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 third quarter ended September 30, 2024.
Third Quarter Highlights
- Revenue totaled $0.9 million, lower than expected, as the Company experienced an acute supply chain delivery delay in receiving new Z3 inline enclosures from a key supplier. The supply chain delay had a significant impact on revenue for the quarter. This delay has had no adverse impact on Eos’ total committed backlog and the Company is actively working with customers on updated delivery schedules.
- Cost of Goods Sold totaled $25.8 million, a 21% increase compared to the prior year period, driven by larger customer projects undergoing field installation and commissioning along with higher labor costs related to manual sub-assembly manufacturing. This is expected to decrease significantly as further automation is implemented.
- Other operating expenses totaled $28.4 million, a 65% increase compared to the prior year, driven by costs associated with the state-of-the-art manufacturing line, higher legal and professional fees related to Cerberus and Department of Energy financing activities and non-cash equipment write-downs following Z3 design enhancements.
- Net loss attributable to shareholders of $342.9 million with an adjusted EBITDA loss of $46.1 million.
- Net loss attributable to common shareholders of $384.1 million with an earnings per share (EPS) of $(1.77) and an adjusted EPS of $(0.44).
- Cash balance of $23.0 million (excluding $7.6 million restricted cash) as of September 30, 2024.
- Commercial pipeline of $14.2 billion, up over $0.4 billion from the second quarter, with a 23% increase in signed letters of intent, and an orders backlog of $588.9 million as of September 30, 2024.
- As a result of Project AMAZE costs coming in below forecast, along with the Delayed Draw Term Loan from Cerberus, Eos has requested a reduced loan amount under its 2023 conditional commitment.
- As previously announced, signed a 960 MWh Letter of Intent in July with a solar plus storage integrator and developer in Puerto Rico which is expected to convert to backlog upon customer financing. Eos expects Puerto Rico and surrounding island countries to be a significant market for safe energy storage solutions going forward.
“We remain proud of the significant progress and momentum we’ve made within the business, despite the short-term enclosure supply chain challenges. We have successfully reached our second set of performance milestones and secured additional funding, all while focusing on converting our growing pipeline into firm orders. Project AMAZE, together with our strategic partnership with Cerberus, is rapidly enhancing Eos' capabilities and bankability,” said Eos Chief Executive Officer Joe Mastrangelo. “Z3 system delivery delays have not impacted positive customer sentiment, which is a testament to the growing affirmation of our product and the quality of customer relationships we have developed.”
Mastrangelo concluded, “As we look to 2025, I am confident in our ability to deliver on our growth strategy. With strong funding and enhanced commercial bankability, we believe Eos is well positioned to deliver a readily available, safe and secure storage system manufactured in the U.S., to meet the fast-growing demand for longer duration energy storage.”
2024 Outlook
- The Company continues to forecast positive contribution margin by year end. Contribution margin is defined as sales price less direct labor and direct materials and includes the benefit of the production tax credits.
- As a result of the enclosure supply chain bottleneck and its impact on Eos’ second half 2024 shipments, the Company expects to recognize approximately $15 million in revenue for the full year 2024. The difference between Eos’ prior and current guidance is expected to be shipped and recognized in the first half of 2025. The Company has secured a no fee waiver on the September 30 revenue covenant under the credit and guaranty agreement with its strategic partner, Cerberus. The Company anticipates a similar waiver or amendment for its December 31 revenue covenant.
Recent Business Highlights
Cerberus Strategic Investment
The Company successfully achieved all four of the second tranche of performance milestones previously agreed upon between Eos and an affiliate of Cerberus Capital Management LP (“Cerberus”) as part of Cerberus’s strategic investment in the Company. Achieving these performance milestones enabled the Company to draw an additional $65 million from the Delayed Draw Term Loan.
Eos has reached significant accomplishments in its second set of performance milestones, including exceeding its cost-out milestone target and demonstrating first pass yields that already exceed future milestone requirements. These milestones reflect the Company’s progress in optimizing its automated production line, reducing material costs, enhancing the performance of its Z3 technology, and accelerating backlog and cash conversion.
The remaining tranche of funding is expected to be drawn in the amount of $40.5 million upon the successful completion of the January 31, 2025, milestones.
Commercial Growth
Eos today announced a 216 MWh order with City Utilities, its largest municipal order to date for two project sites in Springfield, Missouri. This landmark project marks a significant step forward in Eos’ mission to deliver innovative, sustainable energy storage solutions while expanding further into the municipal customer segment. This project will leverage Eos' Z3™ technology to enhance City Utilities' energy storage capabilities, directly advancing its expansion goals and strengthening reliable energy delivery to the community it serves.
With 2.2 GWh in late-stage approvals—including grant awards, short-listed project closures, and final contracting for Eos technology—the Company continues to advance its $14.2 billion commercial pipeline with strong momentum across key markets.
Ensuring 2025 Commercial Bankability
To further accelerate the conversion of Eos’ pipeline into firm orders, Eos is strengthening its commercial bankability by launching a comprehensive suite of insurance products alongside additional third-party validations. The Company has selected a major insurance provider to offer these policies which is expected to be available to customers before year end. Coupled with an extended 10-year warranty and continued financial stability from Cerberus, the Company is positioned to achieve a robust bankability profile heading into 2025 and beyond. This customer-focused solution is expected to strengthen financial assurance, facilitate project financing access and convert pipeline opportunities into secured orders.
Software Optimization
Recently, the Company signed an agreement with Cerberus Technology Solutions (CTS) to develop a secure, fully integrated Battery Management software platform and customer interface that will include performance management and analytical capabilities. CTS, an operating company and subsidiary of Cerberus, is dedicated to leveraging emerging technology, data, and advanced analytics to drive operational transformation. As energy storage systems play an increasingly vital role in stabilizing renewable energy, an effective software solution is essential for maximizing operational efficiency and value.
CTS will support the Company in deploying an innovative solution designed to incorporate a new embedded AI platform, enabling real-time optimization of resource utilization for grid-scale customers. As a result, this should allow Eos’ customers to store energy more efficiently, reduce operational costs, and extend the lifespan of its batteries. The system is expected to be configured for uninterrupted power to critical infrastructure, including data centers, healthcare facilities, and other essential services, ensuring reliable and efficient energy management across diverse applications. Through this integration of AI and predictive analytics into its software ecosystem, the Company is strategically positioning itself to lead in long-duration energy storage, delivering innovative and reliable solutions to its customers.
