Beam Global (NASDAQ:BEEM) Q3 2023 Earnings Call Transcript

Beam Global (NASDAQ:BEEM) Q3 2023 Earnings Call Transcript November 14, 2023

Operator: Good day, and welcome to the Beam Global Third Quarter 2023 Financial Results and Corporate Update. All participants will be in listen-only mode. [Operator Instructions] I would now like to turn the conference over to Kathy McDermott, CFO. Please go ahead.

Kathy McDermott: Thank you. Good morning, and thank you for participating in Beam Global’s 2023 third quarter conference call this early morning. We appreciate you joining us today to hear an update on our business. Joining me is Desmond Wheatley, President, CEO and Chairman of the Board of Beam Global. Desmond will be providing an update on recent activities at being 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 seems 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 until – only through today, November 14, 2023. Except as required by law, be disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. Next, I’d like to provide an overview of our financial results for beam third quarter and the first 9 months of 2023. The revenues for the third quarter of 2023 continued strong at $16.5 million, a 149% increase over $6.6 million revenue reported in the third quarter of 2022. Revenues for the first 9 months of 2023 were $47.3 million, a 236% increase over $14.1 million reported for the same period in 2022.

Our revenue growth in 2023 is primarily driven by an increase in deliveries to federal agencies. We also increased our energy storage revenues by $2.5 million year-to-date compared to the same period in 2022. 10% of our revenues year-to-date are international sales, primarily for our energy storage business, but we’re looking forward to beginning production of EV ARCs [ph] at our new Serbian facility to expand our EV charging sales into Europe. Our gross profit for the quarter ended September 30, 2023, was $0.3 million or 1.7% of revenues compared to a gross loss of $0.3 million or 5.1% of sales. Gross profit year-to-date through September 30, 2023, was $0.8 million or 1.7% of sales compared to a gross loss of $1 million for the same period in the prior year.

As a percentage of sales, our gross profit year-to-date improved by 9%. The improvement in gross margin was primarily due to the increase in production levels compared to our prior year, which resulted in favorable fixed overhead absorption and labor efficiencies. We’re also beginning to see some vendor cost reductions and benefit from recent engineering design changes. Operating expenses for the third quarter of 2023 was $4 million compared to $6.5 million in the same period in the prior year, an improvement of 73% of revenues year-over-year. Operating expenses decreased by $3.9 million for noncash contingent consideration recorded in Q3 2022 related to the Alpha [ph] acquisition, partially offset by increases for sales commission and noncash compensation expense.

For the 9 months ended September 30, 2022, we reported operating expenses of $11.9 million or 25% of revenues compared to $10.9 million or 78% of revenue for the same period in 2022, an improvement of 52% as a percentage of revenues. Year-to-date, 2022 only included 7 months of expenses for our energy storage business operations based on the March 2022 acquisition date. 2023 cost increases are primarily attributable to noncash compensation expense, administrative salaries and bonus accrual, sales and marketing expenses, including commission accrual and investment in R&D salaries and expenses. These increases were partially offset by a decrease of $2.4 million for noncash contingent consideration related to the Alpha acquisition. Our net loss was $3.6 million or 22% of revenue for the third quarter of 2023 compared to $6.8 million or 103% of revenue for the same period in 2022.

Net loss was $11 million for the 9 months ended September 30, 2023, compared to $11.9 million for the first 9 months of 2022. The year-to-date net loss included net cash expense noncash expense items such as depreciation, intellectual property amortization and noncash compensation expense of $3 million in 2023 and $5.2 million in 2022. On September 30, 2023, we had cash of $14.8 million compared to $1.7 million at December 31, 2022. The cash increase was primarily due to capital raise in June 2023, offset by increased accounts receivable due to the increased revenues and operating losses. Our working capital increased from $6.8 million to $3.4 million from December 31, 2022 to September 30, 2023. The working capital balance is increased by the $25 million net capital raised in June and increased accounts receivable based on increased sales.

And with that, I will now turn it over to Desmond to provide a business update. Desmond?

Desmond Wheatley: Kathy, thanks very much for that. And thanks also to everybody who’s listening in today, particularly those of you who are on the West Coast. I’m well aware of the fact that this is the second time in a week. I’m actually go up in the wee hours to join these exciting Beam Global update. So thank you for that. I’m actually speaking to you from Europe, where I’ve spent the last 10 days in our new facilities in Belgrade and Kraljevo [ph] in Serbia. Having spent the last 11 months negotiating the acquisition of the company that was formerly known as Amiga and is now Beam [ph] Europe, the parties, which were formally sitting on opposite sides of the table, are now all engaged in the creation of a growth engine for being global in the largest market in the world for our products.

Beam Europe is a reality. And as each day goes by, we’re operating more and more as one company. It’s been an exciting and fantastically busy 10 days, during which I’ve had I and the entire management team over here have been totally immersed in the integration of Beam Europe into our global operations. I hope that many of you were able to join the live tour of our new 6.5-acre facility last week. It was an intense and information packed hour during which I attempted to show the scale and capabilities of our operations over here. In case you missed it, there’s an archived version, which you can find on the Investor Relations section of our website. I’ll return to the subject of our European expansion later on in this call because it’s certainly the most significant event in Beam Global’s 2023.

And in my opinion, after the invention, first sales and production of the EV ARC, it’s the most important evolution in our company’s history. It’s quite an achievement for any event to be referred to as the most significant in our 2023, a year in which we’ve seen absolutely phenomenal growth and improvements in every area of our business. None of them are insignificant and always contributed to making Beam Global a better company than at any time in our history. We dramatically increased the rate of production of our products. We’ve dramatically increased our revenues. We’ve dramatically improved our gross profitability, and we’ve significantly reduced our operating costs as a percentage of revenues as the year has advanced. Starting with revenues.

We’ve delivered triple-digit year-over-year percentage growth in each quarter of this year. Our Q3 results were a continuation of the trend. $16.5 million of revenue we generated in the third quarter of 2023 represents a 149% year-over-year increase. And as I said, that’s the third quarter in a row where we’ve had triple-digit year-over-year growth. When looking at our year-to-date results, we obviously have another record of over $47 million in revenue. That’s a 236% increase over 2022. And to put it into further context, just looking at absolute numbers, we did $22 million in revenue in 2022, and we’re already at $47 million, with another quarter left in this year to add to that. Just as a quick historical reminder, we did $6 million in revenue in 2020, $9 million in 2021, $22 million in 2022, and now we’re at $47 million just three quarters into 2023.

So clearly, a phenomenal growth story that continues today. The acceleration in the pace of our production of both batteries and EVR products is even more impressive. Production of EV ARC so far in 2023 has increased 295% year-over-year and our battery manufacturing facility in Chicago produced something in the order of 10 times more kilowatt hours of batteries than they did before we acquired them. In case you’re wondering how it can be that the 295% year-over-year growth in EVR production is greater than the 236% increase in revenue. The main explanation for this is that we produce more EV ARC than we were able to deliver in Q3, in no small part due to the threatened federal government shutdown at the end of that quarter. It’s not that those deliveries won’t take place.

It’s just that because there was uncertainty around whether or not federal employees would be at work, deliveries of certain EV ARC were postponed. This temporary blip is just that, temporary. And we believe that as long as there’s not another and prolonged federal shutdown, we should catch up back up in the next few months. We had backlog of over $31 million at September 30, and our sales team continues to convert elements of the over $100 million in pipeline that we have into backlog on a regular basis. While we continue to see lumpiness in large order cadence, the flow of purchase order wins brought in by the sales team is actually improving over prior years. And we’ve received no indication from any of our existing customers or prospects that they’re slowing down their plans for EV charting deployments.

We’re all aware that there have been reports in the media recently about a slowing in the growth of adoption of electric vehicles. Certain of the large automobile manufacturers have announced reductions in their aggressive growth plans for the electrification of their fleets in coming months. To put this into context, we need to look at the facts behind the stories. While it’s true that there’s been a reduction in the speed of electric vehicle adoption as a percentage in August and September of this year only, the absolute numbers continue to grow rapidly, and the slowing down that the media is referring to might be better described as a significant growth instead of a phenomenal growth. 2023 EV sales are 61% higher than they were by this time in 2022.

Interestingly, it seems that Tesla is taking the order set with 41% year-over-year growth, while the combination of all the other brands have seen 98% year-over-year growth in the same period. And I view that as a further mainstreaming of EVs as they move from the niche test audience to everyone else. Any way you look at this, it’s still phenomenal growth and far higher growth than that, which has been experienced by internal combustion engine vehicles or ICEs [ph] The installation of electric vehicle charging infrastructure has not kept pace with EV sales. And there was already not enough publicly available charters for the existing fleet of electric vehicles, far less from the tremendous growth that we’re still seeing. The two biggest barriers to consumer adoption electric vehicles continue to be number one perception of their costs, and number two, lack of available charging infrastructure.

Being global is in the business of solving for number two. And as I’ve already said, those of us in the EV charging industry are and will be playing catch up, and therefore, less susceptible to predictable fluctuations in consumer adoption of the ever-expanding lineup of new EVs. By the way, Norway gives us a good look at what the future holds for the rest of the world. There, EV sales are 98% of the market. There’s been heavy investment in education and EV charging infrastructure in Norway. And they’ve now amassed enough data to show that total vehicle ownership costs are around 20% less for the consumer. And that data includes the earlier models of EVs, which are much more expensive than today’s offerings. So the argument that EVs are more expensive is already false.

When consumers get the hang of that, I think we’ll see a rapid shift in sentiment between shifting consumer sentiment and continued government tailwinds, we anticipate, as I’ve said, nothing but growth for the foreseeable future. Any fluctuations that we do see in order cadence in 2023 and in the next several quarters will be more likely to do with the sometimes unpredictable pace of federal and state orders brought about by budget uncertainties and potentially impactful events like thread or actual government shutters. But none of this, I think, will be meaningful in the long term. Again, I still firmly believe and I think that all the evidence confirms this, that however lumpy this order cadence may be, the macro trend provides for nothing but sustained growth for the next several decades.

Electric vehicles are not going away. On the contrary, government tailwinds are continuing to strengthen as the increasing awareness of climate impacts matched by continuing geopolitical uncertainties associated with the global oil industry, make it more difficult not to double down on already aggressive carbon reduction plans. Additionally, while most experts accept that there is some short-term slowing of the rapid increasing of the adoption of electric vehicles, they’re equally certain that the widespread electric vehicle adoption is inevitable and that the infrastructure requirements will somehow to keep pace with consumers’ demand for the products. All of the reputable studies that I’ve looked at still show the majority of consumers stating that they’re considering an electric vehicle for their next purchase.

In the meantime, I and the rest of the management team at being Global are ensuring that we diversify our opportunities for revenue generation. Said another way, we’re widening the top of the funnel. We’re doing that in the United States by adding sales resources and targeting a broader set of customer prospects as well as deepening our government relations and playing a greater role in the formation of policy rather than waiting for that to happen without us. Of course, absolutely the most significant step that we’ve taken to broaden our prospects is the opening up of Europe as a market for our products. Europe is by every measure, the largest potential market for our products. So we haven’t just widened the top of the funnel marginally. We’ve doubled or tripled it.

As we continue to evolve the lumpiness that we experience in one market should be offset by corresponding lumpiness, moving the opposite direction in another. The fundamental takeaways from these proceeding points is that there continues to be significant growth in our addressable markets, significant improvement in our ability to address those markets and a continued growth in urgency in the requirements for the unique attributes delivered by our portfolio of patented products. We’re not just using geographic market expansion and additional segments to widen them out of our funnel. We’re also diversifying our product offering while staying true to our strategic goals. Up until 2022, EV ARC sales provided materially all of our revenues. In 2022, with the acquisition of All Cell Technologies, we added batteries to our product mix.

The sale of batteries to external customers, in other words, not that used in our own products, has contributed over $6 million to our revenues in the first three quarters this year, a significant contributor to our growth and an excellent diversification of revenue opportunities for us. The acquisition of All Cell Technologies has also contributed significantly to our gross margin improvement through a reduction in costs in the batteries, which we’ve integrated into our products. We’re going to start to see the biggest impact of those cost reductions in the fourth quarter of this year and the first quarter of next, really significant savings. Now our engineers in San Diego, Chicago, Belgrade and Cryago [ph] are all working on the next and what I believe will be the most significant diversification in our product offering in the company’s history.

We have made more progress in the development of our EV standard product in the last month than in the last 4 years. EV standards a streetlight replacement, which will provide renewed and energized to EV charging and energy security infrastructure at the curb without the requirement for significant civil or electrical projects. Comprising much of the same technological excellence, which is found in the EV ARC but in a different form factor, it will solve the very real challenges associated with installing electric vehicle charging for on-street parking. Providing charting to vehicles parked on the street is essential to the success of the electrification of transportation. I know of no more elegant solution to do that than the EV standard. By the major consideration in the acquisition of Amiga was that they’re one of the top streetlight manufacturers in Europe and have sold those sorts of products across 17 nations.

They’ve already manufactured solar-powered streetlights and other types of street furniture with renewable energy and electronics integrated, and as a result, have the perfect combination of experience and expertise to assist our EV-charging and energy storage engineers and the perfection of the EV sounder product. The level of collaboration between our engineering teams in Europe and those in the United States is really impressive. In the very near future, I believe that diversifying our product offering in this manner should have a significant effect, not only on the lumpiness in order cadence, but much more importantly, on delivering another tremendous growth engine for being global, both in Europe and in the United States. So we’re executing on a multipronged strategy to increase our opportunities through geographic expansion, expansion of the verticals that we were targeting with any geography and through the introduction of new products, which are equally or more unique and compelling.

And we’re doing all of that while at the same time delivering triple-digit growth in revenues, improving our gross profit and reducing our overhead costs as a percentage of revenue. We continue to generate gross profits during the third quarter, about 3% when excluding noncash items. Year-to-date, we’re gross profitable, and we’ve yet to be – we have yet to be positively impacted by the significant cost savings, which our engineering and operations teams have identified and are now putting into effect. As I told you during our second quarter earnings call, the gross profits we were generating then and are generating now are as a result of increased efficiencies and volumes of product running through our factory. Those volumes are sufficient to overcome the fixed overhead burdens, which had previously caused us to report negative gross profits, even though the unit economics on the EVR have been positive since quite early in that product’s development.

We’re better off from a cash point of view, every time an EVR leaves a factory, not worse off as would be the case if the unit economics were not positive. Now we’re entering a new year of cost improvements, which are more dramatic than those which we’ve received simply through increasing volumes. Engineering and operational improvements should deliver a better than 20% improvement in our cost structure and a similar improvement in our gross profit. I stated previously that those cost savings should take effect materially in the fourth quarter and be fully manifested by the end of Q1 2024. The facts are supporting that prediction, and we’re now looking at current cost to produce EV ARC, which are meaningfully lower than at any time in our history.

That’s a process which will not end. Even though we’re going to present significant cost reductions in the next couple of quarters, we do not consider this job done. On the contrary, these cost savings are simply the next step on our relentless path to improving our gross profitability while maintaining quality and the unique attributes of our products. We know that there are further opportunities to generate more significant cost reductions, and we’ll continue to develop and invest in those areas which will enable the savings.’;’ Beam Europe actually provides a couple of excellent examples of these opportunities. Our operations over there will benefit immediately from the reduced costs, which are now incumbent in the latest generation of EV ARC products, but also from day 1, Beam Europe will have a lower cost structure, not just because Serbia is a much lower cost environment in which to operate, but because Beam Europe is better equipped than our U.S. operations.

And as a result, able to self-perform a couple of activities, which are elevated cost centers due to our outsourcing in the United States. Beam Europe has its own sandblasting and painting operations. We outsource those activities in the U.S. Sandblasting and painting [ph] in San Diego is already inexpensive undertaking because of the highly restrictive compliance environment that exists in California. We then have to add to that, the gross profits taken by the company that provides those services to us as well as all the handling and transportation costs, which result from our having to ship heavy steel sections to inform the service provider. In Europe, we’ll have the raw cost, labor and materials, though less expensively than in the U.S., but not the gross profits on those elevated costs or the logistical cost of handling and transport.

Beam Europe has its own sandblasting and painting facilities already a future EV ARC and EV standard products producer will not need to leave the factory for this important activity nor will the dollars associated with [indiscernible] our accounts. Another expensive process, which we outsource in the U.S. is the forming of our engineered ballast and traction pack. This forming is vital to our product, and it’s an expensive and not without risk process, which also involves logistical challenges. Beam Europe has in-house capabilities to perform this forming task with none of the risk or elevated costs that we’re paying to a vendor in the U.S. Incredibly, only three weeks after closing on the acquisition, our Beam Europe team is already making engineered and ballast and traction pads for EV ARC systems.

That process is arguably the most technically demanding where the structure of EV ARC is concerned. So it’s very encouraging to see bear have success with self-performing this activity so soon after becoming part of being global. If you’ve seen the tour in Europe that we did last week, either LIBOR or YouTube, then you’ll have noted my excitement when I saw one of these great, big heavy plates being run through the machine that forms it. I and the team in Europe know that if they can perform this task, there’s nothing else in the production EV ARC that they will not be able to do. This single task is responsible for about 2% of our cost structure in the U.S. It’s not going to disappear entirely in Europe, but it will become practically immaterial.

In sourcing, painting and sand blasting will have much more profound effects on our efforts to reduce costs and Beam Europe is already there. Frankly, another benefit of this acquisition is that we now have as part of our organization, these European operations with their 30 years of experience in improving their production capabilities and facilities. In the U.S., we’ve only been seriously producing for a couple of years. And we’ve made tremendous improvements during that time, but we’re going to learn a lot from our new European colleagues. The other significant impact to gross profitability, which is coming, but as yet has not affected our results is the price increase we put into effect this year. New sales will include this increase in price, which adds about 8% to our base model.

That 8% will go straight to gross profitability because nothing else has changed where the price raise is concerned. Combining the price increase with the cost savings now being realized in the EV ARC systems that are coming off the line today, will give us an improvement in our gross profitability in the mid- to high-20s percentages. Again, the full impact of this improvement will come when all the current cost improvements are implemented and we’ve worked through our current backlog, which was priced before the increase went into effect. Where backlog to last us through the first quarter, so you should anticipate the full gross profit improvement at or towards the end of that Q. We generated over $1.5 million of gross profit so far this year, net of noncash items.

Had we been operating all year with the lower cost now being integrated into our current products. And with the price increase, we would have generated $8 million to $10 million in gross profit. Our total loss for the year-to-date is about $11 million. So that you can see with a couple of other tweaks to our model, like those that I’ve just outlined our European operations. Cash flow is far from a distant and vague premise, especially when noncash items are removed from that $11 million. We can’t go back in time, obviously, but this thought experiment looking at 2023 volume, but with gross profit improvements, we expect in 2024 provides a very useful forecasting methodology for where we’re going. It’s simple arithmetic at this point. Remember also that Beam Europe’s core business generates positive cash flow and will be accretive to our overall business.

I’m often asked if we can cash flow in 2024. Well, you can make your own assessment based upon the factors I’ve just outlined. One of the most significant results of these improvements to our gross profitability is the reduction of our reliance on the cash on our balance sheet for our day-to-day operations. If we improve nothing else and have a first three quarters of 2024, that’s identical to the first three quarters of 2023, except that we’re operating with the improved gross profitability that I just described, we’d only need to dig into our cash for $1 million. At September 30, we had approximately $15 million in cash, $15 million in AR and $14 million in inventory. And we convert AR and inventory to cash in generally less than 90 days, giving us over $40 million of firepower to pay our bills.

We’re well capitalized, have no debt and are looking at a real scenario in which our reliance on investment dollars on the balance sheet is less and less crucial. Beam Europe does not require material investment. It’s already cash flowing and any amounts that we do invest to start producing EV ARC standard in that market should be more than offset by the lower cost inherent in operating in Serbia and with a very well-equipped facility, which is much less reliant on outsourced services than our U.S. operations are. Beam Europe is already featured quite a lot in my comments because even though it’s brand new to us, it’s so important both from a strategic growth point and also from the point of view of positive impact to profitability. It’s strategically important because it gets us into the largest market in the world for our products and also because it’s so important to the development and production of our EV standard product, which I believe will be the biggest earner for us not long after we release it.

It’s important from a profitability point of view because of the lower cost structure, better capabilities and increased opportunities for profitable revenue it brings along with its long history of discipline, leading to positive cash flows. We paid €10 million for Beam Europe. That price was a reasonable, even low-end valuation for the business that we acquired on its own, but we didn’t just get the business. We got the land, the buildings and all the equipment too. The land has recently been independently appraised at around €7 million, buying the equipment from scratch would cost between €6 million and €10 million. I said another way, had we gone to Europe and bootstrapped, we would have had to spend over €13 million just to get the property, plant and equipment.

Then we’d have to recruit the 35 engineers and the other 170 or so employees and try to start building a customer base from zero. Instead, we have a mature, experienced and excellent team. We have solid customer relationships in 17 nations. We have a history of performance delivering to exactly the same customer profile with whom we’re having success in the U.S. We have credibility and in many cases, existing contracts, we have a solid and growing complementary line of business, which generates positive cash flows, and we have an excellent management team. Pro International, where we are to do the due diligence, described Omega as one of the best run companies they’ve ever seen in Serbia. We got all of that for less than we would have had to pay for the buildings and the machinery in them.

It’s true that this acquisition could cost more. It Beam Europe, it’s very aggressive earnouts that we put in place for 2024 and ’25. But that’s exactly the way I like to pay for a company, a low-end valuation for the initial consideration with a great opportunity for the sellers if and only if they stick around and knock it out of the park for being global. It’s not only fair, it’s an excellent incentive for all involved to make a tremendous success out of the integration of our organizations. I can see that already happening. Again, any of you who watch the tour, we’ll have seen how far we’ve come in an incredibly short time. Just three weeks after closing the deal, Beam Europe is making EVR pieces. The employees are working in Beam uniforms and the signage and other branding on site is largely be in Europe.

There’s a lot more work to do to entirely transform what was Amiga into Beam Europe, but the progress we’ve made so far is exemplary and faster than I’ve ever seen with any previous acquisition. This is certainly an instance of 2 plus 2 equals more than 4. How much more remains to be seen, but I’m very confident that bringing Beam Global to Europe and bringing Europe to being global, will provide all of the tremendous growth that we’ve had in the U.S. market. And in my opinion, it will offer more. So the effect will be, in my opinion, again, to far more than double our business. We did that using about 1/10 of our market cap, even in this market when growth stocks have been so severely devalued and without taking on any debt in this elevated interest rate environment.

So Beam Global is a very different company than it was last time I reported to you. We have 370 employees, more than 110 per advanced engineers. We have a whole new set of products and opportunities, and we’re rapidly advancing new products, which we all believe will be highly impactful to our bottom line. We’re operating in the largest market in the world for our products at a time when Europe is committed to zero emission vehicles in 12 years and zero emissions energy by 2050. This is also the time that Europe has felt least secured in its energy infrastructure since the end of the second world war due the Warren Ukraine. There could not be a better time to add this huge new opportunity to Beam Global’s business, and I don’t think we could have done it in a better manner.

Please do take the time to watch at least some of the video tour that we did last week. I don’t think you’ll be disappointed. So I sum up. Record results, no debt, well capitalized, highly differentiated in a growing industry and now with massive new markets open to our products and the ability to capitalize on it. Our share price it’s 1/10 of where it was when we had more or less none of these things. How long can I go on. We’re doing what we’re committed to do and the entire beam team is executing across the board. Personally, I’m very busy, and I’m not spending a lot of time with my family, but I’m loving being a part of Beam Global, and I believe more than ever that it’s a great time to be beam. With that, I’ll return the call to the operator, I think, and take your questions.

Thank you very much.

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Q&A Session

Operator: We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Tate Sullivan with Maxim Group. Please go ahead.

Tate Sullivan: Hi. Great to hear the update. And you mentioned building the foundation for the EV ARCs already in Europe when we saw those last Thursday. Are those demo units? Are those orders? Can you talk about how you’re planning to build out the EV ARC in Europe?

Desmond Wheatley : Yes. I’m quite comfortable and confident in saying to you that we are not changing our strategy of not making anything unless it’s sold.

Tate Sullivan: All right. And then also on the Amiga legacy business, can you remind us how much Amiga generated recently in revenue? And is the – will you move employees away from that business to the EV ARC – or will that business continue to potentially grow?

Desmond Wheatley : So that’s one of the really exciting things that we’ve been going over during the last 10 days. Amiga reported revenues of, I think, something in the other €8.5 million last year. We haven’t announced any numbers for them this year, but I can tell you they’re not doing worse this year, not by any means. And what’s really interesting about that is that because Amiga runs their business as a cash flow business, it’s typical of a sort of smaller business, family-type run business operations where they do everything out of their own cash flow. They have certain inefficiencies about the way they produce products. They have to staff for the peak production. And like any business, the repeats and troughs in demand oscillate during the year.

And so sometimes they have people who are not being fully utilized because, again, they have to start for those peaks in demand when their customers want their street furniture products, whatever those may be, they want them pretty quickly. And what we discovered last week is that we can help them to kind of flatline that production a little bit, produce more with less people. And the result of that will be not that we get rid of those excess people. But what it means is that we’ll be able to introduce the production of EV ARC and EV standards and take advantage of those resources, which because of just improved efficiencies, the way we’re handling the orders, we’ll be able to put them on EV ARC and EV standard production. And I do anticipate we’ll have to grow the team because I think we’re going to do so much EV ARC and EV standard in Europe.

But for the moment, just by being more efficient, the way we’re using people, we should be able to do both.

Tate Sullivan: Last one for me is on the revolving credit, the $100 million, can you use that for Amiga’s receivables? Do you have to change your facility? And have you accessed that facility at all in intra-quarter?

Desmond Wheatley : As it happens, I met with OCR yesterday, they’re the provided $100 million credit facility. And you may remember that when I first mentioned this $100 million credit facility, OCI is used to doing deals in the sort of billions. And so the question was why were they looking around with this smaller number? The answer was because they were very, very interested in our potential to expand into Europe, particularly with renewably energized products. You will be aware that many of the large funding institutions over here are aggressively looking for clean technology – so-called green type funding opportunities. And there’s a lot of money looking for home for these types of opportunities in Europe. And the result of my meeting with OCI yesterday was confirmation of what I already knew, which is that they will be just as interested and just as aggressive in financing our European opportunities as they will be in financing anything that we do in North America.

Tate Sullivan: Thank you, Doug.

Desmond Wheatley : Thank you. Tate.

Operator: Our next question comes from Chris Souther with B. Riley. Please go ahead.

Chris Souther: Thanks for taking the questions here. Maybe just initial kind of thoughts around Amiga’s kind of traditional customers, you kind of introducing the EDR product. Could you give us a sense of what you think the initial demand is and kind of walk through kind of the cadence of building interest with those customers, with new customers kind of where do we go from here in Europe, I think, would be helpful.

Desmond Wheatley : Yes. So Amiga has spent the last 30 years selling street furniture. Certainly, a big part of that being street lights to municipalities, states, militaries, nations and corporate customers. They’ve also produced a lot of telecommunications products and a lot of energy infrastructure products. What you find is that the – all of the customers to whom they’ve been selling for the last 30 years are almost identical in their profile to those customers to whom we’ve had good luck selling our EV charging infrastructure products in the United States. And on top of that, we’re arriving at this at a time when all of these municipalities and states and militaries and corporates and everybody else are desperately trying to add electric vehicle charging infrastructure.

Now it’s not easier to do that in Europe, the traditional way, connecting to the grid and all that sort of stuff. In fact, it’s more complicated. So we now have an opportunity, and this is what we’re doing right now. Again, this is – it’s easy to see the tremendous progress when you can see being EDR components being manufactured in the facility. Perhaps less easy to appreciate the fact that the sales team is now already out and already talking to existing customers with whom we have good credibility and in many cases, existing contracts and saying, hey, you’ve been buying solar street lights from us, you’ve been buying electronic integrated street furniture and all the other kind of stuff. Well, we now have these renewably energized rapidly deployable, very low impact, EV charging product are interested.

And I mean, I shouldn’t have to tell you and I’m sure I don’t have the response in a very large number of instances, yes, we are interested. So as I all say to the sales team, if there’s no intent interest means nothing interest is not revenue. But sales come from interested customers, especially when you’ve got credibility with them in existing contracts and when they have a profile which is pretty much identical to those people who are buying from us in the U.S., both from a government side and the corporate side. So it’s a perfect match. The sales seem really excited about this. And as I said, we’ve established ways that we can add capacity without dramatically increasing labor costs there, so more efficiency, basically, which will make them even more profitable.