Bimergen Energy Corporation (BESS) Earnings Call Transcript & Summary

Hi. This is Craig Brelsford with RedChip Companies. Thank you for joining today's event with Bimergen Energy Corporation, which trades on the New York Stock Exchange American under the ticker BESS. With us today, we have Robert Brilon, Director, CFO and Co-CEO of Bimergen; and Cole Johnson, who is also the Co-CEO of Bimergen. We will begin with a brief presentation in a moment and then we will answer your questions. [Operator Instructions]. Before we begin, please allow me to read the safe harbor statement. This call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements pertaining to future financial and/or operating results, along with other statements about the future expectations, beliefs, goals, plans, or prospects expressed by management constitute forward-looking statements. Any statements that are not historical fact should also be considered forward-looking looking statements. Of course, forward-looking statements involve risks and uncertainties by Bimergen team. Welcome, and please go right ahead.

Thank you very much. Appreciate it. Cole and I appreciate you guys taking the time to hear about Bimergen Energy. Again, I hope it's a great day for you. We are excited about what's happening here at Bimergen. We will jump right into it. Bimergen Energy is a company that is building battery farms. These battery farms are projects that are the size of about 10 to 30 acres. And are typical is about 100 megawatts. So what's important about that is building a 100-megawatt battery farm cost about $125 million. So as you can see on the slide here, we have 23 development stage projects in process. So that's going to take over $2 billion to get those in the ground. What's nice about them, though, once they're in the ground, they're creating about $20 million a year in energy arbitrage. So that's our business model is buying and selling energy. So we take it into the batteries and sell it back out on a daily basis. And sometimes it's even by the minute, by the hour, just depends on how the day is going. What I also need to bring up here is we just did a uplisting to New York Stock Exchange. We raised $13.6 million. Again, that $13.6 million wouldn't go very far on building these projects. That $13.6 million is really just to get us on the New York Stock Exchange and have some working capital. We really finance these projects off balance sheet, if you will, with the project basis. So each project has a mezzanine part to it, which is usually about 20% or a project equity partner. And then the other part is done by long-term debt, which is about 80%. So again, using the numbers we talked about, about $25 million in the mezzanine or project equity and $100 million is in the long-term debt. Now the other good thing about this is the reason it pencils out so nicely and makes it a very profitable entity for us is that when you go down and get it operational within that 9 months to a year, you now get an investment tax credit. This is a federal tax credit that we don't have to use, we can actually monetize immediately. So on our numbers, when you talk about $125 million, you get $60 million back, you then pay off your first mezzanine debt, say that was at about 12% and then you pay down your bank debt. So you're only at $65 million against that $125 million asset that's thrown off $20 million a year in annual arbitrage revenues for you. We'll get into the details here. The 23 projects we actually bought from Cole Johnson's company back in April '24, we did this for common stock. And so cole owns about 25% to 30% of the company right now. And he owns that in just common stock. He has taking these projects from the beginning to getting them through almost NTP on several of these projects. And then what we needed from then on was getting the financing. So that jumps into the next part. And that next part really comes down to the money that we're bringing in. So here, I'll jump to here. We have $50 million that we have commitments from RelyEZ. RelyEZ is a battery manufacturer out of China. But they have committed to $50 million worth of mezzanine debt and that -- and $10 million of that has already gone into a joint venture. And we just recently announced that we are moving forward with projects with that, and they've already funded the initial development fees back to us. That's where I should also mention, so another revenue stream for us. Besides that $20 million a year per project is also development fees. So the 23 projects that we bought, and again, we paid $22 million worth of stock, and that's what they're on our balance sheet for. They actually have a fair market value of about $150 million. So yes, there's a disparity there that you've got $22 million on your books, and it's really got a value of $150 million. That's a good thing for our future shareholders. The other one here is Cox. And Cox is not TOX local, but it's Cox out of Spain. We have a $200 million commitment from them. And again, between the 2 of those, the $250 million worth of equity capital, that unleashes about $1 billion worth, and that's over half of our pipeline of actual bank debt that can be matched up against that. We also have Gotion here as another, again, supply chain with lithium battery out of China, but they're also doing manufacturing now here in the United States. We were working with them on a supply chain agreement when Cox came to us and said, no, now that you have a deal with us, we actually have an incredible supply chain agreement with Gotion and it's better than you would ever get. So it was great that they brought that to the party. Last here is Eos. Again, it wasn't in our original $250 million number of really equity partners. We knew we'd be working with them because we talked to them for several months, in fact, years at this point. Eos is going to be an incredible partner. They do zinc bromide batteries. And again, they're here in the U.S., so that's good for both tariffs and also on investment tax credits for us. So Eos, we just announced that we're doing a project with them, and it is Redbird, so we're moving forward with Redbird. There's money being thrown at that project now. We'll do more conversations in the near future as to exact timing on when that will be done. But you'll hear more about that. Let me back up here just a little bit, and we're going to get to the rising power demand and intermittent renewable supply. A lot of our shareholders don't need to be told about this, but it is really the sustainable model. It's because that between now and 2030 is expected that energy use is going to double here in the United States. What that means is the renewable supplies are going to try to keep up. But at the same time, the key word there is intermittent. So there's times where several terabytes of terawatts of this energy is actually being generated but can't be used on a yearly basis. And that's because there's a grid lock there on -- at the actual grid. So we're there to take that power off very, very cheap prices and put it back on when the grid needs it. So again, we're that balancing act, if you will We're that arbitrage, so it's a capitalistic model for us. But at the same time, we're really helping the economy and the grid, so it works for everybody efficiently. The deepening duck curve is just a model that's been done over the last 15 years, just showing again the disparity between supply and demand. This is really showing you that we really don't care where the energy comes from. It can come from solar, come from wind, oil and gas, hydroelectric, doesn't matter because when it gets to the grid itself, we take it out of the substation. So that's when we put it into our batteries and hold it for when we then exit it back out. And again, part of this is it's a buy low, sell high arbitrage model. The other piece that's in this, though, you need to be aware of is we have guaranteed revenues and that's because our banks that write us that $100 million check initially for the equipment. They want to make sure they're going to get covered for their payback and also the debt service. So they require us to put a tolling agreement in place with the likes of Goldman Sachs Commodity Index or somebody like that, we're doing agreements where we'll have that tolling agreement where it has a floor and then we share in the upside. So again, that's guaranteed revenues. We're not taking the risk. That's usually a 5- to 6-year agreement, and these batteries will last 15 to 20 years. Also here, we talked about the long-term tolling agreement, but also we need a scheduler. So instead of hiring our own trading desk, several guys that are watching the market, knowing when to buy and sell energy from the grid. We are actually working with Tenaska. Tenaska runs about 60% of the market actually in Texas right now. Cole and his group have worked with these guys before. So it's really a good partnership where they take a small piece of the pie, but you know everything runs very smoothly. And again, they'll work very closely with the group that we choose for the tolling agreements. So on the case study with like Redbird, it's a 100-megawatt project. The key thing here is having all the key partners in place. This has just come out for the last 6 months, if you will, as soon as we decided and got all these agreements locked in with our equity partners, with RelyEZ, Cox and now Eos, we really have been flooded with additional opportunities for partners, but also additional opportunities for development projects. So even though we have 23 projects that are going to be about 2 gigawatts worth of projects. And again, like I said, that for us is about $150 million worth of just development fees that come back to us, not including the $20 million annually for each one of those. And again, if you take the 2 gigawatts times $20 million, you realize that's $400 million annually that we should be at once we get this 2 gigawatts in place. And we expect that to happen over the 4-year project. The other thing that I was bringing up there, though, is we're being brought projects to us that are ready to go. So we want to bring those projects under the by Bimergen umbrella. So not only having the projects that are in our pipeline, but growing from these other projects that are out there and ready to go. You'll hear more about that as we give press releases and those come into play. But having all the pieces of the puzzle here are what's key because this is not something that everybody has, not everybody has their offtaker. They don't have their equity guy. They don't have mezzanine. They don't have the end bank guy. So that's what we have in place now is all these partnerships.

Bob, this is Craig. I'm terribly sorry. We can't see your deck right now. Could you make sure that you're sharing it?

Sure.

Appreciate it. Thank you very much. We can now see your investor presentation. Bob, thank you very much.

All right. Sorry about that. I don't know how that got taken off. Let's just go back just so you can see the deck because here, I talked about the 23 projects, 2 gigawatts and $250 million worth of committed capital. Again, 23 projects, the development process that has gone through. And again, that takes a couple of years. We talked about the demand and the sustainability. And again, here, we talked about the buy low, sell high and getting the tolling agreement in place. Here where our partners, again, RelyEZ, Cox and Eos, all who we're working with on different projects. We talked about scheduling. And again, that we were here talking about $125 million project, about 68% of that is equipment capital. So your project guys and your bank guys are very happy that most of your money is going to physical assets. The other part of this is the management team. The fact that we have been there, done that management team is what's key. You've got Cole Johnson, who has been in this business for over 20 years. And again, he's been in oil and gas, battery, solar, all of the above. But at the same time, he's done every aspect of the business. So he's done the corporate finance, the project finance and run the companies in his past. So he understands what needs to happen. Myself, I've got 35-plus years now in capital markets, taking several companies public understand what we need to do, now that we are uplifted, we're going to be out talking just like this to more and more investors, making sure that we get on those roadshows, understand which institutions need to be aware of us, because it's not always about walking in and asking for the order, asking for somebody to buy into your company. It's really making them aware of it. So when you hit that inflection point, i.e., this year, we'llhit profitability, we'll hit cash flow positive. And when they see that, they're like, okay, that's when I want to get in. So we want to make sure we do that. We have that liquidity for current investors and future investors so that we get the word out there, this is going to be a company that people are going to talk about because when you get to be profitable in your first year and you've got this type of extrapolation on profitability going forward, it's something that people can't deny. So we're excited about that. And then also Cole brought along with him a great management team. These guys are also been there, done that. They also bring their own relationships. And these -- I've talked about it before, are priceless relationships. You just can't buy these. And again, Ben Tran, he's our founder, brought us all together, and he does a great job for us also on a daily basis. We have a balance sheet, again, very simple. We have $23 million on our assets. Originally, when this was -- you see it was a 9/30 number. But since then, we raised $13.6 million. So again, you've got $39 million now in assets, and you have stockholders' equity. Again, that's gone up to $13.6 million also. The cap table is very clean in that we don't have any convertible debt. We have 7.3 million shares now outstanding after this offering. We now have tradable warrants in the market of $3.6 million. Those are at $5. So again, when I stopped trading now down in the 3 range, it's really a good opportunity we see for people right now. And then again, 12.3 million on a fully diluted basis. I'll just summarize here, we talked about 2 gigawatts. But again, we're hoping to be closer to 4 gigawatts at the end of 4 years, just from these other projects that are coming into us. We just announced the projects we bought from Aggreko. Those weren't in our initial pipeline. So again, they add to our capability of making more revenues and creating more operations. The stable contracts guaranteeing minimum revenue floor with our tolling agreements and these hedge agreements are important because it de-risks. So if there is a fluctuation in the market and it's not as good as everybody thought it was going to be. We're not taking that risk in those first 5 years. It's actually the group that we work with on that tolling agreement. The project financing, that is very, very important. That's what most people don't have. So us having the opportunity to work with RelyEZ, as well as Cox and Eos now is awesome because we're moving several projects forward with the 3 of these groups. We talked about the $250 million, which now at an Eos, you have even more. The key relationships, again, these are the relationships that got brought to us by Cole and his team. And then the market tailwinds are obvious. I mean, with data centers, AI, everything chewing up more and more energy, we are going to be a sustainable model and a needed business. So we're very excited that we have this kind of runway ahead of us. And again, working with these gentlemen that I just talked about is a delight because everybody knows what they're doing. They know where we're headed, and we're just excited to be part of this company. And we're also excited to make our shareholders a lot of money in the near future. With that, I'll turn it over to any questions you might have.

Bob -- Cole, are you going to have any words? Or should we go straight to questions?

Let's just go straight to the question.

Absolutely. Excellent. [Operator Instructions]. We already have several questions, gentlemen. When should we expect TOX zto begin with data center owners?

And really, we've already -- we've decided at this point that we're working directly with the utility companies. So we're buying our energy from the utility companies. We're powering our batteries and we're selling it back to that same utility company. So that's the tolling agreements that are currently in place. That's not to say that we can't do the other model, which is straight with a data center. In fact, it would likely be our tolling agreement partners that would have those relationships and work with those data centers. And we know that they already have those relationships. So there's nothing to say that 1 of our projects, 2 of our projects might be going that way in the near future. But right now, we're really focused on that utility scale, buy it from the utility, sell it back to utility just doing our own energy arbitrage.

Thanks, Bob. What were the plans for the $13 million raise? Was that to acquire the RelyEZ projects? Or would your capital partners typically help fund similar acquisition?

Yes. No. Actually, the $13 million wasn't used and wasn't planned to be used for acquisition of those projects. Those projects were actually acquired out of our joint venture with that RelyEZ group. Our joint venture is called GridSpan, and we actually got development fees that we used for the acquisition -- initial acquisition. And then also for initial long lead equipment purchases. And again, the GridSpan and the bank funding will be what is used for that project. And the same thing over on the Eos side. Eos project is moving forward. We don't plan on using -- it was never a plan to use the $13.6 million for the project, we'll be working with Eos and their financing partners to move that project forward.

When do you expect Redbird to get to the construction phase?

We really haven't put that information out yet. We will put that out probably in the next 30 to 45 days. We'll know exactly when construction will start, and we'll actually probably let you know who we've picked for the construction partner on that. Same thing on the Aggreko, 80 megawatts that we purchased we are close to letting out those contracts. And we'll let people know again who are we working with because it's always nice to give your partners some good publicity and everybody likes to know that you're working with good partners when it comes to construction of these projects.

How aggressive will you be in the data center space? And how soon do you see yourself providing your products to data centers?

That's kind of the same answer as the first question. We really aren't focusing on data centers. Data centers are definitely eating up a bunch of the energy. So our tolling agreement partners do have those relationships. But we're just focused right now on buying and selling to the utilities.

You have $0.25 billion in committed capital from strategic partners. What unlocks the next tranche? Would it be Redbird or something else?

Yes. Those -- what unlocks those tranches are actually just project acceptance, I'll call it. So these projects are looked at by our partners and they decide, yes, we want to go forward with this project. That's kind of what happened with Redbird. That's what happened with now the Aggreko 80 megawatts. And so that will happen again, again and again, it's going to be rinse and repeat. So each project will come up, be reviewed, go through due diligence and decide, okay, let's start this one. Let's throw some money at it and get it over the line.

Walk me through the ITC monetization mechanics on Redbird specifically. When does that cash actually hit the balance sheet relative to COD. And does this capital help fund the next project? That would be a great benefit for investors.

Yes. No, it actually -- the ITC is used to our great benefit, but it really isn't usually used for the next project. It's used on that project. So you want to make these projects themselves on a project by project. You want them to have an IRR in the high teens. And so to do that, that's when you have the $125 million that you spent on the project and then you have the $60 million, again, right at when it's operational, that comes back to you from the monetization with your tax equity partner and you then pay down your debt. So really paying down that debt really means you have a lot less debt service and you have a lot less debt to pay back from your cash flows. So that's why everything works out for the whole project is because those ITCs are very, very important, and monetization of them is very, very important. If you had to wait and use them yourself, you just wouldn't have that same IRR.

What are your similarities to and differences from Bloom Energy?

To be honest, I don't know much about Bloom Energy. We've seen them on the outskirts. And I don't know, Cole, do you have any more insights...

What is the similar in ways as they'll come back, do some behind-the-meter stuff, data center stuff, with the aspect of they do manufacture fuel cells and they really focus on fuel cells. Bimergen, we're not a manufacturer. We're out there to solve a problem. Not saying Bloom doesn't. But yes, that's a key difference, the manufacturing aspect in fuel cells.

This person wants to know about the Aggreko deal as a proof point. You just closed 8 late-stage DG projects from Aggreko with RelyEZ simultaneously, does that deal structure acquiring late-stage assets with joint venture become the repeatable playbook for the rest of the pipeline?

100%. That is -- you got that as a repeatable playbook for buying assets that are out there ready to build. And then you have our current pipeline of 23 projects that are going to be working similar to what we just announced with Eos. So you've got both sides, and that's how we're going to get from 2 gigawatts, we believe up to 4 gigawatts over that same time period. So instead of having $400 million in annual revenues, our goal is have $800 million in annual revenues by the end of year 4.

I read that Redbird just cleared JDA approval. What's the honest time line from here to first dollar of revenue? And what are the 2 or 3 things that could accelerate that?

Sure. The -- again, we haven't put out the exact time lines on that. The typical for that size of a project is between 9 months to a year. So you can use a year as your conservative number. Now as for revenues, that's when operational revenues start. You'll actually see development fee reimbursement revenues coming back to us Bimergen long before that. And again, I said the revenues on that type of 100-megawatt type project is between $7 million and $8 million. So we'll do that announcement when those timing of when that's occurring. So our shareholders can be aware. And as you can see, there's a lot of money here that's flowing around. We're always trying to make sure that we're cash flow positive. And at the same time, you can also see that with -- if you look at last year's, I guess, the P&L, there was only about $2.5 million worth of cash used for our corporate overhead. So as you can see with just the development fees coming back in and just minimal operations started in 2026, you'll see some good profitability. And then 2027, you'll have full operations on these projects that we're starting right now. And again, you'll see new development fees coming in, in that year. So you see even more increased profitability going forward.

Congratulations on your recent uplist to the New York Stock Exchange American. What can we expect in the next 90 days?