Bimergen Energy Corporation (BESS) Earnings Call Transcript & Summary

Hello. 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 J. Brilon, Director, CFO and co-CEO of Bimergen; and Cole Johnson, co-CEO. We will begin with a presentation in a moment, and then we will answer your questions. Welcome to everyone joining us today on X, YouTube, LinkedIn and other social media platforms. [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 statements. Of course, forward-looking statements involve risks and uncertainties. Bob and Cole, if you're ready, please go right ahead.

Thank you. Appreciate it. Good afternoon, everyone. It's great to be with you if you've been here before, and if you're here for the first time. Again, this is Bimergen, and it is ticker symbol BESS, standing for Battery Energy Storage Systems, and that is on the New York Stock Exchange, American. So I'm going to start off today. I'm actually going to flip through some slides here real quickly because I want to get to one that everybody is interested in, and that's kind of an update on our financial, just Q2 earnings that just got announced. We're really thrilled with what we were able to bring to bear, Q2 earnings and the balance sheet, revenues we reported of $7.9 million. That's our first revenues that we've ever reported. That brought EBITDA in at $3.9 million of earnings. So -- and the net income of $1.6 million. Again, we have some stock comp and intangible amortization that make up that difference. Balance sheet, we have the cash and current assets at $14.6 million, again, up from our first quarter and then total assets of $38 million. That includes $22 million, or actually now it's $23 million in our intangible assets for the projects that we purchased back in April 2024. One thing we've talked about in the past, those $22 million worth of projects that we purchased or actually have a fair market value of around $150 million if you look at what we can sell those into a joint venture for as we're going forward into operations. Again, very little in the accounts payable. We have a little deferred revenue there that you'll see come in during 2026. And then just -- also just while we're here, again, our cap table, again, still the same, very simple, very clean, nothing toxic, no convertible debt. We have 7.1 million common shares outstanding, 300,000 prepaid warrants. And again, that's just because we had one investor in our offering that hit the limit of 4.9%. And so they've left themselves that money they've already given us, and they'll change those into common stock as it makes sense. But they're still 100% in our deal, and they've done a 13G filing to prove that. So let's go backwards here, and we will get back to the beginning. So again, Bimergen Energy is battery farms. So we are building battery farms throughout the United States, but we are focused in Texas. The majority of our development projects are in Texas. We -- one of those projects that we came to bear is called Redbird, and it's one that we worked on with Frontier, Cerberus, using Eos batteries. So they're moving forward with that project with two other projects that we actually bought and sold to them. We also talk about another 8 projects, which are small projects, 10 megawatts. So it's 80 megawatts that we're working with RelyEZ. And we'll talk about how those come into play, and why RelyEZ would do this with us. Again, RelyEZ is one of our capital commitments. So we have $50 million of committed of this junior and mezzanine debt. They do this very, very strategically. They get about 12% of the money as it's in there for about a year during construction. And then they get paid out during the investment tax credit time period. And investment tax credits are very important to us because we get up to 50%. So as I didn't mention yet, but each of these projects, a 100-megawatt project cost about $125 million. So everybody says, well, $125 million, you only raised $13 million, how are you going to do this? We'll show you how we're going to do this. The other thing between -- is also having the key partnerships in place, and this 100% of our projects is done through project equity -- excuse me, project debt financing. And then we'll talk about how an offtake/tolling agreement really helps all this work for the banks. Why can't anybody do this? If we're using other people's money? It's because you need all the pieces to the puzzle. In fact, since we've gone public and done this uplisting, we've had other developers come to us with projects saying, "Hey, you seem to have all the pieces of the puzzle. You've got the deal flow with your development projects, but you also have the junior and the permanent debt guy that you're working with. The ITC monetization partners, the EPC, meaning the engineering, the procurement and the construction relationships and also the offtake hedge guarantee agreements." So again, we've talked about those type of agreements. What that is, is that's a guarantee of revenues. So when a bank comes in and says, "Hey, I want to write you $100 million check, but I need guaranteed payback of my debt and my debt service." Then you bring in a group, and it's a group like a Goldman Sachs, and let me show you the numbers on that. So here, as I mentioned, we're using other people's money. The other important part is the very last sentence down here in red. Each project is financed on its own assets and operations, very important. No recourse back to Bimergen. It's each project is its own silo. So when you take a project to a bank, you say, here's this project, it's 100 megawatts. This is what it's going to throw off. And as you can see here, it throws off about $20 million a year in the arbitrage revenues. These aren't just fake revenues. These are revenues of buying electricity and selling electricity daily. And that's your buying it low when there's low peak, and then you sell it back when there's high peak demand. And again, it's best that you have -- it's important for location, location, location, where do you put your project? You put it where there's alternative energy, where you've got plenty of energy during certain times of the day and not enough during other times of the day. So we're there balancing the grid. We're being very capitalistic in doing it, but it does help everybody along the way. And we're making sure that all of our partners are getting their piece of the pie. As you can see, the piece of the pie, it's a very big pie. So when you have $20 million, you have an offtake guarantee agreement here of $6.5 million. That is what you get like a Goldman would get there, and it shows the calculations below. They're getting half of your profit -- above their guarantee. So if they guarantee $7 million and you do $20 million, they get half of the $13 million. So they get $6.5 million. It's a big chunk, but it also derisks it for everybody. So they're taking a risk in that sense. Also, because this project doesn't take a lot to run. There's no people on site, it's an asset. You're buying and selling energy all day long, powering up your batteries, discharging your batteries, and you're doing that remotely. We actually hire a firm that does this throughout the nation. They own about 60% of the Texas market, and it's called Tenaska. These are groups of guys that use AI as well as historical and predictive modeling to actually know when to buy, when to sell the energy and make us the best profits doing that. And again, they get a small piece of the pie for doing their piece of the action. As you can see here, as we talked about, 100-megawatt projects is $125,000 (sic) [ $125 million. ] And again, we do the ITC tax monetization. We get back down to $65 million after you pay off $60 million. With that $60 million, you're paying off your upfront mezzanine debt. So now we're owning 100% of that project going forward. And as you can see, our EBITDA on that project is $11 million. And that's when we're using a Goldman type company to actually be our hedge agreement. If we weren't using a Goldman into the process or once the debt is actually paid off, that, of course, jumps up significantly up to $17.5 million of annual cash flows. Here, I want to show you, so we have 23 projects that we bought from Cole Johnson and his group back in April of 2024. Cole is our other co-CEO. He owns about 25% of that -- of the company today because of that merger that we did. Again, I have Redbird in yellow because that's the one we have sold, the majority of that project to Frontier, Cerberus, with Eos being the battery supplier. We will end up having 7.5% of that project going forward as well as the other projects that we've sold in that transaction. And I'll talk more about that in a little bit. As you can see here, though, we are very heavily weighted in Texas. And that's because Texas has a need, and we have the solution in putting those battery farms in areas where there's plenty of alternative energy. In fact, there's times when the power companies call and say, "Hey, you need to shut down. I can't take it. There's a traffic jam. I can't take any more energy." So that's just wasted energy that we're taking advantage of and really helping balance that grid. So the recent developments, again, on August 17, we announced our quarter. Again, like I just went through, it was a great quarter for us with $7.9 million in revenues, and this is -- these are the first revenues we've ever reported. So we're off to a great start. Again, very cash flow positive on the quarter and also had great EBITDA and net income. We talked about the projects that we sold back in May 21. That's what helped bring these August numbers to bear. We talked about the best development process and the progress. Again, Redbird is the one that's going -- has gone now through the financing and is headed for construction. The development process is going through the feasibility studies and getting the legal formation done, going through the engineering, interconnection, et cetera. This is what we bought from Cole and his group back in August of '24 (sic) [ April of '24. ] And as I mentioned, these are worth between $5 million and $8 million for each one of these, and we have 23 of them. So it's around the $150 million mark in market cap or market value. The rising power demand and the intermittent renewable supply is what makes this a very sustainable model. The fact that you have all this energy, but it's being wasted, and we're there to help balance that grid, again, buying it at a very low price, selling at a high price on a daily basis, where you can make $20 million doing that on an annual basis. The deepening duck curve is just further sustaining -- showing the sustaining model where it says over the last 15 years, the supply and the demand has been getting worse and worse. So bringing in batteries and this type of energy is very important, and it is balancing the grid. What happened in 2025 was the current administration said, "Hey, we're going to go ahead and put in this investment tax credit for batteries. We're going to continue with it until 2033." Solar and wind, we're going to cut back a little bit, but we're going to actually now take batteries and put it in its own little silo. So it no longer has to be attached to wind or solar. It can be right there on the substation, taking energy off, putting it on, and that's been a great thing for us. The nice thing is both sides of the aisle agree. Both sides of the aisle agree that the current grid needs balancing, and this is the way to do it. So we expect this actually to get continued beyond 2033, and it should be something that goes way beyond where we're at right now. Our projects will all be done by about 2030, 2031, that we currently are under way of getting built, but we expect to buy more as we're going forward. Again, I talked a little bit about we are energy agnostic. Where does it come from? Wind, solar? We're not tied to anything. We take it off the substation. So it's actually the transmission lines that we're taking it off, and we're putting it back on to those transmission lines, buying it from that utility company and selling it right back to that utility company. I get the question oftentimes out on the road, why doesn't the utility company just do this themselves? Well, they can't. They can't because of the monopolistic reasons. A utility company can't own batteries, and they can't own a power producer. So they are -- it's a symbiotic relationship that works for all of us. Again, this shows the buy low, sell high model. Talked about the partnerships earlier. Again, having $50 million from RelyEZ, they're a lithium-ion battery manufacturer. They're the first ones that stepped up. We're doing our first projects with them. Again, it's great to have a partner that -- again, they're doing it very because it's strategic for them. So committing $50 million, they put, say, $25 million into a project and then the bank puts in the other $100 million. In this case, they put their $25 million for the upfront construction, getting things going and really, they'll make 12% on that money during that time, but that's not why they're in it. They're in it because then they will get their batteries purchased by the bank debt. So they'll get about an $85 million check for their batteries. So again, it's a symbiotic relationship. Everybody wins. Eos, they're the ones that are involved with the Cerberus, Frontier, agreement we just did with Redbird and two other smaller projects. And again, we had a joint development agreement with them. We have that going forward. And it's a great relationship. Eos is the zinc bromide batteries. Again, they have -- they're pros about those, the longer life batteries. And they've just been a great partner, and we think we'll do more business with them going forward. It's different than what we're doing with RelyEZ. RelyEZ will own 100% of those projects at the end. On Eos, these -- the current transactions, we're only going to own about 7.5% of those, but we'll get paid out right upfront for the development fees and then own the 7.5% going forward, getting cash flows from that. But we talked about also other commitments. We have Cox. We're going through a definitive agreement process with them, and that $200 million worth of that upfront type equity -- project equity. And then you have Gotion, who's another lithium-ion battery manufacturer that we've worked with. And we also -- it's nice to have -- there's about 10 guys out there that check the box with our bankers. The bankers have to sign off on your battery manufacturer because they're writing a check. You're not going to be working with any battery manufacturers that are brand new, new technology, when you're getting $100 million debt from your banker. Talk about the scheduling and long-term tolling agreements. I did talk about Tenaska. Again, that's who's doing our scheduling for us. Again, pushing the button to buy, pushing the button to sell to load up the battery and discharge the battery back into the grid. And then we talk about Goldman Sachs here, who's doing the tolling agreement. Again, that guarantee of revenues for the bank and us. Case study, took 100 megawatts, again, $125 million I've talked about on a project, $85 million of that is equipment. So mostly batteries, interconnection equipment, et cetera. But again, the banks like it, the fact that they initially loaned $100 million. They now have been paid down. There's only $65 million against that $125 million asset and $85 million of that is actual equipment. Company management, again, Ben Tran is our founder, started this company back in 2021 when he brought me on board. We did a reverse merger back in 2022 to get OTC. And then we did the merger with Cole back in 2024. And that actually really catapulted us forward and allowed us to go do an SEC filing, get the uplisting done here in February of 2026. Cole has 20-plus years of experience in the industry. So oil and gas, wind, solar and batteries. So he brings the team with him. So these are the been-there, done-that guys, including Cole. They also come with just extreme relationship. So when you have guys who have been in this business for this many years, they have people they can call. You don't have a bank writing you a $100 million check unless they've written you $100 million check before without going through a lot of due diligence. In this case, these guys have done this before with these banks. They've worked with Goldman, they work with several different institutions that we'll be working with here in the very near future. Myself, I had 30-plus years. I'm the old guy of the bunch. I'm the one that has been in this market. I've done 6 different public companies. Really, it's about now going out and communicating our story, communicating our successes because we want people to have us on their radar screen. We're not expecting them to buy the stock tomorrow because they hear about it. We expect them to watch us and say, okay, "Gee, I like this. When it goes to $5, I'm in. When they hit profitability, I'm in. When they hit a $100 million market cap, I'm in." That's what we want. We want to get on the radar screen. So when it hit an inflection point for the individual wealthy investor or the institution themselves, we want to be on those radar screens. Again, I talked about the earnings and the balance sheet a little bit. And then we had the cap table I also talked about. So with that, we're actually happy to take any questions. There was a question that came in earlier that I'll go ahead and address. The question was, are you going to be raising any more money because they had looked at our financial statements and saw our burn rate. And that's what I need to basically clarify. When you look at the financial statements and see SG&A has a certain number. The EBITDA number actually is a better, I guess, reality because when you look at the SG&A and you say, "Gee, it looks like you're burning this much money." What you have in there is amortization. You also have stock comp. So for us, you have about $3.7 million, I believe it was, this year so far at stock comp. So if you take that out, you can see that we're only actually on a burn rate of about $4 million to $5 million this year. And that's what I kind of said in the past is we expect that to be in that $5 million cash burn rate. We had some additional fees during the quarter, that were actually some legal fees that were pretty much directly related to the sale that we had occur. Again, that was offset by the sales, so we're still very cash flow positive for the quarter. And if you look how things are trending for us, there is no reason to go raise additional money at this point. The reason we would raise additional money in the future is if we want to raise money to be our own bank. So if we want to be our own junior and mezzanine debt funder, but at this point, it really doesn't make sense to dilute ourselves or our shareholders to do that because we just don't have the market cap value that it would make sense. With that, I will turn it over to any additional questions.

[Operator Instructions] Just a comment, great business model. I am surprised this stock is range bound with $150 million in assets, especially with AI energy needs and the run in Bloom Energy. With warrants exercisable at $5, I hope you can get institutional support or analyst reports to get the stock well over $5 to raise funds with the exercise of these warrants, keep up the hard work and speak with big energy investors. Anything you'd like to add to that? He said it's just a comment.

Yes. No, I think that's -- he's exactly right. I appreciate the comment. We are doing what we need to do, and that's we're staying focused on business. We are obviously getting out there, getting these webinars, doing some local presentations. We'll be at some presentations in the next few weeks in New York. And so it is about getting the story out there about what our reality is. It's great now to not be able to just go out and talk about what we're going to do, but it's wonderful now that we can talk about what we've done, and how we're going to extrapolate upon that. So it's a very exciting time for us. Our stock definitely isn't showing it yet. But we also see that as a positive in that the people that we're talking to now and that are hearing about this. As you know, this is a non-deal roadshow, and we're not raising any money. So my hope is that if you get in, you make money, and that's why we're here and making sure people are aware of this.

This person writes: How long will it take to roll out the full portfolio of projects? How many projects per year?

Yes. It's going to take us between 4 and 5 years to do all 23 projects. And again, we believe that it's an average of 4 to 5 projects a year, is what we're counting on. That -- and again, we're doing that with just what we currently have in-house. I mentioned a little bit earlier that we're having kind of deal flow thrown at us. So that could add to what we do during that time period. But we see that, that's -- we're very capable of taking on those additional projects and getting those done during that 4- to 5-year project time line.

How much of your pipeline is long-duration storage? Can you expand about the projects sold to Frontier Power USA? Were those projects already scoped to use Eos' technology?

Yes. Those -- and again, our projects are various, some are short and some are long. We don't have a specific percentage right now set up. The answer to the second part of the question is, yes, those projects were very well suited for the long duration of the zinc bromide Eos batteries.

Will all the projects have the same capital structure and terms?

And the answer to that is definitely not because it seems like as we go through this. There's a lot of ways to do these different projects. And what I mean by that is there's a lot of different nuances to them. There's a lot of different partners that can be involved. And so we are seeing, as we go forward, we're doing what makes the best economic sense. So just like we started out with a project where we're end up owning 100% of those 80 megawatts. And then on the one we did with Frontier, Cerberus, that one we're only going to own 7.5%. So again, the way we end up going about this and moving these projects forward and making money for us and our shareholders is really going to be project-by-project basis.

Thanks, Bob.

You bet.

You described roughly 2 gigawatts across 23 development stage projects. Where do most of those sit today? Early siting, interconnection queue or late stage?

Yes. Again, the majority of them actually are in Texas. And so the 11 that we have in Texas, those are going through -- it is exactly what you're saying there. They're in interconnection queue, or they're through the interconnection queue, ready to go into financing. So they're in various stages because as you can imagine, you don't have all of your projects ready to go financing right now. Otherwise, you'll be able to do all 23 in the first year. Right now, we're bringing them up through the ranks and having them ready and in queue when we're ready to build those over the next 4 years.

Building even a fraction of 2 gigawatts costs far more than the balance sheet holds. How much of the funding model is project-level capital versus anything that touches the common equity?

Yes, that's a great question. And back to 100% of our projects are going to be financed through debt or other partners. And so we aren't using our current equity. We didn't raise equities to go actually build projects because it just doesn't make sense when you're only have $13 million that you raised, and it cost $125 million to a project, you'd run out of money very quickly. So that's why we always had this financial engineering set up so that we could go forward and really just have it, be what we wanted it to be. And that's just having all of our debt partners in place, whether it be the mezzanine, junior debt and then also our long-term bank debt. And again, if you try to do this, you better be very, very well capitalized. We would have to be a several billion-dollar company, having our own bank, if we were going to do this the way we're doing it, and that's through debt instead of equity raises.

Interconnection queues are the bottleneck everyone in storage talks about. What's your average wait, and how do you derisk it?

It varies. And again, Cole and his group have been doing this and have been in those queues for several years. And so that's how you derisk. It is just to make sure you have things ready. And again, these guys have been there, done that. They know the process. They know the individuals. They know the different areas. Like I said, ERCOT is where we have now almost 20 of our projects are in the ERCOT area. So it's important, and that's 20, including 8 that we purchased that are small ones. But 11 of our 23 are in ERCOT. And so that's an area that we're focused on, and that's mostly Texas. So again, you get into the queue, you -- and whoever is putting that question out there is exactly right. That's a very, very important aspect as well as making sure you have the equipment that you need because there are long lead time equipment. So you have to have the ideas in place that when you're going to go into production, and when you're going to go into construction, so you have things ready.

Can you speak about how current political winds are impacting your business pipeline, fire safety concerns and NIMBY for data centers. Texas Governor or Government -- Texas Governor has an energy audit and PA Governor issued his executive order, are these tailwinds or headwinds?

Right now, what we've seen is every -- especially in Texas, they are pro-business, pro battery energy storage. And that's because they see it as a need. They don't count on something else coming along and balancing the grid. You're going to have to spend a tremendous amount of money to upgrade your infrastructure. And obviously, people talk about what are the future energy pieces that are going to be coming online, nuclear, et cetera. Again, we're talking many, many years out. So you need something to put in place to really do the balancing now, and you can also look at the infrastructure in the future. But as we all know, we've seen it that over the next 4 years, the conservative estimates are that energy demands are going to double. And that kind of answer your question, when people talk about AI, data centers, et cetera, they are the ones that are starting to use up a lot of the grid. And so when they have -- they want to run 24 hours a day, and there's not alternative energy there for them to use at night, there needs to be some balancing going on.

How should investors think about a quarter like this? Is this a run rate? Or is revenue inherently transaction-driven at this stage?

Definitely, inherent. It is transaction driven because in those revenues, there's no, what I'll call, operational revenues, where we're not generating any revenue yet from buying and selling energy. That will come next year. These are good transactional pieces. But again, it's not a one and done. You will see more transactional pieces going forward because you have to have the transactional pieces to actually flow into your operations. And all of our analysts that actually follow us have kind of shown that in their analyst reports that here's what the company is going to do during '26. They're going to have mostly transactional. These development fees that are going to go on to their top lines. And then in 2027, they'll have a mix of additional transactional but then some operational revenues in addition.

Management has referenced a path to roughly $400 million in annual revenue from the pipeline once fully built. What has to go right in sequence for that number? And what's the biggest thing that could pick it off the table?

It's really -- it's simple math. Really, when you look at 100 megawatts or 2 gigawatts that we have there, just what we own. So just the development projects that we already had in our stable going forward. And you say, okay, the -- at the average on those is going to be $20 million annual energy arbitrage. That's where you come up with and you say, "Okay, this is $400 million is what we expect to get to just if we do this over the next 4 to 5 years." As I mentioned before, we want to stay conservative. We know we're going to buy additional projects. We believe that number can go way north of $400 million, but $400 million is what we've kind of put out there to the world, and we want to hit that target and beyond.