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Fluence CEO says energy storage leader to become profitable this year

Rows of cabinets containing lithium-ion batteries supplied by Fluence, a Siemens and AES company, are seen inside the AES Alamitos battery energy storage system, which provides stored renewable energy to supply electricity during periods of peak demand, in Long Beach, California, on September 16. 2022.

Patricio T. Fallon | AFP | fake images

Leader in energy storage Creep is seeing strong demand from the energy-hungry utility sector and will be profitable this year, CEO Julian Nebreda told CNBC in an interview Friday.

Fluence shares rose 13% this week despite reporting a net loss in its most recent quarter. However, orders are strong, and the company posted a record quarterly intake of $1.1 billion, boosting its order book to an all-time high of $3.7 billion.

Nebreda said Fluence is preparing for “hypergrowth” as wind and solar power play a growing role in the U.S. power grid. Solar energy, for example, is collected during the day but consumption peaks at night. Fluence technology helps balance supply and demand by storing energy for later use.

“Our technology is essential to ensure that we can all take advantage of the great benefits of renewable energy,” said Nebreda. Fluence is the leader in energy storage in the United States, she said.

Fluence posted a net loss for the three months ended Dec. 31 after reporting a profit of $4.8 million in the previous quarter. The company’s reported loss of $25.6 million was 31% smaller than its loss in the same period a year earlier.

Fluence’s gross profit margin is now in double digits, 10.5% on an adjusted basis, and its cost structure is stable, Nebreda said. About 70% of Fluence’s projected revenue of between $2.7 billion and $3.3 billion is delayed toward the end of the year, the CEO said.

“As revenue increases throughout the year, we will be profitable and we will be profitable throughout the year,” Nebreda predicted. Fluence expects between $50 million and $80 million in earnings before interest, taxes, depreciation and amortization in 2024.

Founded in 2018 by Siemens and AES, Fluence went public in October 2021 at $28 per share, quickly reaching $35 on its first day of trading. The stock is down about 36% since then, to $22.43 at Friday’s close. Today, Siemens still owns 33.3% and AES 29%, while the Government of Qatar controls another 12.3%.

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Fluence stock over the past year.

Wall Street has turned bullish on Fluence: 73% of analysts rated the company’s stock a buy equivalent, with an average price target of about $32, implying a 43% upside from Thursday’s close. .

“Fluence continues to experience strong growth momentum, driven by strong market fundamentals for energy storage, favorable legislation such as the IRA, and improving supply chains,” Evercore ISI analyst James West told clients. in a note on Thursday, referring to inflation. Law of Reduction.

West said Fluence has a “clean path to profitability,” setting a price target of $59, implying an upside of 163% from Friday’s close.

Nebreda said the cost of energy has been a long-standing problem for utilities, but batteries are becoming more effective, less expensive and less prone to safety issues. Global demand for energy storage will grow at a compound annual rate of 27% through 2030, according to Bloomberg NEF.

“It’s an immense number,” Nebreda said. “We designed our capabilities for hypergrowth.”

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