Desmond Wheatley
Analyst · H.C. Wainwright. Please go ahead
Thank you, Kathy, and thanks to everybody else for joining us today and for your continued support of -- and interest in Beam Global. Before I get into comments about the quarter and the business in general, I want to thank you all for your patience and give you a brief explanation for our delaying this call on the release of our Q1 results. Let me start by making absolutely clear that there is and was nothing wrong with our financials. I want to congratulate and thank Kathy for her tireless efforts in always producing accurate reporting, which has only ever been described by our auditors as the highest quality. For the last decade or so, we do Solberg and close our audit -- auditors. Solberg did a great job for us, and as you’re aware, we have always filed on time and without controversy. This year, as a result of the significant growth which we hope to achieve and our position on a national exchange, we elected to engage RSM as auditor. This is the first quarter that they’ve been engaged. We’re a simple and easy to understand company with simple and easy to understand financials. Nevertheless, any public company is subject to complex and sometimes hard to interpret the SEC regulations. It took longer than any of us expected for RSM to ensure to their satisfaction and ours that all of our activities were in compliance with even the most arcane SEC requirements. We have together reach comfort that that is in fact the case and have as a result file today. It’s important for me to note that we did not make any material changes to our filings during this period of delay. It’s also important to note that we’re not late in filing our first quarter results. So again, thanks for your patience while we went through this. Now, my comments will be a little bit briefer than usual today, because of course, we just did our full year conference call about a month ago and there’s not been a great deal of change since that time. In fact, the really significant change is related to what is arguably the most important factor in our business contracted backlog and that’s a lot healthier than it was just a month ago. We currently have over $5 million of contracted backlog, all of which we expect to convert to revenue in 2021 and most of it should deliver before the end of Q3. Combining backlog with our Q1 revenue of $1.3 million puts us in the position of knowing that we will exceed 2022 -- 2020 revenues in 2021, while still having more than half of the year left to sell. This, at a time when we have a growing pipeline and many indicators that our opportunities are both increasing and accelerating velocity. Those of you who are on the last call know that remember me saying that we were just days away from winning the biggest order in our history. Of course, at that time, I didn’t say exactly how many deals, but I think most of you know me well enough now to realize that I didn’t expect it to be quite this many. But anyway it did happen, a little later than I expected, but it happened. We received an order for 52 units from California Department of General Services with whom we’ve had a contract in place for several years. This will add to all the other units that we’ve delivered to DGS and many other California Government departments. It’s an order that’s broken down into 27 separate purchase orders, each of which is directed at a different government office. Thanks, perhaps, at least some of the delay. Absent situations beyond our control, we anticipate delivering these 52 units before the close of the third quarter. There are several useful indications to take from this order. First and foremost, it taken away descriptive of our broader business. It’s not and was never a question of if it would happen. It was just a question of when. Everyone involved from our side and from the customer side, you could see that the order was coming, but none of us could put an exact date on when we would receive it. As I look at the markets we approach, the convergence of clean energy and transportation. I don’t think anyone any more questions if it will happen. The only questions I see no and even the more skeptical quest is when will it happen? The shift to this future is if anything accelerating and we’re well positioned to take advantage of it. This order is a pretty good indicator that that future is rapidly upon us. Many of you will have seen President Joe Biden test driving Ford’s magnificent new F-150 Lightning last week. The Ford F-150 has been described as the most popular consumer product in history. The top selling vehicle in United States and has been the top selling pickup truck for 42 years in a row. But this new Ford F-50 -- F-150 is similar only to the old gas and diesel models and that it can carry until just as much as they could. As President Biden discovered when he drove it, as soon as he press the accelerator pedal, you find out how very different it is from the previous models. To call the President, this sucker is really quick. In fact, the F-150 Lightning accelerates from nought to 60 miles in about 4 seconds. Compare this to the gasoline and diesel models which take twice the time to reach 60 miles per hour. I think that the President’s use of language and indeed the vehicle that he was driving describe a significant shift in the future consumer relationship with electric vehicles. Until now, they’ve been largely viewed by the broader public as the domain of elitist in Tesla’s and tree-huggers in cars like the Nissan Leaf. What Americans really want pickup trucks and SUVs, and this year and next it will be served up with a whole portfolio of what are simply the best vehicles they’ve ever had the opportunity to drive. The F-150 will be joined this year by other new entrants, like the Rivian and Lordstown Endurance and GM has, of course, been famously announced the impending arrival of the 1000 horsepower all electric Hummer SUV, which has an insane 11,500 foot pounds of torque and will be nought to 60 in three seconds. And they’ll be plenty of other models to choose from too, just about every major auto manufacturer, foreign and domestic has a portfolio of electric vehicles, which either in production or soon will be. The two things all these vehicles have in common is that they’re either far superior to the diesel and gasoline vehicles currently produced. And most importantly for us, they will all need a place to charge. It won’t be at home because most people don’t live in homes that can support EV charging and it won’t all be tied to the grid, because the grid doesn’t have capacity to support at all. And anyway, it takes time and money and disruption to connect charges to the grid. Consumers are too impatient to wait for that sort of thing. What’s needed is a rapidly deployed product which could supply the charging that they need, where they were already going, without disruptive construction and electrical projects. Beam Global is as far as we know, the only company offering such a product, and of course, we have very good intellectual property protection. One very cool recent addition to the EV lineup is the Jeep 4xe, another product that moves EVs from the edge and places them firmly at the center of consumer interest. Just imagine how fantastic it will be to go four wheel driving in the wilderness in an electric vehicle. The torque acceleration and ability to control each of the driving wheels will make these new off-road vehicles must haves. Of course it won’t be easy to deliver good circuits to wilderness areas and that’s probably why Jeep selected the world’s best rapidly deployed off-grid, the newly energized electric vehicle charging infrastructure product. Take a look online and pull up some of the fantastic images of our EV ARC product with a very attractive Jeep branding package. Certainly one of those interesting developments that I’ve seen in the automotive industry is Jeep selection of Electrify America to provide and manage their EV charging infrastructure. Electrify America is of course a Volkswagen company and I just don’t recall ever seeing another instance where one car company has engaged another car company to provide a managed fueling infrastructure for them. This is a powerful indication of the revolutionary new business models, which are going to develop along with the revolutionary technology of electrified vehicles. Beam is very well positioned to take advantage of these new business models. We are of course delighted that Jeep selected our product and we’re also very happy to continue to advance our existing relationship with Electrify America for whom we’ve already deployed EV ARC products to support their electric vehicle charters throughout Central California. Electrify America seems to be doing a very good job of evolving beyond their initial incarnation and we really look forward to continuing to support their infrastructure requirements as they grow. So far, there’s been a great deal of talk about government tailwinds within the EV industry and it’s certainly true that a significant amount of activity around EVs and EV charging infrastructure has been driven by government activity. Governor Newsom in California has announced the banning of internal combustion engine vehicle sales from 2035. There’s nothing controversial about this. And in fact, it’s quite an astute and safe political set to take because and I’m sure Governor Newsome knows this. By 2035, California consumers will not be able to buy anything but electric vehicles. Anyway, because internal combustion engine vehicles by that time will have been banned across most of Europe and it’s simply not impossible for car manufacturers to make one set of vehicles to the United States and a completely different set of vehicles for Europe and the rest of the world. Governor Newsom’s announcement is bold and seems fraught with risk. But, in fact, I think that his mandate will not be required, because the industry and the consumer will deliver on its requirements before it comes into effect. California is not alone. The State of Washington has won up to us with a ban on the sale of internal combustion engine vehicles starting in 2030 and there are several other states with similar bans in the works. But again, I don’t believe that they will be necessary, because I think the consumer and the industry will make the change before the bans come into effect, at least not all, but outlier cases. At the federal level, we have President Biden’s commitment to electrify the federal fleet of 645,000 vehicles. The federal government is the single largest consumer of gasoline in the world by far and will become the single largest electric fleet operator in the world. President Biden has also announced his intention to deploy 0.5 million publicly available EV charging stations on America’s highways in the next few years. Perfect future ground for our products. In June of this year, we’ll be taking part in the Electric Mobility Symposium at Marine Corps Air Station Miramar. There’ll be a fantastic selection of electric vehicles both manned and unmanned at that event. The Marine Corps like all branches of the U.S. Military is working hard to decarbonize and wean itself off the terribly expensive both in terms of money and human lives reliance upon liquid fuels. Our EV ARC product will be prominent throughout the symposium charging all types of electric vehicles and we’ll also be demonstrating as transportability on ARC mobility trailer and its rapid deployment capability. Everything about the EV ARC, its autonomy, its transportability, its rapid deployment makes it an excellent choice for the future warfighter and fueling requirements for the fantastic array of electric tactical vehicles which are coming. Interestingly, the Marine Corps like many other fleet operators, probably, every other fleet operator starting to recognize that internal combustion engine vehicles are increasingly becoming a liability. They recognize that as manufacturers move to electric portfolios that will become harder and harder to source spare parts and service for internal combustion engine vehicles. So it’s not just about decarbonizing or about reducing reliance on liquid fuels. It’s also about their recognition that there’s an end coming to the era of the internal combustion engine vehicle and that they need to be in front of that process, not behind it, we intend to help them. All of these moves towards electrification, whether they be at the federal, state or the municipal government level, are driven by enterprise or consumers have one thing in common, they all require a significant and rapid increase in the availability of electric vehicle charging infrastructure. Beam Global produces the fastest deployed more scalable, most robust and lowest total cost of ownership EV charging infrastructure solution available in the world today. We support all the major brands of EV charging products and service providers behind them. Our products are immune to blackouts, provide energy security, and a clean and green and Made in America, sounds like a winning combination to me. The California order, the way it was placed and the reasons behind it is not in my opinion anomalous. I believe that this is an indication that for all the reasons mentioned above, we’re going to see a significant increase in the need for rapidly deployed and resilient off-grid EV charging infrastructure. Also signals a recognition on the part of government that a single percent of -- a significant percentage of our future fueling infrastructure must be independent, with locally generated and locally stored electricity, people to defend ourselves from a catastrophic failure in the fueling system caused by a grid failure. Of course, this is exactly what our products are designed to do and this is exactly the sort of evolution of thinking they formed that -- has formed the basis of much of our investment thesis over the years. I feel that some questions about California, New York and the apparent inactivity with those customers during 2020. Actually, we’ve never stopped receiving orders from the California contract and while New York had other things on their mind during 2020, we’ve recently received an order from them for our new EV ARC 2020 product. They look forward to seeing the flood proof unit. Having had years of service from our previous excellent but not flood proof models. California’s Governor Newsom has committed over a billion dollars to the electrification of transportation. California has also just become the first state in the U.S. that will require rideshare operators such as Uber and Lyft to transition from gasoline to electric vehicles in their networks by the end of the decade. I think it’s very obvious that there’ll be a requirement for significant increase in the availability of public EV charging infrastructure and at a pace which far exceeds anything that we’ve seen during the last decade. We have the fastest deployed most scalable, most robust EV charging infrastructure solution available today and this most recent order from the State of California demonstrates that they recognize the value of our products and the resilient clean off-grid, locally generated, locally stored electricity which they deliver. Interestingly, and tellingly I think, the funding for this latest acquisition came from California Office of Emergency Services. With around 20 million cars on California’s roads, there will be a requirement for several million publicly available EV chargers and a huge increase in capacity and the delivery of electricity. I believe that we’re ideally positioned to be a very significant role in delivering this increasing capacity in a rapidly deployed and highly scalable manner. Surely is not a coincidence that California has renewed our contract and increased its scope to include more of our products and also make it available to any other government entity which wants to use it. Two weeks ago, I spent several days in Washington, D.C., with our new lobbying consultant. This new consultant is very well known and very well thought off in Washington, D.C., forms part of our increased investment and government relations, which I’ve committed to over the last year. We now have one full time employee, the Washington based lobbying firm I just mentioned and also another consultant who helps us identify funds which our customers can use to buy our products. I believe that this investment in government relations cannot be better at times. Our full time employee Brad Groters has already secured meaningful changes in both state and federal rules, which now ensure that our solution is both recognized and eligible for important programs and funding. Our funding consultant has joined me on several webinars in which we demonstrate our products and then show various funding resources available to help our customers pay for them. We realize additional sale is a direct result of these efforts. It’s early days with our D.C. lobbyists, but my first trip to D.C. demonstrated to me that they are indeed well connected and very supportive of our efforts. Over the next few weeks, I will be meeting with high level staff on House Energy and Commerce, House Transportation and Infrastructure, Senate Environment and Public Works and Senate Finance. Although, we sold a lot of products to various government agencies over the years we have historically not aggressively focused on receiving funding from any arm of the government. Moving forward, we will make sure that our important contribution to the electrification of transportation and to energy security is not missed by any arm of government and that we’re supported and have access to an equal playing field, and that we’re recognized as the leaders that we are. While in Washington, D.C., I have several fruitful meetings with members of the federal government and find them to be very much in support of what we’re doing. And why wouldn’t it be? It didn’t hurt that I was there, just as the colonial pipeline fiasco with shutting gas off the Northeast, is easier than ever to speak about the value of fueling infrastructure that’s independent and resilient. It seems to be across the aisle agreement, the infrastructure spending, particularly transportation infrastructure spending is something that can be agreed upon in a bipartisan manner. Even the electrification of transportation no longer seems controversial or too political. And of course, energy security has always been a safe area for agreement. Finally, nobody in Washington thinks it’s a bad idea to use American products to reach these worthy goals. In many ways, our products seem to be tailor made to satisfy the aspirations of those who are engaged in deciding our stimulus and other infrastructure dollars will be spent. Certainly, it was a very good idea for us to spend eight months going through the rigorous vetting process necessary to finally be awarded a federal GSA contract, which enables any federal agency to buy our products without having to go through a painstaking and lengthy process. We’ve already seen the fruits of this contract vehicle. We’ve now received several purchase orders through it. And we believe that many more are coming. In fact, in the first quarter we received a purchase order from a federally funded entity who has bought from us several times before. The difference in the experience was not trivial. Often the past conditions had to be just right and a good deal of work had to go into receiving orders from this entity. This time it was a simple, quick, painless process, a very good harbinger for what is I believe to come. We were involved in a couple of excellent press events during the first quarter and since. San Diego’s new Mayor, Todd Gloria cut the ribbon and spoke at a press conference, which I was honored also to be invited to speak at, and which took place in front of two of our EV ARC products recently purchased by the City of San Diego. Each of those EV ARC systems was charging five Chevrolet volts, also recently purchased by the city as part of their ongoing plan to electrify their entire fleet. This was an excellent opportunity for us to demonstrate our products ability to charge multiple vehicles and deliver to them all of the daily range replenishment they require from a single parking space-based product. San Diego has ambitious plans and an ambitious Climate Action Plan and we’re delighted that this new administration is so enthusiastic about our products. We look forward to providing them with much more EV charging infrastructure and energy security. Later, I find myself in Kansas City to join the Mayor of the City of Olathe to do a ribbon cutting and press event there, introducing six EV ARCs systems, which we’ve recently deployed. I think it’s fair to say that San Diego and Olathe, Kansas are about as different as any two cities in one nation could be. And yet the EV ARC product fits equally well in both of their requirements. There about 19,000 municipalities in the United States, EVR is currently deployed in over 100 of them. Our pipeline, which is larger than it’s been at any time in our history leads me to believe that will make it rolls into the other 18,000 and some at an accelerating pace in the coming periods. And it’s not just municipalities who are benefiting from our products. We just announced that for the first time the entertainment industry in the form of one of the world’s best known and the best loved brands has for the first time started to use our products to provide electric vehicle charging and clean energy on the set of one of their new productions. We delivered for the first time the Forest Service and also placed EV ARC in our nation’s capital Washington, D.C. Again these deployments demonstrate the fantastic variety of different opportunities being global addresses. When considering our total addressable market, one could genuinely say that it’s equal to all other EV charging companies’ times put together and all charging scenarios whether they be Sedan’s medium-duty, heavy-duty or even for aircraft and other electric transportation solutions. All of these new opportunities and anticipated growth of focusing our attention on our ability to scale our production and to improve our gross profit, there’s no question that volume will be the single largest contributor to our improved gross profits, as we spread the overhead cost in our facilities, which has room for 20 times growth across a larger number of products. We are in the process of making improvements to our factoring facility, which we believe will make us much more efficient. Increased efficiency will mean an increased ability to keep our product as well at the same time reducing risk and increasing quality, and of course, and importantly, reducing cost. I’ve mentioned many times before that, other factors will contribute to cost reduction, such as the decline in the price of batteries and solar modules and other components which we integrate into our products. These inputs are outside of our control, unfortunately, but they do not require any investment from us. We are also concentrating heavily on things that we do control. The engineering team is working tirelessly to make changes to both our EV ARC product and our Solar Tree, which we believe will increase its quality and reduce the cost producing. During the first quarter, we were able to announce a 12% increase in energy delivered from our EV ARC product. 12% increase in energy means 12% increase in the miles delivered to our driving users. These increases in energy delivery came about as a result of the fantastic efforts of our engineering team. We’re currently deploying our Solar Tree product to power full-sized batteries in the State of California and the engineering team has been similarly engaged in making sure that we’re taking the steps required to improve our efficiencies and reduce our costs with that important product set. As a result of its focus we’re not currently committing time or resources to producing our patented EV Standard product. However, we believe more than ever that the EV Standard is vital solution to one of our EV charging industry’s greatest challenges, curbside charging, and as such will provide a significant revenue source for us in the future. Our current engineering roadmap and plans include focusing on the EV Standard in the second half of 2021. Another major initiative that deserves mention is of course our Driving on Sunshine program. The process of attracting sponsors to this opportunity is thoroughly underway. Updates on this are sort of the binary in nature, nothing to report until we have a sponsor signed up. I can tell you that we and our partners are thoroughly engaged in this and I remain as confident as I’ve ever been that we will get a sponsor. It’s a process not an event it takes longer than I wanted to, I’m a very impatient person and nothing happens as quick as I wanted to, a three minute egg takes too long in my book, but it’s something that has never been done before and we’re working with very large organizations. They have departments and processes and we have to work at their pace. Getting the city contract longer than I anticipated but we got it done. I’m sure the same will be the case with the sponsors. Finally I’d like to welcome Nancy Floyd to our Board of Directors. We tragically lost Bob Schweitzer, who passed away during the first quarter. It was a dreadful event on every level, but if any silver lining existed on that cloud, it was that we were able to attract Nancy to our Board. Look her up. She has a fantastic history of picking winners in the clean energy space. We are very lucky to have on our Board and I’m going to see she is very lucky to be on it. Welcome, Nancy. So to wrap up, we have an excellent backlog and pipeline position. We have sufficient revenues year-to-date and backlog to ensure that we will beat 2020 and we still have seven months left in the year. We have historically high levels of working capital and no debt. The EV industry is really kicking into gear. We are anticipating a post-vaccine acceleration of EV charging infrastructure across both government and enterprise. Our products are better than ever and we’re working hard to improve gross margins on all of our products. Again, volume sells all and it certainly looks as if volume is coming. We’re going to have a busy an excellent 2021 and all the years beyond. Thank you for your time and attention and I’ll now hand it back to Kathy and take any questions that you may have. Please keep them brief and restrict yourself to a single follow-up as we want to make sure that everyone gets a chance and in the event that I don’t get to you, you can always call directly. Kathy?
