ESS Inc. Announces Third Quarter 2021 Financial Results

ESS Tech, Inc. (NYSE:GWH) (“ESS” or “ESS Inc.”), a U.S. manufacturer of long-duration batteries for commercial and utility-scale energy storage applications, today announced financial results for its third quarter of 2021 ended September 30, 2021. Given the Company’s public listing occurred in the current quarter, ESS will not host a conference call related to the third quarter results, but will hold quarterly earnings calls beginning with fourth quarter of 2021 results.

“ESS made immense progress in the third quarter and, in October, became the first publicly traded U.S. long-duration storage company. We continue to produce and ship towards our goal and continue to ramp operations in support of our journey to be the leading provider of long-duration energy storage,” said Eric Dresselhuys, CEO of ESS. “Looking ahead, our pipeline and backlog remain robust, and we are rapidly expanding capacity to satisfy the accelerating worldwide demand for long-duration energy storage. While supply constraints remain a concern for most manufacturers, we feel we are in a solid position to deliver on our opportunities in the coming quarters, and will continue to monitor the situation and proactively work with our partners to manage any issues. I am confident in our ability to increase manufacturing capacity and expand our sales and support footprint to bring long-duration iron flow battery technology to the world.”

Recent Operational Highlights

• Secured an additional 45,000 sq/ft of manufacturing space in Wilsonville, OR
• Global identified opportunities in excess of $8 billion, compared to $7 billion at the end of the second quarter ¹
• Customers continue to mature through pipeline for 2022 with 72%+ classified as booked or awarded
• Successful hiring efforts led to a more than 30% increase in total company headcount in Q3

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Our $8.0 billion pipeline of visible potential opportunities for 2021 through 2027 was determined based on named projects with customers ESS has spoken to and signed non-disclosure agreements to discuss the projects. Within our pipeline, we classify opportunities as (i) booked (ESS and the potential customer have signed a contract and ESS has received a purchase order), (ii) awarded (ESS has been notified by a customer that they have been selected for a potential contract), (iii) negotiating (ESS and the potential customer are negotiating a potential contract) and (iv) qualifying (ESS and the potential customer are determining whether move forward with contract negotiations).

Third Quarter 2021 Business Highlights

• ESS finalized the business combination with ACON S2 Acquisition Corp. on October 11, 2021, and its shares and warrants began trading on the New York Stock Exchange (“NYSE”) under the new ticker symbols “GWH” and “GWH.W”, respectively. The closing of the business combination resulted in cash received of $246 million, including a private investment in public equity (PIPE). All prior ESS shareholders rolled 100% of their equity holdings into the new public company.
• On August 3, 2021, ESS announced it was selected by TerraSol Energies, Inc., a developer and manager of turnkey solar and storage solutions for commercial customers, to deliver an ESS Energy Warehouse flow battery at a commercial facility in Pennsylvania. The Energy Warehouse system will be integrated with solar PV as part of a microgrid to reduce electricity demand charges and provide safe, sustainable backup power to Sycamore International, an Information Technology Asset Disposition (ITAD) company with a focus on data security.
• On September 16, 2021, ESS announced expanded coverage of its industry-leading 10-year warranty insurance coverage for its Energy Center product through Munich Re, the world’s largest reinsurance company. The innovative policy provides a warranty backstop for ESS Inc.’s proprietary flow battery technology and electrolyte management system, supporting the system performance guarantee regardless of project size or location. ESS has also collaborated with Munich Re to similarly expand its Project Cover to ensure a bankable product offering for the Energy Center. The Cover eliminates any technology or business continuity risk for operators and can be extended to provide long-term assurance of project performance to system owners, investors and lenders.
• On September 23, 2021, ESS announced a contract with Enel Green Power España to deliver 17 ESS Energy Warehouse iron flow battery systems, which will be used to support a solar farm in Spain as a part of a broader EU-wide engagement, providing resilience for the local power grid. With a combined capacity of 8.5 MWh, the ESS systems will be among the largest battery storage resources in Spain.
• On September 30, 2021, ESS announced that it has entered into a framework agreement with SB Energy, a wholly owned subsidiary of SoftBank Group Corp, to deploy 2 GWh of ESS batteries through 2026. The first ESS system has already been delivered to an SB Energy location in Davis, California, and is currently being commissioned. SB Energy plans to install additional ESS flow battery systems to complement its expanding portfolio of solar power projects in Texas and California.

About ESS, Inc.

ESS Inc. (NYSE: GWH) designs, builds and deploys environmentally sustainable, low-cost, iron flow batteries for long-duration commercial and utility-scale energy storage applications requiring from 4 to 12 hours of flexible energy capacity. The Energy Warehouse and Energy Center use earth-abundant iron, salt, and water for the electrolyte, resulting in an environmentally benign, long-life energy storage solution for the world’s renewable energy infrastructure. Established in 2011, ESS Inc. enables project developers, utilities, and commercial and industrial facility owners to make the transition to more flexible non-lithium-ion storage that is better suited for the grid and the environment. For more information, visit www.essinc.com.

Forward-Looking Statements

This communication contains certain forward-looking statements, including statements regarding ESS’ and its management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. The words “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “intends”, “may”, “might”, “plan”, “possible”, “potential”, “predict”, “project”, “should”, “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These forward-looking statements are based on ESS’ current expectations and beliefs concerning future developments and their potential effects on ESS. Many factors could cause actual future events to differ materially from the forward-looking statements in this communication. There can be no assurance that the future developments affecting ESS will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond ESS’ control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Certain of these risks are identified and discussed in the section titled “Risk Factors” in the definitive proxy statement/prospectus filed by ACON S2 Acquisition Corp. with the Securities and Exchange Commission (“SEC”) on September 14, 2021 (the “Proxy Statement”). These risk factors will be important to consider in determining future results and should be reviewed in their entirety. Except as required by law, ESS is not undertaking any obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. Readers should carefully review the statements set forth in the reports which ESS has filed or will file from time to time with the SEC, including the Proxy Statement.

ESS Tech Subsidiary, Inc.
	Condensed Balance Sheets
	(In thousands, except share data)
			As of
			September 30, 2021 (Unaudited)				December 31, 2020
	ASSETS
	CURRENT ASSETS:
	Cash and cash equivalents		$	8,019			$	4,901
	Restricted cash			1,217				1,167
	Prepaid expenses and other current assets			6,506				793
	Total current assets			15,742				6,861
	Property and equipment, net			2,007				1,836
	Restricted cash			75				326
	TOTAL ASSETS		$	17,824			$	9,023
	LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT
	CURRENT LIABILITIES:
	Accounts payable		$	3,037			$	522
	Accrued and other current liabilities			4,595				2,194
	Notes payable, current			23,415				5,678
	Total current liabilities			31,047				8,394
	Notes payable, non-current			2,253				19
	Other non-current liabilities			3,662				2,258
	Derivative liabilities			248,450				22,911
	Warrant liabilities			-				3,329
	Total liabilities			285,412				36,911
	COMMITMENTS AND CONTINGENCIES (NOTE 5)
	REDEEMABLE CONVERTIBLE PREFERRED STOCK:
	Redeemable convertible preferred stock ($0.0001 par value, 62,072,064 and
	61,436,037 shares authorized, 38,768,389 and 32,865,949 shares
	issued and outstanding, liquidation preferences of $61,392 and
	$46,391 as of September 30, 2021 and December 31, 2020, respectively)			90,073				34,372
	STOCKHOLDERS' DEFICIT:
	Common stock ($0.0001 par value; 79,000,000 shares authorized
	as of September 30, 2021 and December 31, 2020
	9,125,954 and 7,134,668 shares issued and outstanding
	as of September, 2021 and December 31, 2020, respectively)			1				1
	Common stock warrants			-				153
	Additional paid-in capital			2,516				1,079
	Accumulated deficit			(360,178	)			(63,493	)
	Total stockholders' deficit			(357,661	)			(62,260	)
	TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT		$	17,824			$	9,023

ESS Tech Subsidiary, Inc.
Condensed Statements of Operations and Comprehensive Loss
(Unaudited, in thousands, except share and per share data)
		Three Months Ended September 30,								Nine Months Ended September 30,
		2021				2020				2021				2020
Operating expenses
Research and development		$	7,672			$	3,935			$	19,546			$	8,903
Sales and marketing			1,048				279				2,261				876
General and administrative			2,316				630				7,667				2,178
Total operating expenses			11,036				4,844				29,474				11,957
Loss from operations			(11,036	)			(4,844	)			(29,474	)			(11,957	)
Other income (expense):
Interest expense, net			(1,582	)			(38	)			(1,693	)			(106	)
Gain (loss) on revaluation of warrant liabilities			(2,949	)			24				(17,753	)			78
Gain (loss) on revaluation of derivative liabilities			(36,703	)			2,089				(248,691	)			5,849
Other income (expense), net			945				(2	)			926				(64	)
Total other income (expense)			(40,289	)			2,073				(267,211	)			5,757
Loss before income taxes			(51,325	)			(2,771	)			(296,685	)			(6,200	)
Provision for income taxes			-				-				-				-
Net loss and comprehensive loss		$	(51,325	)		$	(2,771	)		$	(296,685	)		$	(6,200	)
Net loss per share - basic and diluted		$	(5.82	)		$	(0.39	)		$	(35.08	)		$	(0.87	)
Weighted average shares used in per share calculation
- basic and diluted			8,823,458				7,102,536				8,458,054				7,099,532

 

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