Beam Global

Good day and welcome to the BEAN Global Second Quarter 2025 Operating Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. 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, CFO. Please go ahead.

Hi. Good afternoon, and thank you for participating in BEAM Global's second quarter 2025 operating results conference call. We appreciate you joining us today to hear an update on our business. Joining me is Desmond Wheatley, President, 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'd 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, August 14, 2025. Except as required by law, BEAN 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 BEAMS Q2 of 2025. For the second quarter of 2025, our revenues were $7.1 million. This is a 12% increase over first quarter of 2025. Revenues for the six months ending June 30th of 2025 were diverse across commercial entities and state and local governments, with a significant rebalancing towards enterprise customers Whereas 60% of our revenues were derived from commercial customers compared to only 24% in the same period of 24. Additionally, for the same period, our international customers comprised 37% of all revenues in 25 versus only 15% in 24. Our current backlog at the end of Q2 of 25 is 7 million. Our gross profit for Q2 of 25 was $1.4 million, or a 20% gross margin. This reflects an improvement of 4 percentage points compared to the same period in 24. The gross profit includes a non-cash negative impact of $657,000 for depreciation and amortization. Without this non-cash expense, gross profit for Q2 of 25 would be $2.1 million, a 30% gross margin. We have continued to recognize synergies and positive gross margin contributions from our acquisitions, and we expect the company's revenue to grow in the future in our fixed overhead absorption to continue to prove resulting in improved gross margins. Our total operating expenses were $5.9 million for Q2 of 25 compared to $7.1 million for Q2 of 24, a reduction of $1.2 million, or 17%. The Q2 25 net loss was $4.3 million compared to Q2 24, $4.9 million. The Q2 net loss excluding non-cash items was $1.4 million compared to $1.8 million in Q2 of 24, a reduction of $400,000 or 20%. We ended the quarter with a cash balance of $3.4 million compared to $2.5 million at March 31st. We have historically met our cash needs through a combination of debt and equity financing, and more recently through increased gross profit contributions. I will now turn the call over to Desmond to provide a business update.

Thank you very much, Lisa, and thank you all for joining us for this call. The second quarter of 2025 was a quarter in which Beam Global successfully executed on another very significant expansion of our global market presence through the creation of Beam Middle East. It was also a quarter in which we returned to revenue growth and generated the best GAAP gross profit margin in our history. We shipped EV Arc and other Beam products to 13 states in the United States and to multiple countries in Europe. We grew our energy storage systems business with both commercial and military customers, We added several new contracted reselling relationships in Europe, and we made our European operations far more efficient through continuing to add lean manufacturing processes, and because we own all the buildings and property there, we've been able to install sufficient solar generation to support our operations in a green and sustainable manner while saving a great deal of money on utility bills. We did all of this while remaining debt-free, reducing our operating costs, maintaining sufficient cash and operating capital, and improving almost every other aspect of our operations. Elisa has just gone through all the numbers, so I'm not going to take more of your time by restating too much of what she's already said. But I do want to highlight a couple of important factors that we can take from these numbers. First of all, we're at a 12% increase in revenues in the quarter. And while this is not quite as meteoric as some of the growth that we've seen in previous quarters, I want you to remember that we're doing this in the face of a more or less complete cessation of all federal sales activities as a result of the new administration's position on electric vehicles. In prior years, sales to federal entities have accounted for almost half of our revenues, and we've had to adjust our approach to deal with the new reality of the federal government not buying electric vehicles or electric vehicle charging infrastructure. But adjust we have, and that's how we've managed to increase our revenues quarter over quarter even in the face of this challenge. There have been a couple of major contributors to this recovery and our return to growth. The first has been, as Lisa just said, that about 37% of our revenues in 2025 came from our international business. This is yet another validation of our strategic strategy of diversifying, not just away from federal government customers, but into new and very promising international markets. I started the call by mentioning that we've made another significant geographic expansion through the creation of BIM Middle East, but that's very recent. And all of the revenues just mentioned have come from our European entities based in Serbia. We've made sales of both our acquisitions legacy products and BIM global portfolio products to multiple countries in that region. The impact of our European business is growing, just as I've previously anticipated and suggested to you that it would. I'm very happy with the way things are going at Beam Europe and remain extremely enthusiastic about our future opportunities for growth, as this is the largest market in the world for our products. The other really significant contributor to our return to growth is that revenues derived from non-government commercial entities are 60% of our year-to-date revenues. And this should put to rest any doubts that people may have, leading them to think that our products might only be bought by governments. Clearly, our products have a great deal of value and attraction for non-government entities as well. But we're also having a lot of traction with state and local governments in the United States. While it's true that the federal government has reversed course on the electrification of transportation, that is certainly not true of the majority of state and local governments with whom we deal. We intend to continually, aggressively market our products to those government entities until we see a change in appetite at the federal level, and even after that. I'm very confident that we will see that change in appetite at some point, though it may take a change in administration to get there. Electric vehicles are still growing in the United States, the sales of them, and they're really growing in other parts of the world. Let me throw a few numbers at you. J.P. Morgan tells us that after a 20% increase in electric vehicle sales in 2024, 25 has delivered a 35% increase so far. Bloomberg says that globally electric vehicles will be one in four cars sold this year, and there'll be at least another 25% increase in sales. Remember that these percentage increases are on top of the very significant percentage increases that we've seen in prior years, so absolute numbers are growing even more significantly. Grandview Resource tells us that we should expect a 32.5% CAGR from 2025 to 2030 in EV sales. I think it will be a lot more. So, as I've often said before, don't pay too much attention to what you're seeing in the press or hearing from politicians or legacy industry insiders who want you to believe that EVs are dead or dying. The complete opposite is the truth. All this growth in demand for electric vehicles will, of course, translate into growth in demand for electric vehicle charging infrastructure. And I can give you a couple of interesting statistics on that subject as well. In China, there are about nine electric vehicles for each public EV charging station. In Europe, that number rises to about 14. And in the United States, there are no fewer than 29 electric vehicles for every public charging station. So you can see that the U.S., way behind Europe and even further behind China in terms of the deployment of charging infrastructure per EV on the road. Of course, that spells opportunity for being global because the U.S. is going to have to catch up. And frankly, Europe's going to have to catch up to China, too. But what's really interesting is that China doesn't even have enough charging for its current EVs. It's probably going to take at least one EV charger for every five EVs on the road to get to the point where there's adequate levels of EV charging. Not good levels, but adequate. So you can see that even China has about half as many public chargers as they need today. And that's without all the growth in EV adoption that we're seeing accelerate globally. Part of the reason that we're so enthusiastic about expanding into the Middle East It's because it's a gateway for Africa, where at the moment there's neither EV charging infrastructure nor a utility grid which could support it. But I'm pretty confident that in the coming years, Africans who never owned diesel or gasoline cars will end up owning electric vehicles in the same way that they adopted cell phones without ever having had landlines. Beam Global's products will be ideally suited for the African market, which is vast demand. highly dispersed, and lacks any sort of centralized infrastructure, at least when viewed from Western standards. I've spent a great deal of time traveling in Europe, in the Middle East, over the last several months. And the increase in the number of electric vehicles I'm seeing on the road is remarkable. Sadly, the majority of them are Chinese. And I say sadly because I've always hoped that the United States would be the leader in this technology, which is a global inevitability. And it concerns me to see us giving up that leadership at a time which is absolutely pivotal to the evolution of the industry. After closing the Beam Middle East transaction, I had to take a car from Abu Dhabi to Dubai with a driver. Now, I made that trip in a Chinese BYD electric vehicle. And I can tell you that traveling 100 miles an hour for an hour and a half through the desert in total comfort and surrounded by the latest technology really highlighted for me the giant leaps that have been made by EVs in general, but particularly by Chinese manufactured products. You can be left in no doubt that electric vehicles are the future. At the moment, it certainly looks like the future is Chinese where EVs are concerned. And that's not good news for the United States, but the increase in adoption of electric vehicles is very good news for Beam Global. Because the more of them that there are on the road, regardless of who makes them, the more charging infrastructure is required. The more charging infrastructure is required, the harder it gets to install grid-tied charging infrastructure, and the more value our products deliver. Coming back to our financials for a minute. Another notable bright spot can be found when you look at our gross margins for the second quarter. We reported gap gross margins of 20%. And if you take out the non-cash impact to COGS, we actually generated a 30% gross margin during that period. Remember all of you that I've been telling you that we're heading for 50% gross margins, and we keep relentlessly heading in that direction. That 30% adjusted gross margin was a 12% increase over the same period in prior year, even though our revenues were lower because of the loss of federal sales that I've already mentioned. I'm sure I don't need to explain that when revenues decrease and all other things are equal, gross margin should be negatively impacted because of the increase in overhead allocations burdening a smaller number of unit sales. In fact, the BEAM team dramatically improved gross margins even in the face of these challenges. Our European operations again contributed significantly to this, as did the efforts of our global engineering and operations teams who continue to make our products better while finding ingenious ways to reduce our costs. I know that our American employees are listening to this call right now, and I just want to say a special thank you to them for all of their efforts where that's concerned. Good work. Keep it up. We will continue to tirelessly and relentlessly pursue cost reductions, although never at the expense of quality. And in the face of the increased challenges that we and everyone in the manufacturing industries are facing as a result of increased cost burdens brought about through the ever-changing tariff policies, And we also reduced our operating expenses during the second quarter by $1.2 million while continuing to improve our processes and invest in growing our business. One quick reminder as you look at our six-month results, you're going to notice that we took an $11 million charge for the impairment of goodwill. And I said this in the last earnings call, but I'm going to say it again today. No one on the Beam team is disappointed in the performance of our acquisition. No one thinks our acquisitions are worth less today than they were when we made them. No one thinks that the future opportunities for growth as a result of our acquisitions are less than they were when we acquired those companies. It's the absolute opposite. The impairment of goodwill, rather than being an indication of the actual value of our acquisitions being any less, is actually driven by the fact that our market cap has dropped to lower than the carrying value of the acquisitions with a goodwill. As a result, we're required to make an adjustment. And the only way that we can do that is by reducing the value of the goodwill. So the impairment of the goodwill is driven by a reduction in our share price, not by any actual reduction in the true value of those assets. It looks pretty horrible when you're looking at our bottom line, but please remember that these are non-cash impacts. And again, in my and my team's opinion, in no way indicative of any negativity around Beam's operations. We continue to be very careful with cash, as we always have been. And you can see that our cash position at the end of the second quarter is actually an improvement over where we were at the end of the first quarter. You'll also note that we have no going concern. Oh, and we remain debt free. Now on some operational matters. I was in Abu Dhabi in July, as I already mentioned, for the signing ceremony, which marked the creation of Beam Middle East, our new joint venture with the Platinum Group. The creation of Beam Middle East marks the first instance where we've expanded geographically without owning outright Prior to joining Beam Global, I spent many years living and working in the Middle East, and I learned that while it's important to have a good product and a good company in that region, it's also important to have very good relationships. I do not consider it wise to attempt to bootstrap in that region while flying solo. With that in mind, I spent the last several years seeking an entity with whom we could partner to create Beam Middle East, an entity that we could trust and work with and has the right relationships and experience to assist us in the growth of our business there. Well, I'm delighted to say that with Platinum Group, we've really knocked it out of the park on both measures. We conducted our due diligence on them, and I'm bound to say they did the same to us. I spent a great deal of time with the leadership negotiating the terms of our joint venture. At all times, I found them to be constructive, innovative, and honest in their dealings. And it was a real pleasure working through the process with them. It wasn't easy, but it was a pleasure. The Platinum Group is chaired by His Highness Sheikh Mohammed Sultan bin Khalifa Al Nahan. Spend a couple of minutes Googling the Al Nahan family, and you'll see why I'm so confident that we partner with the group with the relationships at the very highest level. But I'll save you a bit of time on that and tell you that the Al Nahans are the leaders of the United Arab Emirates. Platinum Group is a multi-billion dollar organization with investments in energy, gold, finance, real estate, healthcare, food, hospitality, and technology, and a whole host of other things. They're connected at the highest levels in both government and enterprise in the Middle East, and also, importantly for us, Africa. In the middle of September, I'll be returning to Abu Dhabi for the grand opening of our BAME Middle East offices. I visited the shell of our building while I was there in July, and as I said, I'll be returning in the middle of September when I'll find them completed. Such is the speed that things happen in Dubai and Abu Dhabi. In the early days, our focus will be entirely upon selling in the region, and those product sales that we do make will be manufactured in and supported by Beam Team Europe and the U.S. Once we get to a certain level of volume, and as a result, the economics support it, we'll invest in facilities to assemble our products in that region. So we'll manufacture the pieces in the U.S. and Europe, and then we'll assemble them in the region. Then as the volumes increase further, it's our plan to actually manufacture there. This will give us sales and manufacturing in North America, Europe, and the Middle East and Africa. Perhaps you can start to see what we're doing here. We're creating a sales and manufacturing platforms in all the most significant markets for our products in the world. Our products are relevant in all these regions, and with our manufacturing experience in the United States and Europe, our ability to cookie cutter and recreate these types of facilities inexpensively and rapidly in other parts of the world is becoming exceptional. Some of you may find it paradoxical that the Middle East, a region which is known for its production of oil and gas, could also be a region full of opportunity for renewable energy and the electrification of transportation. Again, I encourage you to spend five minutes on Google. What you're going to discover is that there are vast sums of petrodollars being invested in latest sustainable technologies, and renewable energy and electric vehicles in particular are very popular, experiencing significant growth and attracting tremendous investment in the coming years. In fact, the Middle East region has already announced investments of over $1 trillion in sustainable technologies by 2030. As the former Saudi oil minister, Sheikh Ahmed Zaki Yamani, said, The Stone Age did not end because we ran out of stones. Planning for life after oil and using the revenues to fund that life is a huge priority in the region, and we aim to position BIM Middle East to take advantage of that paradigm. I certainly saw the evidence of the beginnings of those investments during my recent trips, and anyone who's familiar with the region and the governments and industries there will know that these investments are only accelerating. BIM Middle East will actually be heavily engaged in Masdar City, which is the United Arab Emirates showcase sustainable city. It's a truly incredible place. There are no gasoline or diesel vehicles, but there are lots of autonomous vehicles, micro mobility solutions, and electric vehicles. I met with the leadership while I was there, and I'm confident that you will soon see BIM Middle East solutions providing even greater levels of autonomous sustainability within that extremely high-profile environment. Of course, this will be good for our business on a practical level, but also our ability to bring people from across the region to what is recognized as the leading sustainable city over there and show them our products at the forefront and leading edge of this development will give us a tremendous springboard for the adoption of our products in the broader region. Returning for a moment to our European operations, as I mentioned earlier, we're increasingly happy with the revenue and gross margin contributions which we're receiving from there. I'm also very enthusiastic about what the future holds for us there because, as I've mentioned before, Europe's still the largest market in the world for our portfolio of renewably energized EV charging, energy security, and smart cities products. It also continues to be a very vibrant market for the legacy businesses, which we inherited when we acquired Amiga and Telcom. Those lines of business are actually mutually supportive and fit in very well with the Beam Global portfolio of products. Same customer in almost every case. I'm also very enthusiastic about our opportunities in Europe because we've done a great job over there of recruiting reselling agents, essentially force multipliers for our sales team that don't end up in our operating costs. Second quarter was very active where that's concerned. We now have new resellers for Croatia, Switzerland, Germany, Austria, and as a result of those efforts in the second quarter. And we can add these to the existing reselling partners that we already had engaged, like, for example, our partners in Romania who are responsible for the latest sale of EV arcs there. I spent time in Bucharest during the second quarter at the Romanian Mayor's Congress where leadership from over 50 cities converged to assess products and technologies which they're considering for their cities. Beam Global received the Sustainability Award for Innovation and Infrastructure at that Congress, which was a significant win for us, because believe me, there were lots of very good products and solutions there. I'm extremely proud of the fact that we were singled out as being the most innovative and most impactful product solution at the event. Our European operations continue to get better every day. We've implemented further lean manufacturing procedures, which make us more efficient, safer, and reduce the cost to produce our products. You can see some of this in the most excellent margin contributions that we're generating from that part of our business. And because we own the land and the buildings for Beam Europe, rather than leasing as we do so far in the U.S., we're able to make other investments which make us more sustainable and further reduce our costs. For example, we've just completed a significant solar installation on the roofs of our factory buildings in Craiovo. This solar installation makes us increasingly self-sufficient, which is important to us as a sustainability company, but also from a bottom line perspective. It will be very impactful, as we'll have low to no utility costs when we finish out this project, which by the way will include the installation of battery storage as well. Having Europe be as efficient as possible is important to us, not just because we want to control our costs and increase our efficiencies as we address the European market, but also because, as I've already stated, We intend to produce product for the Middle East from our European facilities until such time as we hit sufficient volumes to justify the investment in, firstly, assembly facilities in Abu Dhabi, and then later for manufacturing there as well. This is typical of the way we grow. We evolve as demand teaches us to. We invest as demand teaches us to. And that's part of the reason that we do such a good job with cash and equity. All that's to say that we expect that our European facilities will get very busy So our investments in making them more efficient, safer, and more cost-effective will become even more important at that time. Now to our energy storage business in Chicago. The whole world is starting to understand that battery storage is going to be very important for the future. For that reason, and so many others, I continue to be very glad that we made that acquisition of a battery company in 2022. Certainly, their contributions have been essential to the improvements that we've made in our EV arc and beam spot families of products. And they continue to be essential to our expansion in Europe and the Middle East. Closer to home, I'm happy to report that our battery business is also doing excellent work in terms of attracting top tier customers. This is not because we're the cheapest or the highest volume producer, but because of our unique ability to create specialized bespoke battery solutions for some really critical applications. I've never planned for us to become a high-volume, low-margin provider of battery solutions. It's always been my intention that we make money doing the difficult things, using the expertise of our fantastic science and engineering teams to solve problems which I believe are going to become increasingly relevant as the world moves deeper into an untethered, electrified environment. Our ability to make batteries for drones, robots, medical devices, and of course our own unique applications, as well as a whole host of others, is going to be an ability that I believe will create bigger and bigger returns for us as the industry evolves. This ability is increasingly being recognized by really interesting customers. In the second quarter, we announced that we gained three major new customers. One of them is a Fortune 500 automotive company. And we also have been able to attract customers in the defense industry who require the highest quality product solutions for often very difficult and mission-critical applications. Being selected by these types of customers is excellent validation of our capabilities and creates opportunity for really significant and high-margin growth in the future. Finally, I just want to spend a moment touching on our investor relations efforts. I'm really happy with what Luke Higgins, our internal IR manager, and the rest of the contributors to our efforts have achieved over the last six months. At the beginning of this year, we had an average volume of under 100,000 shares a day. Right now, we're averaging just under 700,000 shares a trading day, maybe a little more today. averaging I mean and we've also seen share price appreciation in this time I certainly accept that the broader market conditions are probably playing a perhaps a bigger role in our price today than even our own internal activities and so I'm not going to claim that we've been responsible for the appreciation entirely although I do continue to believe that our discipline and our relentless commitment to doing what we say we're going to do and creating growth opportunities where we get the maximum benefit from the minimal investment inevitably will win recognition from the street say when and but I'm sure it will. But I do believe that our activities have had a significant impact on our liquidity. More liquidity is a good thing, and I think that the move from an average of 70,000 shares a day to almost 700,000 shares a day can only be good for Beam Global and, most importantly, for you, our investors. Many of you will have had firsthand experience of these increased efforts on our part because you'll have received the regular emails, newsletters, videos, and meaningful press releases that we put out. We are directly sending those now to about 20 times more people today than we were at the beginning of the year. I've spent a lot of time telling the Beam Global story to people, and, well, not everyone invests or even buys our products. Nobody ever tells me that they think we have bad products or a bad strategy. So the more people we tell the story to, the more people like Beam Global. And so we're going to maintain these efforts to continue to get out the message about this excellent but still perhaps under-recognized company. If you're not on our mailing list or if you're not receiving those communications, please let Luke Higgins know. Luke.higgins at beamforall.com. Send him a note so that he can solve that problem. His name and number and email address are on the bottom of all our press releases in case he didn't write that down. If you are on our list and you're still not seeing our messages, check your spam folders and add Beam for All to your approved address book. There's a lot of very good things going on at Beam Global, and we want you all to know about them. And by the way, we want you to tell others about the good work we're doing and the value that we're creating. Okay, to summarize, in the second quarter, Beam Global returned to revenue growth, dramatically increased our gross margins, maintained a healthy balance sheet with no debt, created a massive expansion opportunity in the Middle East with very little investment, and continued to successfully adapt our business to an environment where we have to be less and less reliant upon revenues from the U.S. federal government. For the time being, we have an excellent expanded portfolio of patented products, which are increasingly relevant and compelling across the group. At the same time, we're creating a global footprint to sell and produce those products, and we're doing it within an incredibly disciplined investment structure. Just consider where Beam Global is today in comparison to where we were 12, 24, and 36 months ago. We've improved our operations in North America. We've expanded into Europe and now into the Middle East and Africa. One of the great things about our products is that they operate anywhere they can see the sky. We now have an opportunity to replicate the successes that we've had in the United States, which has delivered about 50% revenue CAGR over the last five years in a massively expanded market. The share price is nowhere near where I want it to be. and it's nowhere near where I believe it should or will be. We're going to keep doing the fundamentally important things to remedy that. I remain very enthusiastic about our future. I'll now return the call to the operator and look forward to any questions you may have.