BEEM - Beam Global Raises Funds As Gross Profit Ramps

2023-06-09 11:18:22 ET

Summary

• Beam Global has secured a 5-year credit facility after a 30% decline in its stock price and a cash position of $1 million at the end of its fiscal 2023 first quarter.
• The company reported a 245.4% year-over-year revenue growth and its first-ever positive gross profit in the first quarter.
• US EV sales grew by 57% in 2022, and Beam Global's improved cash position and continued gross margin gains could drive a recovery in its stock price.

Beam Global (BEEM) has had a brutal year, down 30% since the start of 2023 as continued net losses and a cash and equivalents position that had declined to $1 million as of the end of its fiscal 2023 first quarter left shareholders questioning the near-term future of the EV charging company. However, the company has since raised $100 million through a 5-year credit facility priced at SOFR plus 3%. Beam also has the option to expand the size of the facility, providing a material source of funding as the company more aggressively chases the opportunities posed by the transition to low-carbon modes of transportation. Critically, the new facility has secured a future for San Diego-based Beam against consecutive quarters of net losses and cash burn.

The company's current market cap of $129 million stands against trailing 12-month revenue of $31.2 million as of the end of its fiscal 2023 first quarter for a price-to-sales multiple of 4.13x. Beam's main product is an off-grid EV charger called the EV ARC. It has a carport-like roof structure covered with a 4.4 kW solar array, battery storage to allow night-time charging, and a base that fits inside a standard car parking space. Beam's solution to the growing demand for EV charging prioritizes a 100% renewable, easily deployable, and low total cost of ownership product. It's a relatively niche approach against the intensely crowded market for EV chargers.

Capital Raising, Net Losses, And Growth

Beam had a cash runway of less than three months as of the end of its fiscal 2023 first quarter. This quarter saw revenue come in at $13.02 million , a material growth of 245.4% over the year-ago comp and a beat by $4.68 million on consensus estimates. Growth was driven by EV ARC deployments that increased by 233% year-over-year and around 92% sequentially from the fourth quarter. The company also reported its first-ever quarter of positive gross profit. This came in at an incredibly marginal $5,000 but was a huge improvement from a loss of $305,000 in the year-ago period. Higher EV ARC production volumes and improved labor efficiency drove most of the gross margin gains with Beam producing 3x more EV ARCs in the first quarter versus the year-ago period.

However, the company's material cost for steel remained higher than the prior year, indicating that the future quarter could see even more year-over-year gains in gross margin as steel prices have dropped significantly versus last year. Gross profit was also negatively impacted by a $200,000 inclusion to cost of goods sold from a non-cash intangible amortization expense. This was from Beam's February all-stock purchase of AllCell, a lithium-ion battery producer. Gross profit margins would have been 2% if this expense was excluded.

Beam ended the first quarter with a record order backlog of $52 million and an order pipeline of $117 million to $132 million as of May 15th when it reported earnings. The company has increased its EV ARC sales price by 8.25% post-period end in response to heavy demand, a move which should herald continued quarters of positive gross profits. However, Beam recorded a net loss of $3.8 million during the first quarter, up around $1.55 million from its year-ago comp with a net loss per share of $0.38 up by $0.14 year-over-year.

EV Sales Are Booming

The company also saw first quarter cash burn from operations come in at $600,000, a huge improvement from a cash burn of $1.9 million in the year-ago quarter. Beam has now reached a watershed moment in time as a public company where lackluster returns have defined much of its history. For bears, who form the 18% short interest, reaching positive gross margins does not dispel its net losses. Further, Beam's sales multiple of 4.13x remains high against what is still expected to be a highly leveraged balance sheet. However, the multiple is high because the company's revenue is more than doubling year-over-year with a number of tailwinds from their buyout of AllCell, ARC EV price hikes, and the 2022 Inflation Reduction Act set to see even more marked revenue gains in the future quarters.

US EV sales have gone parabolic with 750,000 fully electric cars registered in 2022, 57% growth over 2021, and around 5.6% of the total market. This growth came even against financing costs that have been driven materially higher by a Fed funds rate increased to its highest level since 2008. The US is now well underway in the runaway adoption phase of EVs. I think the stock is likely primed for a recovery here as continued gross margin gains, a potential Fed pause at its upcoming FOMC meeting, and an enhanced cash position partner to drive an improvement in investor sentiment.

For further details see: