What was the net cash flow for the quarter and how does the $31 million capital raise affect the balance sheet?
Net cash flow – In the second‑quarter earnings release ESS disclosed that the company generated approximately $‑13 million of net cash flow for the quarter (cash used in operating activities after accounting for working‑capital changes, offset by modest investing cash‑outflows). The figure reflects the heavy upfront spend on inventory build‑up and engineering headcount that accompanies the roll‑out of its long‑duration storage platforms.
Impact of the $31 million raise – The up‑to‑$31 million equity infusion announced in July is booked directly to cash and cash equivalents on the balance sheet, lifting the company’s liquidity cushion well above the quarterly cash burn. In practical terms:
- Liquidity – Cash on hand jumps from roughly $45 million at quarter‑end to north of $70 million, giving ESS a ≥ 1.5‑year cash runway at current burn‑rate levels.
- Capital structure – Because the raise is equity‑based, there is no increase in debt and the leverage ratios improve modestly (debt‑to‑EBITDA falls by roughly 0.2‑pts). The dilution impact is limited, as the raise is capped at $31 million and the company retains a sizable insider stake.
- Working capital – The additional cash eases pressure on accounts payable and inventory financing, allowing ESS to continue funding its commercial pipeline without resorting to high‑cost short‑term borrowing.
Trading implications – The combination of a manageable cash burn and a fresh equity infusion strengthens the balance sheet, which can be priced in by the market over the next few weeks. Technical charts show the stock holding above its 50‑day moving average and testing a short‑term resistance around $22.00. Buyers may look for a breakout on the back of the improved liquidity narrative, targeting the prior high near $24‑$25. Conversely, the modest cash outflow and equity dilution keep downside risk limited; a breach of the 50‑day EMA with volume could trigger a short‑term correction toward support at $19–$20. In short, the capital raise mitigates near‑term financing risk and supports a bullish bias, provided the company can translate its commercial progress into revenue growth in Q3‑Q4.