Just another week of sitting on the edge of our seats now.
Some may call it fluff, others may call it context, but the entire presser is all about this particular paragraph. They are basically saying, ‘hey look, Q3/Q4 2022 aren’t going to look as good as we planned, but that’s because we’re intentionally going to make it all back and then some in 2023’:
- Benefits for energy storage customers and manufacturers will begin in 2023. Eos has worked proactively and in partnership with its customers to push out orders originally scheduled to be produced and delivered this year to 2023 so that both Eos and its customers can better realize the benefits offered by the ITC. Eos intends to finalize production and delivery on the Pine Gate Renewables Eastover project in the fourth quarter of 2022 and to reduce production on the current generation product thereafter. This results in a revised full-year 2022 revenue expectation in the range of $17 to $20 million, shifting the remaining revenue originally planned in 2022 to 2023.
My only question/concern is that: Is the Inflation Reduction Act an absolute lock at this point?
Inflation Reduction Act Offers Opportunity for Eos Energy Enterprises, Inc. and Energy Storage Customers to Capture Substantial Long-Term Value While Significantly Reducing Emissions
Eos outlines strategy shift and revises 2022 revenue outlook
EDISON, N.J., Oct. 31, 2022 (GLOBE NEWSWIRE) – Eos Energy Enterprises, Inc. (NASDAQ: EOSE) (“Eos”), a leading provider of safe, scalable, efficient, and sustainable zinc-based energy storage systems, today announced the expected impacts on the energy storage industry and on Eos from the recent passage of the transformational Inflation Reduction Act (“IRA”) and Eos’s shift in strategy and revised outlook for fiscal year 2022.
“We believe that one of the important benefits of the IRA is that it will significantly reduce the costs of battery cells, modules, and energy storage systems, particularly for those manufactured in the US which we expect to accelerate the domestic energy transition,” said Joe Mastrangelo, Chief Executive Officer of Eos. “We continue to see accelerated demand in our robust opportunity pipeline. The IRA encourages the building of a clean energy future in America and Eos is well-positioned as one of the only at-scale US manufacturers of proven long duration energy storage.”
The IRA features significant economic incentives for both energy storage customers and manufacturers that begin for projects placed in service after December 31, 2022. Customers placing new energy storage facilities in service after this date will be allowed to claim at least a thirty percent investment tax credit (“ITC”) under certain conditions. The IRA also offers an extra ten percent credit if the project is in an “energy community” and another ten percent credit if the project satisfies domestic content requirements, which will be set forth when the implementing regulations are finalized. Mastrangelo continued, “The ten percent bonus for domestic content is a strategic advantage for Eos resulting from our near-sourcing and Made in America strategy, and we currently anticipate that projects utilizing Eos batteries would qualify for the bonus.”
Starting in 2023, there are also meaningful production tax credits (“PTC”) that can be claimed on battery components manufactured in the US and sold to customers which could apply to Eos, including credits for ten percent of the cost incurred to make electrode active materials, $35 per kWh of capacity of battery cells, and $10 per kWh of capacity of battery modules. These credits are cumulative, meaning Eos expects to be able to claim the tax credit amount for each component. The IRA directs the Internal Revenue Service to pay manufacturers the cash value, also known as direct pay, of production tax credits for making battery components, and therefore, these credits may be a new source of cash flow for Eos. The direct pay option is valid for up to five tax years, after which any such tax credits can be sold to other companies for cash.
Benefits for energy storage customers and manufacturers will begin in 2023. Eos has worked proactively and in partnership with its customers to push out orders originally scheduled to be produced and delivered this year to 2023 so that both Eos and its customers can better realize the benefits offered by the ITC. Eos intends to finalize production and delivery on the Pine Gate Renewables Eastover project in the fourth quarter of 2022 and to reduce production on the current generation product thereafter. This results in a revised full-year 2022 revenue expectation in the range of $17 to $20 million, shifting the remaining revenue originally planned in 2022 to 2023.
Mastrangelo added, “Against the backdrop of the new IRA legislation and major progress on our new battery design, the Eos Z3™ battery, we believe reducing output on our current product and focusing our team on tooling the factory for Eos Z3 battery production is the best capital allocation decision for the Company. We believe this decision will deliver long-term value creation for both our customers and our shareholders.” The Eos Z3 battery builds off the same stable, proven chemistry that has not fundamentally changed for the better part of a decade. The Eos Z3 battery is designed and purpose-built for scalability and cost. It is simple with 50% fewer battery cells per module and 98% fewer welds than the current product.
“The Eos Z3 battery product is a paradigm shift in design which significantly reduces assembly complexity,” said Francis Richey, Senior Vice President of Research & Development at Eos. “Incorporating conductive plastic into our patented bipolar electrode design reduces cost and weight and improves manufacturability and system performance.” The Eos Z3 battery is designed to be capable of significantly higher manufacturing throughput and reduced cycle times at full-scale production which will allow Eos to maximize the PTC relative to the current generation product.
As previously disclosed, Eos has been invited to the due diligence stage of the U.S. Department of Energy’s (“DOE”) Renewable Energy and Efficient Energy Loan Program. The DOE Loan Programs Office’s (“LPO”) invitation to Eos to enter into full due diligence represents an important progression in the LPO’s evaluation of Eos’ loan application. This stage includes LPO performing its due diligence of Eos’ project to expand manufacturing to support at least 3GWh of production capacity. During this stage, Eos and LPO will work to negotiate a Term Sheet setting out the principal terms and conditions of the loan. This work provides the LPO the foundation to advance the loan towards a Conditional Commitment. Although the DOE LPO’s invitation to due diligence is not an assurance that the DOE will offer a Conditional Commitment or provide a loan to Eos under the DOE LPO, Mastrangelo concluded, “We believe Eos is positioned well in this process since our products and technologies are an enabler to greenhouse gas emission reduction and decarbonization. In addition, the Company’s Made in America and job creation strategy meet many policy objectives of the IRA and broader White House Administration.”
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Just for fun I bought into the 11/18 2.5Cs, 4 of them, for a cost basis of $0.05. Seems that the stock is getting some traction and it’s been on a bit of a tear these past few days. I’m still underwater on my boomer position but things are looking up for this guy in the near future.
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Another good article explaining the shift in Rev to 2023…
- Sam Jaffe, vice president of battery solutions at E Source, said he expects a strong flow of private capital into stationary energy storage because of the IRA.
Zinc-based storage manufacturer Eos delays some production to 2023 to capitalize on federal tax credits
Took another helping of 100 shares of EOSE at $1.45
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Just as we suspected earlier, the link between Indian Energy and EOSE continues! Super bullish… If Cali is on board with EOSE. then the DOE loan looks even more promising imo…
Eos Energy Enterprises, Inc. Selected for 35 MWh Long Duration Energy Storage Project in California
California Energy Commission (“CEC”), Indian Energy, and Eos Energy Enterprises to bring innovative Made in America clean energy storage solution for Viejas Enterprise Microgrids project to Viejas Band of Kumeyaay Indians
EDISON, N.J., Nov. 04, 2022 (GLOBE NEWSWIRE) – Eos Energy Enterprises, Inc. (NASDAQ: EOSE) (“Eos”), a leading provider of safe, scalable, efficient, and sustainable zinc-powered long-duration energy storage systems, today announced an order for a 35 MWh energy storage system capable of 10-hour discharge duration. The order, worth $13.5 million, is funded by a grant through the CEC’s Long-Duration Energy Storage (“LDES”) Program as part of a project being carried out by Indian Energy, a 100 percent Native American-owned business, to create a first-of-its-kind resilient clean energy microgrid. A long-term service agreement is expected to be signed by Eos and Indian Energy in the coming weeks.
Eos’ proprietary Znyth™ zinc-based battery energy storage technology is a trusted long-duration (3-12 hour) energy storage solution. It is tailor made for projects like the Viejas Enterprise Microgrid because it is reliable, flexible and can safely be deployed in communities facing increasing challenges related to climate change. Eos energy storage systems are nonflammable and noncorrosive, and they are made in America using primarily domestically-sourced components that are fully recyclable.
The CEC has a long-standing relationship with Eos, a previous Electric Program Investment Charge (“EPIC”) awardee. Eos’ inclusion in this project will allow California to increase the diversity of its clean energy mix as the state accelerates efforts to transition to a 100 percent clean electricity system that is equitable and delivers clean, safe, reliable and affordable power. Investment in projects like these moves California closer to net zero greenhouse gas emissions goals, a more resilient power grid and a fully renewable energy sector.
“Eos is excited to be chosen by the CEC to serve the Viejas Band of Kumeyaay Indians and the people of California,” said Joe Mastrangelo, CEO of Eos Energy Enterprises. “Our energy storage technology is well-suited for projects exactly like this and adding long-duration energy storage is a critical piece of a resilient energy mix, allowing wider adoption of solar and wind power.”
This project is a significant milestone for efforts to accelerate the adoption of a diverse set of energy storage technologies while also providing resiliency and energy stability in communities at the greatest risk of being adversely affected by climate change. The full scope of the project aims to establish a solar plus storage clean energy microgrid. Eos zinc battery energy storage systems will help fulfill 35MWh of the 60MWh system, making it a critical component of the renewable clean energy value chain supporting long-duration storage for solar and wind energy projects.
“Native communities have been fighting for resilient infrastructure for decades, and this has now become an urgent crisis for our communities,” said Allen G. Cadreau, CEO of Indian Energy. “By securing funding for this microgrid project, we will be able to lead instead of follow. We can no longer rely on fossil fuels - as custodians of the planet, we are creating a next-generation clean energy grid that will enable the Viejas Band of Kumeyaay Indians to run businesses and homes cleanly and without disruption. We are excited to work with Eos as the first Made in America long duration storage solution.”
Indian Energy is a Native American-owned project developer working on grid-scale battery storage and microgrid projects with funding coming from the CEC’s LDES Program. The battery energy storage systems for this project will be produced in Eos’s Turtle Creek, Pennsylvania manufacturing facility, one of the few locations in the world producing non-lithium-ion energy storage solutions at scale with an 80 percent domestic supply chain.
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Reporting After The Bell Today, 11/7
- Eos Energy Enterprises NASDAQ:EOSE is expected to report quarterly loss at $0.69 per share on revenue of $13.30 million.
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Earnings weren’t great. They’re hosting an investor call tomorrow morning at 8AM though. Here’s the highlights from their earnings: pretty big miss on EPS and Revenue. Markets weren’t happy, but it wasn’t a huge fall from market open today.
Reported a 3rd Quarter September 2022 loss of $1.12 per share on revenue of $6.1 million. The consensus estimate was a loss of $0.75 per share on revenue of $13.2 million. Revenue grew 744.7% on a year-over-year basis.
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That’s a bold move, cotton, let’s see if it pays off
Keep in mind they just had a pressor acknowledging they shifted revenue that was included in these estimates for 2022, to 2023 for better tax credits… but still… yuck lol
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Well, the covered calls for Dec that I sold today seems like it’ll be safe after this earnings miss. Cost basis now about $1.42/share and will continue to hold onto the new year
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Dip buy opportunity?
Everyone is killing my boys. First GETY and now EOSE.
I’ll start with the bad news - I have completely exited my position on EOSE as of this morning after the conference call for a total loss of $50. I actually really like a lot of things about this company, but with deferred revenues until Q1 2023 it’s hard to see upside for the stock until well into the new year (hopefully reflected in Q4 2022 guidance around February, but we will have to wait and see).
The thing that scared me away the most in the short term is that the company has $70mm in sellable stock that they can dilute the float with and have already done so with $30mm. They have some diversity in terms of financial channels where they can receive funding outside of selling common stock, but until those are solidified (namely the DOE loan), there is going to be an inherent risk of imminent dilution until the revenue starts pouring in.
They have billions of dollars of opportunities but have deferred most sales until the Inflation Reduction Act kicks in with benefits in 2023. With the Senate and House likely to flip to R after today, that Act should not be considered gospel for the full 10 year window that was quoted by the CEO repeatedly on the call today. That fact will be exacerbated by foreign feedback to the IRA, as @The_Ni kindly reported before Walter this morning:
https://twitter.com/DeItaone/status/1590003883572543488
The big risk of dilution currently is in the balance sheet. They currently have $38mm on hand, but the cost of goods sold for the quarter was $50mm, and they ran an SG&A of $14mm. @DankeDeNada noted that during the conference call they have indicated that they’ve found ways to lower their cost of production, however this technology is still in R&D. This means that if they fail to quickly capitalize on their revenue opportunities in 2023, the COGS and SG&A will outpace their cash on hand and they will be forced to dilute further to raise cash. Furthermore, their dilution is At The Money, so the lower the stock plunges the more shares need to be introduced into the free float. It will be an uphill battle to regain value without significant buy backs over the coming years.
At the moment, I still think there’s a ton of upside to the company but I think it’s smarter to play shares through earnings, purchased a couple weeks before earnings to enjoy some run-up and potentially catch a good wave after forward guidance comes out strong. I do believe this company will come out well ahead of where they are now, but I don’t think that will be realized within the next 6 months.
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Thanks @SuckyMayor for this detailed write up. Spot on with your risk assessment here with shares only and entering at specific times.
Unfortunately, I entered too much and too quickly and wasn’t able to average down enough since acquiring my initial position in shares. I will be (bag) holding into 2023, with the second half of 2023 where I expect things to really pick up. Currently down 50% using only money I’ve specifically reserved for small cap plays… still ouch…
With the price now sub $1.30, there is no reason we couldn’t see sub $1 in the short term before knowing more on the DOE loan award. I’d either only reenter now with 10% of what you’d typically enter as a starting position (e.g. if you typically buy in 100 share increments, buy 10 this week). I’d wait for more confirmation on an established “floor” before entering at this point though.
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Hi try this
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I’ve opened our boy 
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$11 Price Target from Stifel Initiating Coverage Report, implying 958% upside from yesterday’s close. Electric grid battery technology.
So our little Stevie Cohen investment down over 50% since starting this thread just received a significant price target that got the heads talking again.
Share available to short is at 300 according to Fintel at 8am. (Ortex showing 0 now)
8.95% of FF is short with 5.6m shares and the 90-day average volume is 2.2M.
This morning we already have 2.3M in volume PRE MARKET…. 
Very possible this was some shorts covering this morning in the $1.20s but overall I think it’s gain attention again. Twitter seems to be liking this news.
Just a cool 18.92M in volume so far today, definitely nothing to see here. 
Would like to see this continue to consolidate and close above 1.20 for today. But you know, beggars can’t be choosers.
My speculation is this mornings volume was possible short positions being closed. We’ve already dropped from 8% to 7% over the last week. Slow unwinding with no real constant buying/volume gives “them” the ability to cover a portion then let it melt down on no continued upward pressure. Suspect potential DOE loan news and new price target isn’t worth fucking with at the moment… (plenty of other small caps to short, why take one with a 10x pt?)