Good afternoon, and welcome to the Beam Global First Quarter 2022 Financial Results and Corporate Update Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Kathy McDermott, Chief Financial Officer. Please go ahead.

Thank you. Good afternoon, and thank you for participating in Beam Global's conference call for the first quarter of 2022. We appreciate your time today for joining us for this call. Joining me is Desmond Wheatley, President, CEO and Chairman of Beam. Desmond will be providing an update on the recent activities at Beam followed by a 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 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 25, 2022. 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 first quarter ended March 31, 2022. In March 2022, we're excited to say that the company closed on the purchase of AllCell Technologies. The addition of energy storage solutions to our EV charging product is a great partnership with many synergies from a sales and manufacturing standpoint. Because this was an asset purchase, the first quarter of 2022 financial statements include the energy storage business for the March 4 closing date through March 31, 2022. It is not included in the prior year comparison. For the first quarter of 2022, we reported revenues of $3.8 million, a 175% increase over $1.4 million reported for the first quarter…

Well, thank you, Kathy, and thank you to all of you who are listening and supporting Beam Global. I'm speaking to you today from the HC Wainwright Conferences in Miami, Florida, where I have spent the last few days meeting with the investment community. So my apologies in advance for any outside noise as it's not easy for me to control the environment here. But I'll push through whatever challenges come my way, like I always do. 2021 was a year of records for Beam; record revenues, record product deliveries and record sales. We're continuing that record breaking streak as we head into 2022 with a new record for quarterly revenues of $3.8 million, up from $1.4 million in the first quarter of 2021 and up from $3.4 million in the fourth quarter of last year. Product deliveries in Q1 of 2022 were 250% of what they were in the same period of last year. Now this is a metric which tells us much more of a story than perhaps might first meet the eye because Q1 has often been a fairly weak quarter for us. Not surprisingly, in the past, we've crammed all the revenue we came into the fourth quarter to hit full year results and that's typically left us in a position of starting the New Year with low or no backlog sometimes. We certainly did cram a lot of revenue into the fourth quarter of 2021, and it was, in fact, until now, the best quarter in our history. But because our sales growth was so strong in 2021, particularly towards the end of the year, we did not exhaust our backlog even during that record-breaking quarter. On the contrary, we entered 2022 with the strongest combination of pipeline and backlog we have ever had. We…

[Operator Instructions] Our first question is from Greg Lewis with BTIG.

Clearly, you're doing a good job on execution. But I did have a question. Clearly the government/military opportunity is a huge potential growth opportunity for the company. As we think about the event path of that, as you'd work with these customers, how should we think about the timing of the ordering of the EV ARCs versus the ordering of the vehicles, i.e., are some of these entities trying to get their hands on EV ARCs ahead of ordering or is it kind of a chicken and egg, any kind of thoughts around that?

Yes. So you've uncovered multiple areas, as you usually do, Greg. Let me just -- let me try and address them. And the first thing I want to point out to you is that, yes, the government side of our business remains very vibrant, and there's a lot of growth ahead of us for that. But cast your mind back to Kathy's opening comments, where she pointed out that our traditional state and municipal business was only [ 78% ] of our revenues, only, that's a lot, but it also shows you there was [ 38% ] coming from other opportunities and I think we're going to see an increase in that as we've said before, post-COVID, return to work, return to corporate type of environment. So while I'm thrilled with the government business, and we're going to continue to thrash it, don't think of us as a government only business. We're far from that. Now to your other question about the sort of cadence of ordering, it might not be surprising to anybody listening to this call to find that there are government entities who have electric vehicles, who are coming to them and do not yet have charging infrastructure in place for them. I don't mean that to sound unkind, I just mean it's one of those things no one's ever really done before, so no one's really been sure on the timing of these things. Again not to sound unkind or exploitative, this is excellent for us. The simple fact of matter is, if you're a government agency who receives a bunch of electric vehicles in the fourth quarter of this year and you don't have any charging infrastructure, what's happening is at the moment you're starting to look around and figure out what does that mean.…

And then I did want to talk, I guess, a nice job on seeing the margin progression. It looks like it improved a couple of hundred basis points sequentially. What is…

Three hundred basis points to be precise.

Yes. What has customer feedback been around the stickiness of pricing? And the reason I ask that is, whether it's the steel or the energy storage piece or the solar panels or the wage, labor? I have to believe most of the inputs in producing the unit is going higher. Now clearly, volumes are also improving. But what has kind of been, obviously, it's a product that the buyers need. What has been -- how should we be thinking about ASPs as we kind of move forward in this year?

Yes. So it's a subject which gets an awful lot of attention from us, frankly. I am still very heavily focused on winning market share and increasing volumes. I think that it's got to be the most important thing that we do. We want large orders. We want to turn them through the factory. We want to grind cost out of the product. I'm convinced there's still a lot of room for cost reduction as we increase our volumes. And so the focus is heavily on bringing in the sales. Now that said, we have had a lot of internal discussions around increasing our prices because we are at very good value, in hundreds of deployments across the U.S. and internationally. In just about every instance the cost of our unit was less than the cost of avoided construction and electrical work and then the energy suite essentially after that. So we're very good value and that means that you'd think there's an opportunity for increasing our prices and we have talked about that. I can tell you, right now our tendency is to not increase the sticker price of the product, but we have had discussions and actually, I think, we're putting into effect some instances where there will be an inflationary surcharge, if you like. This is something that gives us some luxury. We can remove it in the future if costs stabilize as we anticipate and also if our costs come down and without giving people a sticker shock because they see the price going up. We're still dealing with an audience strength that is not educated in this space. And again, that's not to be unkind. They just haven't had experience with it. And so we're still dealing with an audience who has difficulty figuring out how a charge point -- charger can be $6,500 and an EV ARC can be $65,000. That sounds like it's 10x more expensive because they don't yet know how expensive it's going to be to go through the construction, electrical work and all of the other things. That takes a bit of about education. So we want to bring them in. We want to win big orders. We want to improve our profitability through reducing costs. And as I say, there's still a lot of opportunity to do that. But we are definitely looking very seriously at responding to inflationary pressures through some pricing increases, but probably is delivered as a line item on the proposal at some kind of surcharge, which we think the customer base will understand and probably be more ready to accept and digest and a simple, just a blanket cost increase with our explanation.

Next question is from Tate Sullivan with Maxim Group.

Going back to your comments on the Beam pack. Did I hear you say are you going out and replacing the batteries and EV ARCs that are already deployed with that or is that just in future EV ARCs?

No, we will not do that. We have no requirement to do that. What's so exciting about the Beam pack is that we are -- we acquired AllCell Technology on March 4. That wasn't very long ago. Time goes by very, very quickly when you're doing this stuff. And yet the teams have been working very hard, the engineering teams in San Diego on the charging side of the business and on the energy storage side of the business, and they have already produced a custom tailored pack for our products, the Beam pack and we have not been installing them in our products to date. So what's important for you to understand and the other callers to understand, other listeners to understand, is that the gross profits that you're seeing right now do not reflect the reduction in costs that we anticipate from using our own internal battery packs. However, those packs are being produced, even as I'm speaking to you, and through an incredibly accelerated timeline, and they will be introduced into our products, I believe, in the first week of June when we get the first shipment out of our Chicago facility and San Diego into first -- not first week of June, it will be some time in June. And so what that means is that from that time forward, the EV ARCs will be going out with our own custom battery packs in them. Those are better, will get better -- make a batch of products essentially. It's easier to integrate them into our product, which will mean ultimately a reduction in labor cost of integration and most importantly, they're a good deal, less expensive because we're only paying the cost basis, we're not paying the margins and everything else. That's just the beginning of…

Yes. And great point on seeing other charging companies start to try to do batteries and products as well, too. And then circling back on the customer with 500 buildings, I imagine they can do a quite compelling analysis on how much they're paying for extra electricity for charging as well. Is that customer, if you can share, a repeat customer or is that a new potential customer?

By the way, just on your first comment, let's remember that those batteries that the other EV charging companies are integrating into their EV charging installations are grid dependent and so you're not getting resiliency out of that. If the grid goes down, you're not recharging those batteries. I think it's very important to point that out because I don't want people thinking that what we've been doing for 10 years is being replicated by others now. It isn't. It's just adding batteries to a grid-tied installation maybe gives you one more charge for a vehicle, but it doesn't get you that kind of resiliency that we offer to all our customers, and that's a key differentiator for us. But to answer the core part of your question, the customer with the 500 buildings that I was talking. No, it's a new customer. And you're absolutely right, they have a lot of data. I think the really important takeaway from that is this second wave deployment thing. People often say to me, well, so and so has already got EV chargers. So therefore you don't have an opportunity with them. Well, that may be true today. But as there are more and more Rivians and F-150 Lightnings and all of the incredible variety of electric vehicles that are coming out here and hitting us, parking lots are just going to be full of the EVs. They're all going to expect to charge. And while all of these building operators who have already deployed, to their great credit, by the way, who have already deployed grid-tied EV charging are going to discover is that the next wave or perhaps the wave after the next wave will be either massively more expensive because they would have to dig a lot more trenching…

The next question is from [ James McCullagh ], a private investor.

Two questions. First one is, is there any R&D going on to improve the survivability of the systems and adverse weather events? Obviously that's probably your key differentiator as well as the construction cost issue. But just on survivability, is there any way whether it's dismantling solar panels or anything that could be done to improve the survivability in an adverse weather event? That's the first question. And then the second question was on international market opportunities. If there's a concerted effort, whether it be in Europe or Australia, Southeast Asia to penetrate markets? And if so, if there's any discussion going on, on JV greenfield or is it too early for that kind of a capital investment?

Yes. So those are both excellent questions. Let's talk about survivability first and let's talk about the reality as it exists today. Our product is rated now, actually an improvement of 5 miles per hour. Previously it was rated at 120 miles per hour winds. That means when I say rated, I mean an independent agency has taken a look at the thing, done all of their calculations and said that we'll survive 120 mile per hour winds. We have just increased that now to 125 miles. So 5 miles doesn't sound like a lot, but I'll tell you what, it does. The wind events of those sorts get exponentially more rare for every mile per hour you add to that sort of equation. That's what we're rated for. We know that they have survived 185 mile per hour category 5 winds in the Caribbean, and we know that we got a letter. We have this letter still from our customer who is a Governor down there saying that our products were the only thing that survived those hurricane storms. I went right over the top of it, frankly, even I was surprised. I know we built a very robust product, even I was surprised that we survived the sheer ferocity when I saw videos of buildings flying around and stuff like that, cars being overturned. So very robust from that point of view. Now the other thing is in terms of advancing it, just a couple of years ago, we were not flood-proof. Well, we were flood proof to about 6.5 inches actually. Today the product is flood proof to 9.5 feet. So it requires a 9.5 foot inundation to destroy our product. And that is incredibly rare in the sorts of locations where we're deployed. Waist-high water, yes,…

I remember in one -- I think it was a year ago on one of your conference calls, a quarter was impacted just by a freight charge on shipment to the, I think, it was the State of Hawaii based on -- it was a contracted price, which included freight. And obviously when you're dealing with -- it's fairly heavy equipment from what I understand, and you're dealing with some pretty significant freight costs, I'm guessing. So it sounds like that's a -- it sounds like Europe would be a tremendous opportunity, not just given the growth in EVs and the political climate. But I would guess also you might have some fairly unique solutions there too, so.

You're quite right. By the way, you actually bring up something else very interesting, and I probably should have mentioned it in my comments. I'm very intent on bringing battery manufacturing from Chicago into San Diego, not at the expense of Chicago, in addition to Chicago, and that's because it will make a lot of sense for us to make -- produce our new proprietary batteries right where we produce our charging products, in our San Diego factory. We've got some space to do that there. I'm really interested in doing that, particularly because of a lot of government incentive money to help me get that done. And similarly, we are considering moving some EV ARC manufacturing and our charging products manufacturing into the Midwest. Again, not at the expense of San Diego, it's an expansive move. And a big part of the reason for that is what you just pointed out, products are heavy and bulky. We ship a lot of them to the Northeast and to other parts of the country. It would be a lot less expensive and a lot more efficient to do that from the Midwest. So these are things which are very much on our -- on the whiteboard, on the roadmap and for planning and we generally get to things. We generally do what we say we're going to do. Sometimes it takes a bit longer than I wanted to. But if we're planning it, we generally do it.

[Operator Instructions] Showing no further questions, this concludes our question-and-answer session. I would like to turn the conference back over to Desmond Wheatley for any closing remarks.

I think we've covered a lot of stuff here today. We just had a record breaking quarter following a record-breaking year. We've got record-breaking pipeline and backlog combinations, our new battery company and the Ops team is doing a fantastic job of producing products and getting it out. As I said earlier, it's never without challenges, but that's what we're here to do. If it was easy, everybody would be doing it, right? It's just -- everything is positioning very well for us, for the future of electric vehicles, for the requirement of EV charging infrastructure like we make and I'm thrilled to be doing what I'm doing for a living. So thank you all for that opportunity. Thank you all for listening today and for being involved with Beam. Like I said, it's a great time to be on the Beam team. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.