ESS Tech, Inc. (NYSE:GWH) Q4 2022 Earnings Call Transcript

It’s just the kind of the chipping away of individual components that seemed to have issues and then and then resolve themselves.

Operator: Your next question comes from the line of Colin Rusch with Oppenheimer. Your line is now open.

Colin Rusch: This is Andre on for Colin, with the completion of the automated line installation, can you give a sense of what the yields are looking like so far, and the rate of improvement that goes I think?

Eric Dresselhuys: I think too early to put a specific number to it because we just commissioned the line. So, we’re ramping up its production. Through this quarter, we still have our semi-automated lines, which are carrying most of the load in the near-term, but it was certainly sufficient quality that the team officially commissioned the line and signed off from our vendor partner who was helping us set it up. So, we feel very good about the password to Tom.

Colin Rusch: Thanks. And just as a follow-up, could you give us a sense of timelines for OpEx spending?

Tony Rabb: Hi, this is Tony. So, at this point, I think we haven’t provided any guidance in terms of what that might look like going forward. But if you take a look at where we were in the fourth quarter. We feel like that’s a fairly adequate level of spending. And so, the change between third and fourth quarter, there was too much of a change there. So, we’re looking at maintain.

Colin Rusch: Thank you, so much.

Operator: Your next question comes from the line of Davis Sunderland with Baird. Your line is now open.

Davis Sunderland: Thanks for taking my question. I wanted to ask about any challenges you may have had with validating the technology to customers. And then stemming from that if a few of these bigger deals like small in the Amsterdam airports have kind of been proof points, or if you’ve seen an uptick in demand following those?

Eric Dresselhuys: Sure. Well, I’ll pick that. So, we talked about the biggest challenges that we’ve had in the field that we’ve been working through is how our product interfaces with the kind of the grid or third-party system, but there’s a lot of complexity that we’ve had to work through over the course of the year to demonstrate not just the core performance of our products, but really how it interacts with other people’s products. So that’s been a chunkier process than we had expected. But I think we’ve moved through it pretty well. And some of the more recent units in particular that we’ve shipped here in the states to folks in commercial applications, or some of the units that have shipped down even as far away as Australia have performed quite well.

And the time to commissioning, as I alluded to, in my prepared remarks, has really started to shorten. So that’s we think, fantastic. The interest has picked quite a bit. I think it’s a combination of some of the announcements and people seeing the different use cases, for long duration storage and where it comes into play. I don’t frankly think a lot of people think of something like the Schiphol Airport and said, that was an obvious application that I expected for long duration storage. When they understand what the application requirements are, and how our technology is really uniquely well suited because of its safety, reliability to be in an airport environment, the response we get as well, that’s obvious. I didn’t know that. No, you said it makes perfect sense.

That the last thing I’d say is that there has been a big uptick in interest relative to the Inflation Reduction Act. But as I mentioned earlier, it would be great to get the final rules, in terms of the IRS is administration out the door, because we have had some people, we’re getting into conversations and planning projects, but they’re hesitant to go to full commitment until they know what those IRS rules are.