Beam Global Form 10-Q Summary
Business Context and Reporting Period
Beam Global develops and manufactures renewable-energy EV charging infrastructure, energy-storage systems, energy-security products, disaster-preparedness infrastructure and outdoor-media platforms. The company operates as a single reporting segment. This unaudited Form 10-Q covers the three and six months ended June 30, 2023, compared with the corresponding 2022 periods.
Key Financial Metrics
| Metric | Q2 2023 | Q2 2022 | Six Months 2023 | Six Months 2022 |
|---|---|---|---|---|
| Revenue | $17.8 million | $3.7 million | $30.8 million | $7.5 million |
| Gross profit (loss) | $0.5 million | $(0.3) million | $0.5 million | $(0.6) million |
| Gross margin | 2.8% | (8.8)% | 1.6% | (8.4)% |
| Operating loss | $(3.5) million | $(2.8) million | $(7.4) million | $(5.1) million |
| Net loss | $(3.5) million | $(2.8) million | $(7.4) million | $(5.1) million |
| Net loss per share | $(0.32) | $(0.28) | $(0.69) | $(0.52) |
| Cash flow from operations | Not separately provided for the quarter | $(5.1) million | $(7.4) million |
Q2 revenue increased 379% year over year, while six-month revenue increased 312%. Product sales were $17.1 million in Q2 and $29.9 million for the first six months. Federal, state and local government customers represented 86% of Q2 revenue, compared with 50% in Q2 2022. Federal-customer revenue was $23.4 million for the first six months, versus $0.9 million in the prior-year period.
Operating expenses were $4.0 million in Q2 and $7.9 million for the first six months, rising in absolute dollars but declining to 23% and 26% of revenue, respectively, from 67% and 60% in the comparable periods. The company continued to report operating and net losses despite achieving positive gross profit.
Cash, Liquidity and Capital Structure
- Cash was $23.7 million at June 30, 2023, compared with $1.7 million at December 31, 2022.
- Working capital was $37.1 million at June 30, 2023, compared with $6.8 million at year-end 2022.
- Six-month cash used in operating activities was $5.1 million; investing cash use was $0.6 million; financing cash inflow was $27.7 million.
- Financing inflows included $25.4 million from a public stock offering, $2.1 million from the B. Riley committed equity facility and $0.1 million from warrant exercises.
- Total liabilities were $13.4 million, including approximately $0.2 million of note payable and $1.4 million of operating lease liabilities. The filing does not report material conventional long-term debt beyond these amounts.
- In March 2023, Beam entered into a receivables-based supply-chain credit facility with OCI of up to $100 million. The company had not drawn on the facility as of the filing date.
- Management believes existing resources can fund operations and contractual obligations for at least twelve months from the report date, but expects continued losses and may require additional capital before achieving positive cash flow.
Material Changes Versus the Prior Comparable Period
- Revenue growth was driven primarily by deliveries of EV ARC systems to federal customers and by the All Cell energy-storage business acquired in March 2022. Energy-storage revenue was $2.1 million in Q2 and $3.9 million for the first six months.
- EV ARC deliveries increased to 354 in the first six months of 2023 from 74 in the comparable 2022 period.
- Gross margin improved due to higher production volumes, better fixed-overhead absorption, labor efficiencies, lower battery costs following the All Cell acquisition and early improvements in material pricing. Six-month gross profit included $0.4 million of non-cash intangible amortization; management reported a 2.9% adjusted gross margin excluding that expense.
- Operating expenses increased by $3.4 million for the first six months, reflecting the full-period impact of All Cell, higher non-cash compensation, administrative costs, research and development, sales commissions and the change in fair value of contingent consideration.
- Accounts receivable increased by $6.0 million to $10.4 million, contributing to operating cash use. Accounts payable increased by $4.3 million and accrued expenses by $1.8 million.
- Shares outstanding increased to approximately 13.9 million at June 30, 2023 from 10.2 million at December 31, 2022, primarily due to the public offering, the All Cell earnout settlement and equity-facility sales.
Guidance, Outlook, Risks and Unusual Items
The filing does not provide formal revenue or earnings guidance. Management expects revenue growth, further gross-margin improvement and better overhead absorption as production volumes increase. It believes the company may become profitable in the next few years, but acknowledges that profitability and positive cash flow are not assured.
On June 12, 2023, Beam signed a binding letter of intent to acquire Amiga DOO Kraljevo, a Serbian manufacturer of lighting, communications and other infrastructure products. The proposed consideration includes EUR 7.0 million of cash, EUR 3.0 million of Beam common stock and potential earnout shares, subject to definitive documentation, due diligence and customary closing conditions. Management expected a potential Q4 2023 closing, but the transaction was not assured. Amiga reported more than EUR 8.5 million of 2022 revenue, but its financial statements had not been audited under U.S. GAAP.
- Customer and government-program concentration is significant: four customers represented 90% of Q2 revenue, and three customers represented 84% of first-half revenue. Two customers represented 67% of accounts receivable at June 30, 2023.
- The company maintains cash deposits above federally insured limits; approximately $26.4 million of deposits exceeded such limits at June 30, 2023. Beam reported full access to funds previously held with Silicon Valley Bridge Bank and had also opened Bank of America accounts.
- Beam disclosed a material weakness in internal control over financial reporting related to manual inventory tracking, valuation and manufacturing controls, including at the facility acquired with All Cell. An ERP implementation was in progress and scheduled for completion in 2023.
- Supply-chain costs, particularly steel and other components, remain a risk, although management reported some improvement. Demand and order timing may fluctuate with government budgets, customer approvals and available funding.
- Beam was not in compliance with Nasdaq’s requirement for at least three independent audit committee members following a director resignation. The company had a cure period and was seeking a replacement; failure to regain compliance could result in delisting.
- Additional equity or debt financing may be required, creating potential dilution. Outstanding warrants to purchase 620,105 shares could generate approximately $6.0 million if exercised, but exercise is not assured.
- The filing reports no material pending litigation and no material off-balance-sheet arrangements.
Investor Verification Items
- Verify whether revenue growth remains diversified beyond federal government orders and whether customer concentration declines.
- Track gross-margin progression, including the effect of All Cell battery integration, material costs, production efficiency and intangible amortization.
- Assess operating cash burn and the conversion of the $10.4 million accounts receivable balance into cash.
- Confirm the status, funding requirements, definitive terms and closing of the proposed Amiga acquisition, including potential share dilution.
- Monitor remediation of the inventory-related material weakness and completion and effectiveness of the ERP implementation.
- Confirm Nasdaq audit committee compliance within the applicable cure period.
- Review future financing needs, use of the OCI facility and any additional equity issuance.