Eos Energy Enterprises, Inc. (NASDAQ: EOSE) ("Eos" or the
“Company”), a leading provider of safe, scalable, efficient, and
sustainable zinc-based long duration energy storage systems, today
announced financial results for the fourth quarter and full year
ended December 31, 2023, and announced 2024 outlook.
Fourth Quarter Highlights
- Revenue totaled $6.6 million, a
148% increase compared to prior year, as the Company fully
transitioned production to the Eos Z3TM Cube on its semi-automated
manufacturing line.
- Cost
of Goods Sold totaled $30.4 million, a 66%
gross margin improvement compared to prior year resulting from the
Eos Z3 battery’s simple design that utilizes low-cost raw
materials combined with a streamlined manufacturing process.
- Operating expenses
totaled $18.5 million; a 10% reduction compared to
Q4 2022.
- Cash balance of $69.5
million (excluding restricted cash) as of December
31, 2023.
- Commercial
opportunity pipeline of $13 billion, a 77%
increase compared to prior year with a $534.8 million orders
backlog as of December 31, 2023, an increase of 15% compared
to December 31, 2022.
Full Year Highlights
- Revenue totaled $16.4 million,
compared to $17.9 million in the prior year as the company
launched the Eos Z3 Cube that has current cycle times of
less than 3-minutes, down 70% since product launch, with scrap
rates running below 3%.
- Costs of Goods Sold was $89.8
million, a $63.5 million decrease compared to prior year, a 41%
gross margin improvement driven by lower raw material input costs
combined with initial Z3 program benefits.
- Operating expenses of $79.5M,
a 7% decrease compared to prior year, primarily
driven by tighter cost control measures.
Eos Chief Executive Officer Joe Mastrangelo
said, “Eos transitioned its entire manufacturing
capacity from Gen 2.3 to the new Eos Z3 Cube. We’ve already begun
seeing the anticipated operational benefits associated with the Z3
battery design that provides improved power density along with
lower unit costs from its simpler mechanical design.”
Mastrangelo concluded, “We remain focused on
executing the path to profitability outlined in our December 12
strategic outlook call that includes bringing into service the
state-of-the-art (SotA) manufacturing line 1. I’m pleased to report
that the timeline for expanding affordable American made battery
storage capacity remains unchanged. There continues to be strong
demand signals for longer duration energy storage, and we’re
excited to work with our customers to fulfill this growing need
with a safe, secure and differentiated alternative.”
2024 Outlook
- For full year 2024, the Company
expects to recognize $60 million to $90 million in revenue as
state-of-the-art (SotA) line 1 is expected to begin initial
commercial production in Q2 2024. The Company then plans to
increase manufacturing volume throughout 2024 that aligns
production with customer requirements as well as the planned
realization of its cost-out roadmap.
- The Company forecasts positive
contribution margin in Q4 2024 as multiple cost
reduction actions are implemented throughout the
year. Contribution margin is defined as sales price less direct
labor and direct materials and includes the benefit of the
production tax credits. The cost out program should deliver initial
benefits in late Q1 2024, with majority of the benefits being
achieved in Q4 2024 as the Company ramps up production volume.
Recent Business Highlights
Project AMAZEAt the end of
January, the Company’s automation partner, ACRO Automation, fully
powered on the core Eos Z3 battery assembly and finishing
operations on SotA line 1. Achieving this milestone begins system
integration, implementing final controls logic and full mechanical
completion followed by the automation system debugging to prepare
for Factory Acceptance Testing in Wisconsin. The Company is
currently on schedule for full SotA line 1 commissioning in Turtle
Creek during Q2 2024.
Eos Z3 Product
LaunchIn mid-February, the Company produced the 100th
Eos Z3 Cube which took less than 5 months compared to Gen 2.3 where
over one and a half years were required to produce the first 100
units. Since the Z3 launch in September, the Company has
reduced Eos Z3 battery cycle times from an average of 10
minutes at launch to 3 minutes, with scrap rates below 3%. The
Company will continue manufacturing on its semi-automated
manufacturing line until SotA line 1 is commissioned. The 2024
revenue assumptions tie factory output with customer delivery
requirements and the Company’s cost-out roadmap to minimize working
capital requirements.
Path to ProfitabilityDuring the
first quarter, the Company entered a multiyear agreement with SABIC
Specialties’ US business unit to supply conductive composite
thermoplastic for the Eos Z3 battery module while also expanding
its partnership with TETRA Technologies. TETRA is designated as
Eos’s preferred strategic electrolyte supplier for the Eos Z3 Cube.
These expanded partnerships position Eos to better achieve scale,
reduce costs per battery, and improve overall quality and
performance as the Company progresses on its cost-out roadmap with
initial savings to be realized in late Q1 2024. As of Q4 2023, the
Company achieved nearly 30% product cost out, which is more than
35% of the Z3 cost reduction goal stated on the December 12
strategic outlook call. The Company expects the Eos Z3 Cube
to achieve a power density up to 695 kWh for longer
duration applications by the end of Q1 2024 with planned
increases to deliver 800 kWh by the end of 2024.
Commercial OutlookThe Company
continues to build a strong foundation both domestically and
internationally, with its commercial opportunity pipeline
increasing to $13 billion as of Q4 2023. There are 1.9
GWh in late-stage opportunities, including a memorandum of
understanding (MOU) with Pine Gate Renewables to expand the
existing partnership with closing anticipated by the
end of Q1 2024. Recent macro-level regulations continue
to drive a shift toward longer duration
discharges combined with the need for safe, secure American
made energy storage solutions. In addition, the Company is
seeing increased international momentum as three key markets
recently communicated renewable goals for the next decade.
Most recently, an Eos Z3 Cube was shipped to Sicily, Italy to
test a diverse set of potential use cases that is expected to
provide further opportunities for international
growth.
Earnings Conference Call and Audio Webcast
Eos will host a conference call to discuss its
fourth quarter and full year 2023 financial results on March 5,
2024, at 8:30 a.m. ET. A live webcast of the call will be available
on the “Investor Relations” page of the Company’s website at
https://investors.eose.com. To access the call by phone, please
register in advance using this link (registration link), and you
will be provided with dial in details via email upon registration.
To avoid delays, we encourage participants to dial into the
conference call fifteen minutes ahead of the scheduled start
time.
The conference call replay will be available via
webcast through Eos’s investor relations website for a limited
time. The webcast replay will be available beginning at 11:30 a.m.
ET on March 5, 2024, and can be accessed by visiting
https://investors.eose.com/events-and-presentations.
About Eos
Eos Energy Enterprises, Inc. is accelerating the
shift to clean energy with positively ingenious solutions that
transform how the world stores power. Our breakthrough Znyth™
aqueous zinc battery was designed to overcome the limitations of
conventional lithium-ion technology. Safe, scalable, efficient,
sustainable—and manufactured in the U.S—it's the core of our
innovative systems that today provide utility, industrial, and
commercial customers with a proven, reliable energy storage
alternative for 3- to 12-hour applications. Eos was founded in 2008
and is headquartered in Edison, New Jersey. For more information
about Eos (NASDAQ: EOSE), visit eose.com.
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Contacts |
Investors: |
ir@eose.com |
Media: |
media@eose.com |
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Forward Looking
StatementsExcept for the historical information contained
herein, the matters set forth in this press release are
forward-looking statements within the meaning of the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include, but are not limited to,
statements regarding our expected revenue, contribution margins,
orders backlog and opportunity pipeline for the fiscal year ended
December 31, 2024, our path to profitability and strategic outlook,
the tax credits available to our customers or to Eos pursuant to
the Inflation Reduction Act of 2022, statements regarding our
ability to secure final approval of a loan from the Department of
Energy LPO, or our anticipated use of proceeds from any loan
facility provided by the US Department of Energy, statements that
refer to 2024 outlook, projections, forecasts or other
characterizations of future events or circumstances, including any
underlying assumptions. 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. Forward-looking
statements are based on our management’s beliefs, as well as
assumptions made by, and information currently available to, them.
Because such statements are based on expectations as to future
financial and operating results and are not statements of fact,
actual results may differ materially from those projected.
Factors which may cause actual results to differ
materially from current expectations include, but are not limited
to: changes adversely affecting the business in which we are
engaged; our ability to forecast trends accurately; our ability to
generate cash, service indebtedness and incur additional
indebtedness; our ability to raise financing in the future; our
customers’ ability to secure project financing; the amount of final
tax credits available to our customers or to Eos pursuant to the
Inflation Reduction Act, uncertainties around our ability to secure
final approval of a loan from the Department of Energy the Loan
Programs Office, in a timely manner or at all, or the timing of
funding and the final size of any loan if approved; the possibility
of a government shutdown while we work to finalize loan documents
with the U.S. Department of Energy Loan Programs Office or while we
await notice of a decision regarding the issuance of a loan from
the Department Energy Loan Programs Office; our ability to develop
efficient manufacturing processes to scale and to forecast related
costs and efficiencies accurately; fluctuations in our revenue and
operating results; competition from existing or new competitors;
the failure to convert firm order backlog and pipeline to revenue;
risks associated with security breaches in our information
technology systems; risks related to legal proceedings or claims;
risks associated with evolving energy policies in the United States
and other countries and the potential costs of regulatory
compliance; risks associated with changes to U.S. trade
environment; risks resulting from the impact of global pandemics,
including the novel coronavirus, Covid-19; our ability to maintain
the listing of our shares of common stock on NASDAQ; our ability to
grow our business and manage growth profitably, maintain
relationships with customers and suppliers and retain our
management and key employees; risks related to the adverse changes
in general economic conditions, including inflationary pressures
and increased interest rates; risk from supply chain disruptions
and other impacts of geopolitical conflict; changes in applicable
laws or regulations; the possibility that Eos may be adversely
affected by other economic, business, and/or competitive factors;
other factors beyond our control; risks related to adverse changes
in general economic conditions; and other risks and
uncertainties.
The forward-looking statements contained in this
press release are also subject to additional risks, uncertainties,
and factors, including those more fully described in the Company’s
most recent filings with the Securities and Exchange Commission,
including the Company’s most recent Annual Report on Form 10-K and
subsequent reports on Forms 10-Q and 8-K. Further information on
potential risks that could affect actual results will be included
in the subsequent periodic and current reports and other filings
that the Company makes with the Securities and Exchange Commission
from time to time. Moreover, the Company operates in a very
competitive and rapidly changing environment, and new risks and
uncertainties may emerge that could have an impact on the
forward-looking statements contained in this press release.
Forward-looking statements speak only as of the
date they are made. Readers are cautioned not to put undue reliance
on forward-looking statements, and, except as required by law, the
Company assumes no obligation and does not intend to update or
revise these forward-looking statements, whether as a result of new
information, future events, or otherwise.
Key Metrics
Backlog. Our backlog represents
the amount of revenue that we expect to realize from existing
agreements with our customers for the sale of our battery
energy storage systems and performance of services. The
backlog is calculated by adding new orders in the current
fiscal period to the backlog as of the end of the prior fiscal
period and then subtracting the shipments in the current
fiscal period. If the amount of an order is modified or cancelled,
we adjust orders in the current period and our backlog accordingly,
but do not retroactively adjust previously published backlogs.
There is no comparable US-GAAP financial measure for backlog. We
believe that the backlog is a useful indicator regarding the future
revenue of our Company.
Pipeline. Our pipeline
represents projects for which we have submitted technical proposals
or non-binding quotes plus letters of intent (“LOI”) or firm
commitments from customers. Pipeline does not include lead
generation projects.
Booked Orders. Booked orders
are orders where we have legally binding agreements with a Purchase
Order (“PO”) or Master Supply Agreement (“MSA”) executed by both
parties.
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EOS ENERGY ENTERPRISES, INC.EARNINGS
RELEASE TABLESCONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE LOSS(In
thousands, except share and per share data) |
|
|
|
For the Years Ended December 31, |
|
2023 |
|
2022 |
Revenue |
|
|
|
Total revenue |
$ |
16,378 |
|
|
$ |
17,924 |
|
Costs and
expenses |
|
|
|
Cost of goods sold |
|
89,798 |
|
|
|
153,260 |
|
Research and development expenses |
|
18,708 |
|
|
|
18,469 |
|
Selling, general and administrative expenses |
|
53,650 |
|
|
|
60,623 |
|
Loss from write-down of property, plant and equipment |
|
7,159 |
|
|
|
6,846 |
|
Grant income, net |
|
— |
|
|
|
(16 |
) |
Total costs and expenses |
|
169,315 |
|
|
|
239,182 |
|
Operating
loss |
|
(152,937 |
) |
|
|
(221,258 |
) |
Other (expense)
income |
|
|
|
Interest expense, net |
|
(18,770 |
) |
|
|
(7,915 |
) |
Interest expense – related party |
|
(37,466 |
) |
|
|
(10,898 |
) |
Change in fair value of warrants |
|
(24,980 |
) |
|
|
848 |
|
Change in fair value of derivatives - related parties |
|
9,983 |
|
|
|
10,880 |
|
Loss on debt extinguishment |
|
(3,510 |
) |
|
|
(942 |
) |
Other expense |
|
(1,795 |
) |
|
|
(477 |
) |
Loss before income
taxes |
$ |
(229,475 |
) |
|
$ |
(229,762 |
) |
Income tax expense |
|
31 |
|
|
|
51 |
|
Net loss |
$ |
(229,506 |
) |
|
$ |
(229,813 |
) |
Other comprehensive
income |
|
|
|
Foreign currency translation adjustment, net of tax |
|
1 |
|
|
|
6 |
|
Comprehensive
loss |
$ |
(229,505 |
) |
|
$ |
(229,807 |
) |
Basic and diluted loss
per share attributable to common shareholders |
|
|
|
Basic |
$ |
(1.81 |
) |
|
$ |
(3.68 |
) |
Diluted |
$ |
(1.81 |
) |
|
$ |
(3.68 |
) |
Weighted average
shares of common stock |
|
|
|
Basic |
|
126,967,756 |
|
|
|
62,439,857 |
|
Diluted |
|
126,967,756 |
|
|
|
62,439,857 |
|
|
|
|
|
|
|
|
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EOS ENERGY ENTERPRISES, INC.EARNINGS
RELEASE TABLESCONSOLIDATED BALANCE SHEET
DATA(In thousands) |
|
|
|
|
|
December 31, 2023 |
|
December 31, 2022 |
Balance sheet data |
|
|
|
Cash and cash equivalents |
$ |
69,473 |
|
|
$ |
17,076 |
|
Other current assets |
52,858 |
|
|
38,071 |
|
Property and equipment, net |
37,855 |
|
|
27,169 |
|
Other assets |
26,306 |
|
|
24,472 |
|
Total assets |
186,492 |
|
|
106,788 |
|
Total liabilities |
297,292 |
|
|
239,499 |
|
Total deficit |
(110,880 |
) |
|
(132,711 |
) |
|
|
|
|
|
|
SUMMARIZED STATEMENT OF CASH FLOW DATA (In
thousands) |
|
|
|
|
|
December 31, 2023 |
|
December 31, 2022 |
|
|
|
|
Cash used in operating activities |
$ |
(145,018 |
) |
|
$ |
(196,857 |
) |
Cash used in investing
activities |
|
(29,461 |
) |
|
|
(17,170 |
) |
Cash provided by financing
activities |
|
227,918 |
|
|
|
139,544 |
|
Effect of foreign exchange on
cash, cash equivalents and restricted cash |
|
5 |
|
|
|
14 |
|
Net increase (decrease) in
cash, cash equivalents and restricted cash |
|
53,444 |
|
|
|
(74,469 |
) |
Cash, cash equivalents and
restricted cash, beginning of year1 |
|
31,223 |
|
|
|
105,692 |
|
Cash, cash equivalents and
restricted cash, end of year1 |
$ |
84,667 |
|
|
$ |
31,223 |
|
(1) Includes
current and long-term restricted cash, as reflected on the balance
sheet |
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