Q1 2021 Beam Global Earnings Call
Yeah.
Ladies and gentlemen, thank you for standing by good afternoon, and welcome to the beam Global first quarter 2021 financial results and corporate update conference call.
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I would now like to turn the call over to Kathy Mcdermott C. F O a blame global beam Global Please go ahead.
Thank you and good afternoon, and thank you everyone for participating and beam Global conference call for the first quarter of 2021.
And we appreciate your time today and for joining US for this call. Joining me is that a suite Desmond Wheatley, President and CEO and chairman of beam Desmond and we'll be providing an update on our recent activities have been 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 expectations for future performance or operational results and forward looking statements involve risks and other factors that may cause actual results to differ materially from those statements and more information about these risks please.
Prior to the risk factors described and beans, 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 24, 2021, except as required by law beam disclaims any obligation to publicly update or revise any.
Information and to reflect events, our current circumstances that occur after this call.
Next I'd like to provide an overview of our financial results for beans first quarter ended March 31.2021.
But the first quarter of 'twenty, 1 and we reported revenues of 1 million $3.72, 3 and 92, a 4% increase over 1 million 317, Oh 50 true reported for the first quarter of 2020. During the recent quarter, we shipped systems to municipalities as well as into federal academic utility and enterprise business segment we.
Also provided and Edr system to cheap a scientist brand and want to their partner Electrify America to support the launch of the project to provide renewable charging and off road trail has throughout the United States as part of jeeps for ex E charging network.
As of March 31st 2.2021, our contracted backlog was approximately $1.2 million.
Gross loss in the quarter ended March 31, 2021 was 149120 compared to a gross loss of 39006.41 for the same period and 2020. The increase in gross loss was primarily due to an increase and cost, but the new E. B R. Twenty-twenty system that was launched at the end of 2019, we expect to reduce.
These costs over time and also improve our gross margin as we increase our production volume to improve our fixed overhead absorption and improved labor efficiencies.
Operating expenses were 1 million 1 O..2 675 for Q1, 'twenty 'twenty, 1 compared to 902000 and for Q1, 2020 the.
The increase in operating expenses was due to an increase and noncash compensation expense for stock option expense investing of director shares increased sales head count to support revenue growth and increase R&D head count to help reduce product costs and product development.
The net loss was 1 million to $58.9 for the first quarter of 2021 compared to 942521 for the first quarter of 2020 due to the increase in gross loss and increased operating expenses.
At March 31, 2020, 1 we had cash of 28 million to 14 or 29 compared to 26 million 7 O..2 8 O 4 at December 31, 2020.
The increase was primarily due to the exercise of warrants, partially offset by operating cash usage of working capital also increased to 29 million 5 or 7 and 478 at March 31.2021.
And I will now turn the call over the desk and meant to provide a business update.
And.
Thank you Cathy and thanks to everybody else for joining us today and for your continued support of an interest and being global.
Before I get into your 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 and the release of our Q1 results.
Let me start by making it absolutely clear that there is and was nothing wrong with our financials.
Want to congratulate and thank cathie for her tireless efforts and always producing accurate reporting which has only ever been described by our old interest is at the highest quality.
The last decade, or so we do solberg and cause all of it all.
And so all of our did a great job for us and as you are aware, we have always filed on time and without controversy.
This year as a result from the significant growth, which we are and we hope to achieve and our position on a national exchange, we elected to engage our S. Amazon that's true.
This is the first quarter, but they've been engaged.
And there are simple and easy to understand and company.
Simple and easy to understand and financials.
Nevertheless, any public company subject to complex and sometimes hard to interpret and SEC regulations.
Longer than any of us expected progress and to ensure their satisfaction and others, but all of our activities were in compliance with even the most all Kane and SEC requirements.
We have together reach comfort that that is in fact, the case and have as a result filed today.
Important for me to note that we did not make any material changes to our filings during this period of delay.
Also important to note and we're not late and filing our first quarter results. So again, thanks for your patience, while we went through this.
And my comments will be a little be briefer than usual today because of course, we adjusted our full year conference call about a month ago and Theres not been a great deal of change since that time, but the really significant change as it related to what is arguably the most important factor and our business contracted backlog and that's a little healthier than it was just a month ago.
We currently have over $5 million of contracted backlog and all of which we expect to convert to revenue in 2020, 1 and most of it should deliver before the end of Q3.
Combining backlog with our Q1 revenue of 1.3 million purchase and the position of knowing that we will exceed 2000, and 'twenty, 2.2020 revenues and 'twenty 'twenty, 1 while still having more than half of the year left to sell.
This time, and we have a growing pipeline and many indicators that our opportunities are both increasing and accelerating velocity.
Those of you and the law School will no doubt remember me, saying that we were just days away from winning the biggest order and our history of <unk>.
Course about telling them I didn't say exactly how many days, but I think most of you know me well enough and I do realize that I didn't expect it to be quite as many at any rate. It did happen a little later than I expected, but it happened.
And in order for 52 units from California's 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 D. G S and many other California government departments.
It's an old and it's broken down into 27 and separate purchase orders and each of which was directed to a different government office. Thanks, perhaps at least some of the delay.
I've seen situations and beyond our control we anticipate delivering these 52 units before the close of the third quarter.
There were several useful indication should take from this order.
And foremost it taken away descriptive and our broader business.
No and was never a question of if it would happen and it was just a question of when.
Everyone and Baltimore aside from the customer. So you can see that the older was coming but none of us could go and exact dates and when we would receive it.
As I look at the market as we approach the convergence of clean energy and transportation I don't think anyone any more questions. If it will happen and the only questions I see no and even the most skeptical press is when will it happen the share.
This future is if anything accelerating and we are well positioned to take advantage of it. This all does a pretty good indication that features rapidly upon us.
Many of you will have seen president Joe Biden test driving forwards magnificent New F 150 Lightning last week. The Ford F..150 has been described as the most popular consumer product and history.
Selling vehicle in United States and has been the top selling pickup trucks, the 42 years and a rule.
But this new Ford F 150, and similar only to the old gas and diesel models and that it can carry a total just as much as they could.
President Biden discovered when he drove it.
As soon as you press the accelerator pedal you find out very differently from the previous models to cool the president the suckers really quick.
In fact, the F 150 lightning accelerates from not just fixing and about 4 seconds compare this to the gasoline and diesel models, which take twice the time to reach 60 miles per hour I.
And I think that the president's use of language and indeed, the vehicle, but he was driving describe a significant shift and the future consumer relationship with electric vehicles.
Until now they've been largely viewed by the broader public is the domain of elitist and teslas and tree Huggers and cars like the Nissan leaf.
Americans really won't pick up trucks, and Suvs and this year and next there'll be served up and the whole portfolio what are simply the best vehicles and they've ever had the opportunity to drive.
The F 150 will be joined this year by other new entrants like the Arabian and large times endurance and Jim has of course famously announced and pending arrival of the 1000 horsepower all electric Homer SUV, which has an insane and 11500 foot pounds of torque and will be not just safety and 3 seconds and.
There'll be plenty of other models to choose from to just about every major ultra manufacturer foreign and domestic is a portfolio of electric vehicles, which are either in production and will soon will be.
The 2 things all these vehicles have been Coleman is it there a far superior to the diesel and gasoline vehicles currently produce and most importantly garage and 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 it all and anyway. It takes time and money and disruption to connect charters to the grit consumers or 2 and patient to wait for that sort of thing what's needed is a rapidly deployed brought up which could supply the charge and that they need.
Who are they were already going.
Without disruptive construction and electrical projects.
Being global is as far as we know the only company offering such a product and of course, we have very good intellectual property protection.
1 very cool recent addition to the EBIT line up as the Jeep for bi and other product that moves E beam from the age and places and firmly at the center of consumer interest.
Just imagine a fantastic it will be to go 4 wheel driving and the world and us and an electric vehicle.
Mark acceleration and ability to control each and are driving wheels will make these new off road vehicles and muscle hubs.
And of course, it won't be easy to deliver good circuits to wilderness areas and that's probably why <unk> selected the world's best rapidly deployed off grid and your Atlanta, Georgia electric vehicle charging infrastructure and product take a look online and pull up some of the fantastic images of our edr product with a very attractive Jeep brand and package.
Certainly 1 of the most interesting developments that I've seen in the automotive industry is Jeep selection of Electrify America to provide and manage their EV charging infrastructure.
And I know because of course, and Volkswagen company and I, just don't recall ever seeing another instance, where 1 car company is engaged and other car company to provide and manage fueling infrastructure for them. This.
And this is a powerful indication of the revolutionary new business models, which are going to develop along with a revolutionary technology and electrified vehicles beam.
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 and Electrify America, with whom we've already deploy DVR products to support their electric vehicle Chargers throughout central California.
Well, that's why America seems to be doing a very good job of evolving beyond their initial incarnation.
Forward to continuing to support their infrastructure requirements as they grow.
So far and it's been a great deal of talk about government tailwind within the industry and it's certainly true, but a significant amount of activity around evs and EV charging infrastructure is being driven by government activity.
Governor Newsome, and California has announced the binding of internal combustion engine vehicle sales from 2035, there's.
There's nothing controversial about this move and in fact, it's quite an astute and state political step to take because and I'm sure Governor and use of news. This like 2035, and California, and consumers will not be able to buy anything but electric vehicles anyway, because internal combustion engine vehicles by that time will it be and bond across most of Europe, and it's simply not possible for car manufacturers to make 1 second.
And of course, the United States and a completely different set of vehicles for Europe and the rest of the world.
Governor Newsome announcement, and bold and seems fraught with risk, but in fact, I think that is mandate will not be required because the industry and the consumer will deliver an ex requirements before it comes into effect.
Before he is not alone and state of Washington is well known to us with a ban on this day like internal combustion engine vehicles, starting and 2030 and there were several other states with similar bonds and 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 bonds come into effect at least and hold but outlier cases.
And the federal level, we now have a president Boyd and his commitment to electrify the federal meat from 645000 vehicles.
Federal government is the single largest consumer of gasoline and the world by far and will become the single largest electric fleet, operator, and the World President Biden has also announced its intention to deploy half a million publicly available EV charging stations on America's highways and the next few years perfect fertile ground for our products.
In June of this year will.
And we'll be taking part in the electric mobility Symposium at Marine Corps Air station Miramar.
And it'll be a fantastic selection of electric vehicles, and both manned and unmanned up after net the Marine Corps like all branches of the U S. Military is working hard to Decarbonize and wean itself won't be terribly expensive both in terms of money and human lives reliance upon liquid fuels.
I'll review, our product will be prominent symposium charging all types of electric vehicles, and we will also be demonstrating its transport stability on Oct mobility trailer and its rapid deployment capability.
Everything about the E. R. It's autonomy ex transport stability its rapid deployment makes it and eat excellent choice from the future War fighter and they're fueling requirements and a 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 moved to electric portfolios, it will become harder and harder to source spare parts and service for internal combustion engine vehicles. So it's not just about decarbonising or about reducing the lunch and liquid fuels. It's also about their recognition that there's and and coming to the euro and 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'd be at the federal state or the municipal government level or driven by enterprise or consumers are 1 thing and call them. They all require significant rapid increasingly available if you have electric vehicle charging infrastructure.
Being global producers the fastest deployed most scalable most school bus and lowest total cost of ownership EV charging infrastructure solution available in the world today.
For all of the major bonds be charging products and service providers behind them.
Our products are immune to blackouts provide energy security and our clean and Green and made in America. It 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, a normal list I believe that this is an indication that for all the reasons mentioned above we don't see a significant increase and the need for rapidly deployed and resilient awkward EV charging infrastructure also signals a recognition on the part of government a single percentage.
A significant percentage of our future fueling infrastructure must be independent with locally generated and locally stored and electricity.
And where to defend ourselves from a catastrophic failure and 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 it was formed the basis of much of our investment thesis over the years.
I'll field, some questions about California, and New York, and the parent and activity with those customers. During 2020 actually we've never stopped receiving orders from the California contract and while New York and other things on their mind. During 2020, we just recently received an order from them for our new E V. O 2020 product and look forward to seeing the flood proofed unit.
Having had years of service from our previous excellent, but not fluffy models.
California's Governor Newsom has committed over $1 billion to the electrification of transportation.
<unk> is also just become the first state and the U S that will require rideshare operators, such as Uber and Lyft and transitioned from gasoline to electric vehicles and their networks by the end of the decade.
I think it's very obvious and there'll be a requirement for significant increase and the availability of public EV charging infrastructure and our pace, which far exceeds anything that we've seen during the last decade.
We have the fastest deployed most scalable most jewel box 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 and electricity, which they deliver.
Interestingly and telling me I think the funding for this latest acquisition came from California's office of emergency services.
With with around 20 million cars from California's rules, there will be a requirement for several million publicly available EV Chargers and a huge increase in capacity and the delivery of electricity.
And I believe that we are ideally positioned to play a very significant role and delivering this increasing capacity and are rapidly deployed and highly scalable model.
Surely not a coincidence that California's renewed our contract and increased its scope to include more of our products and also to make it available to any other government entity, which wants to use it.
2 weeks ago, I spent several days and Washington D C with our new lobby and consultant. This new consultant is very well known and very well thought out from Washington D. C forms part of our increased investment and government relations, which is committed to and the last year.
We now have 1 full time employee the Washington based and lobbying from I, just mentioned and also another consultant who helps us identify funds, which our customers can use to buy our products.
And I believe that this investment and government relations could not be better times.
Our full time employee broad Gutierrez was already secured meaningful changes and both state and federal rules, which now ensure that our solution is both recognized and eligible for important programs and funding.
Our funding consultant is joining me on several webinars and which we demonstrate to our products and then show various funding resources available to help our customers pay for them.
And we realized additional sales is a direct result of these efforts and so.
Early days with our D C lobbying, 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 stop and house energy and Commerce, I was transportation and infrastructure Senate environment, and public works and Senate finance.
Although we still have a lot of products to various government agencies over the years, we've 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 energy security is not missed by any arm of government and that was supported and have access to and equal playing field.
And they were recognized as the leaders that we are.
While in Washington D. C. I had several fruitful meetings with members of the federal government and find them to be very much and support of what we're doing and why wouldn't it be.
Alright, and then I was there just as the colonial pipeline and see absolutely shopping gossip and northeast is easier than ever to speak about the value of fueling infrastructure its independent and resilient.
So it seems to be a cross sale agreement the infrastructure spending, particularly transportation infrastructure spend and it's something that can be agreed upon and a bypass and manner.
Even the electrification of transportation no longer seems controversial or to political and of course energy security has always been a safe area for agreement.
Finally, nobody and Washington thinks it's a bad idea to use American products to reach these worthy goals and many ways all products seem to be tailor made to satisfy the aspirations of those who are engaged and deciding stimulus and other infrastructure dollars will be spent.
And certainly was a very good idea for us to spend 8 months going through the rigorous vetting process necessary to finally be award and 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 with net.
We received several purchase orders to it and we believe that many more are coming.
In fact, and the first quarter and we received a purchase order from a federally funded entity who's bought from a several times before.
The difference and the experience is not trivial.
And the past conditions ought to be just right and a good deal of work has to go into receiving orders from this entity. This time. It was a simple quick painless process, a very good harbinger for what I believe to come.
We were involved and a couple of actual press events during the first quarter and since San Diego's New mayor called Glory and cut the ribbon and spoke at a press conference, which I was on and also to be invited to speak up and which took place and from for 2 of our Edr products recently purchased by the city of San Diego.
Each of those E V O X systems with charging 5 Chevrolet bolt also recently purchased by the share G. As part of their ongoing plan to electrify their entire fleet.
This is an excellent opportunity for us and demonstrates our products ability to charge multiple vehicles and deliberate to them all of the daily range replenishment they require from a single parking space based product.
San Diego has ambitious plans and and ambitious climate action plan and we will do.
And that this new administration, and so enthusiastic about our products and.
We look forward to providing them with much more EV charging infrastructure and energy security.
Nathan and I find myself and Kansas City to join the merits and the city of elite to do a ribbon cutting and press event, there introducing 6 D var systems, which they recently deployed.
I think it's fair to say that San Diego and elite Congress are about as different as any 2 cities and 1 nation could be.
And yet the E b, our product fits equally well and both of their requirements.
And we're about 19000 municipalities and the United States, maybe Archs currently deployed and over 100 of them are pipeline, which is larger than it's been at anytime and our history leads me to believe that we'll make 8 roads and to the other 18000 and some at an accelerating pace and the coming periods.
And it's not just municipalities who are benefiting from our products and we just announced that for the first time, the entertainment industry and the form of 1 of the world's best known and best loved brands has from the first time starting to use our product to provide electric vehicle charging and clean energy on the second 1 of their new productions.
We delivered from the first time the Forest service and also plays D V arc and our nation's capital Washington D C.
Again, these deployments that demonstrate the fantastic variety of different opportunities being global addresses.
When considering our total addressable market when can genuinely say that it's equal to all other he'd be children companies times put together and all charging scenarios, whether they be presented ons medium duty heavy duty or even for aircraft and other electric transportation solutions.
All of these new opportunities and anticipated growth.
Ah 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.
Our improved gross profit as we spread the overhead costs and our facilities, which has room for 'twenty time school across a larger number of products.
We're in the process of making improvements to our factory facility, which we believe will make us much more efficient increased efficiency will mean and increase the ability to put 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.
Hum such as the price decline and 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're also concentrating heavily on things that we do control.
And the engineering team is working tirelessly to make changes to both our AVR product and our solar tree, which we believe will increase its quality and reduce the cost to produce it.
During the first quarter, we were able to announce a 12% increase and energy delivery from our E beam products.
And what percent increase and energy means 12% increase from the Bible celebratory you'd be driving users.
These increases and energy delivery came about as a result of the fantastic efforts of our engineering team.
Currently deploying our solar true product to power a full size buses and the state of California, and the engineering team has been similarly engaged and making sure that we're taking the steps required to improve our efficiencies and reduce our costs without and put up important product set.
As a result of this focus we're not currently committing time or resources to producing our patented D. V standard product. However, we believe more than ever that the standard is a vital solution to 1 of our E beam chartering industry's greatest challenges curbside charging and as such will provide a significant revenue source for us and the future.
Our current engineering road map and plans include focusing on the standard and the second half of 2021.
Another major initiative that deserves mention is of course are driving on Sunshine pulled them.
Of course, that's what attracting sponsors to this opportunity is darla underway updates on this are sort of 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 and this and I remain as confident as I've ever been that we will get to sponsor.
It's a process not an event it takes longer than I wanted it to them are very impatient person and nothing happens as quickly as I want it to a 3 minute egg takes too long and my book, but it's something that has never been done before and we're working with very large organizations.
And of departments and processes and we have to work at their pace.
Getting the city contract took longer than I anticipated, but we got it done and I'm sure. The same will be the case with the sponsors.
And finally I'd like to welcome Nancy Floyd to our board of directors.
We tragically lost Palm Schweitzer, who passed away during the first quarter.
And was a dreadful event on every level, but if any silver lining existed on that dark cloud. It was that we were able to attract Nancy to our board look her up she has a fantastic history of picking winners and the clean energy space. We're very lucky to have her on our board and I'm going to say she's very likely it would be on it.
Welcome Nancy.
So to wrap up.
We have and 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 7 months left and the year.
Historically high levels of working capital and no debt.
The E beam industry is really kicking into gear and we're 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 solves all and it certainly looks as if volume is coming.
We're going to have a busy and excellent 'twenty 'twenty, 1 and all the years beyond.
Thank you for your time and attention and I'll now hand, it back to Cathy 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 and the event that I don't get to you you can always follow up directly Kathy.
Ladies and gentlemen, we will now begin the question and answer session.
To ask a question you May press Star then 1 on your telephone keypad. If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then 2.
At this time, we will pause momentarily to assemble our roster.
Yeah.
Our first question comes from Amit Dayal with H C. Wainwright. Please go ahead.
Hi, Jayson and.
Thank you for taking my questions.
And Oh.
Right.
Just to begin with you know the 52 arcs.
And the government order and is this part of her 5 million backlog or is this and a different.
To tobacco and know that isn't that bad.
Isn't backlog.
Okay.
Well anything that we and the thing that's contracted we will describe as backlog.
Got it thank you for that and exhibition and just 1 more follow up from me. So you know the government orders.
Continue to come through you know the outlook on that front remains pretty positive.
Are there similar opportunities in your pipeline on the enterprise sales, excluding sort of a media model, where you could see orders flow 50, or 100 units at a time from enterprise type customers.
I think without a doubt I mean, certainly the the electrify America Slash Jeep thing that we've already discussed during this call. It is a good example of enterprise spending and.
You know there are so many other similar opportunities like that and the pipeline.
This quarter really was no. It's all about government and Ah I mean, I think obviously 2020 was a year during which there's a lot of people who were not going to places of work and not doing very much of anything and so COVID-19 will have had an impact on the enterprise deployment of EV charging infrastructure and we certainly saw that and <unk>.
Had a year, where we had record revenues in 2020 without essentially half of our opportunities are and are bearing fruit for us because there wasn't any workplace charging being deployed and however, we think that that changes. This year post vaccine second half I think you'll see a big increase of return to work a lot of workplace EV charging will be required to support that.
And then beyond that with all these new fantastic models that I mentioned and my and my comment.
Comments, they're just gonna be a giant requirement for EV charging infrastructure for consumers and fine and I think it's going to happen in a way that nobody's really properly anticipating and so I'm I'm very bullish about enterprise.
But we won't turn them back on the government itself.
Right of course [laughter]. Thank you that's all I have thank you. Thank you on it.
The next question is from Tate Sullivan with Maxim Group. Please go ahead.
Hi.
Good day.
We're talking about the sponsorship opportunity you mentioned partners and the 10-Q noted and addition of a contracted industry expert and he can you just do you have multiple partners. In addition to outdoor media or dedicated sales can you just talk about that a little please.
And so we were not exclusive with anybody and I want to maintain that position. It's basically instead of like a flagpole and 100 Bucks force 1 up wins it but we definitely have engaged a group who does nothing at all box sell corporate sponsorships and with a very particular focus on trends and transportation. So they do you know and all the buzz.
Susan trains and everything that you've seen with with no advertising.
Advertising on them and they also do stadiums and.
And just about any kind of but this thing you can imagine so they have a.
And what's good about dealing with them is because they do nothing else is firmly their area of expertise. They obviously have a very good.
Rolodex and a great history of <unk>.
Making sort of unusual sponsorships work I'm really happy to be working with them I think the important thing to point out to everybody listening about them is that although we cover their costs.
They really don't get paid any material amount of money unless they are successful and so I think the takeaway from that is that here's a group who is.
And expert in this space and does nothing with it and he was essentially willing to invest and moving this thing forward because they believe that it's such an excellent opportunity and you know.
While it's new and new makes it difficult it's new a time when he be charging is just coming into its own and they believe and so do I thought as soon as we are get as soon as we start moving on this thing it's going to take off like a wildfire.
He doesn't and I'll turn it back and acute.
The next question is from Jacob Green with B T. I G. Please go ahead.
Thank you Jasmine and Jacob.
Oh part of your sales this quarter, what's your Jeep and Theyre wrangler for ex the launch and Moab and have you had any other conversations with any other Oems you've talked about Florida, and Theyre lightning about sponsorship.
Sponsorships and deploying Chargers as a part of their rolling out of their EV offerings.
Yeah, and we have announced nothing and so there's no point nothing that I can say about that but you can imagine of course that we we believe that as more of these companies.
Deliver more and more of a sort of product, particularly the kind of products and be very very popular with American consumers. We do also anticipate that those same consumers are going to be demanding a infrastructure and we know that consumers are very impatient. They don't like to wait for staff and so we anticipate that that level of and patients is gonna be transmitted incident and <unk>.
Structure space.
As you know, it's taking longer and getting more complicated every day to deploy grid tied infrastructure and between the permitting and construction and electrical work. So I think that we are an ideal solution for this sort of you know what I am hoping at some point becomes panic buying as it were and when you've got lots of people buying F 100, Fifty's and Hummers and all the other products that are coming out right now and they're not.
And the Huawei, a range and they won't they will not.
And B, you know forgiving of people, telling them well it takes a while to permit there so forth and build it ought to do the electrical work and they're going to say it doesn't matter and we won't do it right now.
And that's what we're positioned to take advantage of it so I can't I can't I can't go into any detail on that but you know our target it's not hard to figure out who our targets are.
Sure Great and then and just 1 more from me just talking about your supply chain and having some other issues with out there.
E V E V companies, having some issues with their supply chains and batteries and modules have you had any issues getting our solar modules are batteries for your arcs.
So far no.
And something that we pay a lot of attention to obviously, we're monitoring all the time.
But at the moment, we are we have not had any of those sorts of delays I mean, nothing nothing material.
And we are at the moment not anticipating any of those sorts of delays.
But we monitor it obviously.
Okay, great, Thanks, and I'll turn it back.
Okay.
Question is from Frank Heart with high capital funding. Please go ahead.
Hello Desmond.
And congratulation on a line thing that a big order finally.
Thank you I have 2 quick questions for you and in that regard.
1.
Are you prepared for the avalanche of orders.
Youre clearly going to get over the next year as a result of all of the Mega trends and things that are going on and you're being ready for it and your production facilities and financial capability handle it and your current facility.
And so it's a good question, Frank and I and a way I could shelved and preparing this for teng for preparing for this for 10 years and what I'll tell you is we have a facility, which which has room for 'twenty ex growth. We can get to about 2200 units a year out of our factory facility are moving from 1 shift 5 days a.
Weak, which is where we currently are 2.3 shifts 7 days a week 1 of them potentially dollar call partially dock with automation.
We are also and the process now of identifying sub assemblies and components, which we can start to outsource for contract manufacturing and this will move us away from sort of a laborious manufacturing processes that frankly, where we're not and so I thought to do and.
And those sorts of processes into highly automated environments.
Environments, and then our people will move from manufacturing to assembly. So single operator, who today does 1 action will and the future opened 50 boxes a day for 50 similar actions.
So I think we're in good shape, where that's concerned. It's also I've never made a secret of the fact that I that I believe that will have to open a lot more of it and see if even at 2200 units a year, we're not going to do anything just scratched the tip of the iceberg of demand nothing nowhere near it.
And so I believe we will have to open more of these sorts of factories. Fortunately the footprint is readily available across United States and even globally.
And we've done the hard work of great and the only people figuring out how to make these things.
Scaling this thing up and I was going to be a question of cookie cutter and human resources and will always be the most challenging aspect of that but again, Fortunately the really intellectually challenging stuff. We've already done so it'll just be a matter of finding good people to do the manufacturing and it and.
But as we move forward and then I've also got aspirations to moving to other markets relative to not just the U S opportunities definitely and global opportunity.
And so you'll see us certainly unconstrained and like a lot of time and effort right and I'm looking at Europe, which is currently the largest EV market and the world possible, you'll see we might see expansion there before we do so and you'd like to say, it's I don't know yet and some of this will be driven by demand and then just to answer your question on money. We you know we have more operating capital and be proud of at any time in our history I think.
Anybody would agree with very good at managing money and spending it wisely as I tell everybody if it doesn't make the product make the product Bachelor or sell the product we don't invest in it that's our mantra and that's worked for us. So far so we have plenty of operating council and no debt at all and that would put us in a position to do what we need to do to to scale up.
And don't need to raise money at the moment, but I certainly would if it if it appeared to make a strategic sense.
And you know to grow the business and I say all of our existing shareholders.
None of that is.
And none of that is surprising because you're always ready and ahead of the curve.
And and.
And as.
As a as a management and C E O and I'm head of your team, which is extraordinary and.
You are 1 of the finest Ceos I've had the pleasure of running into and 40 years and I can't say, we're trying to do you think you and I got out of watching you do this all day long every day.
But I have 1 thank you very much from it as well.
Well sure because it's true.
What's the story and what is the risk to beam global.
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Cash flows or others.
Milligan mile batteries, and and what's going on with that technology.
Worldwide, Great news for us its great news for us anything at all that and that increases the adoption of electric vehicles is great news for us, but the key thing to understand about this Frank and everybody else is that it doesn't matter how much capacity of battery housing. It you still have to put a certain amount of electricity and the vehicle to pro or the number of miles are going to do.
And all electric vehicles get between 3 and up and for Saddam zone between 3 and 4 miles per kilowatt hour and.
And climate environments and.
Whether or not they have a huge and long lasting batteries are smaller batteries and won't make any difference they'll fill up the channel. It's the same amount at and charge and as the business that we are and we're not and the business of the Ah.
Selling boxes into cars or anything else, we were and the business of charging and all of those vehicles will require the same amount of charging regardless of how good their batteries. So it's nothing but good news for us.
Right and thank you my questions.
Sure.
And next question is from Bill Crisp angry with Needham. Please go ahead.
Yeah.
Good evening everyone.
That's why I think a couple of quick questions first off.
And instead of winter defined how large a day jeeps Atlantis opportunity can be lovely royalties E V. Our southern initially being placed and I know I recognize and I'm asking a hard question, but is there any context you can provide in terms of how many you create and hence they plan to place teens. These E V Arps and they have plans.
And the pacings, and the Arps and and cities as well and long lived on.
I think that's a sort of question that probably would be much easier are answered by Salon, and Electrify America and by me and.
The truth is even if I knew I wouldn't be able to say anything about it but.
But look we think it's an excellent product and we know there are lots and lots of locations and it's not just cheap there are lots of other companies, making these new vehicles that are gonna be going off road and everything else.
There are lots and lots of locations around the country are where they're going to need EV charging and where the grid doesn't exist. So we see all of them as opportunities I'm not going to speak specifically about what's the lenses might be up to or anybody else for that matter, but I do think it's pretty obvious and there's a huge opportunity here and don't forget we have the only right.
And we deployed a totally off grid infrastructure solution that charges that supports antibodies electric vehicle charger and antibodies and electric vehicle charging service and so as I said earlier, our time is all of the EV charging companies palms together, because we support all of the good ones ourselves already and as we see more and more of these companies pushing into places where.
The grid doesn't exist, we will definitely be there to support it with our patented products, but I don't think it's worth making too much of that because that will still be and edge case. The simple facts of the matter is wall Street Journal says, there's somewhere between 500001 point from 500 million and $1.2 billion parking spaces and the United States a huge number of them are gonna of E beam.
And and our products are better for even just in the parking lot and turns out not that easy to get power even into a parking lot and so we're gonna be very well positioned for that well certainly take advantage of all the off road stuff, but I think it will be a niche and I definitely don't want anyone thinking of buses and niche product because that's not what we are we're a solution that solves for everybody.
Everywhere that we can see the sky.
Understood and I as I said I recognize it's a hard question to answer and it's probably a better question first and then still and doesn't G.
But as a follow up and you indicated and a quick comment and said the pipeline of orders remains extremely robust. Despite these large orders moving from pipeline to backlog since that pipeline has replenished pretty.
Impressively so 2 questions on that front, 1 it seems like to replenish that pipeline rapidly. Despite these orders moving from pipeline to backlog.
And I'll, probably larger and <unk> orders.
Are those in the pipeline. So can you comment on how large are the and on average. These new orders are what's the size of orders is includes door volume this year versus last year and to.
And you talked about E V standard being launched a debacle here is there anything related to EV standards, and the project pipeline and order and backlog and if yes.
Could you talk about people for pharma and some even standard or the pricing on the day margin expectations on there and how are you thinking about launching that product and back off from there.
Okay. So the second half of your question first there is no E beam standard opportunity and our pipeline at the moment, where we've always been very conservative about this we build products and get them ready to go before we sell them to people and.
Uh huh.
That's where we are with EV Sunday. So we have not included any EV standard opportunities and the pipeline at the moment and I still believe that E beam sounded could end up being our Irish highest volume sales and product maybe by far I'll, just because of the nature of it and not the sort of city environment and it fits into that curbside charging.
Solution, but as I said right now and the pipeline doesn't include that to the first part of your question.
And I definitely think that we're seeing and and and it's not just me and sales teams agrees to think that we're seeing a shift.
From the Onesie Twosies that we've had and the Pos when people have dipped their toe in the box just to see if the product works and you know see if they can get and understanding of it and.
We're now seeing that shifting away from onesie Twosies off to you know is it 45 days and then we believe that turns into 10, 15 visa and 20 P. T therapies and so on and so forth. So there's a general shift and it's and it's positive for us in terms of the increasing size of.
Opportunities coming.
Great and thanks, and that's when it that's all I had and follow up offline for other question. Thanks again. Thank you. Thank you.
Next question is from Gabe Daoud with Cowen. Please go ahead.
Okay.
Hey doesn't how are you alright.
Maybe just on the.
Just following up on the last question around the pipeline I think last quarter.
You would know and indicated it was.
I guess 40 million and with a 70% conversion rate and a $9 million and agreements with the 70 and the 99% conversion rate and I'd imagine that maybe both of those figures are lower now just given a the this quarter you just announced but is there and update on those 2 figures.
Actually I just looking at total pipeline on them I don't have and open in front of me at the moment, but looking at total pipeline I watched total pipeline together around 49 million for a little while there and then it finally poked his head above 50 million I know is back down and that sort of $47 million range because of course, we've added 5 or so from now.
Taken 5 or so million out of pipeline and put it into backlog, but our pipeline and tends to be an increasingly good story for us and.
And that's just going along with the general trends that we're seeing and the industry.
Okay. Okay, great. That's helpful. And then I'll just maybe follow up on the margin side understand that as production levels scale gross margin well will follow but I'm just curious I guess at what production level do you need to see out of your your San Diego facility to to get to that 50% gross margin.
The facility has to be completely maxed out at 2200 units or so or are you just trying to think about the progression there on the on the gross margin side.
It certainly does not have to be Microsoft no, but the some of the gross profit and some of that trajectory to that 50% gross profit will come and buy a big chunk of it well after we well after we reach a certain volume level. So to the point, where we can actually absorb the fixed overheads and and pass that through our gross profit to the bottom line.
A really big piece of this is going to come from.
Reductions in and cost of things like batteries and solar modules and all that stuff and you know you. If you follow the industry gave you know where this is going.
We anticipate a for a further 4 fold reduction and our cost of batteries in the future. It's hard to say exactly when that will take place, but all the industry experts are talking about battery prices coming down into the sort of on average under a dollar zone, we're paying quite a lot more than that right now, but we anticipate taking advantage of those cost savings when they come.
So it's a combination of things, but no we do not need to be operating at full capacity by any means to get to that level. There are several really quite straightforward steps that we need to take them to 2.
To reduce our costs engineering's working on those at the moment and then of course volume is a very big piece of it because you know the fact that it's great to have a facility that's capable of 'twenty to 'twenty ex growth, but its kind of and explore and expensive piece of and overhead.
The offset people and everybody would be blood and delighted when we're using it.
Great. Thanks, that's very helpful.
Okay.
And again, if you have a question. Please press Star then 1.
The next question is from Richard bats, and a private investor. Please go ahead.
Yeah, It does but I don't know Joan Hello.
Hello, Richard.
My question is I know from being familiar with your company for a few years there used to be you had to have around 10 to 11 million and revenue to get to that breakeven part and.
And it sounds like you might be profitable this next quarter, but.
It has it changed or is it still around that area.
Well first of all we're not forecasting portability and nice quarter lets me and let me be absolutely clear about that although of course, we continue to work the warranty and do everything that we can take.
To execute on that the number has gone up Richard and the number's gone up for reasons, which I've been very open about over.
Over the over the last several.
And water and that's because we are now investing and a lots of things that we think are really important for our growth.
For example, our government relations as I mentioned, and our and our and our people. We've increased sales head count we've increased marketing spend and we've just brought and for the first time and our history of government relations.
It's just a.
These are increasing expenses, but I'll tell you what hasn't changed.
Discipline around money, we just do not invest and anything that we don't believe is in the best interests of the shareholders and that means driving growth of the company.
And so you know leap.
Our breakeven number will go up as we make these investments but of course, we believe that the increase and the breakeven number that will be far more than overcome by the benefits brought about by making these investments.
Right, well hopefully the price of batteries coming down will help offset that as well.
It definitely will.
Okay, Alright, I appreciate it doesn't.
Thank you.
This concludes our question and answer session I would like to turn the conference back over to Desmond Wheatley, President and CEO and chairman for any closing remarks.
Thank you, but thanks very much for your questions and thank you to everybody for your time and attention again appreciate your patients and this we could delay and don't forget what I started out by saying that there was nothing to be read into that at all and we didn't change anything in our and our filings as a result of the week of delay and again hats off to Kathy you work very very hard and should produce and to really.
Product beyond that I'm, just grateful to have all of you on board and you and I need your support and I think that she's going to be a great year for us and I'm really looking forward to it so thank you.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Okay.
Yeah.
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