Beam Global Q1 FY2022 Earnings Call

Thank you. Good afternoon, and thank you for participating in Beam Global's conference call for the first quarter of 2022. We appreciate your time today for joining us for this call. Joining me is Desmond Wheatley, President, CEO and Chairman of Beam. Desmond will be providing an update on the recent activities at Beam followed by a question-and-answer session. But first, I'd like to communicate to you that during this call, management will be making forward-looking statements, including statements that address Beam's expectations for future performance or operational results. Forward-looking statements involve risks and other factors that may cause actual results to differ materially from those statements. For more information about these risks, please refer to the risk factors described in Beam's most recently filed Form 10-K and other periodic reports filed with the SEC. The content of this call contains time-sensitive information that is accurate only as of today, May 25, 2022. Except as required by law, Beam disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. Next, I would like to provide an overview of our financial results for Beam's first quarter ended March 31, 2022. In March 2022, we're excited to say that the company closed on the purchase of AllCell Technologies. The addition of energy storage solutions to our EV charging product is a great partnership with many synergies from a sales and manufacturing standpoint. Because this was an asset purchase, the first quarter of 2022 financial statements include the energy storage business for the March 4 closing date through March 31, 2022. It is not included in the prior year comparison. For the first quarter of 2022, we reported revenues of $3.8 million, a 175% increase over $1.4 million reported for the first quarter of 2021, which was the highest revenue quarter in the company's history, in the first quarter that is typically lower revenues. The quarter includes $0.4 million for the energy storage business. Our sales to state agencies and municipalities continue to be our primary market at 69% of total revenues. We also increased our revenues to federal customers based on our increased investment in sales resources and consultants in the federal space. We also saw growth in the enterprise business segment as employees are heading back to the office and looking for EV charging. Gross loss in the quarter ended March 31, 2022, was $0.3 million compared to $0.1 million for the same period in 2021. The gross loss improved by 3 percentage points compared to the prior year as a result of the increased production volume resulting in favorable fixed overhead absorption and improved labor efficiencies and utilization. These savings were partially offset by higher material costs for steel and other components due to supply chain shortages and other inflationary pressures. Operating expenses were $2 million for Q1 2022 compared to $1.1 million in Q1 2021. The increases were primarily due to the addition of AllCell expenses for March, increased investment in sales and marketing to support revenue growth and also increased legal and accounting services partially due to the acquisition. The net loss was $2.3 million or $0.24 per share for the first quarter of 2022 compared to $1.3 million or $0.14 per share for the first quarter of 2021. At March 31, 2022, we had cash of $19.2 million compared to $21.9 million at December 31, 2021. The cash decrease was primarily from operating activities and the cash payment for working capital for the purchase of AllCell. Our working capital decreased from $24.6 million at December 31, 2021, to $21.8 million at March 31, 2022. I will now turn the call over to Desmond to provide the business update.

Well, thank you, Kathy, and thank you to all of you who are listening and supporting Beam Global. I'm speaking to you today from the HC Wainwright Conferences in Miami, Florida, where I have spent the last few days meeting with the investment community. So my apologies in advance for any outside noise as it's not easy for me to control the environment here. But I'll push through whatever challenges come my way, like I always do. 2021 was a year of records for Beam; record revenues, record product deliveries and record sales. We're continuing that record breaking streak as we head into 2022 with a new record for quarterly revenues of $3.8 million, up from $1.4 million in the first quarter of 2021 and up from $3.4 million in the fourth quarter of last year. Product deliveries in Q1 of 2022 were 250% of what they were in the same period of last year. Now this is a metric which tells us much more of a story than perhaps might first meet the eye because Q1 has often been a fairly weak quarter for us. Not surprisingly, in the past, we've crammed all the revenue we came into the fourth quarter to hit full year results and that's typically left us in a position of starting the New Year with low or no backlog sometimes. We certainly did cram a lot of revenue into the fourth quarter of 2021, and it was, in fact, until now, the best quarter in our history. But because our sales growth was so strong in 2021, particularly towards the end of the year, we did not exhaust our backlog even during that record-breaking quarter. On the contrary, we entered 2022 with the strongest combination of pipeline and backlog we have ever had. We also entered the year much better able to deliver on that backlog because of the excellent efforts of our operations and engineering teams in increasing our efficiency and ability to output products. These combined factors enabled us to make Q1 of 2022, apart from being a weak quarter as historically been the case, rather the best quarter in our history with the highest revenues. That increase in revenues and deliveries continued another set of trends that we put in motion during 2021. Our relentless efforts to manage costs and to extract value from every facet of our business and the vendors and partners who support us, continue to pay off in Q1 of 2022. You'd have to be in a coma to have missed the impact of inflation across the economy and across the globe. It seems as if everything is getting more expensive and our observation is that that has been the case during the last several quarters. Our cost structure was impacted in Q1 by increasing cost of inventory, which we encountered during the second half of 2021 and also into the first quarter of this year. Those cost increases span the great variety of materials and components, which we integrate into our end products: Steel, aluminum, copper, battery cells, semiconductors and even mundane items like fasteners and plastic parts all came with increased costs. Shipping, a very large cost component of our business was impacted by higher diesel rates for our internal transportation resources and also by increased third-party transportation costs, which are no doubt being impacted by the same influences we're seeing. And yet, in the face of all of these rising costs, which are outside of our control, we actually had a further 3% improvement in our gross profitability as a result of managing what was within our control. Our teams grounded 3% of our cost structure, while everybody else's costs are going up, cost per unit structure, I should be really specific on that. And I've been reported for some time that as our volumes increase, we'd see a reduced impact from fixed overheads. I've also been reported that labor cost per unit would come down as our production cadence increases. Well, the numbers make reality as of my projections. We've seen at least a 10% increase in our bond costs during the COVID and inflation period, and yet we've reduced our overall cost per unit produced. Combining the 10% increase in bond costs with our 3% improvement to gross margins means that actually the Beam teams had about a 13% impact on total cost reductions through internal actions. And take note that the cost reductions we've caused to happen do not yet include the significant reductions in costs we anticipate as a result of integrating our new battery solutions onto our products instead of using third-party solutions as we're still doing. Those further savings are in our very near future. By the way, we share the opinion of many experts that pricing stability should return this year. And as a result of that externality and our own internal ongoing cost management efforts, we anticipate further improvements in gross profitability as the year rolls on and as our volumes increase. And we certainly do expect volumes to increase. At the moment, our pipeline is well over $100 million. Adding our new battery company pipeline to that number takes it up significantly higher. We're seeing new and material opportunities from both government and enterprise. We've received purchase orders for our products from internationally recognized corporations and we continue to advance opportunities for our Driving on Sunshine sponsored network from similarly recognizable corporate clients. On the government side of the business, we continue to receive orders from municipal, county, state and federal entities. We recently announced that we've been awarded a blanket purchase agreement from the federal government. This enhancement to our previously announced general services administration contract will make it even easier for federal entities to buy our products at a time when their requirements are rapidly increasing and the urgency around EV charging infrastructure is picking up steam. Many federal agencies will be taking delivery of electric vehicles in the fourth quarter of 2022 as part of the administration's requirement to move away from gasoline and diesel. There is as yet not enough charging for those vehicles, time-consuming permitting, construction and electric work make it very difficult to install traditional grid-tied infrastructure on such a short time frame. And the lack of available grid circuit capacity in many of the intended EV charging locations is daily coming to light. It's also important to remember how important resiliency will be to these government fleet vehicles and for all EVs for that matter. Our product's ability to continue to charge vehicles during blackouts and other utility grid failures is an increasingly important selling differentiator for us. Note that many other EV charging companies are starting to add energy storage to their installations, something we've been doing for a decade. But theirs rely on the grid to recharge their batteries; ours do not. Fleet operators get that. And as they become more reliant on EVs, they're becoming less forgiving of EV charging infrastructure that's only as reliable as the grid to which it's connected. Of course these circumstances are what Beam Global's products address in a unique and well-protected manner. Urgency is music to our ears. Lack of utility grid capacity, while it's alarming, is a key ingredient to our success, and it is very real. Resiliency and the importance of maintaining vital fueling infrastructure during disasters is just what we do. In fact, many of the critical cornerstones of our business strategy over the last many years, cornerstones, which previously were not recognized broadly, are now becoming central issues at both a local and national level. I believe we're firmly in the lead when it comes to addressing these challenges, and so it seems to our increasingly large portfolio of customers. If you're looking for proof of how mainstream and recognized our products are becoming, you need to look no further than the front cover of the Federal Highway Administration's NEVI or National Electric Vehicle Infrastructure program guidance document. This document offers program guidance on how the $7.5 billion slated for EV charging infrastructure should be allocated by the states and other agencies who will spend the money. The document only contains one image. It's a photograph, and it's on the front cover, and it's of our EV ARC systems providing DC fast charging at a rest area in California. That's right. Our products are the only products pictured in the spending guidance document. It's a nice picture. Further recognition at the federal level came when Congressman Peters recently named us and our products specifically during a televised house energy and commerce hearing, saying that Beam Global is creating innovative products that will be essential to transportation and energy in the future. The essential nature of our products finds yet another new opportunity to shine this quarter when the Marine Corps and others used it for a wildfire fighting exercise in California, who would have thought of that when first looking at Beam Global. There are just so many areas where reliable power that does not rely on liquid fuels or the utility grid is essential. More and more agencies and corporations are looking to Beam Global to provide that power. Two or three weeks ago, I was with a new very large corporate customer. The person I met with has responsibility for around 500 buildings in the company's network. She's done an excellent job of installing grid-tied charging at many of those locations. And yet, there I was meeting with her, and she told me that, and I quote, "We saved her ass." It turns out that she needs more charging in those locations and it's been reported that there's not sufficient grid capacity on her properties to add more chargers, but she needs them. So she's turned to us. Our EV ARC product is solving her problem. Now I've been commenting on this future certainty for many years, and now that future is here. Just think of all of the buildings across the U.S., which have tapped their capacity and will need more charging in the future. The opportunity for second-wave deployments for us is fantastic. Solving for all of those people who used up their grid capacity in the first waves of EV charging deployments that they did in the traditional grid-tied method. I'm very happy to solve that problem for them because they will need more chargers after they run out of circuits than they needed when they used up what was available to them. By the way, I just took delivery of a brand-new Rivian R1T pickup truck this week. I think I made the down payment about 2 years ago, and I can tell you it was worth the wait. Zero to 60 in 3 seconds in a pickup truck. You have to experience it to believe it. And when you do, you will be certain of one thing, EVs are going to own the future, and they're going to do it a lot sooner than many anticipate. That means that there will be a whole lot of demand for our products because the EVs will come a lot faster than the grid upgrades. And I believe we'll see many more customers like the one I just described to you, who need charging but don't have available circuits, lots and lots of new customers with urgent needs. And while we're getting a lot of new attention and orders from entities with whom we've not done business in the past, we're still providing solutions for some of our excellent current and past customers, just about the best endorsement of a product you can get. For example, the State of California's Department of General Services, who last year gave us the biggest order we received in our history, so far that is, continues to order meaningful volumes of our EV ARC product. We recently received purchase orders for 23 more units to be delivered in the coming months. The combination of year-to-date revenue, booked backlog, record high pipeline and the integration of new revenues and pipeline from our battery business are setting 2022 up to be an excellent year and a launch pad for many more excellent years thereafter. We are advising our customers to get their orders in as soon as possible, especially large orders, so that we can get them into our increasingly crowded order queue. Our acquisition of AllCell Technologies, which closed on March 4, 2022, is moving through its integration stage of evolution. Beam Global's energy storage business has already made significant sales like the $2.3 million order we received shortly after closing the transaction. This is adding to our backlog and revenue and we're delivering orders on those orders to date. We're also in the final stages, and I'm very excited about this, of development of a new Beam pack battery solution for our EV ARC products, which will be integrated into all EV ARCs soon. We expect the first EV ARCs to leave our San Diego factory with Beam packs in them as early as the beginning of June. The packs are being manufactured in our Chicago facility. I've seen them and I'm delighted with our quality, ability to scale and also crucially cost because remember, bringing down the cost of batteries will have a significant impact on bringing down our overall cost per unit. Battery supply chains are under a lot of pressure at the moment. During the last few months, we've seen cost increases for battery cells for the first time in over the 10 years that I've been involved in this industry. There are further cost increases to come before we return to what the entire industry expects, a prolonged and inexorable lowering of battery cell prices. These are extraordinary times indeed. Had we not made this acquisition, it's quite possible that we would not have received sufficient batteries to fulfill our charging business's requirements, but we did make the acquisition, and we're now about to backfill shortages elsewhere with our own superior product and at a lower cost. I'm delighted. Even the first generation of packs that we're producing are costing us less than we were paying for externally sourced product. But I believe the cost-cutting journey for battery storage is only just beginning. Our engineers and scientists on both the charging and the storage side of the business are working together to engineer battery solutions, which are ideal for our products and at significantly lower cost than the more generic packs we've been using to date. There's never been a more important time to take control of battery supply chains. And while we still see cost increases on commodity cells, steel conductors and other components used in making these battery packs, we are confident that we can continue to reduce the cost contributions to our charging products. Remember that batteries constitute not far off one-third of our bill of materials. So any cost savings we can achieve in this area will be meaningful to our overall cost model. Beyond that, we're very excited to be in the other areas of our battery business and by the opportunities which we see. The world is increasingly electrifying and the move to untethered battery-powered products is plain for anyone to see. We intend to advance our technology leadership in thermal management, safety, energy density and data so that our batteries offer the best, safest and most connected solution for an increasing universe of customers. Being able to provide safety from thermal runaway, as far as an explosion for those of us who are not experts and also superior level of data connectivity at the battery level will, I believe, be significant differentiators for us. Energy density, long life, safety and telemetry are key ingredients to successful battery integration. And we've demonstrated abilities in each area to date and a roadmap of developments, which will soon further enhance our leadership in these important opportunities. So to sum up, we remain well capitalized. We have no debt. We have record revenues, record product deliveries, record backlog and pipeline of opportunities. We're cutting our costs even in the face of historically high inflation, and we're increasing our throughput and efficiency. We uniquely have a battery storage solution, which is central to our own products and the products of our battery-only customers. We've diversified our revenue opportunities whilst defending our most critical supply chain. And we've positioned ourselves to take advantage of the unprecedented spending in EV charging, energy security and carbon reduction efforts that are taking place at both governmental and enterprise levels. Business is never without challenges. But I can tell you that, thanks to the efforts and dedication of the Beam team, ours is going according to plan. From my point of view, Beam Global has never been better positioned with so many growing opportunities and an improved ability to execute on them. It's a great time to be on the Beam team. Thank you for your attention. And I'll now return the call to the operator and answer any questions you may have.

Our first question is from Greg Lewis with BTIG.

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

You've highlighted several key areas, as you often do, Greg. Let me address them. First, I want to emphasize that the government aspect of our business is strong, and there is significant growth potential ahead. However, it's worth noting, as Kathy mentioned in her opening remarks, that our traditional state and municipal business comprises only 78% of our revenues. This means that 38% is coming from other opportunities, and I believe we'll see that percentage increase as we move into a post-COVID environment with a return to work in corporate settings. While I am excited about the government business and we plan to continue to develop it, we should not be viewed solely as a government-focused company. Regarding your other question about the timing of orders, it might not be surprising that some government entities that have received electric vehicles are currently lacking the necessary charging infrastructure. This is a new challenge for many, leading to uncertainty about the timing of these installations. If a government agency receives electric vehicles in the fourth quarter and doesn't yet have charging infrastructure, they will need to assess what that entails. This includes navigating permitting, electrical work, construction, environmental impact studies, and potential grid capacity issues. By the time they address all these factors, they risk having electric vehicles without a way to charge them, which would not be ideal and would waste taxpayer money. We can address this issue and have a GSA contract, which has been enhanced with a blanket purchase agreement. This allows customers who are delayed or concerned about rapid installation of charging infrastructure to turn to us for solutions. However, we will need to scale up our operations to meet their requirements effectively, which is a primary focus for us now. Furthermore, even those who initially use grid-tied charging will eventually face capacity limitations. We are engaged with these customers, investing in government relations and direct federal sales, and it's encouraging to see the growing attention we are receiving at the federal level. Overall, I believe this will drive increased demand for our services and lead to a significant rise in demand.

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

Three hundred basis points to be precise.

What feedback have we received from customers regarding the consistency of pricing? I'm curious because whether it relates to steel, energy storage, solar panels, or labor costs, I assume that most production inputs are increasing. While we are seeing improved volumes, I would like to know how we should consider average selling prices as we progress through this year.

Yes, this is a topic that we pay a lot of attention to. I remain focused on capturing market share and increasing sales volumes, which I believe are our top priorities. We aim for large orders and to process them efficiently. I am confident that there are still significant opportunities for cost reductions as we boost our volumes. Our primary focus is on generating sales. However, we have had discussions about raising our prices since our offerings provide great value across numerous deployments both in the U.S. and internationally. In almost every case, the cost of our units is lower than the expenses of avoided construction and electrical work along with the energy suite. Given this value, it seems reasonable to consider price increases, and we have discussed this. Currently, we are leaning towards maintaining our product's sticker price. However, we are also considering implementing an inflationary surcharge in certain cases. This approach allows us the flexibility to remove the surcharge in the future if costs stabilize and if our expenses decrease, without alarming customers with a sudden price increase. We are still working with an audience that may not fully understand this market. It is important to provide them with the necessary education since they might find it hard to grasp why a charger can cost $6,500 while an EV ARC may be priced at $65,000, mistaking it for being much more expensive without realizing the additional costs of construction and electrical work involved. We want to attract customers, secure large orders, and improve our profitability by reducing costs. There is still a lot of potential to achieve these goals. We are seriously considering how to address inflationary pressures through some price adjustments, likely as a line item surcharge in proposals, which we believe our customers will be more willing to accept than a straightforward price hike without explanation.

Next question is from Tate Sullivan with Maxim Group.

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

No, we will not do that. We have no requirement to do that. What's exciting about the Beam pack is that we acquired AllCell Technology on March 4. That wasn't long ago. Time goes by very quickly when you're doing this work. The teams in San Diego have been working hard on both the charging and energy storage sides of the business, and they have already created a custom battery pack for our products, the Beam pack, which we have not yet begun to install in our products. It's important to understand that the gross profits you're seeing now do not reflect the cost reductions we expect from using our own internal battery packs. However, those packs are being produced at an accelerated pace, and we anticipate introducing them into our products in June when we receive the first shipment from our Chicago facility and San Diego. From that point onward, the EV ARCs will be equipped with our own custom battery packs, which will improve the product quality and will be easier to integrate, ultimately reducing labor costs. Additionally, they will be less expensive since we will only be covering the cost basis without extra margins. This is only the beginning of our cost reduction efforts. It's not about replacing batteries in the field, as we're not experiencing any problems with the batteries already deployed. Moving forward, our products will feature our integrated packs, which will save us money and enhance our offerings while providing opportunities for further cost savings in the future. Regarding the Beam pack, the kilowatt hour requirements for our products align with those of many other users, which isn’t surprising. Because of this, we plan to make the Beam pack a standard, mass-producible battery pack for our own products and for use by others. This will enable further automation in manufacturing and higher production volumes, leading to additional cost reductions and increased revenue opportunities. Customers who have been waiting for bespoke solutions will be able to receive a product that addresses their needs without extensive development. There are many opportunities emerging from this battery business, and I'm grateful for the acquisition, especially considering the current supply chain landscape, as it will positively impact various aspects of our business.

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

Regarding your initial comment, it's important to highlight that the batteries used by other EV charging companies are reliant on the grid, which means they lack resilience. If the grid fails, those batteries cannot be recharged. I want to clarify that our approach, developed over the last decade, is not being duplicated by others. Simply adding batteries to a grid-tied setup may provide an additional vehicle charge, but it doesn't offer the level of resilience we provide our customers, which sets us apart. To address the main part of your question about the customer with the 500 buildings, that is a new customer. You're correct that they have substantial data. The takeaway from this is related to the second wave of deployment. People often think that because a company has already installed EV chargers, there are no opportunities. While that might be true now, as more electric vehicles like Rivians and F-150 Lightnings enter the market, parking lots will fill with EVs expecting to charge. Those building operators who have wisely installed grid-tied EV charging may find that the next wave of installations will either be significantly more expensive or impossible due to increased trenching and electrical infrastructure needs. When capacity runs low, it's not just about the individual building or parking lot but also the local substation serving those structures, which may also run out of capacity. This would necessitate a costly and time-consuming substation upgrade, and when enough substations need to be upgraded, a new power station and its accompanying transmission infrastructure will be required. This situation is a cascading effect that is increasingly becoming a reality, which I have been warning about for the past decade. We are positioned to solve this issue, creating a growing opportunity for us with each new EV sold and each EV charger installed on the grid, which will reduce future grid capacity. We observed this firsthand with a current customer. Hearing them say, "You saved our ass," is incredibly gratifying, particularly from a new customer with significant potential. However, we are not deploying solutions for all 500 of her buildings just yet; it’s the beginning of our relationship. Nevertheless, it’s fantastic that she chose us and views our offerings favorably. Typically, when we roll out several products for a customer, which in this case is indeed a substantial number, they tend to return for additional installations.

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

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

Yes. Those are both great questions. Let's discuss survivability first and the current situation. Our product is now rated to withstand winds of up to 125 miles per hour, an improvement from the previous rating of 120 miles per hour. An independent agency has verified this rating by analyzing our product and confirming its capability to endure these high winds. Although a 5-mile increase may not seem significant, it makes a difference because wind events of that strength become increasingly rare with each mile per hour added. We know our products have survived category 5 hurricane winds of 185 miles per hour in the Caribbean, and we have a letter from a Governor there stating that our products were the only ones that withstood those storms. I was honestly surprised by how well they held up amidst such extreme conditions, especially seeing videos of destruction all around. Additionally, we have made significant advancements in flood protection. A few years ago, our products were flood-proof to about 6.5 inches, but they are now capable of withstanding flooding up to 9.5 feet. This kind of inundation is exceptionally rare in the areas where we operate. While localized flooding can occur, a 9.5-foot flood is almost unheard of. This means that during events like Hurricane Ida, our products often remain functional when grid-tied infrastructure is completely destroyed. While traditional infrastructure, including chargers and transformers, is often damaged and requires extensive repairs, our products can be used again as soon as the water recedes. In fact, there are even possibilities to connect to them during flood events, as they maintain power there. We've made notable progress with both wind speed and flood-proofing improvements. We are dedicated to continuous enhancement of our product. Regarding the acquisition of a battery technology company known for preventing thermal runaway, we plan to integrate these advancements into our products to ensure even greater safety and resilience. On the topic of international expansion, I am keen on entering the European market. Whether through acquisition, partnerships, or organic growth, we are exploring all avenues. The European market is the largest for electric vehicles, and I believe our products will be exceptionally well-received there. My home in Edinburgh, Scotland, highlights how European sensitivity to environmental impacts makes our renewable energy solutions particularly appealing. Although we have many initiatives underway, including the recent acquisition, expanding into Europe is a priority for me. As for Australia, it is interesting to note their slower progress on electric vehicles, but the new administration might change that trend. We have observed interest from Australia, particularly in the aviation sector. We set a world record last year for the longest flight of a production electric airplane, garnering a lot of media attention. Given Australia's vast distances and reliance on small aircraft, there is a significant demand for charging infrastructure, which we can provide easily. While Australia is not our primary focus right now—Europe takes precedence—I plan on pursuing opportunities internationally. Our name is Beam Global, not just Beam San Diego.

I recall that about a year ago during one of your conference calls, a quarter was affected by a freight charge for a shipment to Hawaii based on a contracted price that included freight. Given that this involves fairly heavy equipment, I would assume there are significant freight costs. It seems that Europe presents a great opportunity not only due to the growth in electric vehicles and the political environment, but I also believe you may have some unique solutions to offer there.

You're right. You bring up an interesting point that I should have mentioned earlier. I'm focused on relocating battery manufacturing from Chicago to San Diego, not instead of Chicago, but in addition to it. This makes sense for us as we will be producing our new proprietary batteries at the same location where we make our charging products in San Diego. We have space available for this, and I'm particularly keen on it due to the substantial government incentives available. Additionally, we're exploring the possibility of moving some of our EV ARC manufacturing and charging products manufacturing to the Midwest as well. Again, this isn't to the detriment of San Diego; it's a strategic expansion. A significant reason for this is the weight and bulkiness of our products, which we frequently ship to the Northeast and other regions. Manufacturing from the Midwest would be more cost-effective and efficient. These options are very much part of our plans, and we usually follow through on our commitments. Sometimes it may take longer than I hope, but if we are planning it, we typically execute it.

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

I think we've covered a lot today. We just achieved a record-breaking quarter after a record-breaking year. Our pipeline and backlog are at all-time highs, and our new battery company along with the Operations team is doing an excellent job of producing our products. As I mentioned earlier, there are always challenges, but that's our role. If it were easy, everyone would be doing it. Everything is aligning well for us in the future of electric vehicles and the need for EV charging infrastructure like ours. I'm excited about what I do for a living. Thank you all for this opportunity, for listening today, and for being part of Beam. It's a great time to be on the Beam team.

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