Fluence Energy tries to maneuver around supply-chain problems as demand grows

Fluence Energy Inc.'s financial results for the final months of 2021 were worse than Wall Street expected as the battery storage company grappled with tangled supply chains and cost overruns in its project development business.

Revenues for the three-month period ending Dec. 31, 2021, the company's first fiscal quarter, rose 50% year over year to $174.9 million, short of the roughly $207 million that analysts had anticipated, according to the S&P Global Market Intelligence consensus mean estimate. Net losses, meanwhile, grew faster than analysts had expected, widening to $111.5 million, or a loss of 53 cents per share, compared to a year-earlier loss of $12.5 million. Analysts expected a loss of 34 cents per share.

The results reflect "strong order intake and delayed revenue recognition," Fluence said.

"Our team has acted swiftly to implement corrective actions that provide us the confidence to further execute on our plan," Fluence CEO Manuel Pérez Dubuc said on an earnings call Feb. 10. "During the second quarter, we will continue to catch up on some of the installations that were delayed in the first quarter."

Fluence shares were down about 1% in midday trading Feb. 10.

In response to the headwinds, the company has secured more shipping capacity, increased the size of its supply chain and manufacturing teams and is providing additional training for project development and commissioning, Dubuc said. Fluence will also begin using a raw-material indexing mechanism in future contracts to guard against commodity price spikes.

"Industry appetite for applications of energy storage remain robust, suggesting continued momentum for orders throughout 2022," Dubuc said. "As we have seen, energy storage is key to providing clean energy for a sustainable future."

So far this year, Fluence Energy has announced a slew of contracts and partnership agreements. The company signed a term sheet with ReNew Energy Global PLC for a joint venture in India, partnered with software firm Pexapark Ltd. and signed a strategic agreement with QuantumScape Corp., another battery company, that could lead to "a possible large-scale supply agreement in the future," Fluence said.

Most significantly, Fluence Energy said it signed a contract with The AES Corp., a Fluence Energy co-founder and major shareholder, for the use of Fluence bidding software on a 1.1 GW portfolio of solar and energy storage projects in the western U.S.

"They are ramping up, they are expanding aggressively their renewable targets. And they have done that in a very solid way," Dubuc said of AES. "And the fact that California is such an important market for AES, we will keep capturing market share in California."

Fluence Energy reaffirmed 2022 revenue guidance of between $1.1 billion and $1.3 billion.

"Clearly, always good to [be] riding the coattails of a company expanding like AES, no doubt about that," Bank of America analyst Julien Dumoulin-Smith said on Fluence's earnings call.