Q2 2021 Beam Global Earnings Call
[music].
Good afternoon, everyone and welcome to the beam Global second quarter, 2021 financial results and corporate update conference call.
All participants will be in a listen only mode should you need assistance, let me see you know a conference specialist by pressing the star key followed by zero.
After todays presentation, there will be an opportunity to ask questions.
I'll ask a question you May press Star and then one using a touch tone telephone.
Withdraw your question you May press star into.
Please also note today's event is being recorded at this time I'd like to turn the conference call over to Kathy Mcdermott Chief Financial Officer Ma'am. Please go ahead.
Thank you good afternoon, and thank you for him because he participating and being global conference call for the second quarter of 2021. We appreciate your time today and joining us for the call and joining me is Jasmine Wheatley President CEO and chairman of theme that's won't 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 beams expectations for future performance or operational results forward looking statements involve risks and other factors that may cause actual results could differ materially from those statements for more information about these risks please refer to.
The risk factors described in beans, most recently filed Form 10-Q, excuse me 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 August 12, 2021, except as required by law being disclaims any obligation to publicly update.
Or revise any information to reflect events or circumstances that occur after this call.
Next I'd like to provide an overview of our financial results for being second quarter ended June 30th 2021.
For the second quarter of 2021 view, we reported revenues of 2 million 121, 98, a 46% increase over 1 million $4.55, 158 reported for the second quarter of 2020 revenues for the first six months ended June 32021 were 3 million $4.93 for 90.
A 26% increase over 2 million $7.72 to 10 for the same period in the prior year.
During the second quarter, we deployed the first seven up 52 units ordered by the state of California, and we shipped two units on the New York City contract.
We also shipped the second of our latest generation of solar tree products to a customer in California, which will provide charging for full sized electric buses and heavy duty vehicles, primarily for the construction industry during.
During the second quarter and year to date, we continue to have strong sales to municipalities.
We increased sales to federal agencies, utilizing our federal GSA contract and we believe that trend will continue as a result of increase in federal funding and grant opportunities for EV infrastructure.
We also increased our sales to enterprise customers and expect this to continue as employees return to offices.
As of June 30th 2021, our contracted backlog was approximately $3.7 million.
The gross loss in the quarter ended June 30 of 2021 was 273877 compared to gross income of 55336 for the same period in 2020.
For the first half of 2021, our gross loss was 422000.1997 compared to gross income of 15695 for the same period in 2020.
The increase in gross loss was primarily due to an increase in costs for the new Edr Twenty-twenty system that was launched at the end of 2019, we expect to reduce these costs over time.
Also being negatively impacted by increases in steel prices and shipping costs due to high demand.
As we increase our production volume, we expect to improve our fixed overhead absorption and improved labor efficiencies.
Operating expenses were 1 million $3.69, 010 for Q2.2021 compared to 888456 for Q2.2020 opt.
Operating expenses for the first six months of 2021 was 2 million $4.71, 685 compared to $1.790 456 for the first six months of 2022.
The increase in operating expenses was primarily due to an increase in noncash compensation expense for stock option expense investing a director shares.
And increased sales and marketing expense to support our revenue growth.
The net loss for the second quarter of 2021 was 1 million 641, 788 compared to 833957 for the second quarter of 2020.
The net loss for the first six months ended June 30th 2021 was 2 million 892, 597 compared to $1 million 776, $4.78 for the same period in 2020.
The increase in net loss was due to the increase in gross loss and increased operating expenses.
At June 32021, we had cash of 25 million to 308606 compared to $26 million 702008 O. Four at December 31.2020.
Cash decreased primarily due to year to date operating cash usage, partially offset by the exercise of warrants.
Our working capital increased from 28 million or 63.320 at December 31, $2000.20 million to $28 million 177437 at June 30th.
2021, and with that I'll now turn the call over to Doug Whitman.
Alright, thanks very much.
Kathy and thanks, everybody for joining us today for your continued support and trust in my.
My favorite company being global.
The last few months, you've been really good for the electrification of transportation and also good for BMD.
Since the end of Q1, we received the largest order in our history.
Pipeline increased dramatically.
Maintaining a healthy backlog sets a world record.
Added to the Russell 2000, and growing our business across federal state municipal and enterprise customers, while receiving follow on orders from two of our most important accounts.
Most other brands.
In the second quarter, we generated more revenue than in any second quarter in our history, even as the country is still struggling to recover from the Covid pandemic.
Q2 was a record second quarter from a revenue point of view, but it is a record that we look forward to breaking again and again.
As of June 30th.
First want revenue was recorded on the contracts you've signed into backlog when combined equal more than all of the full year of 2020 revenues.
We expect all of our contracted backlog to be converted to revenue within 2021, with one or two possible and I think immaterial expectation exceptions.
Said another way by midway through the year, we have sufficient revenue contracted backlog to be 2020, our previous best year was six months remaining in 2021 to continue to to the largest pipeline we've ever had.
That pipeline into backlog and of course revenue.
I'm convinced you to you for some time, but I was confident that we would start to experience an acceleration in the adoption of electric vehicles and as a result, an increased urgency and the requirements of electric vehicle charging infrastructure.
I believe that we are beginning to see that acceleration within the broader transportation electrification industry and importantly in the order velocity on shortage issue to be.
Increased urgency and demand for EV charging infrastructure is core to our investment thesis and to the product portfolio, which we developed.
It's because we're confident that it will be an increasingly rapid requirement for EV charging infrastructure and thats the traditional methods of deploying and supporting in ground and utility grid power and infrastructure will be insufficient.
That we've developed a product and invest in the future we see coming.
Receiving the largest order in our history from California's Department of General services was I believe no one isolated incident, but rather a harbinger of things to come.
Let's start with seems to be being backed up by the realities of our order book.
Whereas in the past we've seen often orders for one or two units. We're now also seeing single purchase orders for multiple units. For example, we recently announced the Ventura County placed an order for 10 units.
The Tennessee Valley Authority order for reveal 2000, Twenty's until mobility transportation systems, which generally only people with large fleet order.
Uh huh.
And looking at our pipeline I can clearly see that these types of orders rather than being a normal ish are increasingly becoming the norm.
Also interesting.
While our previous orders were heavily weighted towards municipal governments, we started to see a return to end consumer pipeline from enterprise customers as.
As well as growth in state and federal orders.
We did expect that is corporate America returns to the office post vaccine there would be an increase requirement for workplace charging.
I believe that the lack of enterprise orders. We saw in 2020 was simply a pause as people return to work increasingly in electric vehicles any opportunities. We may have missed in 2020 will return this year and next and perhaps with an increased level of urgency due to the lack of activity in 2020, and the increasing number of employees driving the five.
Caustic range of new Evs, which are now available.
Remember that in 2020, we generated more revenue than in any previous year with almost no contribution from corporate workplace charging.
This year is the source of business was a significant contributor to our top line.
And we're not seeing any deceleration in government interest for our products and so I think its reasonable to suggest that as workplace charging activity returns to pre pandemic levels and probably in my opinion much greater levels of activity, but all of that growth should be further accretive to our top line.
Much work as of June 30th was approximately $3.6 million.
That is a reduction from the $5 million backlog I reported during the last earnings call, but that's not alarming.
Backhaul it doesn't grow the business revenue does.
Our job to convert backlog into revenue and we did so during the second quarter, a greater rate than it than any previous second quarter in our history.
A more useful way of looking at backlog is to recognize that June 30, we still had a healthy backlog and one which is greater than the delta between the previous backlog I described and the revenue. We recognize your period visible of course can only be explained by selling and converting pipeline into backlog.
During the previous earnings call I told you that I'd been eagerly watching our pipeline reported sales force as it danced around the $50 million market.
We have never in our history had a pipeline that large it was.
Exciting.
We've strongly indicative of the thrilling future we have in front of us to push through that significant milestone.
Well first of all we did and I'm happy to report you today that our pipeline now exceeds $75 million.
It took us a retired history to get to $50 million and in the last quarter. We've added another $25 million in pipeline.
Tells me something.
Too early in our evolution for us to be able to have.
Accurately forecast when or even how much of our pipeline will convert to backlog. However, as I've mentioned to you in the past we took a fairly conservative view of opportunities, which we hope to pipeline and we have historically had pipeline to backlog conversion rates, which are higher than at least I have exceeded previous businesses.
I do not believe that these conversion rates will deteriorate on the country I think that we're going to see a growing pipeline on our conversion rates will be at least as good if not better than they have been in the past.
There are several contributing factors, which support this belief.
Government tailwind for our industry have strengthened significantly during 2021.
At the federal level President Biden. This committee to electrifying the entire fleet of federally owned vehicles. Some 650000 and all are currently the largest consumer of gasoline in the world.
The largest consumer of gasoline in the world will become the largest electric fleet in the world and I believe that we are well positioned to play a significant role in the provision of the charging infrastructure that fleet will certainly meet with our made in America rapidly deployed EV charging and disaster preparedness products.
We now have a general services administration contract in place, which allows federal agencies to purchase our products without having to go through any competitive process and without having to do technology our company vesting.
While we have sold to federal agencies in the past the process has been laborious and time consuming.
We have already received the first orders from federal agencies, using our GSA contract and observed that the process has been far easier and far faster both for us and for our new customers.
In the last few days the Senate has passed a one trillion dollars infrastructure Bill which includes over $7 billion for the rollout of electric vehicle charging stations.
That's more than it's being spent by the entire industry in its history.
There are other funds slated for the hardening and improving of our electrical infrastructure in general.
Important to remember that our products do not just provide electric vehicle charging infrastructure, but also a secure source of emergency power during blackouts and brownouts.
If you look at some of our more recent press releases you will note that there is an increasing presence of funding from disaster preparedness agencies being directed towards the purchase of our products.
It's long been part of our strategy to create EV charging infrastructure products, which are not only the fastest most scalable lowest total cost of ownership solutions available, but also important disaster preparedness assets and that the continued to provide EV charging and emergency power during the increasing number of grid outages that Americans are.
<unk>.
The United States has a strategic petroleum reserve, our SBR, which was created in the 19 seventies during the OPEC oil prices to ensure that we never run out of oil.
Our diesel or gasoline.
Europe is such an important part of all of our lives and the broader economy that we simply can't afford to be in a position, where we can run out of it.
Electricity is the fuel of the future.
And yes, there is no strategic electric resort.
We're already at capacity in most markets, which is why New York suffers blackout during August when people turn up their air conditioning and the same thing happens in California during gateways.
Of course, we're all aware that there are many other reasons why the power goes out as with amply demonstrated in Texas earlier this year during the cold snap.
Inconvenient and even dangerous certainly expensive to lose power today, but think how much more impactful it will be when the transportation sector is allowing upon electricity as a fuel.
Our products are immune to centralized good periods and continued to operate even during very harsh weather conditions as was demonstrated when we survived both hurricanes Irma and Maria and the 185 mile for our category five wins.
Our products are forming the beginnings of the strategic electric resort, which will be vital to keep this nation's transportation fuel security in the future.
52 unit order, we received from the state of California is an excellent example of this the first of these <unk> systems are already providing rapidly deployed and renewable energized EV charging infrastructure to multiple state agencies across California agencies, like California, and count on the California office of emergency services.
They will also importantly provide a source of emergency power to those agencies and to others, who need it whether the pirates, perhaps off due to public safety power shut offs wildfires heat waves or some other event.
Note that the funding for these 52 units came from the California office of emergency services themselves a clear indication that the state has recognized the value of beam products not just as a rapidly deployed EV charging infrastructure, but also as important disaster preparedness assets.
Governor Newsome announced a ban on the sale of internal combustion engine vehicles, starting in 2035.
This was not a controversial announcement the state of Washington has already done in California, but it's owned by commencing in 2013 and several other states have announced plans to follow suit.
The same time almost every major European nation, as an OEM similar bonds before 2014, starting less than three and a half years from Norway.
US any automotive manufacturer and they will tell you that they cannot build internal combustion engine vehicles for the United States in electric vehicles for Europe.
We're going to electrify this market that's no longer an question Blayne.
<unk> recently reported that U S will need to deploy something in the order of 120000 EV Chargers every months for the next decade, California alone will meet over 200000 publicly available charges every year simply to support government Houston's mandate.
To put that in perspective for the less than 100000 publicly available charges deployed across the United States to date after a decade of work.
It seems obvious to me at least that are rapidly deployed and highly scalable solution, which is not relying upon the utility grid and which provides so much more than simple EV charging infrastructure must play a significant role in this gigantic opportunity.
But it is not just increasing government opportunity, which leads me to feel so confident our pipeline will continue to increase and so too will our backlog and revenues. The fact is I've always believed that this would be a consumer led revolution hen.
Henry Ford's mobile T transform the way consumers access transportation.
Until the model T automobiles had been the domain of elitist people, who could afford handmade and generally rare vehicles. After the mobile T everyone out of car.
One could say that during the last few years electric vehicles have also been the domain of elitist Intel shorts.
Environmentally conscious members of society and cars like the Nissan leaf.
I believe that forward is in 2022 for the second time in its history.
Clearly revolutionized the way consumers view personal transportation.
The introduction of the Ford F 150 Lightning, maybe the most pivotal event in the transition from internal combustion engine vehicles to an entirely electrified fleet.
The Ford F 150 is already the top selling vehicle in 19 states and the top selling pickup truck over 40 years the.
The new electric Lightning will have all the capabilities of its diesel and gasoline predecessors, but it will accelerate from <unk> to $6 four seconds and it'll never required trips to the gas station or expensive scheduled maintenance.
Also priced competitively with other traditional pickups, just a possible for me to imagine a future where U S and indeed global consumers will continue to go to dealerships and select slower more expensive more problem prone vehicles than the fantastic new selection of electric vehicles, which will be available in the coming months.
So the combination of significant government tail winds in investment both in United States and abroad combined with the coming consumer Revolution will ensure that there is a massive need for EV charging infrastructure for the next several decades.
I do not believe that it will get easier cheaper faster or more reliable to deploy grid tied charging as the low hanging fruit opportunities were sufficient electric circuits are available close to places where people part a.
Plucked.
In fact, I believe it will become more expensive more complicated and more time consuming as the demand and urgency increases to put the grid type stuff in the ground.
While it is becoming more complicated and more expensive for the traditional construction and electrical projects reporting solar grid tie charter it will become less expensive more efficient and more rapid for us to deploy our products, which will at the same time become more energy dense and more capable it's inevitable.
We simply have the right approach at the right time to meet the massive and urgent demand, which all of the evidence suggests is coming.
So as I've said I predict that our pipeline will continue to grow but our conversion rates will strengthen our ability to execute on our orders will improve dramatically and profitably as we exploit both government and consumer driven demand.
With that confidence in our near mid and long term future. We've increased our investments in various aspects of our business, which you've seen reflected in our increased overnight costs.
It has to be said that while our overhead costs have increased they are still very modest when compared to any of the other publicly traded companies of our size remarkably low.
We continue to have an excellent discipline were use of cash is concerned and as I've often said if it does not make the product make the product better or sell the product we don't invest in it.
Increased investments are being made in sales and marketing government relations research and development and improvements in our factory, which are increasing our efficiency safety and ability to respond to the growth, which we're experiencing and anticipating.
Our increased investment in sales and marketing is already paying dividends since the end of the first quarter. We received orders for more delivered products to California, Georgia, Hawaii, New Mexico, New York City, Pennsylvania, South Carolina, Tennessee, and Washington.
As I've already mentioned to you we received increased orders from federal and state entities as well as corporate enterprises.
The new salespeople, who we brought on board have the best collateral we've ever produced in our history, along with increasing numbers of policy videos and other tools, which help themselves.
We now have the first of our own demonstration avionics systems, which we're able to transport to customer sites to demonstrate the magnificent qualities of this product firsthand I'm sure we'll make more.
We're going to need them.
A very notable use of this demonstration unit in a couple of others, which when we deploy the EV charging infrastructure in the U S. Marine Corps Electric mobility Symposium at Marine Corps Air station Miramar in the second quarter and by the way Im under the flight line of Marine Corps Air station Miramar from time to time, you may hear a dreadful noise behind me that's the all these magnificent aircraft.
Nothing I can do about it I'll, just try and shoot over it but be aware.
It's sometimes knocks me off my pace, a little bit, but I'll be back with Baidu as soon as I can.
The Marine Corps like all branches of the U S. Military is beginning to electrify their fleets.
Clearly they will not have the luxury of building a grid tied construction project EV charging infrastructure and particularly on tactical environments.
EMS, we demonstrated that we could rapidly deploy resilient EV charging infrastructure in remote locations during stimulation battlefield conditions.
We could probably make a very successful business are doing nothing but supply in the U S military over the next several years.
I can tell you that our products were very well received by the courts and of course now that we have a GSA contract in place, we'll be able to accept orders from them and more importantly, they will be able to place them.
Our made in America product, which offers rapid deployment and highly resilient source of fuel without the requirements for generators or other sorts of infrastructure, which seem to be a very good fit.
Those decision makers Ive talked with the Marine Corps do not disagree.
Another exciting use of our demonstration D. Vioxx was to set the world record for the longest flight in the production of electric aircraft powered purely by locally generated and stored renewable energy.
Towards the end of 2020, we conducted the first ever such test flight to prove that this capability could work.
July we took our learnings from that test flight and set a new world record.
This record breaking flight took place in California and was covered by four major networks and many other news outlets.
We have already received inquiries from Australia, and Europe, as well as the United States for people, who wish to use electric aircraft, but cannot do so because the lack of charging infrastructure and a terrible expense and disruption involved in deploying it and therefore environments, which only much more complicated even than typical street and parking environments.
There are about 15000 airports in the United States I'm certain that they will all have charging infrastructure in the future because aviation is a major target for carbon reduction.
We proved that we can deploy that charging infrastructure rapidly and scalable without going through any of the expensive risky and lengthy permitting construction and electrical process required to enabling ground grid tied charging.
One of the most interesting aspects of our setting this new role record was that we were able to demonstrate that we can use our products originally designed to charge cars to charge an entirely different mode of transportation airplanes.
In the past different forms of transportation that require different types of liquid fuels motorcycles and cars use gasoline buses and trucks use diesel ships use bunker oil and airplanes use jet fuel or currency.
It's fascinating to consider the all these different types of fuel will be replaced by one fuel.
Electricity.
Understanding that it's important to recognize the vast opportunity ahead of being book, we're not just making EV Chargers are products are providing the future of fuel.
Being global tagline is clean mobility for all when we say that we mean, everyone globally and every form of transportation.
The flying on Sunshine World record, demonstrating clearly the our products have the capability to deliver our goals.
Stay tuned for much more from this exciting space.
Government relations as being one of the most significant new areas of investment for us This year.
Obviously with the vast sums of money being considered and planned by the federal government as well as all the activity coming in from the various states. It's very important for us to make sure that we're in front of the right audiences on our voices are being hard where decisions are being made about what sort of infrastructure should be deployed.
There have been times in the past when we find ourselves excluded from opportunities because of some inadvertent language governing the deployments of EV charging infrastructure, which includes connections the utility grid.
Our government relations team, both internally and through the two consultants we are important in D C.
Hep successfully changed our included language in multiple regulations or bills. So that no emphasis is placed upon the importance and value of our mix of off grid and renewable energized EV charging infrastructure.
We're doing a very good job of helping those in government understand how risky it will be to have our entire fueling infrastructure relying upon the utility grid, which we know sales from time to time.
We're hearing from Louis empower the importance of having some significant percentage of EV charging infrastructure off grid with locally generated and stored electricity, which will continue to operate even if theres, a centralized regional or God forbid national failure of the grid.
This has been part of our plan from day, one, but its only been with this investment and government relations that we've been able to put our plan in front of those who hold the purse strings.
I'm confident that the dollars we're committed to ensuring a place at this table will be some of the best investments we've ever made.
Just this morning, I joined our federal funding consultant on a webinar for which we presented the EV charging and disaster preparedness benefits of our products to over 100 registered attendees and federal state and local governments.
I explained the products and our consultant described to many sources of funds available even without the infrastructure bill so those prospects can buy our products.
Fact that were made in America clean Tech EV charging and disaster preparedness makes all sorts of buckets of funds available to us which would not be available. If we did not uniquely provides so much value in one product family.
Our investments in engineering and R&D are currently heavily focused upon improving our product and our ability to produce it efficiently rapidly and profitably.
We've made several changes to the product, which are not evident to the untrained eye, but which improve it and make it easier and less expensive to manufacture it.
At the same time, we've invested in improvements in our factory nemanja modest, but the impacts of very significant both in increasing safety and throughput.
We're also investing in improving our ability to ship our products to our customers with increased efficiency and reduction in cost.
Some of the most significant impact to our gross profitability in the second quarter came from highly inefficient shipping.
$25000 on shipping <unk> units to Hawaii.
On delivery.
Due to the impact on our gross profit for the quarter. This content.
We will not let that happen again.
We've already implemented changes to our shipping processes, which should dramatically reduce our costs and increase our ability to deliver to our customers on time.
Because of our emphasis on cost reduction and improving margins.
Our direct to the engineering and operations teams to focus on improving our ability to produce and deliver our products profitably IMAX.
Im excited by what I see them, achieving and buy the impacts I believe it will have on profitability and throughput.
This is not I mean that we've taken our eye off new product development or increasing our intellectual property portfolio. During the first half of this year, we successfully deployed our new solar tree product, which is currently in use in California charging full sized electric buses.
This product is capable of charging any large sized vehicle all of that to class eight trucks.
Well it is being directed towards the significant growth in what we believe will come from both agriculture and construction equipment as those two industries are called upon to reduce their carbon impact. This is already happening and we can already see both industry and government focusing on those spaces.
The new generation solar tree is a new product development for us and we believe it as a significant opportunity.
We also increased our intellectual property portfolio during the period, receiving another pattern. This time from China for our transforming Edr product.
China is the world's second largest EV market after Europe, it's important that we protect our products and our IP over there, even though I think it's likely that our first international expansion will be a move to Europe.
We have nothing specific in the works, where that's concerned but I've made no secret of the fact that I'm looking hard to expanding to Europe, where our products will work just as well as they do in the United States and perhaps be even more popular.
The EV standards and UA VR products are still on our roadmap with emphasis on the EV side of course, we still intend to bring that product to market as soon as possible, but I have to focus our current engineering attention on the increasing interest in <unk> and our ability to produce it profitably and rapidly.
We're currently in the process of seeking new engineering talent. So that we can attack more funds at the same time.
E V standard will get the attention it deserves and I look forward to showing it to the world when our priorities permits it.
Finally being included in Russell 2000 was an important milestone for this company.
We have no debt.
$28 million in operating capsule, a clean capital structure and balance sheet, and a solid and disciplined management ethos, where fiscal discipline and corporate governance is concerned in fact.
We recently introduced and announce a new corporate government's Portugal, which I and many of the banks and institutions I communicate with believe should be more broadly adopted.
We have ambitious growth plans and the tools and experience to act upon them.
We have a world class board and a proven ability to close contracts and execute on them.
We're continuing to pursue our media funded strategy and I'm happy to report that our partners, who are helping us to sell the driving on Sunshine sponsorship with naming rights network, we're making solid and accelerating progress in moving us towards success in that space.
Our task.
We're doing is brand new and requires the buying from multiple entities in large corporate organizations.
But I think that what we're seeing is that our timing is only getting better because the adoption of electric vehicles and the emphasis on decarbonising global economies becomes more mainstream everyday.
What was an interesting idea just a year or two ago is becoming an imperative and we're ideally positioned to take advantage of it.
I remain as confident as ever that we will be highly successful with this business unit.
San Diego continues to be our focus city for the business, but we do know of other cities, which are both enthusiastic about the driving on Sunshine network themselves and interesting to potential sponsors with whom we've spoken.
The opportunities broadening on eyeglass, none of my confidence that we will get it done.
The combination of increased sales increased pipeline increased funding, both government and enterprise and our increased ability to deliver products either for sale or for rich.
<unk> revenue models like our media strategy is I think very powerful.
Throughout our history, there has never been an occasion, where I felt that the micron the macro trends do not favor our strategy.
What I am seeing no clear and tangible indicators that those trends are turning into orders and revenue for us.
I believe that this will continue and accelerate and I'm champing at the bit to get on with it.
So is the rest of the BMT.
Thank you for your time and your continued support I've never been more excited are enthusiastic about the industries that were addressing or are placing them.
Great time to be doing what we're doing and I believe that it's only going to get a whole lot better.
No. Thank you and I'll turn it back to Cathy for the moment.
So operator would you please queue up for questions.
Ladies and gentlemen at this time, we'll begin the question and answer session to ask a question you May Press Star and then one using a touchtone telephone.
If you are using a speaker phone with you that you. Please pick up your handset before pressing the keys to ensure the best sound quality.
To withdraw your question you May press Star and two once again that is star and then wanted to join the question queue.
Just momentarily to assemble the roster.
I'm just going by the way before we get started on questions I'm just going to say this I'm going to please ask you to restrict yourself to one maybe two short questions Max because I want to make sure that everyone who wants to ask a question gets an opportunity to and then if it turns out that we run out of questions. Then I'm happy to follow up with any of you either own this line or in person.
Anytime.
And with that in mind. Our first question today comes from Craig Irwin from Roth Capital Partners. Please go ahead with your question.
Hello, Craig.
No actually hearing Craig at the moment on my end missed misheard. It everyone is it possible that your phone is on mute.
Well move onto our next question. Our next question comes from Noel Parks from Tuohy Brothers Investment Research. Please go ahead with your question.
Hi, good afternoon.
Alright, and I already know real.
Good thanks.
Just a couple of things you talked about the GSA contract and how much.
That has made the process of.
Your federal procurement easier.
Just talk a little bit about that I'm. Just wondering is it is it a shorter series of steps or just for.
Overall faster process.
Yes, I mean, we as I said in my in my remarks, we've made federal sales in the pumps and it was just agony time consuming they need to have some sort of contract vehicle in place that needs to be competitive they need to do all sorts of.
Looking at the kill does it work now that we have the GSA contract in place all of that vaccine that competitive process technology process company Batching and nothing is done so essentially we've moved from a very time consuming lengthy and uncomfortable process, which frankly, most federal entities don't want to put themselves. They just won't do it they're going to find something that is on the GSA contract.
We're through that now they can essentially point and click to buy our product so.
Again, it's kind of early days the federal government doesn't move quickly is I think we're all aware, but we've already received the first orders from it they do most of their spending in the sort of towards the end of the year end of third quarter and during the fourth quarter, what we've seen during the early stages with the first purchase orders that we received through the GSA is that it was practically seamless.
Certainly when compared to the previous opportunity so that makes it much easier for us, but more importantly, maybe it makes it much easier for them to buy from us and we know that easy is good.
Great.
Could you just talk a little bit more about our recent product improvements you did have an announcement during the quarter that you.
<unk> experienced a 12% increase in the EV charging capacity so interested in that and also you mentioned improvements.
Improvements that are being made to make the product easier to manufacture.
Yeah, I think it's absolutely crucial to understand this it's never going to get easier or there won't be any improvements to digging trenches pulling cables and pouring concrete.
It just it won't and yet at the same time, our products are getting better now this 12% increase in energy density came as a result of our engineering team finding ways to make that brought up more efficient and just essentially put more sunshine into electricity into the car, we will never stop doing that and so the product will continue to get better and better while at the same time the competition the general.
Contracted the electrical contractor the consultant the zoning specialists all the disruption.
Loss that just doesn't get better in fact, it gets worse and harder to do during site. So it's fantastic. If you were to grasp. This you would see our product getting faster more efficient and more powerful while at the same time, what you're going to see is increased inefficiencies and difficulties with grid tied installations as more code has written more and more.
The low hanging fruit slots or taken so that's the 12% efficiency piece of it again, we won't rest on that the other side of it is at the same time.
The engineering team looking very carefully at how do we make the arc.
What steps, we take what materials, we're using and they essentially they are tasked with figuring out ways to make it faster less expensive, but never at the expense of quality and they've made great strides already I mean, it's just as you go down the factory floor and you see the team is putting the products together I do this every day and my question is obviously our questions like.
Is it are we speeding up is it getting easier is it getting better in the response I'm getting from the people who are actually making the product daily Opex, yes, it's getting better it's getting faster that will in turn reduce our costs and increase our a R. R. R deployment velocity and we're going to need that because we as I said with a $75 million pipeline, we feel that it's likely that we're going to start to re.
We have a whole lot more orders and we need to be able to get them out quickly and efficiently and above all profitably.
Okay. Thanks, a lot.
Thank you.
Our next question.
Our next question comes from Greg Lewis from <unk>. Please go ahead with your question.
Hi, Greg how are you.
Hey, guys how are you doing.
Hum.
Thanks, Thanks for taking my question.
Touched on it a little bit.
Around the logistics side of it I know you called out Hawaii.
Clearly, we're hearing a lot about inflation as we think about that base price for the Edr and delivery.
Is there how.
How have those conversations been with customers around potential inflation pressure that youre seeing and kind of as we think about whether it's in the event that maybe some of this isn't transitory what has kind of been the message from customers in terms of maybe that $65000 base price maybe thats the Mt.
Now for a little bit higher maybe if some of your input costs or.
Yeah, It's an excellent question, Greg and just one obviously that we're talking around here all the time, but I got to tell you that you can tell by the fact that I got specific about a specific loss on.
On the delivery, how frustrated I am by the impact of shipping costs had on us during the quarter because it really paints a very inaccurate picture about the direction that we're moving in in terms of.
Improving gross profitability $25000 on a single bloody delivery, it's just infuriating.
However.
I got to tell you something.
And.
With my usual lack of politics I'm going to tell you that it was more us than inflation.
Didn't do a good job of efficiently, saying setting up our our deliveries.
At least that's where the biggest wind is going to come for us and we've already experienced that.
Getting our hands around this we're getting better at using our own deployment equipment not relying on third party carriers, who are reliable is not a word you use when you're talking about third party carriers.
And the volatility of costs, we can get this under control and we've already made great strides to do that in this quarter, we're going to continue to do it and as I said I won't let something like the Hawaii incident take place again.
So inflation is it's exist, where certainly pay more for steel and we use and we don't want to and we're also seeing cost of components coming down.
In the longer term the important things like batteries and stuff like that so I will tell you. This I don't think that the answer to gross profitability with us comes from increasing our sales price I think the answer to profitability comes from continue.
Continuing to do what we're doing which is getting better at making the product and just volume I've said this to you many times before it's all about volume for US we do we pay less when we buy more.
We are overhead impacts or less of the product when we when we buy when we do more product.
And then we just frankly get better at it more efficient and in this instance, certainly where.
This quarter is concerned a great deal of the gross profit loss just came out of inefficiency and delivering the books not shipping to us and not inflationary impact for shipping the product from us to our customers and we know what the problems are and we can solve them and I'm, telling you today, we're going to.
Okay great.
One more final one I mean, clearly it sounds like you are making.
Perry.
Yeah, I guess I kind of wonder.
Hey, you guys have.
Good quarter boosting revenue.
Is there a little bit of chicken and egg maybe with the military as they kind of think about it.
Relying on you to kind of.
For more equipment than you're currently producing.
Just kind of curious as you talk to some customers maybe are they interested in the product, but maybe that may need some more comfort around Europe.
Beans ability to kind of scale often is that has that been a headwind at all.
In the past, yes, there's no doubt about it in the past when we didn't have these sort of big customers like New York City, and the state of California, Cal <unk> and others.
No doubt that people had doubts about our ability to perform however.
We're constantly.
So aging those dose I mean, we're delivering right now.
These 52 units at multiple different agencies across California, Cal fire Callaway asked Kal trends.
These are not early adopters are risk takers and they're buying it brought it and it's not because we are a California based company by the way. They they put competitively saw a product which could do ours can do and selected us now where the military is concerned.
Again, not early adopt adopters.
I mean, it's really incredible even talking to them, but I just had a conversation with some of the military. The other day that said you know got a thousand dollar computer in my hand here, but I cant use it I have to use my 1995 del whenever I won't do military business, you know the kind of joking and laughing about it but it but its true having said that they are under mandates to clean their fleets.
When you're talking about clean up federal fleets includes military all Buck tactical and even tactical is going to go that way, but in the meantime, they've got massive fleets of other vehicles, which they're going to have to go electric with and if you think about the base environment and if you think about the dynamic nature of the way they deploy and all that sort of stuff as I said in my remarks, they cannot go through the process of constructing.
And doing all the other things that are required but grid type stuff in the ground. So.
Whether or not they have doubts about us from our size and everything else like that the need that they have is so acute and so immediate and our ability to fulfill its immediate and doing this demonstration project E. M's was just a fantastic opportunity for US we've got a lot of video and get in front of a lot of people there.
And the congressional interest in that and everything else too. So I can't speak for how quickly they'll move, but but you know like a mighty battleship when they do move you don't stop them, you don't turn them around and I think as I said, we're very well positioned American made product does energy security clean Tech EV charging all rolled into one product that can be rapidly deployed.
Without construction or any of the other risks of our variable costs.
I just think we're very well placed to take advantage of it while I can't forecast how quickly they'll move.
Perfect. Thank you very much for the time everybody.
Right.
Our next question comes from Tate Sullivan from Maxim Group. Please go ahead with your question.
Hello.
Hello, It doesn't.
Following up on shipping and handling just in a queue and where you break out your revenues I see you do get some revenue from shipping and handling is that a negotiation customer by customer as a standard that you include a standard shipping fee and the <unk> or can you just review that.
It's it's more location by location I mean, we do have certain set rates, particularly when we're using our own transportation system. They aren't mobility system, which is a very good way of delivering product at very low cost incremental cost the cost of diesel and the price of the driver.
And the amortization of equipment of course, and we build a trail of ourselves and even sell it to other people. So when we're doing it ourselves and we control ourselves. It's a good enterprise you're right. We get revenue from it we can do it profitably when were doing ourselves where we get into trouble is when we're quoting customers to deliver two locations.
And sometimes it's a month or two later before we get we go there and in the case of Hawaii. They just doubled the cost on us.
Without so much as a buyer lead and we were not able to go back to the customer and impose that cost increase on them and we didn't think it was wise to at this point in our evolution, because we want to evolve into Hawaii and it was important to us to get out there. So there was some there was some sort of more decision making process in that as well. We could have just said no we're not going to do it but of course as you know we're.
Tempting to grow and the bigger the footprint the more we're seeing the more we sell.
I guess you could say in a way that loss was a marketing expense for us and we don't we don't classify it that way of course, it goes it's cogs, but in a way I view it as a as an SG&A cost.
So it's.
There is volatility there the prices have gone up there's no question about that we've definitely seen inflation in transportation at the moment.
I think it is there is an element of a transitory nature to it because there's of course, there's a lot of activity right now, which didnt take place during Covid, which is taking place right now I think that supply and demand will recover that to a certain extent, but the real opportunity here is in within our own control, we need to do more of this ourselves and we need to get better at planning it.
And better at controlling it.
I'm, telling you, we're taking the steps to do that internally.
Right.
Okay. Thank you.
Thank you you too.
Our next question comes from Gabe Daoud from Cowen. Please go ahead with your question.
Hello, Good afternoon doesn't it doesn't.
Thanks for taking the time, taking the questions.
Just curious if you could give us a little more color on the updated pipeline figure and again, maybe it doesn't just help us train.
How this is defined and maybe any kind of color around customer makeup.
Of that of that Ah I think 75 million figure that you mentioned.
Yes. So first thing for me to tell you. So we do not include things in pipeline that we consider not to be realistic opportunities that can move to purchase order.
So we're.
I've mentioned many times before we have a conservative disciplined where that's concerned so anybody who is in our pipeline noticed what the product is knows how it works has a need for it has budget has all of those other sorts of things and what we're endeavoring to take them through the process towards purchase order, it's not casual interest or.
Extrapolating.
Extrapolating what might happen, if we sell to one customer therefore 10, other similar customers might drop into place or any of that sort. So this is real active engaged interest.
The makeup of it there's certainly still an awful lot of municipal and local government, but what's interesting is we're also seeing a significant increase in both enterprise and federal and certainly state governments as well as you know during 2020, a very significant amount of our business came from municipal governments and you know that's fine we're in.
A couple of hundred of them in the 19000 of them across the U S. So I don't mind, taking municipal government business and they all operate fleets and they're all going to have to electrify them, we solve a lot of problems with them, but at the same time the federal interests of course is huge.
The commitments are funding again, our pipeline is filling up with those sorts of opportunities.
<unk>.
<unk> thing they say.
California, just renewed their contract with us and interestingly I did product so they put more of our solutions onto the state contract and Furthermore, made that state contract available to any other state in the Union and when I was on my the funding webinar. This morning, one of the questions I received from one of the entities was is there some contract that we can use we don't have.
The contract with us or some other contract that we can use to buy your products and I said, yes, you can use our GSA contract. If you are a disaster preparedness aspect to it you can use the state of California contract. If you want because it's available to any governmental entity.
The United States. So we're seeing more of a state as well and then as I said, what's really interesting not interesting actually largely predictable.
A lot of the workplace charging that we didn't see last year because no one was going to the office now we're seeing that coming back and frankly, I don't want to blow my own horn, but I did predict that we would see it come back with a degree of urgency because people who didn't do anything in 2020 in the first half of 'twenty 'twenty. One another you know people showing up and there are lots of D vs. No EV charging infrastructure, we like urgency urged.
<unk> good for us because people are in a hurry and we can solve that problem like nobody can and urgency by the way is only going to accelerate.
I noticed in one of your reports Gabe I think one of your proportional charged one that you're putting on that basically forecasting one plug per vehicle for fleet customers well, that's even more aggressive than we've ever said, but but we like those kind of numbers and we think there's going to be an awful lot of urgency there certainly isn't enough power on the grid and there isn't enough trench digging in concrete pour.
To get anywhere near a couple of hundred thousand or 120000 units a month for the next 10 years out there we've got that problem solved.
Thanks, that's been very helpful and then.
Just the driving on Sunshine initiative I know in the prepared remarks, you mentioned does it certainly takes time and effort, but just curious if there is anything else you can kind of speak to around timing.
Whenever I do these calls I know that there are certain things that people want to hear from me. They want to go to the Argos sponsor on the driving on Sunshine network before they wanted to hear that I closed the city and it took me a long time to do that I did it now they want to hear the Argos sponsor. It's taken me a long time to get it done, but I'll get it done and I know I'm going to disappoint until I get it done my apology.
And no one is more frustrated about that than I am, but I'm going to get it done we will get that done what I can tell you is that I'm definitely seeing a change in the risk.
Reception of the story now as I said earlier.
Went from being an interesting concept something thats, becoming more of an imperative I can't go into a lot of detail on that but the answer is it just as I said in my comments. This whoever does this will be a large.
Organization Multifaceted organization and this is something that they haven't done before and touches on many areas of their organizations renewable energy carbon reduction.
Marketing media.
All sorts of different things and we need to get buying from everybody and that is a process.
What I can tell you and everyone else on the call is no one's saying to US. This is a trap idea we're not interested we're not hearing that.
In the interest of full disclosure, we have had two or three organizations, who have said not for us at this time, but that's okay. Because there are two or three of our organizations of several hundred that are available to us. So we are advancing this conversation and I believe is firmly today as I've ever believed that will get it done it'll never be fast enough for me or for anybody on the call, but we will get it done the other way.
Area, where I'm gonna get black I knew as an EV standard people want to see is that we're taking out to the market and I do too I love that product I can't wait to get the thing out there, but just understand I'm, a disciplined human being and I know that we need to make profitability and efficiency and excellence in the AVR product to take it to take advantage of the current opportunities that we have right now happened now and then we will go for.
That straight and D V standards, and we'll get that out in the market as well and all anyone who was taught to me personally about that feel free to get in touch with me directly I never make a secret if I get in touch with me.
Understood. Thanks, guys and thanks for all that.
Thank you.
Once again, if he would like to ask a question or rejoin the question queue. Please press star one or.
Our next question comes from Tyler Bailey from Needham. Please go ahead with your question.
No Tyler.
Yeah, It looks like Tyler got the same problem Craig Irwin, how it's Greg if you can hear this by the way I'm wondering here. Your question. So if you don't get it out right now called me.
Tyler same to you.
Mr. Bailey is it possible your phone is on mute.
Hello.
Nobody got you, yes, Sir.
I apologize.
Vikram Barbara No. One took my name and I guess I was waiting for my associate to see.
Hey, that's been I have no reactions are doing well.
I have two quick questions one on the product mix you talked about the pipeline you talked about a prison violence of infrastructure plan and spending on that site and electrification of bus fleets and municipal fleets are you seeing more interest in solar Cree is are you seeing that.
Interest increase in discussions are you seeing that interest in <unk>.
Line of Ards.
Could you talk about the product mix in that pipeline.
Yes definitely so the answer is it's almost entirely E V arc at this point.
Having said that that.
That does not mean that we're not seeing increased interest in solar tree as well. It's not just dollar tree is although we've had solar tree. The name the registered trademark for a long time.
The solar trees that we deployed this year a brand new for US same technologies that need to be at but a bigger form factor.
And so really we just deployed the first of them, we haven't actually officially launched that product marketing.
Gritting their teeth listening to this call, but I'm, even talking about it because they want to launch it in a more efficient manner and we're going to.
But at any rate it's deployed it's working but know that we're not seeing the pipeline is still very largely driven by the edr product and remember whereby the spending is concerned we do level one level, two and DC fast charging with that product also remember that we are agnostic as to the provider of the EV charging solution charge point Blink.
And now Electrify America all of their products are out in the field operating on our products right now we just make their products work with our construction and electrical work and all the other things I've already talked about so DC fast charging to the extent that that's an area of large expense, which I think it will be probably on wisely actually in many cases, but I don't think we can perform that.
Level, two which I think will perform them.
The majority of charging in the future.
We can provide that and level one as well if that's something that people are interested and there is a place for that so again, however, they spend the money we can make the Chargers work, we just do it without the construction of the utility bill or the or the risk.
But the mix is still heavily weighted in favor of the Edr right now and that's why I'm, putting so much emphasis from an engineering operations point of view into increasing our efficiency, reducing our costs and getting the point, where we can pump those things light model Ts very profitably.
Great. Thank you.
And as a follow up investment I fully appreciate not disclosing a whole lot of details about D V standard, but as you may realize we and your customers and the street and investors share your excitement about that product. So you said any any more detail you could share on that front in terms of specs in terms of course margins on that.
And what you'll target.
If you I believe fully understand if you cannot what are the signposts that we should keep in mind.
Look far.
On that front are you looking to file more backend and before you fly until you find those back and she wont disclose more details.
And when should we expect more announcements on that front, we are arguing the process. Thank you.
Yes. Good question, Brian So the answer to your question you sort of answered. It already you can find most of what you need to know about that you'd be standard in our existing patents around it.
Just to give you a broadly speaking my intention is to have the E V standard hub.
Approximately.
Within the same ZIP code lets say a performance that the E V archive, because we've learned that not as a performance level, which is really very excellent where EV charging is concerned. So you know the E. V. E. <unk> is delivering up to 265 driving miles a day without connecting to the grid and remembering that we are really interested in Dr. Our or day.
Billy range replenishment, we don't care about empty full scenarios. They just don't happen if you're an EV driver I've been doing it for 10 years, rather you charge. It let you charge your cell phone. So D. RR daily range replenishment as our target average U S sedan drives 34 miles per day and obtain commuters drive less than 24 miles for the round trip commute so the EV standard.
It will be designed to address that D. R. R. We want to make sure that cars were not trying to fill up empty Tesla or any other questions that are frustratingly get all the time, what we're trying to do is make sure that when people parking their cars they pick up their <unk>.
The E V standard would be capable of doing that the second part of your question, Yes, we will but Dave you said it would be capable for doing that for multiple cars not single not a single vehicle just like E. V. ARCUS No does that answer your second question, we're conscious concern yeah I mean.
Again in this quarter, we were issued another patent we are going to.
To pursue our intellectual.
Equity portfolio, but with the same level of discipline, which we've always had which is number one must create barriers to entry for the competition number two must be something that we reasonably believe we can monetize you will not see US building. Our patent portfolio is simply to have a patent portfolio.
Only to make sure that we can protect the valuable intellectual property that goes into the differentiators, which make our products so excellent.
Great. Thank you that's all I had.
Thanks Vikram.
Our next question is a follow up from Tate Sullivan from Maxim Group. Please go ahead with your follow up.
Hi, Thank you I would say.
Hello.
The patent protection you mentioned, China can you or do you already have patents in Europe as you consider expanding there or is it completely different country by country.
Yes, we do Europe is a different difficult animal the way you get patents in Europe, a difficult animal you basically got so if Europe wide patent and then you select the various nations that youre going to go with it. So we're very careful that we do that because it's bloody expensive and so we're constantly trading alone a tight rope there, but we are of course defending our intellectual property in Europe to the extent that we reasonably.
We're defending it and China as well.
The reason that Europe is a greater emphasis for me at the moment is because it has replaced China as the top E D market in the world.
I'm also more.
Sanguine about our opportunities are developing a new business in Europe than I am.
China, having spent several years I think you know trying to get a good deal done in China.
We were unsuccessful in doing that during the Trump Z spot.
But we're confident that we'll get something done it in Europe as long as it's a good deal and as long as it's done in a sober and reasonable manner, which is the only way I know how to do it.
Great. Thanks.
Quick follow up as well is that most of the sales efforts or is it direct outreach now will shift to more responding to rfps or with the infrastructure plan or how do you see that developing.
There's no question that we anticipate more rfps with infrastructure plan at the moment most of our sales are direct outreach, but there's another aspect to our selling too which is growing and this is what is very encouraging to me inbounds and the past almost every sale that we've made has come as a result of just sweat and blood and tears and shoe leather going out and beating down on opportunities.
We're getting we're seeing increasing numbers of inbounds and of course inbounds are by far the best we know we know that there's an appetite and everything else the minute they come to us. So we're getting a lot more of those we do believe there'll be more RFP activity, but here's the good news. We've responded to several rfps in our history say, California City of New York State of Florida State of Massachusetts.
Many others I can't I, just can't remember them all of them at the top of that in every instance, those rfps, where competitively let and resulted in competitively contracts and in every instance, we were the only vendor that had a solution, which met our specifications called out in those rfps. So we love Rfps I don't Wanna be sole source Thats a target.
On your back I want to win Rfps, because what I have is unique and better than anybody else in the market and we've demonstrated our ability to do that where the biggest and best customers are there.
Thank you Devon.
Thanks, Jay Kreger.
Craig Irwin.
Yeah.
Especially because I know once again, if these prospects.
Okay.
Once again, if he would like to rejoin the question queue. You may do so by pressing Star then one.
Sir at this time I'm showing no additional questions like to turn the floor back over to you for any closing remarks.
So I just want to thank everybody for those questions and everyone else, who is listening who didn't ask a question on of course I want to continue to thank everybody for your support in this company your belief in us.
Our shareholders our number one priority.
Along with our employees and customers of course.
I Hope you can hear from me.
I am not less enthusiastic about my job than I was yesterday over the last time, we talked on the country I'm, having a great time and I think we're off to a fantastic.
Acceleration in the way the business is running here.
So again, thanks for your support and thanks for your time here today stay tuned.
Ladies and gentlemen at this time, we will end today's conference call. We do thank you for joining.
You may now disconnect your lines.