District to supply up to 2 GWh of long-duration energy storage over the next five years to support its 2030 Zero Carbon Plan.
In Q2 2022, the company posted revenue of $686,000 compared to zero revenue generation for the same period in 2021.
According to Mercom’s 9M and Q3 2022 Funding and M&A Report for Storage, Grid, and Efficiency, global corporate funding for energy storage, smart grid, and energy efficiency companies in the first nine months (9M) of 2022 increased to $25 billion compared to $15.1 billion raised in 9M 2021, a 66% increase year-over-year (YoY).