Is GWH's 2025 Q1 EPS forecast achievable?

ESS Tech's (GWH) 2025 Q1 EPS forecast is not currently achievable based on the available data and company performance indicators. Here's a detailed analysis:

1. Current Financial Performance Context:
   • ESS Tech has a history of missed earnings expectations, with a pattern of declining EPS estimates and actual values over the past quarters.
   • The company reported a net loss of $86.2 million for the year ending December 31, 2024, with a reported EPS loss of $1.97 for the quarter, missing the estimated loss of $1.37 per share.
2. Revenue Shortfall and Operational Challenges:
   • ESS Tech fell short of revenue estimates, with annual revenue reported at $6.3 million, missing the estimated $9.24 million due to partner funding delays.
   • Despite the revenue shortfall, the company achieved several operational milestones, such as commissioning its first two Energy Centers and delivering eight Energy Center systems to a Florida utility.
3. Market Expectations and Recent Trends:
   • Analysts estimate that ESS Tech will report an EPS of $-1.33 for the upcoming quarter ending March 31, 2025.
   • The consensus EPS estimate for the quarter ending December 2024 was revised 11.41% higher, indicating a potential improvement in earnings outlook.
4. Strategic Shift and Cost Reductions:
   • ESS Tech is accelerating a strategic shift focusing on deploying the Energy Center product and introducing the next-generation Energy Base product.
   • The company has announced cost reduction initiatives that led to the Energy Center achieving breakeven on a non-GAAP gross margin basis by the end of Q4 2024, nearly a year ahead of schedule.
5. Projections for 2025:
   • CFO Tony Rabb stated that revenue growth in 2025 would be backloaded, with significant scale-up expected in the second half of the year.
   • The company anticipates that all products sold in 2025 will achieve profitability on a direct variable cost basis.

In conclusion, while ESS Tech has made strides in strategic positioning and cost management, the current EPS forecast for 2025 Q1 is not achievable based on the company's recent financial performance and operational challenges. The company's strategic shifts and cost reductions are positive indicators, but they may take time to fully materialize and impact the bottom line. The market's expectations for Q1 2025 EPS of $-1.33 reflect the ongoing challenges and the need for further operational improvements to achieve profitability.