Q1 2025 Beam Global Earnings Call
Good day and welcome.
Speaker Change: To the beam global first quarter 2025 operating results conference call.
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Speaker Change: I would now like to turn the conference over to Lisa Pro Doc Chief Financial Officer. Please go ahead.
Speaker Change: Hi, good afternoon, and thank you for participating and beam Global's first quarter 2025 operating results conference call.
Speaker Change: We appreciate you joining us today and hear an update on our business join me is doesn't Wheatley, president and CEO and chairman of the Desmond.
Speaker Change: Desmond who will be providing an update on recent activities are being followed by a question and answer session.
Speaker Change: 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.
Speaker Change: Forward looking statements involve risks and other factors that may cause actual results to differ materially from those statements.
Speaker Change: For more information about these rest please refer to the risk factors described in beans. Most recently filed Form 10-K, and other periodic reports filed with the SEC.
Speaker Change: The content of this call contains time sensitive information that is accurate only as of today may 15th 2025.
Speaker Change: Sept 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.
Speaker Change: Next I would like to provide an overview of our financial results for Q1 of 'twenty five.
Speaker Change: For the first quarter of 25 of revenues were $6 3 million.
Speaker Change: Our revenues were diverse across commercial entities and state and local governments with a significant rebalancing towards enterprise customers, whereas 53% of our revenues were derived from commercial customers compared to only 16% in the same period in 2024.
Speaker Change: Additionally, our international customers comprised 25% of all revenue in Q1 of 'twenty five versus 11% in Q1 of 'twenty four.
Speaker Change: We believe that this decrease in revenue is mainly a result of the uncertainty in the U S government zero emission vehicle strategy related to the presidential election.
Speaker Change: Our backlog as of the end of Q1 of 25 to $6 3 million.
Speaker Change: Our gross profit for Q1 of 25 was <unk> 5 million or an 8% gross margin.
Speaker Change: Our gross profit of $1 5 million or 10% gross margin in Q1 of 'twenty four.
Speaker Change: The gross profit included a noncash negative impact of 1 million for depreciation and amortization of intangible assets, resulting from the also acquisition.
Speaker Change: And our gross margin net of these noncash items, which of course is non-GAAP was 21% for Q1 of 'twenty five.
Speaker Change: Versus 12% in Q1 of 'twenty four.
Speaker Change: We have continued to recognize the synergies and the positive gross margin contribution from our acquisitions.
Speaker Change: And we expect the company's revenue to grow in the future and our fixed overhead absorption to continue to improve resulting in even higher gross margin.
Speaker Change: In Q1 of 25 are operating expenses of 16 million included $10 8 million of goodwill impairment.
Speaker Change: This impairment was recognized because our market capitalization no longer exceeded our net assets at the end of Q1 of 'twenty five due to the decrease in our stock price since December of 'twenty four.
Speaker Change: Our operating expenses net of the noncash items for Q1, 'twenty five $4 1 million.
Speaker Change: Compared to the Q1 of 'twenty for of $3 8 million, a variance of 200000 or 6%.
Speaker Change: The company believes the goodwill impairment reported in Q1 25 is not a negative indicator of our historic or current operating results and not a negative indicator of future performance as the company has taken significant steps to diversify its geographical reach and product offerings, while focusing on our strategic growth.
Speaker Change: In Q1 25 net loss of 15.5 also included the $12 5 million noncash expense items, such as the goodwill impairment that we just discussed.
Speaker Change: Depreciation and amortization stock based comp and provisions for credit losses, and 25 compared to a net loss of 3 million with noncash expenses of $1 1 million and 24.
Speaker Change: So the Q1 25 net loss, excluding the noncash items, which is non-GAAP was $2 8 million compared to $2 1 million for Q1 of 'twenty four.
Speaker Change: Our cash balance at the end of March was $2 5 million compared to the $4 6 million at the end of 'twenty four.
Speaker Change: And our net cash used for operating activities was $1 8 million for Q1 of 25 compared to 3 million for Q1 of 'twenty four.
Speaker Change: We have historically met our cash needs through a combination of debt and equity financing and more recently through our increasing gross profit contributions.
Speaker Change: I will turn the call over to Desmond to provide a business update.
Speaker Change: Yeah.
Speaker Change: Thank you Lisa and thanks as always for the rest of you who have dialed in to listen to this call or who are joining us through the webinar links.
Speaker Change: Let me start off by making a couple of important statements.
Speaker Change: Sales of our flagship products <unk> increased in the fourth quarter.
Speaker Change: We're navigating our way through a series of uncertainties in the U S market well, we're hitting speed bumps along the way. We now believe that we have the pieces in place to return to growth in this quarter and in future quarters.
Speaker Change: Our battery business is doing some of the most interesting and promising work it's ever done.
Speaker Change: Our international expansion strategy is gaining momentum are bearing fruit.
Speaker Change: We have sufficient cash and working capital to continue to operate the business into the future.
Speaker Change: We have no debt and no going concern.
Speaker Change: We're generating gross profit switch massive noncash items are still north of 20%.
Speaker Change: We have proposals out on items in our pipeline, which would simply not have been possible. This time last year before we introduce our fantastic new product lineup and expanded beyond the U S market.
Speaker Change: Losing the immediate benefits of U S. Federal government sales has been tough on us, but we are managing through that and we've created a foundation for growth, which is resistant to those talks about peoples and which I believe will create opportunities for growth, which far outstrips anything we've ever done before.
Speaker Change: Before I go any further I'd like to apologize for the late notice that we gave for this earnings call. We usually like to give at least a week's notice prior to these calls but in this instance, we have some last minute items clear out with our auditors and as a result, we did not have certainty that we're going to be filing until closer to the state than we would normally like.
Speaker Change: I'm going to start off by talking about the item in particular, which made up late for the call because it's somewhat confusing and while it has no impact on the operations of the company and involves a large number which if you don't know how it was derived could appear to be very negative.
Speaker Change: We have elected in this quarter, it's taken impairment charge against the goodwill, which we've had on our books as a result of the very excellent acquisitions that we've done over the last couple of years.
Speaker Change: To remind you those acquisitions are the acquisition of the battery company in 'twenty to 'twenty two the acquisition of our new European headquarters in factory in 2023, and the acquisition of our power Electronics group in 2024.
Speaker Change: Now each of these acquisitions has been excellent for us the deal structures or good beam global and our shareholders got excellent value and our long term strategy as well as the short term benefits. We're receiving from those companies have been vastly improved as a result of us making those acquisitions.
Speaker Change: We as a management team are of the opinion that those companies are worth a good deal more today than they were when we acquired them, where we're also of the opinion that the whole is far greater than the sum of the parts and the contribution that these acquisitions have made to our global presence and growth is hard to overstate, especially given the uncertainties in the North American market.
Speaker Change: And yet we're going to take an impairment charge against the goodwill that came along with them why would we do that.
Speaker Change: Well the simple answer to that question is the GAAP accounting requires it.
Speaker Change: And the reason that got for targeting requires it is it because our share price has declined since 12 31 24, we are now in the incredible position of trading not just a fraction of our revenues, but actually less than the value of our assets.
Speaker Change: As I say our market cap is now lower than the value of the assets that the company owns.
Speaker Change: GAAP accounting does not allow for that condition to exist and in order to balance those two numbers, we have to take an impairment charge against our goodwill.
Speaker Change: So it's of course very frustrating because we believe and the data certainly box. They saw that as I've already said the value of the companies that we bought and the goodwill that came with them. It's worth more today than it was when we bought them.
Speaker Change: Nevertheless, it's not for us to question the wisdom of GAAP accounting, so we've taken the impairment.
Speaker Change: This impairment was two significant impacts to our financials. The first one is that you'll see a significant reduction in the value of the assets that we hold on our books on the second is that when we take the impairment it actually hits, our P&L in the quarter in which we take it there.
Speaker Change: Impairments about $11 million and so youll see an $11 million reduction in our assets and also an $11 million negative impact to our net.
Speaker Change: No I stress and I stress again that these are non cash items that do not impact the operations of the company at all we do don't actually believe that the any negative impacts of the real value of our assets or the business and as I've already stated, we actually think that the value of our acquisitions is greater today than it was when we made them.
Speaker Change: It's not a simple process, but it's certainly not a trivial matter to put these impairments together and so I'll return to Jim which is lean and our auditors have been working together to make sure that we've done it in exactly the right way.
Speaker Change: That explains why were later than we wanted it to be and having certainty on the timing of our filings and hence later than we wanted it to be on giving you noticed protocol.
Speaker Change: So yeah I apologize for the apologies for the Tardiness and you also have an explanation for these entirely GAAP accounting driven adjustments to our financials, which I stress again are noncash and have no impact on the operational viability of the company or in my opinion its true value.
Speaker Change: I'm going to keep the rest of this earnings call pretty brief because we of course, just four weeks ago went through a comprehensive discussion around our full year 2024 results and subsequent events, which covered much of the first quarter.
Speaker Change: I also talked a lot on that call about our new products and our activities and further plans for expansion.
Speaker Change: But he has been working very hard at being global and I'm happy about the advances we continue to make but I'm not going to take a whole lot of time talking about things that have happened during the last four weeks, if you're looking for more information about our new product portfolio and about our international expansion plans and activities and you didn't get to hear the earnings call. We did four weeks ago, you can still find a transcript of the online.
Speaker Change: And I'm pretty sure there's actually still a recording of it somewhere to give Luke Higgins, our internal IR manager a call or drop him to know if you want somehow finding that.
Speaker Change: One of the things I told you during the last call was that I expected to see a couple of tough quarters.
Speaker Change: The fourth quarter of 'twenty 'twenty four was one of those and so it was the first quarter of 2025.
Speaker Change: Our revenues of $6 3 million were about half what they were during the same period the prior year.
Speaker Change: That's disappointing, but it's not surprising dearth.
Speaker Change: During the first quarter of 2020 for more than half of our revenues came from federal government orders and as I explained to you during the last earnings call. The current administration has instructed the GSA or the general services administration to make no further acquisitions all of electric vehicles or electric vehicle charging infrastructure for the time being.
Speaker Change: We'd be working hard to create new opportunities for the company, which are immune to any variations in federal government order Jade.
Speaker Change: But that's a process not an event and while we're seeing good results from our efforts in terms of an increase in our first quarter orders those orders have not yet resulted in an increase in reported revenue or even a replacement of the revenues, which we lost due to the cessation of the U S. Federal government's investment in electric vehicle charging infrastructure.
Speaker Change: You may hear the U S Marine Corps flying over our offices at the moment nothing I can do about it I apologize.
Speaker Change: In fact, the fact is that our diversification strategies are starting to deliver fruit sales.
Speaker Change: Sales orders in the first quarter were up 23% over the fourth quarter of 2025, even though that did not materially include any federal government orders.
Speaker Change: We now believe that we have the pieces in place to return to growth in this in future quarters.
Speaker Change: We've adjusted our sales efforts to concentrate on Nonfederal prospects and we've taken advantages advantage of the moves that we've been making over the last couple of years to grow our geographic footprint through our expansion into Europe.
Speaker Change: In fact international revenues contributed over 25% of our first quarter numbers and Q1 is typically the slowest quarter of the year for the legacy businesses, which we've acquired in Europe, I should say, even during the worst quarter, our European operations contributed significantly to our overall revenues and gross profit.
Speaker Change: We generated 41% year over year growth in non government sales, which is a testament to the efficacy of our strategy to grow and expand our commercial business, which as Ive always mentioned before I believe in the future will be the largest contributor being global's revenue profits.
Speaker Change: At the same time, we did still got significant revenue generation from government customers just not the federal government I think this is positive and it demonstrates that while the government federal government is not proceeding for the moment with electrification of transportation state governments municipal mis municipalities still are and they have historically.
Speaker Change: Brinkley contributed fairly large percentages of our revenues.
Speaker Change: There were even indications that several of our state and municipal customers will actually increase their activities in light of the federal government Hesitance, notably California's government is committed to replacing federal activity of maintaining the pace of growth in EV charging infrastructure.
Speaker Change: California continues to be one of our most important customers.
Speaker Change: Similarly, we have good reason to believe that activity with one or more of our significant municipal customers may actually increase for us this year.
Speaker Change: To further demonstrate our diversification strategy is working in Q1 of 2025, we shipped E V arc units arent mobility trailers.
Speaker Change: Energy storage systems lighting pools.
Speaker Change: Smart city infrastructure solutions to locations across California, Arizona, Colorado, Florida, Michigan, Oregon, and internationally in Croatia, Serbia, Romania and Spain.
Speaker Change: We're continuing our strategy of expanding our sales team through the leveraging of our insight sales resources, we have a full time monitor of resellers that our European operations.
Speaker Change: As our vice President of sales. So that's a great deal of time recruiting and training resellers to expand our market leader as well.
Speaker Change: A great example of.
Speaker Change: The sorts of things that the distributors are cooling off is the E. R is today on a full view of the Internet.
Speaker Change: And so nothing out of the defense that used to go to that which is one of the largest defense and security trade shows in Europe.
Speaker Change: E V auctions on prominent display at the center of the show and it's been visited by various public institutions. The department of defense. The Guardia Saville, who incidentally are already big user of zero electric motorcycles, and new charging infrastructure. The Army Navy Air Force and several large industry corporations as well as about 40000.
Speaker Change: In fact 44000 is the latest number I just call.
Speaker Change: We actually have zero electric motorcycles liberating for law enforcement present with E V. Our kind of our partner in electric motorcycle industry zero motorcycles, an American company is with US there as we demonstrate to our beam patrol solution to law enforcement and the military.
Speaker Change: Our partner in Spain healthy made the investment in attending this trade show and transporting any of you out there.
Speaker Change: This is a fantastic example of how our force multiplication strategy with external sales resources is getting beam global's product's tremendous exposure and a greatly expanded theater without us having to invest operational dollars to make it happen.
Speaker Change: Our loved working with Etsy, and they love Austin, our products I'll do everything I can to support them, but the great thing is they don't need a lot of my support their well established aerospace engineering organization, that's been in business for many years and that's fantastic relationships across the globe.
Speaker Change: We're lucky to have them as a partner and they feel lucky to be representing our products to their tremendous portfolio of relationships.
Speaker Change: By the way tomorrow as people deploy you'd be off permanently the Valencia Grand Prix circuit, another first of us, which will come with tremendous exposure.
Speaker Change: So we're making growth in our commercial sector.
Speaker Change: We're continuing to see sales to government entities outside of the federal government and perhaps most importantly, we're laying the groundwork for what we believe will be significant growth in Europe, the middle East and Africa.
Speaker Change: All of this is to say that while our first quarter results are not what we'd like them to be we still feel good about 'twenty 'twenty five we believe that we will see a return to growth in this in future quarters, and we remain confident about our trajectory towards positive cash flow.
Speaker Change: Our gross margins are inevitably impacted by reduced volumes because of the fixed overhead allocations, which has to be absorbed by the smaller number of unit sales. Nevertheless, we continued to produce positive gross margins in the fourth quarter, which that's a noncash items, we're still north of 20%.
Speaker Change: Well, we're seeing some inflationary impacts directly from tariffs and also indirectly from the impact of tariffs on domestic producers were still managing to make consistent improvements in our gross profitability of the unit economics level.
Speaker Change: Now of course, none of Us know, where these tariffs will be at the end of next quarter.
Speaker Change: For that matter at the end of next week, but it certainly seems at the moment. So the indications are that we will continue to see a reversal of the worst impacts of tariffs as the administration finds reasons to reduce them, we certainly hope so.
Speaker Change: We make our products in the United States and we are Barbour compliant, meaning that we are build America buy American compliant. So we're doing all the right things in terms of supporting manufacturing in the United States.
Speaker Change: We care a great deal about and always have.
Speaker Change: But if you make a complex product as we do and if you rely on raw materials like steel and animal aluminium which are fungible, even if you buy those from U S producers like we do the terrorists can still have an inflationary impact.
Speaker Change: Thankfully because we've always positioned ourselves to have you have to have a U S manufactured product those tariffs should be less impactful to us not too many others.
Speaker Change: Of course, our European operations, when selling into Europe or into the middle East or Africa or not affected by these tariffs. This is another reason that we are focusing on growth in these very large and very promising markets.
Speaker Change: Just next week I will be returning to the middle East, we're spending time in Jordan, where our new beam well product will be demonstrated to the Royal Jordanian armed forces as a precursor we'd hope to its first deployment in Gaza.
Speaker Change: Meanwhile, arrived in Jordan about a week ago and is in the process of being transported to a royal Jordanian armed forces facility on them on the capital of Jordan.
Speaker Change: I'll be there to take meetings with military and other government officials and dignitaries and to demonstrate the efficacy of the product by showing them. How we can convert saltwater into freshwater provide electricity for cooking in the refrigeration of medical supplies as well as showing off the highly ruggedized electric scooters bundled with it which will provide mobility to the people whose job it is to deliver aid.
Speaker Change: Not highly distressed region.
Speaker Change: The answer is of course, a fluid and constantly changing environment, but we're confident that whether age is delivered by Ngos or by U S contractors working with the Israelis are products can provide essential support to their mission.
Speaker Change: They will need rapidly deployed electricity freshwater in mobility, and they're gonna Wanna be able to provide that without relying on centralized grid infrastructure, which no longer exists.
Speaker Change: We have a long and successful history of deploying infrastructure for military and civilian applications, which solve for those needs. We have an American made product and we have excellent relationships in the region.
Speaker Change: Deploying being global small jobs in that region will provide a great deal of benefit to everybody involved in the crisis is also is also providing a highly visible demonstration to assist in the growth of the more commercial aspects of our business there.
Speaker Change: When I leave Jordan I'll go to the United Arab Emirates, where we're working to create opportunities, which we believe will result in significant sales of our products in that market.
Speaker Change: Many of you will be aware that there are some very large projects underway in the Gulf States, which are ideally suited to benefit from being global products.
Speaker Change: <unk> city in Abu Dhabi, as one example, Neil and Saudi Arabia is another you spend five minutes googling those projects I'm certain you'll come away with the impression that they create fantastic opportunities for being global and everything that we produce that's why I'll be returning there again directly after my trip to Jordan.
Speaker Change: As I mentioned earlier, we continue to be very happy with the contribution that we're getting from the acquisitions that we've made that's been a couple of minutes now talking about our battery business we.
Speaker Change: We continue to advance our battery programs with a strong focus on high performance safety critical applications. Our team is actively delivering next generation battery systems to defense customers, while continuously developing and quoting additional phases of new programs that push the boundaries of power and performance.
Speaker Change: These efforts are driving innovation in thermal management, where our proprietary phase change composite or P. C. C. No paired with active cooling is delivering levels of performance and longevity. We believe are unmatched in the industry.
Speaker Change: In parallel we're seeing strong momentum across multiple markets. We're working with two major automotive companies on next generation battery solutions for their recreational power sports and micro mobility segments.
Speaker Change: And marine defense applications were exploring underwater energy storage opportunities, where our proprietary PCC technologies offer significant advantages over and particularly for drones.
Speaker Change: By potentially eliminating the need for traditional active cooling systems, we can reduce system complexity, while enhancing reliability and energy density critical factors in demanding submerged environments.
Speaker Change: This innovative approach positions us to deliver a high performance solutions that meet the unique challenges of Marine defense operations.
Speaker Change: The commercial sector, a battery systems are a natural fit for the glory growing E. T argue market, where the shift away from diesel engines aligns closely with our <unk> business.
Speaker Change: We also continued to support industrial customers with solutions for automated mobile robots guided vehicles and electrified machinery.
Speaker Change: All of this reflects our growing reach and the versatility of our core technology across multiple high tech and high growth sectors.
Speaker Change: These fantastic advances came about as a result of the acquisition that we made in 2022.
Speaker Change: In fact, we have nothing but good results coming from all three acquisitions that we made going.
Speaker Change: Going back to the comments I made at the beginning of the call you can see why the beam global management team rather than thinking that there is some reduction in the value of the acquisitions that we've made in fact believes that there weren't far more today than they were when we first acquired them, particularly when looking at the contribution that they make to the whole company.
Speaker Change: Wrapping up I'll, just say again, our sales are growing.
Speaker Change: We believe that we have the right pieces in place to return to growth in this quarter and in future quarters, we have no debt sufficient cash and working capital and opportunities created by our new products and international expansion, which are greater than anything that we've ever confronted in the past.
Speaker Change: The public markets continues to be very challenging for all companies involved in the electrification of transportation and sustainability industries in the United States I.
Speaker Change: I do not believe that the situation will continue forever and in the meantime, I and the entire being team are going to continue to execute on our plan. So that when the market does turn around as we believe it will we are well positioned to take advantage of the discipline and enthusiasm that we've always had for our competitive edge and growth in industries, which are both fundamental and massive.
Speaker Change: Yeah.
Speaker Change: That concludes my prepared remarks, I'll now turn the call back over to the operator and take your questions.
Speaker Change: Operator.
Speaker Change: Now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone. If you are speaking if youre using a speakerphone. Please pick up your handset before pressing the keys if at any time. The question has been addressed and you would like to withdraw your question. Please press Star then two.
The operator: The first question comes from Ryan thinks from B Riley Securities. Please go ahead.
Ryan: Hey, Jasmine, thanks for taking my questions.
Jasmine: Yeah, Ryan how are you.
Ryan: Good. Thank you curious, how you're thinking about product mix between <unk> and new products in 2025 or maybe over the next couple of years.
Ryan: Yeah, So I'm quite enthusiastic about the about the adoption of some of our new products.
Ryan: First time discussions with people in law enforcement about beam beam control, which is our.
Ryan: Police motorcycle and charging infrastructure solution I've had similar conversations with people.
Ryan: People about beam bike, which is our electric bicycle and charging infrastructure solution and Ah Yeah, and frankly, the same thing goes for being spot, which is our new COO.
Ryan: Beside charging product.
Ryan: In every instance people are very enthusiastic about these products and you know who've been bikers concern, sometimes it's resorts that want to offer electric bicycles to the customer sometimes it's large bike sharing organizations that are transitioning from pedal bikes to electric and discovering how difficult. It is to deliver an electrical circuit to some location in the middle of a city to charge those bikes.
Ryan: So I'm I'm really enthusiastic about that I, certainly think that the remainder of this year, we're gonna start to see the orders come in for those products and then moving into 2020 six and onwards, I I actually expect to see the mixture.
Ryan: Even I I.
Ryan: There's still a huge market opportunity for <unk>, we haven't even begun to scratched the tip of iceberg, particularly once we start getting into middle East in Africa, and other places, but I do think we're going to see an awful lot coming from these other new products and then beyond that we are still seeing growth in the legacy businesses that we've acquired so are our street lighting and smart cities.
Ryan: <unk> products through our European markets, we saw growth in not through 'twenty 'twenty four we're seeing growth in orders for those products this year and again.
Ryan: Again, we'll be taking those out you have that kind of Balkan market. Although we're in 18 nations with those types of products, but we will be expanding to the selling of those into the middle East is as well all of this to say Brian is that we're going to get a lot more diverse we have pretty much been a one product one country, one customer a company for a while.
Ryan: E D arc, United States Federal government and of course, it wasn't just one customer, but they certainly have been the lion's share of it for last couple of years, we're now.
Ryan: Producing a couple of dozen products, our battery business is really showing tremendous promise and doing exactly what I wanted it to do right now which is creating highly technical highly bespoke and as a result, all highly marginal solutions.
Ryan: For for really fantastic customers military and civilian applications. There. So we're gonna have a lot more diversity with that diversity will come a reduction in the risk from impacts from large customers.
Ryan: The fluctuations in their orders as we've seen them in the federal government. This time, but also with the varsity will come a lot more opportunity for growth.
Ryan: Part of the reason I feel so bullish about the remainder of this year and particularly moving into 'twenty six 'twenty seven.
Ryan: I appreciate that.
Ryan: And as a follow up understanding there's a lot of puts and takes here, but how should we think about your margin progression as your.
Ryan: Ex U b arc products and international sales grow in terms of mix.
Ryan: Yeah. So we're getting again, we're getting positive contributions.
Ryan: From our portfolio of acquisitions. So that's good.
Ryan: Our E P. Our gross margins right now the unit well actually not the unit economics level, they're up still up in the 40 and 50% range.
Ryan: Our gross margins net of noncash so non-GAAP gross margins taking out the noncash noncash contributions from amortization of intangible assets that sort of stuff are still north of 20% I've always said that we will get to a 50% gross profit with the with the E V I'll can I.
Ryan: Again, we're pretty much there was a unit unit economics already and we just need enough volume to solve for that but the good news is being patrolled beam by beam scoot. Those are all based on the E. R platform. So the more of those we sell the more volume that we get out of all of the major components and manufacturing processes for E V O. So in other words, if we did.
Ryan: So it isn't been bikes, it's like doing a thousand E V O X, except we get more revenue and more margin for bean bites and even more revenue and margin for being patrol so.
Ryan: I think you know where were we.
Ryan: What we've seen in this quarter is because we had a reduction in revenues because we missed that one half of our expectations because we didnt get the orders that we thought we were getting from the feds are we've seen the fixed overhead allocations eat into our GAAP gross profit what we haven't seen is any lessening of the gross profit that we're getting at a unit or the uneven.
Ryan: The noncash level.
Ryan: What what's what's interesting about that is if you look back historically.
Ryan: In previous quarters, when we've had $6 million six six and a half million dollars worth of revenue we've had negative gross margin because the overhead allocations were so significant oh on that number of units supposed to take away. It would take us into negative territory. In this instance, we did that much revenue at 8% GAAP and 20% that's a noncash gross profits, which shows you that we have.
Ryan: <unk> retained the improvements to gross margins that we've worked so hard to get them. When we get back to volume then you'll see us domestically increasing those gross margins at that level and as I say my goal is still to get to 50%. It's really is a volume a volume game, yet and it's not just a volume game because if things.
Ryan: So bad allocations is also anybody that runs a manufacturing facility will know are also due to the fact that you know the more the more stuff we buy the more buying power. We have the more power, we have to get cost reductions and other concessions from our vendors.
Ryan: No.
Ryan: I'm I'm I'm sanguine and feeling good about the about our gross margin, particularly in light of the fact that we've had this this low volume quarter and still maintained our you know.
Ryan: 8% GAAP gross profit and 20 plus percent net of noncash items.
Ryan: Great I appreciate all that detail I'll turn it back.
Ryan: Okay.
Speaker Change: As a reminder, if you have a question. Please press star one. The next question comes from Noel Parks from Tuohy Brothers. Please go ahead.
Ryan: And you know how are you.
Ryan: Okay. Thanks.
Ryan: You've got a couple and I was wondering could you talk about where manufacturing capacity scans in Europe at this point.
Ryan: Yes so.
Ryan: You didn't ask me, but let me start off in the United States. We I've always maintained them I still maintain where you can get up to about 4000 units a year. If we maximize our the facility we have in the U S which is.
Ryan: 50, 55 zero, so I was in square feet under roof in Europe, we have 250000 square feet underneath five five times more under under roof right now and then six acres of land that we can build on inexpensively and with a great deal of assistance in.
Ryan: And help from the from the local authorities. So in other words, we won't have to deal with.
Ryan: Permitting and all that sort of.
Ryan: The stuff that takes a long time in California and in the U S. In general So just based on that metric alone. We could do about five times as many units in Europe now of course, that's that doesn't happen overnight.
We're quite busy in Europe, right now already with the legacy business again that grew in 'twenty 'twenty four and it appears to be continuing to grow this year.
Ryan: But we do have a tremendous amount of opportunity to expand there so at the moment.
Ryan: We're getting this question a lot which is a good thing because if some of the opportunities that we're looking at you know could we produced several hundred units or get up into four digits and not a European market supply chain will be the biggest hurdle for us where that's concerned you know there are certain items that we have to acquire some of them come from Asia as I said in my comments, although we're you know.
Ryan: In the U S. A barber compliant, but it's still a complex product, there's still supply chain to overcome and some of that by the way is in power electronics and that is another reason I made the acquisition of apparel electronics firm last year was because I want to start.
Ryan: And the same thing that we did with batteries, we had supply chain concerns with batteries back in 2020. One so I acquired a battery company in 2022, and we haven't suffered that concern since similarly with power electronics, we've acquired a power electronics company now they will start to produce power electronics bespoke for our our our equipment, which will make the equipment batch are less expensive.
Ryan: To produce but also defend us against these supply chain concerns and they are in Europe.
Ryan: All of that to say, we can we can quickly get to a point, where we can match U S capabilities and then beyond that expand very significantly.
Ryan: What we're what we're you know.
Ryan: Well when we talk internally about this you know where we would consistently having these conversations what will happen when somebody comes to US and says we want 1000 units and we want them very quickly just like when the U S Army Saint Joseph 71, 370 units and we want to very quickly.
Ryan: Well frankly, we were a little bit late in delivering that but we we we got them. All we got U S. Army all those units before they could get permitting to do a construction site for the grid type stuff and that's my response, where are we where they started and units orders. It comes on we will ramp up very quickly.
Ryan: Okay, great. Thanks, and you know I hate to.
Ryan: Get in the business of.
Ryan: Bad things, but I'm just thinking this time this year's we're heading into summer in the northern Hemisphere again.
Ryan: And you know potential for no.
Ryan: Climate related prop.
Ryan: Problems.
Ryan:
Ryan: And with your broadened product line I'm, just wondering are there going to be sort of new examples are a new parts of the resiliency thesis that you think might might come to the floor.
Ryan: This year.
Ryan: Resiliency is a very significant piece of our of our business people.
Brian: People will qualify refer to us as an EV charging company, we're not an EV charging company, we we have to make products, which enable EV charging companies to deploy their chargers without construction or electrical work I'm very importantly in a way that doesn't require extra capacity on the grid and also continues to operate during blackout, it's I'm Brian <unk>.
Brian: That's a big part of the resiliency play I mean, the largest single order we ever received in the state of California was from the office of emergency services wasn't from an EV group or something like that was the oes that gave us our largest ever thing, but they're they're responsible for making sure there's infrastructure in place for wildfires earthquakes whatever law the disastrous come down the pipe.
Brian: U S Army, New York City Marine Corps, all of these entities buying our products because we provide a source of electricity, which is immune to blackout, some broken out or any other kind of centralized failure to do with the grid.
Brian: Last year during Hurricane Helane.
Brian: We received a photograph from our customer down there the U S. Army I think it was central to photograph of our units operating in eight feet of storm surge. So that's to say that our units were actually in a location, where the seawater was eight feet above the ground.
Brian: I'd argue that we're continuing to operate where flood proofed benign enough seats and we have survived Hurricane force category 585 mile an hour winds. So those all of those things are meet our very important resiliency aspects and by the way. It's one of the ways that we're endeavoring to to make inroads with the new Trump administration is pointing out to them.
Brian: We're not tree hugging E V driving hippies over here, we're making disaster preparedness tools that enhance American energy security and are you using our own resources. So the resiliency part is gonna be a very important part of our business. It is in the middle East you might be surprised to know that when I was in recently in Dubai and Abu does.
Brian: It's not a great deal of time talking about the fact that our products are flood proof.
Speaker Change: People listening to this call them I think it's crazy.
Speaker Change: We're talking to a place where they pictures nothing but burning desert, having flooding problems, but in fact during the last 24 months, both Abu Dhabi and Dubai I've had very very severe flooding events, where massive amounts of infrastructure were destroyed.
Speaker Change: Uh huh.
Speaker Change: It was very expensive and very disruptive in class human lives our products are a perfect hedge against those sorts of things. So yes, you should continue to see us heavily emphasizing the resiliency of our existing product set beam well as of course. The Ultimate example of this here's a product that we developed to go into Gaza, because it will provide them with fresh water.
Speaker Change: Electricity and mobility.
Speaker Change: Not a crisis environment, but it's equally valuable in a post hurricane environment in Florida, where gained ground water supplies electricity and other another utility type infrastructure have been destroyed we can deploy beam well in less than an hour and provide a community with drinking water. We're not we're not gonna be run in a car.
Speaker Change: Sure.
Speaker Change: Something like that but we will provide them with clean fresh drinking water and electricity on mobility without relying on any supply changed at all have been well is the ultimate expression of our resilient resilient and see our products right now and again, while it was while it was designed to assist humanitarian efforts, but we're not giving that away we're selling it but.
Speaker Change: But it was designed to for humanitarian efforts and war zones. We also have now understood from the various offices of emergency services and others that we've talked about has a great deal of appeal in places, where natural disaster and all those sorts of things like that take place. So.
Speaker Change: Sure, Yes, resiliency will be a major part of what we're doing I think you'll see us continue to invest in and making hardened products for these types of environments and that's also true in our battery business.
Speaker Change: Great. Thanks, a lot.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: [laughter].
Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Desmond Wheatley for closing remarks.
Desmond Wheatley: Thank you again all of you who have joined thanks for continuing to fall and support this fantastic company.
Desmond Wheatley: We thought it was rocky couple of quarters and as I said that that's disappointing, but not surprising is in no way an indication of where we're going though on the country.
Desmond Wheatley: Good news is I did get a little ahead of this although I must say I didn't see it coming but I did get ahead of this with our European expansion.
Desmond Wheatley: Sure that we have diversification and product offering in a geography geographic markets to approach them.
Desmond Wheatley: That turns out to have been quite good defensive play for us and I think we'll really see the fruits of that in the coming quarters. So it's still a great time to be beam. It's tough, we're just going to stick to this and and yep.
Desmond Wheatley: No panic, frankly, and we aren't we're going to continue to work very hard.
Desmond Wheatley: The whole team is we're just going to execute where were paying attention to things that we can impact and not so much things that we can impact the broader market conditions or or or some of the the.
Desmond Wheatley: Adult level government decisions that are being made but we're still executing and we're still shipping product in and as I say our sales have grown.
Desmond Wheatley: And we we are looking to be looking forward to returning to growth in our in this in future quarters.
Desmond Wheatley: That's where all our focus is so again, thanks for your attention and thanks for your time. Thanks for your questions and we look forward to keep doing what we're doing never hesitate to get in touch if you've got questions call Us E Mail us I'm I'm I like to make myself available, particularly to our shareholders and our analysts so be in touch anytime you want to and we'll we'll trying to call me just remember I spent a lot of time in.
Desmond Wheatley: She got and traveling in and at the end of next week I'll be spending Memorial day 12 hours ahead of yours will be the middle of the night. When it is literally a day just bear that in mind, but otherwise I'm always willing to talk thank you.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.