Beam Global

Good day and welcome to the BEAM Global First Quarter 2025 Operating Results Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touchtone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Lisa Potok, Chief Financial Officer. Please go ahead. Hi, good

afternoon and thank you for participating in BEAM Global's First Quarter 2025 Operating Results Conference Call. We appreciate you joining us today and hearing update on our business. Joining me is Desmond Wheatley, President and CEO and Chairman of BEAM. Desmond will be providing an update on recent activities at BEAM, followed by a question and answer session. First, I would like to communicate to you that during this call, management will be making forward-looking statements, including statements that address BEAM's expectations for future performance or operational results. Forward-looking statements involve risk and other factors that may cause actual results to differ materially from those statements. For more information about these risks, please refer to the risk factors described in BEAM's most recently filed Form 10-K and other periodic reports filed with the SEC. The content of this call contains time-sensitive information that is accurate only as of today, May 15, 2025. Except as required by law, BEAM disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. Next, I would like to provide an overview of our financial results for BEAM's Q1 of 2025. For the first quarter of 2025, our revenues were $6.3 million. Our revenues were diverse across commercial entities and state and local governments, with a significant rebalancing towards enterprise customers, whereas 53% of our revenues were derived from commercial customers compared to only 16% in the same period in 2024. Additionally, our international customers comprised 25% of all revenue in Q1 of 2025 versus 11% in Q1 of 2024. We believe that this decrease in revenue is mainly a result of the uncertainty in the U.S. government's zero-emission vehicle strategy related to the presidential election. Our backlog as of the end of Q1 of 2025 is $6.3 million. Our gross profits for Q1 of 2025 was $0.5 million, or an 8% gross margin, versus our gross profit of $1.5 million, or 10% gross margin, in Q1 of 2024. The gross profit included a non-cash negative impact of $1 million for depreciation and amortization of intangible assets resulting from the all-sale acquisition. Our gross margin net of these non-cash items, which of course is non-GAAP, was 21% for Q1 of 2025 versus 12% in Q1 of 2024. We have continued to recognize the synergies and the positive gross margin contributions from our acquisitions. We expect the company's revenue to grow in the future and our fixed overhead absorption to continue to improve, resulting in even higher gross margins. In Q1 of 2025, our operating expenses of $16 million included $10.8 million of goodwill impairment. This impairment was recognized because our market capitalization no longer exceeded our net assets at the end of Q1 of 2025 due to the decrease in our stock price since December of 2024. Our operating expenses net of the non-cash items for Q1 of 2025 are $4.1 million. Compared to the Q1 of 2024 of $3.8 million, a variance of 200,000 or 6%. The company believes the goodwill impairment reported in Q1 of 2025 is not a negative indicator of our historic or current operating results and not a negative indicator of future performance as the company has taken significant steps to diversify its geographical reach and product offerings while focusing on our strategic growth. The Q1 of 2025 net loss of $15.5 million also included the $12.5 million non-cash expense items such as the goodwill impairment that we just discussed, our depreciation and amortization, stock-based comp, and provisions for credit losses in 2025, compared to a net loss of $3 million with non-cash expenses of $1.1 million in 2024. So the Q1 of 2025 net loss excluding the non-cash items, which is non-GAAP, was $2.8 million compared to $2.1 million for Q1 of 2024. Our cash balance at the end of March was $2.5 million compared to the $4.6 million at the end of 2024. And our net cash used for operating activities was $1.8 million for Q1 of 2025 compared to $3 million for Q1 of 2024. We have historically met our cash needs through a combination of debt and equity financing and more recently through our increasing gross profit contributions. I will turn the call over to Desmond to provide a business update.

Thank you, Lisa. And thanks as always to the rest of you who have dialed in to listen to this call or who are joining us through the webinar link. Let me start off by making a couple of important statements. Sales of our flagship product, EVARC, increased in the first quarter. We're navigating our way through a series of uncertainties in the U.S. market and while we're hitting speed bumps along the way, we now believe that we have the pieces in place to return to growth in this quarter and in future quarters. Our battery business is doing some of the most interesting and promising work it's ever done. Our international expansion strategy is gaining momentum and bearing fruit. We have sufficient cash and working capital to continue to operate the business into the future. We have no debt and no going concern. We're generating gross profits which net of non-cash items are still north of 20%. We have proposals out and items in our pipeline which would simply not have been possible this time last year before we introduced our fantastic new product lineup and expanded beyond the U.S. market. Losing the immediate benefits of U.S. federal government sales has been tough on us, but we are managing through that and we've created a foundation for growth which is resistant to those sorts of upheavals and which I believe will create opportunities for growth which far outstrip anything that we've ever done before. Before I go any further, I'd like to apologize for the late notice that we gave for this earnings call. We usually like to give at least a week's notice prior to these calls, but in this instance we had some last minute items cleared up with our auditors and as a result we did not have certainty that we were going to be filing until closer to this date than we would normally like. I'm going to start off by talking about the item in particular which made us late for the call because it's somewhat confusing and while it has no impact on the operations of the company, it involves a large number which if you don't know how it was derived could appear to be very negative. We have elected in this quarter to take an impairment charge against the goodwill which we've had on our books as a result of the very excellent acquisitions that we've done over the last couple of years. Just to remind you, those acquisitions are the acquisition of the battery company in 2022, the acquisition of our new European headquarters and factory in 2023, and the acquisition of our power electronics group in 2024. Now each of these acquisitions has been excellent for us. The deal structures are good, Beam Global and our shareholders got excellent value and our long-term strategy as well as the short-term benefits we're receiving from those companies have been vastly improved as a result of us making those acquisitions. We as a management team are of the opinion that those companies are worth a good deal more today than they were when we acquired them. We're also of the opinion that the whole is far greater than the sum of the parts and the contribution that these acquisitions have made to our global presence and growth is hard to overstate, especially given the uncertainties in the North American market. And yet we're going to take an impairment charge against the goodwill that came along with them. Why would we do that? Well, the simple answer to that question is that GAAP accounting requires it. And the reason that GAAP accounting requires it is that because our share price has declined since 1231-24, we are now in the incredible position of trading not just a fraction of our revenues, but actually at less than the value of our assets. That's to say our market cap is now lower than the value of the assets that the company owns. GAAP accounting does not allow for that condition to exist and in order to balance those two numbers we have to take an impairment charge against our goodwill. This is of course very frustrating because we believe, and the data certainly backs this up, that as I've already said the value of the companies that we bought and the goodwill that came with them is worth more today than it was when we bought them. Nevertheless, it's not for us to question the origin of GAAP accounting, so we've taken the impairment. This impairment has two significant impacts to our financials. The first one is that you'll see a significant reduction in the value of the assets that we hold on our books. And the second is that when we take the impairment it actually hits our P&L in the quarter in which we take it. The impairment is about $11 million and so you'll see an $11 million reduction in our assets and also an $11 million negative impact to our net. Now I stress, and I stress again, that these are non-cash items. They do not impact the operations of the company at all. We do not actually believe that there are any negative impacts to the real value of our assets or the business. And as I've already stated, we actually think that the value of our acquisitions is greater today than it was when we made them. It's not a simple process and it's certainly not a trivial matter to put these impairments together. And so our accounting team, which is Lean, and our auditors have been working together to make sure that we've done it in exactly the right way. That explains why we're later than we wanted to be in having certainty on the timing of our filings and hence later than we wanted to be on giving you notice for the call. So you have my apologies for the tardiness and you also have an explanation for these entirely gap accounting driven adjustments to our financials. Which I stress again are non-cash and have no impact on the operational viability of the company or in my opinion, its true value. I'm going to keep the rest of this earnings call pretty brief because we of course just four weeks ago went through a comprehensive discussion around our full year 2024 results and subsequent events which covered much of the first quarter. I also talked a lot in that call about our new products and our activities and further plans for expansion. Everybody's been working very hard at Beam Global and I'm happy about the advances we continue to make. But I'm not going to take a whole lot of your time talking about things that have happened during the last four weeks. If you're looking for more information about our new product portfolio and about our international expansion plans and activities and you didn't get to hear the earnings call we did four weeks ago, you can still find a transcript of it online and I'm pretty sure there's actually still a recording of it somewhere too. Give Luke Higgins our internal IR manager a call or drop him a note if you want some help finding that. One of the things I told you during the last call was that I expected to see a couple of tough quarters. The fourth quarter of 2024 was one of those and so was the first quarter of 2025. Our revenues of 6.3 million were about half what they were during the same period the prior year. That's disappointing but it's not surprising. During the first quarter of 2024 more than half of our revenues came from federal government orders. And as I explained to you during the last earnings call, the current administration has instructed the GSA or the General Services Administration to make no further acquisitions of electric vehicles or electric vehicle charging infrastructure for the time being. We've been working hard to create new opportunities for the company which are immune to any variations in federal government order cadence. But that's a process not an event. And while we've seen good results from our efforts in terms of an increase in our first quarter orders, those orders have not yet resulted in an increase in reported revenue or even a replacement of the revenues which we lost due to the cessation of the US federal government's investment in electric vehicle charging infrastructure. You may hear the US Marine Corps flying over our offices at the moment. Nothing I can do about that. Apologies. In fact, the fact is that our diversification strategies are starting to deliver fruit. Sales orders in the first quarter were up 23% over the fourth quarter of 2025 even though they did not materially include any federal government orders. We now believe that we have the pieces in place to return to growth in this and future quarters. We've adjusted our sales efforts to concentrate on non-federal prospects and we've taken advantage of the moves that we've been making over the last couple of years to grow our geographic footprint through our expansion into Europe. In fact, international revenues contributed over 25% of our first quarter numbers and Q1 is typically the slowest quarter of the year for the legacy businesses which we've acquired in Europe. Even during the worst quarter, our European operations contributed significantly to our overall revenues and gross profit. We generated 41% -over-year growth in non-government sales which is a testament to the efficacy of our strategy to grow and expand our commercial business which as I've always mentioned before, I believe in the future will be the largest contributor to Bean Global's revenue profits. At the same time, we did still get significant revenue generation from government customers, just not the federal government. I think this is positive and it demonstrates that while the federal government is not proceeding for the moment with electrification of transportation, state governments and municipalities still are and they have historically contributed fairly large percentages of our revenues. There are even indications that several of our state and municipal customers will actually increase their activities in light of the federal government hesitance. Notably, California's government has committed to replacing federal activity and maintaining the pace of growth in EV charging infrastructure. California continues to be one of our most important customers. Similarly, we have good reason to believe that activity with one or more of our significant municipal customers may actually increase for us this year. To further demonstrate that our diversification strategy is working, in Q1 of 2025 we shipped EV arc units, arc mobility trailers, energy storage systems, lighting poles and smart city infrastructure solutions to locations across California, Arizona, Colorado, Florida, Michigan, Oregon and internationally in Croatia, Serbia, Romania and Spain. We're continuing our strategy of expanding our sales team through the leveraging of outside sales resources. We have a full-time manager of resellers at our European operations and in the US our vice president of sales spends a great deal of time recruiting and training resellers to expand our market here as well. A great example of the sorts of things that these distributors are pulling off is that EV arc is today on full view at the Seria Internacional de Defensa y Seguridad which is one of the largest defense and security trade shows in Europe. EV arc is on prominent display at the center of the show and has been visited by various public institutions the Department of Defense, the Guardia Civil, who incidentally are already big users of zero electric motorcycles and new charging infrastructure, the Army, the Navy, the Air Force and several large industry corporations as well as about 40,000 visitors, in fact 44,000 is the latest number I just got. We actually have zero electric motorcycles, liberated for law enforcement, present with EV arc and our partner in the electric motorcycle industry, Zero Motorcycles. An American company is with us there as we demonstrate our beam patrol solution to law enforcement and the military. Our partner in Spain, Hethi, made the investment in attending this trade show and transporting an EV arc there. This is a fantastic example of how our force multiplication strategy with external sales resources is getting Beam Global's products tremendous exposure in a greatly expanded theater without us having to invest operational dollars to make it happen. I love working with Hethi and they love us and our products. I'll do everything I can to support them but the great thing is they don't need a lot of my support. They are a well established aerospace engineering organization that's been in business for many years and has fantastic relationships across the globe. I feel lucky to have them as a partner and they feel lucky to be representing our products to their tremendous portfolio of relationships. By the way, tomorrow Hethi will deploy EV arc prominently at the Valencia Grand Prix Circuit, another first of us which will come with tremendous exposure. So, we're making growth in our commercial sector happening. We're continuing to see sales to government entities outside of the federal government and perhaps most importantly, we're laying the groundwork for what we believe will be significant growth in Europe, the Middle East and Africa. All this is to say that while our first quarter results are not what we'd like them to be, we still feel good about 2025. We believe that we will see a return to growth in this and future quarters and we remain confident about our trajectory towards positive cash flow. Our gross margins are inevitably impacted by reduced volumes because of the fixed overhead allocations which have to be absorbed by the smaller number of unit sales. Nevertheless, we continue to produce positive gross margins in the first quarter which net of non-cash items were still north of 20%. While we're seeing some inflationary impacts directly from tariffs and also indirectly from the impact of tariffs on domestic producers, we're still managing to make consistent improvements in our gross profitability at the unit economics level. Now of course, none of us know where these tariffs will be at the end of next quarter or for that matter, the end of next week but it certainly seems at the moment as though the indications are that we will continue to see a reversal of the worst impacts of tariffs as the administration finds reasons to reduce them. We certainly hope so. We make our products in the United States and we are BABA compliant meaning that we are Build America Buy American compliant. So we're doing all the right things in terms of supporting manufacturing in the United States. That's something we care a great deal about and always have. But if you make a complex product as we do and if you rely on raw materials like steel and animal, aluminum, which are fungible, even if you buy those from US producers like we do, the tariffs can still have an inflationary impact. Thankfully, because we've always positioned ourselves to have a US manufactured product, those tariffs should be less impactful to us than to many others. Of course, our European operations when selling into Europe or into the Middle East or Africa are not affected by these tariffs. This is another reason that we are focusing on growth in these very large and very promising markets. Just next week, I will be returning to the Middle East. We're spending time in Jordan where our new Beamwell product will be demonstrated to the Royal Jordanian Armed Forces as a precursor, we hope, to its first deployment in Gaza. Beamwell arrived in Jordan about a week ago and is in the process of being transported to a Royal Jordanian Armed Forces facility in Amman, the capital of Jordan. I'll be there to take meetings with military and other government officials and dignitaries and to demonstrate the efficacy of the product by showing them how it can convert saltwater into freshwater, provide electricity for cooking and the refrigeration of medical supplies, as well as showing off the highly ruggedized electric scooters bundled with it, which will provide mobility to the people whose job it is to deliver aid in that highly distressed region. Gaza is, of course, a fluid and constantly changing environment, but we're confident that whether aid is delivered by NGOs or by US contractors working with the Israelis, our products can provide essential support to their mission. They will need rapidly deployed electricity, freshwater and mobility, and they're going to want to be able to provide that without relying on centralized grid infrastructure, which no longer exists. We have a long and successful history of deploying infrastructure for military and civilian applications which solve for those needs. We have an American-made product, and we have excellent relationships in the region. Deploying Beam Global's projects in that region will provide a great deal of benefit to everybody involved in the crisis, as well as also providing a highly visible demonstration to assist in the growth of the more commercial aspects of our business there. When I leave Jordan, I'll go to the United Arab Emirates. We're working to create opportunities which we believe will result in significant sales of our products in that market. Many of you will be aware that there are some very large projects underway in the Gulf states which are ideally suited to benefit from Beam Global products. Masdar City in Abu Dhabi is one example. NEOM in Saudi Arabia is another. If you spend five minutes Googling those projects, I'm certain you'll come away with the impression that they create fantastic opportunities for Beam Global and everything that we produce. That's why I'll be returning there again directly after my trip to Jordan. As I mentioned earlier, we continue to be very happy with the contributions that we're getting from the acquisitions that we've made. Let's spend a couple of minutes now talking about our battery business. We continue to advance our battery programs with a strong focus on high-performance, safety-critical applications. Our team is actively delivering next-generation battery systems to defense customers, while simultaneously developing and quoting additional phases and new programs that push the boundaries of power and performance. These efforts are driving innovation and thermal management, where our proprietary phase change composite, or PCC, now paired with active cooling, is delivering levels of performance and longevity we believe are unmatched in the industry. In parallel, we're seeing strong momentum across multiple markets. We're working with two major automotive companies on next-generation battery solutions for their recreational power sports and micro-mobility segments. In marine defense applications, we're exploring underwater energy storage opportunities where our proprietary PCC technologies offer significant advantages, and particularly for drones. By potentially eliminating the need for traditional active cooling systems, we can reduce system complexity while enhancing reliability and energy density, critical factors in demanding, submerged environments. This innovative approach positions us to deliver high-performance solutions that meet the unique challenges of marine defense operations. In the commercial sector, our battery systems are a natural fit for the growing ETRU market, where the shift away from diesel engines and electric vehicles aligns closely with our ESS business. We also continue to support industrial customers with solutions for automated mobile robots, guided vehicles, and electrified machinery. All of this reflects our growing reach and the versatility of our core technology across multiple high-tech and high-growth sectors. These fantastic advantages came about as a result of the acquisition that we made in 2022. In fact, we have nothing but good results coming from all three acquisitions that we made. Going back to the comments I made at the beginning of the call, you can see why the Beam Global Management team, rather than thinking that there's some reduction in the value of the acquisitions that we've made, in fact, believes that they are worth far more today than they were when we first acquired them, and particularly when looking at the contribution that they make to the whole company. Wrapping up, I'll just say again, our sales are growing. We believe that we have the right pieces in place to return to growth in this quarter and in future quarters. We have no debt, sufficient cash and working capital, and opportunities created by our new products and international expansion which are greater than anything that we've ever confronted in the past. The public markets continue to be very challenging for all companies involved in the electrification of transportation and sustainability industries in the United States. I do not believe that the situation will continue forever. And in the meantime, I and the entire Beam team are going to continue to execute on our plan so that when the market does turn around, as we believe it will, we're well positioned to take advantage of the discipline and enthusiasm that we've always had for our competitive edge and growth in industries which are both fundamental and massive. That concludes my prepared remarks. I'll now turn the call back over to the operator and take your questions. Operator?