Good day, and welcome to the Beam Global First Quarter 2025 Operating Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Lisa Potok, Chief Financial Officer. Please go ahead.

Hi, good afternoon, and thank you for participating in Beam Global's first quarter 2025 operating results conference call. We appreciate you joining us today and hear an update on our business. Joining me is Desmond Wheatley, President and CEO and Chairman of Beam. Desmond will be providing an update on recent activities at Beam followed by a question-and-answer session. 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 risk and other factors that may cause actual results to differ materially from those statements. For more information about these risks, please refer to the Risk Factors described in Beam's most recently filed Form 10-K and other periodic reports filed with the SEC. The content of this call contains time sensitive information that is accurate only as of today, May 15, 2025. Except as required by law, Beam disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. Next, I would like to provide an overview of our financial results for Beam's Q1 of 2025. For the first quarter of 2025, our revenues were $6.3 million. Our revenues were diverse across commercial entities and state and local governments with a significant rebalancing towards enterprise customers whereas 53% of our revenues were derived from commercial customers compared to only 16% in the same period in 2024. Additionally, our international customers comprise 25% of all revenue in Q1 of 2025 versus 11% in Q1 of 2024. We believe that this decrease in revenue is mainly a result of the uncertainty in the U.S. government's zero emission vehicle strategy related to the Presidential Election. Our backlog as of the end of…

Thank you, Lisa, and thanks as always to the rest of you who've dialed in to listen to this call or who are joining us through the webinar link. Let me start off by making a couple of important statements. Sales of our flagship product EV ARC increased in the first quarter. We're navigating our way through a series of uncertainties in the U.S. market and while we're hitting speed bumps along the way, we now believe that we have the pieces in place to return to growth in this quarter and in future quarters. Our battery business is doing some of the most interesting and promising work it's ever done. Our international expansion strategy is gaining momentum and bearing fruit. We have sufficient cash and working capital to continue to operate the business into the future. We have no debt and no going concern. We're generating gross profits, which net of non-cash items are still north of 20%. We have proposals out and items in our pipeline, which would simply not have been possible this time last year before we introduced our fantastic new product lineup and expanded beyond the U.S. market. Losing the immediate benefits of U.S. federal government sales has been tough on us, but we are managing through that and we've created a foundation for growth, which is resistant to those sorts of upheavals and which I believe will create opportunities for growth which far outstrip anything that we've ever done before. Before going further, I'd like to apologize for the late notice that we gave for this earnings call. We usually like to give at least a week's notice prior to these calls, but in this instance, we had some last minute items to clear up with our auditors and as a result, we did…

We will now begin the question-and-answer session. [Operator Instructions]. The first question comes from Ryan Pfingst from B. Riley Securities. Please go ahead.

Hey Desmond, thanks for taking my questions.

Yes, Ryan, how are you?

Good. Thank you. Curious how you're thinking about product mix between EV ARC and new products in 2025 or maybe over the next couple years.

Yes. So I'm quite enthusiastic about the adoption of some of our new products. I've had firsthand discussions with people in law enforcement about BeamPatrol, which is our police motorcycle and charging infrastructure solution. I've had similar conversations with people about BeamBike, which is our electric bicycle and charging infrastructure solution. And frankly, the same thing goes for BeamSpot, which is our new curbside charging product. In every instance, people are very enthusiastic about these products and for BeamBike is concerned, sometimes it's resorts that want to offer electric bicycles to their customers. Sometimes it's large bike sharing organizations that are transitioning from pedal bikes to electric and discovering how difficult it is to deliver an electrical circuit to some location in the middle of a city to charge those bikes. So I'm really enthusiastic about that. I certainly think that the remainder of this year, we're going to start to see the orders come in for those products. And then, moving into 2026 and onwards, I actually expect to see the mixture really even out. There's still a huge market opportunity for EV ARC. We haven't even begun to scratch the tip of that iceberg, particularly once we start getting into Middle East and Africa and other places. But I do think we're going to see an awful lot coming from these other new products. And then beyond that, we are still seeing growth in the legacy businesses that we've acquired. So our street lighting and smart cities infrastructure products through our European markets we saw growth in that through 2024, we're seeing growth in orders for those products this year and again, we'll be taking those out of that kind of Balkan market. Although we're in 18 nations with those types of products, but we will be expanding the selling of those into the Middle East as well. All of this to say, Ryan, is that we're going to get a lot more diverse. We have pretty much been a one product, one country, one customer company for a while, that, that being EV ARC, United States federal government. And of course, it wasn't just one customer, but they certainly have been the LION's share of it for last couple of years. We're now producing a couple of dozen products. Our battery business is really showing tremendous promise and doing exactly what I want it to do right now, which is creating highly technical, highly bespoke, and as a result highly marginable solutions for really fantastic customers, military and civilian applications there. So we're going to have a lot more diversity. With that diversity will come a reduction in the risk from impacts from large customers, fluctuations in their orders, as we've seen with the federal government this time. But also with that diversity will come a lot more opportunity for growth. And that's part of the reason I feel so bullish about the remainder of this year and particularly moving into 2026 and 2027.

Appreciate that. And as a follow-up understanding there's a lot of puts and takes here, but how should we think about your margin progression as your ex-EV ARC products and international sales grow in terms of mix?

Yes. So we're getting -- again we're getting positive contributions from our portfolio of acquisitions. So that's good. Our EV ARC gross margins right now, the unit -- well actually not at the unit economics level, they're up still up in the 40% and 50% range. Our gross margins net of non-cash, so non-GAAP gross margins, taking out the non-cash contributions from amortization of intangible assets, that sort of stuff, still north of 20%. I've always said that we will get to a 50% gross profit with the EV ARC. And I -- again, we're pretty much there at the unit economics already. We just need enough volume to solve for that. Now the good news is BeamPatrol, BeamBike, BeamScoot, those are all based on the EV ARC platform. So the more of those we sell, the more volume that we get of all the major components and manufacturing processes for EV ARC. So in other words, if we do 1,000 BeamBikes, it's like doing 1,000 EV ARCs except we get more revenue and more margin for BeamBikes and even more revenue and margin for BeamPatrol. So I think what we've seen in this quarter is because we had a reduction in revenues, because we missed out on half of our expectations, because we didn't get the orders that we thought we were getting from the Feds. We've seen the fixed overhead allocations eat into our GAAP gross profit. What we haven't seen is any lessening of the gross profit that we're getting at the unit or -- and even at the non-cash level and that what's interesting about that is if you look back historically in previous quarters when we've had $6 million, $6.5 million worth of revenue, we've had negative gross margins because the overhead allocations were so significant on that number of units as to take away -- take us into negative territory. In this instance, we did that much revenue and we had 8% GAAP and 20% net of non-cash gross profits, which shows you, that we have retained the improvements to gross margins that we've worked so hard to get. When we get back to volume, then you'll see us dramatically increasing those gross margins at a GAAP level. And as I say, my goal is still to get to 50%. It's really is a volume game here. And it's not just a volume game because of fixed overhead allocations, it is also anybody that runs manufacturing facility will know also due to the fact that the more stuff we buy, the more buying power we have, the more power we have to get cost reductions and other concessions from our vendors. So I'm sanguine, I'm feeling good about our gross margin, particularly in light of the fact that we've had this low volume quarter and still maintained 8% GAAP gross profit, 20%-plus percent net of non-cash items.

[Operator Instructions]. The next question comes from Noel Parks from Tuohy Brothers. Please go ahead.

Hey Noel, how are you?

Feeling good, thanks. Just had a couple and I was wondering, could you talk about where manufacturing capacity stands in Europe at this point?

Yes. So you didn't ask me, but let me start off in the United States. We -- I've always maintained, and I still maintain we could get up to about 4,000 units a year if we maximize our -- the facility we have in the U.S., which is 550,000 square feet under roof. In Europe, we have 250,000 square feet under roof. 5x more under roof right now, and then six acres of land that we can those on inexpensively and with a great deal of assistance and help from the local authorities. So in other words, we won't have to deal with permitting and all that sort of stuff that takes a long time in California and the U.S. in general. So just based on that metric alone, we could do about 5x as many units in Europe. Now of course, that doesn't happen overnight. We're quite busy in Europe right now already with the legacy business again, that grew in 2024 and it appears to be continuing to grow this year. But we do have a tremendous amount of opportunity to expand there. So at the moment, we're getting this question a lot, which is a good thing because of some of the opportunities that we're looking at, could we produce several hundred units or get up into four digits in that European market. Supply chain will be the biggest hurdle for us where that's concerned. There are certain items that we have to acquire. Some of them come from Asia. As I said in my comments, although we're in the U.S. a BABA compliant product, which is still a complex product, there's still supply chain to overcome. And some of that, by the way is in power electronics. And that is another reason I made the acquisition…

Okay. Great. Thanks. And I hate to get in the business of predicting bad things, but I'm just thinking this time this year, as we're headed into summer in the Northern Hemisphere again and potential for climate-related problems, with your broadened product line, I'm just wondering, are there going to be sort of new examples or new parts of the resiliency thesis that you think might come to the fore this year?

Resiliency is a very significant piece of our business. People quite often refer to us as an EV charging company. We're not an EV charging company. We have to make products, which enable EV charging companies to deploy their chargers without construction or electrical work. And very importantly, in a way that doesn't require extra capacity on the grid and also continues to operate during blackouts and brownouts. That's a big part of the resiliency play. I mean, the largest single order we ever received in the State of California was from the Office of Emergency Services wasn't from an EV group or something like that, it was OES that gave us our largest everything. They're responsible for making sure there's infrastructure in place for wildfires, earthquakes, whatever bloody disasters come down the pipe. U.S. Army, New York City, Marine Corps, all of these entities buying our products because we provide a source of electricity, which is immune to blackouts and brownouts or any other kind of centralized failure to do with the grid. Last year during Hurricane Helene, we received a photograph from our customer down there, the U.S. Army, I think it was, sent us a photograph of our units operating in 8 feet of storm surge. That's to say that our units were actually in a location where the sea water was 8 feet above the ground and our units were continuing to operate. We were flood proof to 9.5 feet and we have survived hurricane force Category 5 185 mile an hour winds. So those -- all of those things meet a very important resiliency aspects. And by the way, it's one of the ways that we're endeavoring to make inroads with the new Trump administration is to point out to them that we're not tree…

This concludes our question-and-answer session. I would like to turn the conference back over to Desmond Wheatley for closing remarks.

Thank you again all of you who have joined. Thanks for continuing to follow and support this fantastic company. We've had a rocky couple of quarters. And as I said, that's disappointing but not surprising is in no way an indication of where we're going though. On the contrary, the good news is, I did get a little ahead of this, although I must say I didn't see it coming. But I did get ahead of this with our European expansion, making sure that we had diversification in product offering and geographic markets to approach that, that turns out to have been quite a good defensive play for us and I think we'll really see the fruits of that in the coming quarters. So it's still a great time to be Beam. It's tough. We've just got to stick to this and not panic, frankly, and we aren't. We're going to continue to work very hard. The whole team is, we're just going to execute. We're paying attention to things that we can impact and not so much things that we can't impact like the broader market conditions or some of the top level government decisions that are being made. But we're still executing and we're still shipping product. And as I say, our sales have grown and we are looking forward to returning to growth in this and future quarters and that's where all our focus is. So again, thanks for your attention, thanks for your time, thanks for your questions and we look forward to keep doing what we're doing. Never hesitate to get in touch if you've got questions, call us, email us. I like to make myself available, particularly to our shareholders and our analysts. So be in touch anytime you want to and we'll try to accommodate. Just remember I spent a lot of time in traveling and at the end of next week, I'll be spending Memorial Day 12 hours ahead of you. So it will be the middle of the night when it's middle of your day, just bear that in mind. But otherwise, I'm always willing to talk. Thank you.

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