$EOSE earnings report

Eos reported record third-quarter revenue of $82.7 million, up 171% year over year and 20% sequentially, through deliveries to 10 projects. Management attributed the growth to a 216% year-over-year increase in cube shipments and 23% sequential shipment growth. Revenue included $ 68,447 (In thousands) of related-party revenue. The company ended the quarter with $765 million of backlog representing 3.2 GWh and a $24.9 billion commercial opportunity pipeline, although backlog was down 5% from the prior quarter as shipments converted into record quarterly revenue.

The operating model improved materially but remained loss-making. Gross margin was negative 53%, an improvement of 58 percentage points year over year and 18 percentage points sequentially, while adjusted gross margin was negative 44%. The gross loss was $44.2 million. Eos cited lower material costs, increased production volumes, and lower conversion costs as the principal gross-margin drivers. Adjusted EBITDA loss was $63.8 million and adjusted EBITDA margin was negative 77%, improving 96 percentage points year over year and 27 percentage points sequentially.

GAAP net income attributable to shareholders was $125.0 million, but the release stated that this primarily reflected non-cash mark-to-market gains on warrants and debt resulting from changes in the Company's stock price. The condensed statement reports $ 77,746 (In thousands) of change in fair value of warrants, $ 13,222 (In thousands) of change in fair value of derivatives, and $ 129,551 (In thousands) of change in fair value of derivatives - related parties in the quarter. Operating income (loss) remained $ (79,321) (In thousands), highlighting that reported net income did not reflect positive operating profitability.

Manufacturing execution is central to the next period. Thorn Hill had its first full quarter with both battery lines in commercial production. Line 2 reached first-pass yield parity with Line 1 within three months, contributed 17% of total battery output, and delivered approximately 20% higher battery output per shift than Line 1. However, the company began consolidating manufacturing into Thorn Hill in late October, including Line 1 disassembly at Turtle Creek. Management expects the move to temporarily affect production capacity and shipment timing, while targeting lower costs and a single-site footprint with associated operating efficiencies in 2027.

Liquidity included $344.1 million of total cash including restricted cash at September 30, 2026, and the company received a $87 million first advance under the second tranche of the U.S. Department of Energy loan. For the first nine months, net cash used in operating activities was $ (261,591) (In thousands) and net cash used in investing activities was $ (218,955) (In thousands). Eos reaffirmed its full-year revenue outlook in the lower half of its $300 million to $350 million range. The key near-term issue is whether manufacturing consolidation constrains fourth-quarter deliveries while the company continues to improve gross margin and adjusted EBITDA.

Eos reported preliminary third-quarter revenue of $82 to $83 million, representing approximately 19% to 21% sequential growth and approximately 169% to 172% year-over-year growth. The Company said this was its highest revenue to date. Shipments increased approximately 23% quarter over quarter as production scaled at the second manufacturing line at Thorn Hill.

The principal operating improvement was expected GAAP gross margin of (55)% to (53)%, an improvement of approximately 16 to 18 percentage points compared with the second quarter of 2026. Eos attributed the improvement to higher production volumes and lower conversion costs per unit, marking its eighth consecutive quarter of gross-margin improvement. Margin remains negative, however, and further expansion depends on higher volume, capacity utilization, consolidation into one footprint, and material cost-reduction initiatives.

Manufacturing execution remains central to the outlook. Line 2 contributed approximately 17% of total battery production and exited the quarter with first-pass yield aligned to Line 1 performance, but it remained on a partial-shift schedule while Eos hired and trained additional employees. The Company expects the final shift to bring Thorn Hill to 24-hour operation during the fourth quarter. Following consolidation and full-scale operations, Thorn Hill is expected to provide approximately 4 GWh of annual nameplate production capacity across two lines.

Liquidity was approximately $344 million of total cash, including restricted cash, at September 30, 2026, compared with $364 million at June 30, 2026. Quarter-end cash was supported by approximately $114 million of operating cash inflows, primarily from customer deposits, project milestone receipts, and tax credit collections, plus an additional $87 million DOE loan-facility advance. Capital expenditures totaled approximately $35 million, primarily for completion of Line 2 automation.

Commercially, backlog was approximately $765 million, representing approximately 3.2 GWh, after quarterly revenue recognition and new order activity. Eos received six purchase orders from six customers, although the previously announced $100 million order under an existing capacity reservation agreement did not add to quarter-over-quarter backlog growth. The Company expects full-year 2026 revenue in the lower half of its $300 million to $350 million range. These results are preliminary and remain subject to closing procedures, review, and finalization of the Company’s financial statements.

Second-quarter revenue was $68,775 (in thousands), up 351% year over year, supported by 207% higher cube deliveries. Revenue included $55,034 (in thousands) of related-party revenue. Eos stated that a pre-existing project generated $55.0 million of second-quarter revenue and contributed approximately 80% of quarterly revenue, making this project a major contributor to the reported growth.

Production volumes and lower conversion costs improved gross margin to (71.0) % from (203.2) % in the prior-year period. However, the Company remained deeply loss-making at the gross-profit level, with gross loss rising to $(48,801) (in thousands) from $(30,953) (in thousands). Temporary manufacturing underutilization across two facilities and higher project costs partially offset the production-driven improvement. Adjusted EBITDA loss increased to $(71,355) (in thousands) from $(51,626) (in thousands), despite the reported 235-percentage-point year-over-year improvement in adjusted EBITDA margin.

The GAAP net loss attributable to shareholders was $(275,710) (in thousands), primarily driven by mark-to-market fair value adjustments on certain liabilities reflecting changes in the end-of-quarter stock price. Operating cash use was $(191,753) (in thousands) for the six months ended June 30, 2026, while investing cash use was $(70,551) (in thousands). Cash and cash equivalents stood at $305,491 (in thousands), and total cash including restricted cash was $364.1 million, as of June 30, 2026.

Commercial indicators strengthened. Backlog reached $807 million, representing 3.4 GWh, up 25% sequentially and 20% year over year, while the commercial opportunity pipeline was $24.6 billion. Post-quarter-end activity included a $100 million FPUSA purchase order for Phase I of the Blanquilla project. The Company also launched commercial production on Line 2 at Thorn Hill, reporting faster cycle times than Line 1 and targeting full production capacity in the fourth quarter.

Eos tightened full-year 2026 revenue guidance to $300 million to $350 million from $300 million to $400 million. The revision reflects evaluation of the timing of consolidating production lines into Thorn Hill. Management expects the initiative to improve manufacturing efficiency, optimize capacity utilization, enhance margins, and strengthen the long-term operating profile, but the revised guide makes consolidation timing and the production ramp central to the remainder of 2026.