Anna Bliokh/iStock via Getty Images
Anna Bliokh/iStock via Getty Images
Beam Global (NASDAQ:BEEM) provides electric vehicle ("EV") charging stations for off the grid locations and for emergency backup power. The company is also a provider of battery products and will soon introduce a curbside streetlamp charger. Beam increased its global footprint just a few months ago with the acquisition of Serbia-based streetlamp company Amiga, which seems to be a perfect fit.
My investment thesis is that the company's product and European expansion will accelerate the company's already fast-growing revenue, as well as make profitability attainable within the next year. This investment opportunity has been enhanced by the recent selloff in the EV sector, taking BEEM shares along for a decline of almost 60% over the last 52 weeks, despite the company's solid performance in executing its strategy of becoming a market share leader in the off-the-grid renewable power charging industry.
Beam's main product has been the EV ARC 2020 charging infrastructure, which can be set up within an hour. It is cost-effective as it does not need permits, eliminates construction costs, and eliminates the electric bill by being solar-powered. The ARC 2000 is charger-agnostic and has been used in conjunction with major charging brands such as ChargePoint (CHPT) Blink (BLNK), Enel X and Electrify America, as illustrated in the investor deck.
EV Arc 2020 charging station (Beam Global website)
The ARC 2000 is targeted for off-the-grid areas where power is needed and as power security against potential cyber-attacks and blackouts in areas with high electrical power demand. The system is designed to withstand flooding of up to nine and half feet as the electronics are stored at the top of the structure and an engineered ballast and traction pad provides the ability to withstand wind speeds of up to 160 miles per hour.
The company has been announcing new contracts mainly from US. federal government agencies such as the $4.8 million deal with Homeland Security announced in January and the $7.4 million deal with the U.S. Army also announced in January. Beam has also been awarded several US county and city contracts primarily in California such as with San Diego county and with Los Angeles and other regions to power up government vehicles and for public use in parks. The pandemic reduced the need for commercial charging as people stayed home, but a return to the workplace and commercial and social resumption should result in a pick-up in commercial orders for the ARC 2000 product.
BEEM's international sales have been about 10% of total revenue until now. The company completed the acquisition of Amiga, a Serbian streetlight and related products company in October 2023, in order to accelerate European sales. Amiga was founded in 1990 and is one of the largest European streetlight companies according to BEEM's investor deck and press releases. The European streetlight industry has a healthy growth projection, exceeding 10% CAGR.
Management expects Amiga to be accretive to earnings, as the company was profitable in 2022 with annual revenue of about $9 million. Amiga will serve as a launching pad for ARC 2000 sales in Europe as well as for BEEM's yet to be introduced EV-Standard product, a grid connected streetlight with EV charging and energy storage emergency power from solar, and wind.
BEEM EV-STANDARD (Beam Global website)
Amiga, now Beam Europe, offers engineering, production and sales capabilities as well as additional operating synergies that Beam did not previously have, such as sandblasting and painting operations. Beam has been outsourcing these operations. Beam Europe also has the capability to produce the engineered ballast and traction packs for the ARC 2000, which have also been previously outsourced.
The Amiga purchase price appears to be very reasonable at 1X sales plus earnout amount based on performance.
Lithium-ion and lithium iron phosphate batteries which are used for energy storage provide a lot of power in a small space resulting in high temperatures and need thermal management in order to prevent fire. BEEM acquired energy storage technology company AllCell Technologies in March 2022.
BEEM ALL CELL BATTERY (ALL CELL TECHNOLOGY WEBSITE)
BEEM is using AllCell products in the EV ARC 2000 product and plans to use AllCell products in additional products going forward, as well as offering customers customized battery technology options. Adding the in-house battery technology capabilities is a cost-saving feature for BEEM's overall product production.
EV stocks are experiencing a market sell-off, with the reason cited being the slowdown in EV sales due to pricing. But there is still plenty of ongoing growth. Adamas Intelligence reported that almost 5 million EVs were registered in 2023 than in 2022.
With mandates across the globe for replacing internal combustion engines with EVs, the shift will continue, and technology will continue to be developed to reduce the cost of EV ownership, but what is lacking is EV charging infrastructure to support the EV increase. The EV charging industry is forecast to grow at a 23% CAGR over the next five years.
BEEM's stock price has been on a decline despite the positive developments outlined in this article, but the stock price seems to have established a bottom.
Revenues have been growing at an explosive pace.
| YEAR | REVENUE | % INCREASE |
| 2020 | $6 Million | ------------------- |
| 2021 | $9 Million | 50% |
| 2022 | $22 Million | 144% |
| 2023 | $47 Million * | 114% |
Compiled by author from company filings.
*2023 is for just three quarters and includes $6 M in revenue from acquired AllCell.
There are about 14 million shares outstanding. Institutions own over 20% of the shares, which is rare to find in a microcap stock. The company last reported almost $15 million in cash and no debt. The company is well-funded to support operations for the foreseeable future.
The market cap is $98 million, and the EV is $85 million. There are 418,395 warrants outstanding with an exercise price of $6.30 which expire in April 2024. The warrants are currently in the money, so are expected to be exercised, increasing the share count but also bringing in additional funds.
Management has instituted plans to cut costs by improving efficiency and bringing in-house previously outsourced operations such as sandblasting, painting, ballast production and battery technology. Additionally, product pricing has been increased.
CEO Desmond Wheatley said at the 2023 Q3 earnings call:
We generated over $1.5 million of gross profit so far this year, net of non-cash 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.
No dates have been announced for the ARC 2000 European rollout or for the introduction of the EV-Standard product. In the same call as above, Mr. Wheatley said that the EV-Standard has the potential to exceed sales of the ARC 2000.
The increased capabilities, efficiency improvement, product price increase, expanded territory, and new product introduction are all elements that have the potential to improve the bottom line and drive share price appreciation.
The company cash is maintained in a bank account that is lower than the federally insured limit.
The majority of sales reported for 2023, 84%, have been to U.S. government agencies, which are historically lumpy.
The company's existing and not yet introduced products have the potential to be offered in packages that include recurring revenue, which is higher margin and more predictable than the current point of sale model. This is a concern, and you have to wonder why not switch over.
BEEM has new expansion into a new territory. There is uncertainty as to the future success of this expansion. Similar uncertainty exists for the company's plans to introduce its streetlight product in the near future.
Newly acquired Amiga's financials will be subject to SEC audit for the first time.
The company's financials will be more impacted by currency fluctuations due to its increased European footprint.
Management has indicated that there is an intention to continue acquiring complementary companies. Funding for acquisitions would require taking on debt or diluting earnings by introduction of additional shares, and could delay achieving profitability.
This is a microcap stock and carries higher risk than large-cap stocks due to a smaller float and higher price fluctuation due to lower trading volumes.
The shift from internal combustion motors to electric motors is lacking infrastructure to support its growth. BEEM provides a solution to this problem as it is experiencing tremendous growth, The majority of this growth has been organic, but the company has stepped up its operations.
BEEM recently made two key acquisitions which expanded its product offerings, its in-house capabilities, and its territorial reach. The company has also raised prices on its products and expects to introduce a new product in the near future that has the potential to become the company's lead product.
The stock price has been on a decline over the last year despite the company's positive developments. A successful addition of Beam Europe will lead to accelerated growth, improved margins, and profitability and should reverse the stock price trend.
Editor's Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.