Hello and welcome to the Beam Global First Quarter 2024 Operating Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to hand the call to Lisa Potok, Chief Financial Officer. Please go ahead.

Hi. Good afternoon and thank you for participating in Beam Global's First Quarter 2024 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 our question-and-answer session. But 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 risks 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 recent 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 21st of 2024, 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 of Beam’s first quarter of 2024. We had record first quarter revenues of $14.6 million increasing 12% over the same period in 2023. The first quarter increase can be attributed to an increase in our federal sales. The timing of our orders overall may continue to be uneven due to the timing of our customer approvals and their budget cycle. We have begun the process of production of our EV ARCs in our Serbian facility and expect to deliver our first sale to the Ministry of Defense in quarter two. We generated gross profit with a gross margin of 10.2% the highest margin ever. The improvement in gross…

Okay, Thank you, Lisa, and thanks everybody for joining Beam Global's first quarter earnings call. I'm actually speaking to you today from Abu Dhabi, where I'm spending a week working on growing our business in the Middle Eastern region. There's a great deal of opportunity here, and our recent expansion into Europe has enabled us to start taking advantage of opportunities on a far greater scale than anything we've previously been able to address. My comments will be relatively short because, of course we've just recently had our earnings call for the full year of 2023 and the 10-K, during which we did a fairly comprehensive update of the business and the various opportunities in front of us. Nevertheless, things are happening very quickly at Bean Global, so beyond simply updating you on the numbers, I'll be talking to you about a couple of exciting opportunities in front of us, as well as outlining some highlights from the first quarter. Before coming to the Middle East, I spent a week in our Serbian facilities, catching up on our operational expansion there, as well as meeting with existing and prospective customers. It was a very productive week. I'm thrilled by the progress we've made in Europe and equally excited by the opportunities which we have in front of us over here. Aside from the quality and very high level of business development meetings I attended, thanks to the efforts of our European management team, the greatest impression came through seeing rows of completed EV ARC systems waiting to be delivered to customers and also on seeing sections of the EV standard product waiting to be assembled into the first prototypes of that product, which as you all know, I believe has the potential to be our biggest seller. So now I'm…

Thank you very much. [Operator Instructions] Today's first question comes from Sameer Joshi with HC Wainwright. Please go ahead.

Hi, Desmond, Lisa, how are you? Thanks for doing this late night from there. The question I have is about the backlog and the pipeline. How does it -- what does it comprise of geographically and also between AllCell, EV ARC and Amiga? And then for the pipeline, what do you consider pipeline? Are these requests or proposals that you have applied, you sender the proposals, or how do you define that?

Yeah, so the backlog is still -- the majority of the backlog is still comprised of the Beam Global EV Charging Infrastructure products. So what you would consider to be more traditional Beam products. Backlog contribution from Beam Europe is about $3 million at 03/31. And they're going to be less of a backlog intensive business anyway because as I mentioned before, historically, they've always made and delivered product as they've contracted it. So they have some sort of longstanding relationships with existing customers who come back to them and order stuff over and over again, but it doesn't really stay in backlog very long because it's generally produced and shipped off to the customer before too long. As far as the question about the pipeline is concerned, we're quite strict about what pipeline is. Basically, in order to qualify to be in our pipeline, you need to be a customer who understands the product, has budget for the product, is qualified to make the buying decision and has given us the impression or has indicated to us that you are moving towards a purchase order. So in other words, these are not just people who have expressed an interest, you know, passing interest in our products or think we're cool or anything like that. These are active operating customers with budget, with authority, who've expressed an interest in moving towards a purchase order. We actually have a pretty high pipeline to backlog conversion ratio. In other words, the actual -- all those customers who express an interest in the product and have budget, et cetera, historically, a higher proportion of them, in fact, a higher proportion than I've ever seen in any other business, have moved to backlog. And so we have a pretty high degree of confidence that they will do that. Not all of them, of course, but we have a pretty high degree of confidence that a large percentage of them will do that. We have less confidence over is when they'll do that. And I can tell you that historically, we've had some customers who've told us that with absolute certainty, they're going to give us a purchase order at such and such a day. And it's been quite a bit later than we expected for various internal reasons on their own part. And the other side of that coin, which unfortunately doesn't happen as often, is we've had customers who've hit us with purchase orders much faster than we expected. But in general, the pipeline is, I think, a good number and fairly conservative, although it's weighted obviously, all the way from somewhat low percentages all the way up to some that are close to near certainty.

Understood, thanks for that color. And just one more, the contribution from Amiga, I'm guessing, I think I heard you say you're expecting 30% or increase in purchase, or have experienced 30% increase in year-over-year purchase orders. And if we consider that the Amiga probably did return around $10-ish million last year, should we expect it to do around 30% over that amount this year?

Well, what I can certainly say are two things. First of all, yes, their actual purchase orders received year-to-date are up about 30% over their historical norm. And there's a lot of contributors to that. And I mentioned a couple of them during the call. Some of it is to do with the way we're using our balance sheet. Some of it is to do with the just increased confidence in them as a result of being part of the US and NASDAQ traded company. And then also we've been able to allow them, enable them to go out and sell more aggressively, take on more than they would have in the past. Because of course in the past they were essentially constrained by their cash flows. So it's a very positive move actually that's been very impactful. The acquisition has been very impactful for them in a really positive way. And I'm delighted by that. That doesn't necessarily tie in a straight-line to a 30% increase year-over-year revenues because these are just the purchase orders they've received year-to-date are up 30% over historical. However, the other metric that is very important to note and I might have sounded like I was belaboring this during my comments because I really want people to understand this was that we have this contingent consideration that $4.3 million which again is entirely non-cash, please underline that -- that will be made in shares of Beam Global stock. And again, this is exactly how I like to do these types of deals. We've got them for a relatively modest initial consideration, particularly in light of the fact that as I said we got the buildings and land and everything else as part of that transaction but they are in a position to do very…

Yeah, no, I agree with that. Thanks for that color and good luck.

Thank you very much.

Thank you. The next question is from Tate Sullivan with Maxim Group. Please go ahead.

Hi, Tate.

Thank you, Desmond. Hi, good. It's great to hear from you. I think you just said actually that you're starting to deliver your first European EV ARCs at the end of this month, and it sounds like was there any adjustment or inefficiencies at the beginning of making the EV ARCs in Europe please?

Yeah, I mean, I actually saw the units. Yeah, I saw the units that are getting ready to get loaded into shipping containers and head out here at the end of this month. In fact, just to give you more detail than perhaps you want, we're just waiting for the [EVSC] (ph) from the vendor, the actual charger itself. As soon as we get those, we'll install those and they'll let off to their customer. Was there any inefficiency? Yes. There's nowhere near as efficient as it's going to get in the beginning. These are the first units they made, but the quality is very, very good and the end product is excellent and I'm thrilled to bits frankly that it's happened as quickly as it's happened. And I think there's a couple of things that are really important to point out there. We self-performed in Europe some really significant tasks that we have always done through outsourcing in the United States, really expensive significant tasks that we've been outsourcing in the United States. So the economics, taking out the inefficiencies because of the first ones that we've done, and you're right to point that out. But beyond that, what we're seeing is that the economics for producing EV ARCs in our Serbian facilities are far superior to the economics of doing it in the United States. And remember, all the gross profit improvement we've just announced has come from our US operations. We didn't see any benefit from the Serbian. First of all, because we [haven't] (ph) even recognized the revenue on them. We'll do that obviously when we deliver. But I'm anticipating that those inefficiencies are reduced rapidly. Again, it's a very motivated team with a great history of producing a lot of stuff inexpensively and with a lot of efficiency. And then because of these economics improvements, because of the largely due to the self-performance of some really expensive outsourced tasks in the US, I'm hoping for a much better gross profit profile in our European operations than in the US. Well, we'll continue to improve in the US, But the company-wide impact of that will be, we should get better gross profitability from those units that we produce in our Serbian facilities and ship all over Europe and further [afield] (ph) than we do with the ones that we make in the US. And yet, as I said, the sort of move to cash flow that I described in my earlier comments was based on my US Assumptions. So Europe should only make that better. So yes, a little bit of inefficiency in the beginning, but a great product, very well made, very good quality, and as I say, clear opportunities for much better economics moving forward.

Thank you, Desmond.

Thank you, Tate.

Thank you. The next question comes from Chris Pierce with Needham and Company. Please go ahead.

Hey, good evening.

Hey, Chris how are you?

I'm doing great. On gross margins, from here, is it as simple as the more EV ARCs you sell, the higher your gross margins go because you're absorbing fixed costs on top of the price increase that you have, or are there further engineering kind of efficiencies that you can drive out as far as the San Diego production?

Both, definitely both. There's no question the more we produce the better we get from a gross profit point of view because of fixed overhead allocations, absorption. And it's more than that. The more of them we produce, the more stuff we buy, the better buying we get, the better purchasing we get. And that's another reason the European expansion has been helpful because a lot of the stuff that we're buying will be common in both markets coming from common vendors. But yes, there are still further improvements that we can make that we've yet to recognize. And we're going to -- as I said, ruthlessly go after that. This year for us is really going to be much more about getting more efficient and reducing our COGS. I mean, we've always had a laser focus on operating costs. As everybody is aware, we're an extremely lean company. We're an operating side of things, but COGS, we're going to be laser focused on continuing to reduce those, but not the expensive quality. So you are going to get further gross profit improvement contribution from both things. The more we make, the more of that overhead allocation is absorbed, but also further engineering enhancements.

Okay. What can you share about the EV standard margin profile or the strategy there? Is that going to be some sort of, you know, I don't want to use the term loss leader, but it's a new product that you're introducing to the market and it's a new manufacturing product. You're talking about the second half of this year, demoing it, like what's the right way to think about the margin trajectory of that product versus the margin trajectory of the EV ARC product?

Yeah, definitely do not intend for it to be a loss leader. However, there's no question that the earliest units that we make will be the most expensive that we ever make. And frankly, these first units that we're producing right now, the betas, that we're going to use to demonstrate the product which will be how we'll make our first sales. It's a very attractive, very striking looking product. I can't wait to make it public having seen it now myself. But we've already identified, as you might expect, we've already identified areas that where we're going to be much more efficient in the future models that we make. But I'm pretty confident that the first ones we sell will come out with good unit economics and then we'll rapidly do value engineering on the product and widen the gap between our revenue and our costs. I expect that we will actually generate more gross from the EV Standard product in the future than from any other product in our lineup that we have to-date. Because I do think it will be a higher volume product. The sales of it are going to be more complex because unlike the EV ARC, it's not something that you can just drop off in an hour and walk away from and [turning] (ph) to operate. I think that will probably mean that we'll do less of the sort of onesie-twosie type sales with the EV standards. I think it's more likely to be deployed in almost a network fashion. Although there are still good opportunities, shopping malls, airports and other places like that for some smaller volume stuff, but I do think that when we are talking about municipal type deployments, it will come in larger volume and the sales cycles will be longer. But at the end of the day, while the sales cycles might be longer, the volume, I believe will be larger. And again, I think that's going to be an area that we're going to be able to squeeze a lot of gross profitability.

Do you envision a distribution model, like a sales partner channel model, or do you envision direct sales model?

It's only direct in the beginning, but as I mentioned in my comments, we are actively pursuing two very well-qualified channels in Europe right now and that's a model which I'm very much in favor of -- we've been a bit hesitant to do that in the United States previously for a whole host of reasons. We just weren't really ready for it. And it's from just a materials-wise and history-wise and ability to just shift the selling process to outsiders. We weren't really ready for it. But we've got some very motivated partners that we're in the process of negotiating with in Europe right now. One group actually is a group that I've been speaking to for a couple of years already. And then another one is a partner that we picked up as a result of our acquisition of Amiga, which is now in Europe. And that's going to -- I think be profoundly impactful for us because obviously we've had a limited number of salespeople that are selling our product up until now. This force multiplication ought to get a lot more people talking about it, much broader audience. And we know people like it when they understand it, so getting it in front of more people is clearly going to be a good thing for us, particularly in light of the fact that, as I said, it will be performance-based. We won't be adding to our costs -- to our operating costs as a result of this because they'll get paid when they sell. And yes, I intend to do that with the EV Standard as well as with the EV ARC, or other products.

Okay. And just last one for me, on the $4.3 million non-cash that you mentioned a couple of times, is the right way to think about that as 50% of the dilution is at the end of this year and 50% next year? Or what's the right way to [got the timing] (ph) of the shares that you're issuing to the Amiga shareholder, to the Amiga company.

Yeah, and listen, I apologize for belaboring this point, but -- you end up with an awful lot of questions about cash after these calls, and I seem to spend a great amount of time explaining to people things that are non-cash impactful. So my apologies to those of you who grasp that very quickly. This is I'm speaking to those of you who don't. But no – this -- the $4.3 million that you've heard about is a current liability. So therefore we believe it's going to be in fact for the next 12 months. And that's why, and as Lisa made in her comments -- said in her comments, we had moved it into current liabilities within this year because we believe that this is an impact which could take place as a result of the 2024 earnouts. 2025 will be another matter again. And again, I can't stress strongly enough, I want them to hit their earnouts. If they hit their earnouts, it's because we've had really significant growth in those markets. And I'm going to do everything I can to make them successful to do that. Because if they're successful, it means we're successful and vice versa.

Okay. Same pitch. I appreciate the color. Thank you.

Thank you, Chris.

Thank you. The next question comes from Craig Irwin with ROTH Capital. Please go ahead.

Hello Craig.

Hey, this is Andrew on for Craig. And before I get started here, it's kind of ironic, I saw my first EV ARC in the wild in Manhattan today. So maybe a good sign.

We'll give you a [indiscernible]. Welcome to the club.

Thank you. A lot has been covered here. I think just one more thing I want to touch on Europe. Looks like you've had some really good early progress in the UK. And I just wanted to see if you could talk about the opportunities there and maybe other specific geographies or countries in the EU that you're excited about.

Yeah, so the first thing I want to be absolutely clear is that while I'm thrilled to bits that the UK Ministry of Defence has acquired our product, I'm thrilled to bits that we have a contract with the British government now which is like our GSA contract with the federal government, and I'm thrilled to bits that the British Army is going to be using our products in their overseas bases. It has nothing to do with my country of national origin. We didn't win this because I'm British. We won it actually through the merits of the product. The UK Ministry of Defence and the British Army heard about the product because they know that the US Army is using it and they have very similar needs. So it is a great win for us. I believe it's just the beginning of what we are going to do with them. They just like all other European countries and just like the US federal government for that matter have pretty stringent mandates on moving to zero-emission vehicles and in pretty short time frames. In fact, I think the UK government's very similar to the federal government in that by 2027, their light duty vehicles, non-tactical light duty vehicles across the government have to be zero-emission vehicles, which essentially means electric. There isn't any other contender, except in a few very, very niche cases where hydrogen will play a role. So I think it's a great first step for us. And oddly enough, we're not deploying in the UK. We're deploying in the overseas bases for them with this product. I do think the EV Standard will be a very good solution, which is the Streetlight product will be a very good solution for the UK. And in fact, for…

Great, well, thanks for the color, and congrats on the strong margin progress. I'll hop back in the queue.

Really appreciate it, Thanks, Andrew.

Thank you. The next question comes from Noel Parks with Tuohy Brothers. Please go ahead.

Hello, Noel.

Hi, Desmond. Good to talk to you. Just a couple things. You've touched on it a bit, but the meetings with potential customers that you had in Serbia, I wonder if you could just characterize the customers a little bit more and their priorities?

Yeah, so I'm not going into too much detail. It wasn't just Serbia, but certainly it was from that base of operations. The customers are very like the profile with whom we've had a great deal of success in the United States. So, there are people who are in control of environments where there's a lot of parking, a lot of people with vehicles for one reason or another. And of course, there's a great deal of pressure in Europe to move towards electrification of transportation because the Europeans have passed a law -- outlawing the sale of all but zero-emission vehicles in 11 years from now. That's obviously a massive undertaking to move from internal combustion engine vehicles to zero-emission vehicles, which again means electric vehicles. There isn't an option, not a serious option in just 11 years, a massive amount of infrastructure is going to be required. And people over here, I shouldn't say over here because I'm not over here, I'm further south right now, but people in that part of the world are under just the same sort of pressure as we are in the United States. Same considerations, lack of capacity, difficulty in connecting to circuits, not enough electricity on the grid for electrification and transportation, risk from blackouts, risk from foreign sources of fuel to make electricity, even more complicated to dig up the streets and go through the permitting and all those things. And then interconnection with utility interconnection, even more complicated than it often is in the United States. So they've all got the same considerations exactly as the customer profiles that we've been dealing with in the United States. And it's quite infusing to see the relief on their face when they find out that there's an option and particularly an…

Terrific. So then I guess the thing I'm trying to get a feel for is that there is the natural appeal of the EV ARC and the problems it solves, and then that continues on with the EV Standard. So, Amiga's existing customer base, it's just the same people who were customers for their infrastructure, are the ones who are now going to come over and look at the EVRs? Is that sort of translate directly or is it kind of you converting those?

I can state to you categorically that I met with existing Amiga customers whom Amiga had produced Street Lights and other types of furniture and presented the new products, and I met with very enthusiastic response. And that was absolutely part of our strategy when we acquired the company. As I've said before, I had a list of probably 25 bullet points of qualifications that I was looking for in international acquisition. And we got an awful lot of them and one of them was definitely that they had credibility and had sold to customers who were at similar profile if not exactly the same profile which is a case of Amiga as those with whom we've had success in the US. And so yes existing customers reintroducing these new products not reintroducing -- introducing these new products to them and meeting a great deal of success as a result of it.

Great to hear, thanks.

Thank you. We're getting close on time here so I think we're time for one or two more.

Okay. The next question comes from Christopher Souther with B. Riley. Please go ahead.

Hi, Chris.

Hey, thanks for taking my question here. Maybe just on the margin profile around Amiga and if you can kind of talk through whether that is accretive throughout the year as that ramps up seasonally and some of the other businesses presumably start to ramp up as well?

Yeah, that's a really good question because the Amiga's first quarter, on the legacy business we're talking about here, the first quarter gross margins are typically not being good. And because of the things that I pointed out to you, there's generally a slow time selling for them. And so we didn't benefit significantly from that in the first quarter. Again, I keep coming back to this cross-margin improvement that you've seen has really come from the things that we promised that we would do towards the end of last year and into the first quarter of this year and we've done them. We're not finished but we've clearly done a lot of it. But yeah, the good news with the Amiga legacy business is that as we move into second, third and fourth quarters, we'll see the volumes rise and with that we should see the margin improvement. And then beyond that, because of what we've done with our balance sheet, because we've enabled them to produce product during those slow periods, that means that they produce product with a lower cost profile more efficiently. And so when we do get into the selling of those things, we should see a further improvement in gross profitability, even over and above what they would just normally do as they move into higher volume periods in the year. And then finally, I think the biggest part of this is going to be from the fact that, again, I'm very bullish about our ability to sell the new EV charging infrastructure and energy storage products. And because the economics are better in those markets, we should have a further improvement in gross profitability there as well. So all in all, I'm feeling pretty sanguine about gross profit contribution from what was Amiga and is now being Europe.

Excellent. And then maybe just a follow-up here on the EV standard product. Obviously, I think you've talked in the past about Amiga selling Street Lights. So I'm just curious, you know, sales strategy-wise, can you kind of walk through the plan as you develop the final product? And I'm curious whether you think there's going to be more traction initially in Europe or in the US for that product. Thanks.

Yeah, so we will definitely be going back to the customers that buy Street Lights in general. Because of course, one of my ideas, one of my plans is that in the future we're going to be dealing with customers who buy Street Lights and saying, hey, every X number of street lights, you should have an EV Standard because you're going to need the charging infrastructure on street. I don't know what X is. In some markets, every fifth and some, it might be every 50th. I just don't know what every X is, but we'll go back to those existing customers and say that certainly look at this. It is a streetlight product. I mean, if you're looking for street lights, here's a street light that just does a whole lot more for you than that. Similarly, we will also be going back to all of our existing customers who bought EV ARCs from us and saying, hey, we've got this other thing, which might be a good fit for you and other types of deployments that you want to do. That's a kind of a direct sales thing. Then we'll be putting EV Standard into these news channels' hands as well and showing that to them. And honestly I think one of the things I learned from this trip is there is appetite for both products and we may end up, and in fact I think it's very likely that we'll end up selling EV ARCs and EV standards to certain customers, depending on where they're placed and what the use case is for them. Chris, I hope that answered your question, and that's [us at] (ph) two minutes over time here. Operator, are we looking for questions? I think we need to wrap up. I'll take another one if there's one there, but otherwise it might be a good time to wrap.

There are no further questions in the queue at this time.

Okay, excellent. Well, I'm appreciative of that because I need to get some shy here because I got a long day ahead of me tomorrow again. But I'm very grateful for everybody for listening in and for your continued attention and support of the company. I'm very grateful to the Beam team, to Lisa and her team about getting the financials together and getting us piled on time again. And I feel very enthusiastic. A great time to be Beam Global and I'm looking forward to the rest of this year. So thank you all.

The conference has now concluded. Thank you for your participation. You may now disconnect your lines.