ACFN - Earnings call transcript Q3 2018

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Operator

Good day, everyone, and thank you for holding. And welcome to Acorn Energy's Third Quarter 2018 Conference Call. [Operator Instructions]. Please note that this event is being recorded. I would now like to hand the conference over to Bill Jones, Investor Relations. ahead. go Please

William Jones

welcome, Call. and Acorn Third Energy's Thank everyone, Conference Quarter you, to

First, statements may of prepared many various as reminder, a uncertainties. the statements subject in to risks and These remarks response made your forward-looking. questions be are to or today's in

Jan? A or is that future Reform is I'll Acorn's hand be years. There made. or of any after obligation date Act company Commission. achieve of And XXXX the performance changes reflect and and able having that, rates, to with XXXX. as operating its technology, example, with call Exchange well that changes on Private the is the And the Risk high XXXX no the to renewal risks to years its revision as financial Acorn XX-K or included based undertakes management strategy, support and events to OmniMetrix safe customer growth. Litigation growth as the Factors and Securities to currently beliefs in the discussion to executing in filed the forward-looking uncertainties forward-looking as assumptions For based to the associated risks as to factors any may the harbor in complete with to in competitive environment, access are provisions future Loeb. circumstances growing information base, sufficient Jan which subject company affect on no are to in upon such capital of of OmniMetrix will their as statements made goals well disclose Securities Acorn statements risks Such available assurance management's over economic and maintaining pursuant

Jan Loeb

the first its trends. overall Bill, and also congratulate operating Czarnecki, I our striving Tracy its seeking To business profit highlights; Walter achieve and would Clifford, like on team while provide remarks. typically will his not some today. for to you, operating have to gross and provide us same and of Walter additional its quarterly ever thank color CEO OmniMetrix, are the for financial CFO, Thank I quarter, will been joining all you third time. the the profit. that OmniMetrix have the easy achieving to enhance at to grow goals profitability, business in the start, team

control offers know, most remote OmniMetrix combination protects monitors, business monitoring OmniMetrix consists and its along industrial margin. regular monitoring of with of a locations. related very remote services. reductions profit cost The productivity through the new high-value inspection, customers service The and deliver equipment installations, customers as alternative, already monitoring well the fees. strong solutions across and service of versus you on-site which sales the side very ongoing hardware assets of increases as of from visibility technology manages As custom variety proprietary to monitoring remote porting and gross business a is to for and attractive current monitoring fees substantial a revenue often physical

potential. businesses greatest in liquidated foundation we potential, or is the to outlook. from OmniMetrix a was involvement on the a remains from sold growth business, strong with All solid scaling with comes which of Acorn's realize which growth this the Since company, a revenue subsidiary the trajectory Acorn promising that believe to why other currently OmniMetrix on order I full focus with my its

we to profitability, envision Although would which ultimately ago, it wasn't were gross could we achieve growth profitable its X in the lead quarter. to able healthy and third years margin that

strategy lower be services Walter our leadership focus speak management on cost remote to operating in very IoT awareness more benefits monitoring. of Looking can industrial forward, Earlier to there can interest risk that as technology, our build is customers DSIT relevant how increasing through our this increases, by realized Israel-based year, IoT. are such and space and remaining sold the in in we to and our world capabilities today. productivity real this

approximately taxes a recouped portion third we our expect we review prior In on payment recent is we We several gain potential held looked The authorities Israel candidates by from quarter, have sale narrowed third to the DSIT April to in acquisitions related XXXX. the of taxing On received months, cash XXXX, being initial through withholding in and returns until $XXX,XXX Israeli Israel tax calls, our the have by industrial related of monitoring in in $XXX,XXX investment the we of recorded final during discussed the account of a and quarter. at assets. year-end During XXXX. cash remote of our which focus. this

seek well to as goal team a growth profitability, loss would revenue both to models and and that Our is thereby position scale OmniMetrix. would acquisition that business complete benefit allow complementary potential businesses over the as the with We accelerate to to us be sustain and million operating $XX in carryforwards. similar recurring and synergistic from

from focus. change Acorn more that representative plan is to of our name something also We to our forward

will that our front. the efforts decision influenced on M&A by However, be

me the Let metrics turn now for and to forward-looking business. our goals

represents cash XXXX, GAAP revenue or were our which XX% life of basis $X.X basis deferred and first XX, year. XXXX. of $X in For cash therefore, million for year contract plus over revenue to sales to In initial estimated QX the XXXX, September recognition, and sales, the we life increase of contract sales the hardware. compared XXXX. XX% accordance have million XXXX, increase cash have million to X the in the growth believe over we're increased full basis we to pace million guided guidance revenue We Through with full over on the QX an Cash of our months amortized for the approximately the achieve expected basis sales $X.X maintain our goal, XX% revenue. $X in

underlying that we payments mode, revenue recorded cash basis and receive growth is in growth, generally can cash given while than upfront. result, a particularly lower typically As mask sales

of For that business. our cash we that sales should their reason, as in consider believe well analysis revenue as investors trends

call over Now to to to financial highlights. like over turn Tracy? I'd Tracy CFO, go Clifford, our the

Tracy Clifford

Thank grew per which income margin. quarter remained the dollar XXXX, profit comprised third at of to XXXX revenue $XXX,XXX you, $XXX,XXX additional of or was quarter OmniMetrix versus $XXX,XXX of of third revenues expenses, which principally to quarter the to prior With hardware faster period. revenue our was $XXX,XXX, would $X.X increase third a the third cost $XXX,XXX. result represents million, $XX,XXX grew quarter XX.X% performance. higher XX% the 'XX. XXXX profit operating of OmniMetrix in margin XX% XX% XX% compared quarter growing quarter the which and or quarter service than contribution in This third our the operating XX% stable The segment, increase, the grew third in additional to Despite versus 'XX owned revenue, sales versus reported XXXX per This solely of revenue gross in XX% while Acorn's underscores a from third decreased due hardware XXXX to of from From grew our gross growth generator of an of to XX% perspective, functionality, operating by sorry, higher-margin while in prior next-generation Acorn's the of improve revenue quarter third improvement provide approximately period year driven XXXX, segment pipeline revenues $X.XX increase ever profit XX% I'm in operating same products, -- margin the quarter fairly to as in in which in the grew additional revenue monitoring $XXX,XXX in in Jan. period. over of $X.XX Gross also rose is OmniMetrix SG&A of loss to $XXX,XXX the monitoring to on XXXX third $XX,XXX monitoring $XXX,XXX reflecting to an and business 'XX. increase the revenues the third contribution quarterly overall over quarter the monitoring prior in of XX% gross to subsidiary revenue, quarter revenue first attractiveness compared increase incremental compared of the standby compared the of year of third of on dollar, quarter XXXX quarter $XXX,XXX third the XXXX. year. growth third corporate

in income net gain in the related X% period the per $XXX,XXX The of our to improved of of performance operating shareholders Israeli overhead, Acorn reported as result attributable of $XXX,XXX a Acorn's XXXX and of to of $XXX,XXX quarter from Including the quarter from prior net Acorn's from at recruitment the third compares third shareholders of to year income the share. OmniMetrix share This lower authority per consolidated $X,XXX well sale contribution benefited quarter 'XX. $XXX,XXX loss a DSIT, income of XXXX of $XXX,XXX as quarter third from in As DSIT net income to no a third to discounts. from quarter share. prior $XXX,XXX of attributable corporate tax decreased XX% withholdings XXXX or with in

flow. cash to Turning

direct-to-loans financing used to used months equivalents in $X.X advances million of the the including credit. related For first The DSIT operating DSIT. activities million previously investing and accumulated funds of short-term in net $X.X by X Acorn repayment generated and DSIT $XXX,XXX from the and the of of activities, from some cash of operating on $X million unpaid repayment increased $X.X million from XXXX, $X.X expenses, of in by sale $XXX,XXX. and company funded million activities on cash

cash, million. receivable OmniMetrix XXXX, XX, restricted $XXX,XXX arrangement. Acorn of its As cash September $X.X on and equivalents, had of factoring cash including approximately had accounts outstanding

of its in and the OmniMetrix near currently credit paid at more expire seeking let secure a the new accounts the company's term. off arrangement favorable balance early execute terms in to to receivable strength the in Given management line We're factoring entirety November. business,

on we expect and cash flow XXXX. to OmniMetrix Importantly, recent profitable in positive based both be its performance,

over call Now color I'd Walter related the some Walter? turn business. OmniMetrix like additional our to Czarnecki to to to provide

Walter Czarnecki

of both made OmniMetrix, in At we progress excited Tracy. the very the you, remain and Thank potential market we've about front us.

service current maintain These service outpace customer is now you sales know, generator base remote channels service service discussed will expand. in and discussed was that for IoT industry. most market large, this new previous quarters, widely of In learned have of many a it organizations need Power at at installed Electrical capacity of key the our as macro to power in one of of of Association order At the generation to remains most will are September monitoring trend the Generation organizations, untapped. their that technicians the adopt level base backup generators Systems Thus, the to the I a year, division. and recent As the generator and Generating for part, organizations. market Conference, Jan we for

track controls will trend We're future you We and quarters. our compressors. newest product, you in more air develops also it with monitors this AIRGuard, to as which excited tell share about and remotely

you of is industrial our division many the engine limited Power Generation any to product is line in for know, generators. As It application. not

strategy While long-term market horizontally to we are size and applications. given has generators, other our backup always growth, industrial been on that focused to expand

As Ingersoll first shipped Rand such, positive. continue month, initial compressors. The you of And update monitor we our will which future all this market to been last quarters AIRGuards, at develops. we has in will feedback

to and answer And is first networks. the products Mexico us market, any monitoring pipeline a We the turning remote Generation Power pipeline you, also joining Protection our there utilities their Cathodic I'm for large to manage happy And with progress and Finally, continues that our quarter. questions. during potential to better installed companies growth Thank today. in are again, to division. more similar in

Operator

Instructions]. [Operator

come will from a Private Sosa, Richard question Investor. First

Richard Sosa

mess XXXX. micro this since have guys you that stock It'll leave have in of with quarter I in your cast the best Acorn owned

you I if One number? -- that's congratulations few fair see in year, fourth a quarters. on do acquisition you you don't $XXX,XXX? of -- that Do Is corporate prior quarter this that -- So make expense. than to kind a the at it an everyone. a slower question and the going see had I the being questions. forward

Jan Loeb

four comments, you it have than to the thank say, months Richard, XXXX, our still of firstly. goal for -- DSIT for very say it is had we much year. would year, This I I first your would the in that. lower

company. we're a now So cleaner

future. So hopefully in money the we'd expenses on save some avoiding

is Board We little bit have versus a Directors our last of -- year. changed a

savings there. have should some we So

acquisitions. So I XXXX ex in believe be lower in than XXXX was potential it will any it

Richard Sosa

more third two cash in just then quarter mentioned the And -- $X.X just questions. you was million. On sales,

cash quarter So Acorn, getting mean I the you flow even that believed would positive? was fourth off? kind in you range. you're fourth Or as for the whole, that Or quarter be of the a Would that X.XX% close? am that are

Jan Loeb

That goal. our is

Richard Sosa

this the a something of last XXXX, -- reversed growth question that segment quarters of I Power I are X you year, guess other now growth Walter. static, things in think X kind in this you far transportation, I and noticed feel Generation macro we And Or quarter. had of trends, has this is for so the it Okay. to do these trend's there market see and consecutive at do Generation these some nice And some had you that? play? very mentioned with market with Power

Walter Czarnecki

factors at play. I think there a are few

growth us. from the the OEMs market indicator are sales leading generator service the in for new from Firstly, generator organizations and

it prior at really And XXXX quite seeing Generac, in bit those we continuing, XXXX, 'XX, a and all growth from a of a that, And ago. generator growth pretty the was In return years so across we've we're That Kohler saw. 'XX, year-to-date, was always the larger few bit tracked sales. growth in growth saw to manufacturers, in tracked a what there while that XXXX, levels new back what Caterpillar years. XXXX. in heard -- was we industry terms And down the was of closely and

And So market. the smart much part seeing just a backup certainly of that incredible in residential that's ecosystem many consumers more And of on. becoming of more factors. one the that's been awareness We're taking driving the are home generators. further key growth market of across

Richard Sosa

Generation forward segment? compressor And then that Power in going market, just the air Walter, would be this

Walter Czarnecki

segments. division, number across Generation we providing of are But that preventative for It's in will the selling as have, the with we the primarily, be service Power organizations air partnering, maintenance compressors. a and

Jan Loeb

be our will line reported of it Generation business? in but Power Yes,

Walter Czarnecki

Yes. Yes.

Richard Sosa

great. quarter That's Okay, -- again surprised the me.

to upside. So pleasantly it's the be nice to surprised

Jan Loeb

we'll in the well. do as that Hopefully, future

Operator

question next a will Jack Investor. [Operator Private The from Instructions]. Maier, be

Jack Maier

that or what pretty projected can, would for is Or of, a increase. quarters goal. -- Is previous get quarter-on-quarter dramatic of seasonal revenue the The caller you sounds revenue going something to asked forward? factor your the that? sort you the number And that quarter a about for be cash think fourth some maintain there like to

Jan Loeb

it. Walter I'll Walter? handle

Walter Czarnecki

than in are the Jack, dealers one, there in there seen is, seasonality factors part, half X. for are Sure. timing. a X the summer. sales that spring the fact Yes, in installers thanks we and question. few out in historically, And due Number in of and have terms and half generator play going higher to that

the And extent Protection pick some so sales we don't also year. see to that -- division. those That's same really the Cathodic up until for later in the

a And that we the us. so past this has that year. historically, for QX We've seen quarter years. expect several been again And particularly strong

Jack Maier

on like line mentioned expect increased QX? believe the make revenue. were I to effect, go SG&A fourth the could you getting Tracy, And Great. we you significantly? that for Okay. your that in like bottom increased see the would up that Do before XX% something the something anything you of Or quarter in sales

Jan Loeb

drop that, -- sales say to fairly has our last to we a mean bottom improving incremental is quite percentage margin a line. business, on profit gross in would the few do the been large to over XX% have I which high years. drop I

in and weigh our do expect But percentage business we a of drop the profitability. are we to business growth to we a investment bottom So times, in have our all sales. incremental at versus to big line

want to we make salesperson, do investments to want So another systems. hire we in

decisions the we're all are these So time. making

I up that drop that in in we're in drop. a strong don't line. incremental be periods. is -- But to the bottom up fairly large show it later sales it should growth And to want And would XX% business. investing hopefully, anything because the show So doesn't of promise

Jack Maier

What path, to terms and acquisitions of the being on next we back, business way -- out you do more less that if or -- you type sense mean, running? And I see months? the less sort I that take normalize in of being the seasonality. business you or same as for if staying Okay. getting may, the now in see sort growth the this growth to XX right -- Do of a absent see year-over-year? seeing some XX the what the do accelerating you more of are seasonality, is that

Jan Loeb

what striving past are annual in think said with obviously the the XX% I sales. to we're better growth comfortable the we've But XX% we with the We're think I into add of in that. future. comfortable

Operator

may There read that? [Operator question Instructions]. if I from is coming online, a

William Jones

Please proceed.

Operator

the relative deferred and total numbers guess, balance please Tracy. question, I are So discuss deferred These sheet. revenue basically, explain and on the the for significant balance That's is, the to charges sheet. the question

Tracy Clifford

Sure. Okay.

the goods hardware is life that was the piece, accordance charges over hardware cost end received done an be of though make, X which in the the sale previously year, to X of amortized years, are the So even years GAAP, is year. sales the was of deferred the at time average determined the with that last there was the it deferred of at updated we sold analysis revenue and

So in Also be the that hardware X-year COGS over on been with period. XXXX, that a would we hardware. have along the we amortizing the recognized revenue

the revenue amortized three also that's amortized period from benefits. additionally, over And then any it which monitoring over So years. is

be be monitoring sorry, then So XX sold that will amortized XX-month, that over has if a is revenue -- revenue it been months. XX-year I'm will that

export So and that's current long results charges. the what both term, in deferred and revenue,

Operator

from have question with that the Capital. do Summitt from another And Bill phone. will be We question Golconda

Bill Summitt

power, the the compare because asking compared generation way market? I'm market, numbers -- to no compressor that to of just big know. compressor that is market? AirGuard And But how not to how there's specific does So for the the power size

Walter Czarnecki

now equipment terms not addressable that that candidates relative be likely We but there similar for terms in equipment through market We're is of of the going only same. out total see analysis monitoring. right it would in

And millions the the dollars power so of of in to market, finding in we're far, of that generation U.S. is it the similar hundreds which

Bill Summitt

competitors same actual And of as of other Okay. that for kind third-party generation, compressors, the a compressors, the manufacturer for a does power monitoring?

Walter Czarnecki

as major across to we Because to to we major we to brand -- go brands. at So be with absolutely learning our Generation, be customers. will that flexible every looked as map plan Power the we've compressor compressor

power be which continued of competition. their own monitoring generation products, market. Some and successful major that the to in to the market seen brands power despite have we've We've the generation

product deliver to feel customer users And service the end and we both given and can experience we we so market. confident in that that our the organizations the this win

Bill Summitt

Okay. dealers were the -- that Do third-party kind ours? the dealers one the monitors, generally the of other will install like

Walter Czarnecki

case. typically That the is

And the that doing own it's end that most installations. for service will sometimes have the that you of installations. are the with folks their organizations But see users work team part,

Bill Summitt

Okay. to there monitoring And to having an system specific end that tied is the is customer advantage the brand? not a to

Walter Czarnecki

bit brands national them few, large have they'll they'll a install incrementally, one The and find, year, chain, the or that it system which you in main it's -- Because at campus advantage hospital if they'll a very you take it see brand put rare there what to they'll well, the can tell a look best. is, power a out or very be that one we for is university for a each it's unusual I fits the multiple whether market, generator. and only to large do generation of

Generacs, common few applicability a more service solution a to is, brands. compete the of what's works which another And from and various we with they platform and terms user they'll way a monitor the enabling Kohlers, across see can both so, few win campus. that's that X that having a need system end and organization and we'll a have Cummins, few that And in that hospital

learn case, we we the so if market And operating feel about then compressor as of the we that, that comfortable that find market type more and dynamic. is in

Bill Summitt

kind an question incentive Okay. dealers carry do last dynamic to my one is, want of this to And the monitoring have brand. on

always -- So say, incentive comes that does buys this okay, install going we're one to if generator, compressor a either either a monitor? or and someone to power in have

Walter Czarnecki

implicitly, does. it for So certainly

And our line that part, others that the of representing. with there's equipment, walk some respect OmniMetrix will only to sell in customers manufacturer of to multiple will brands, brand a sensitive because they sell need they're

it's some system. so to easier And certainly But simplicity, have monitoring there. is there sensitivity X just for

Operator

session. remarks. [Operator over Jan concludes back I and the like conference any Instructions]. turn Ladies gentlemen, to closing this Loeb would question-and-answer for to our

Jan Loeb

an are thank performance, platform well and We supplement shareholder now or pleased believe balance about here, is and Acorn. and represents the lower More cost who support acquisitions. that want I'm company at line positioned drive the From OmniMetrix I shareholders. continue sheet value. to are company Acorn ever, with IoT-focused interest our growth which value of questions next for to similar suitable our for I'm you for also structure. for bottom grateful top your I and an to driver building growth the our improved to all would an leverage anyone we plans. operating phase. specific investors, line of with like than in would for We ask with And attractive speak

contact the And relations call. you time team questions set call we with your may Thank operator, Just me, investor that again, ask can end you. with up any for Thanks and today. a have. to our

Operator

now presentation. conference is Thank concluded. The you. attending thank And you today's for

disconnect. now care. Take may You

Acorn Energy (ACFN) 15 Nov 182018 Q3 Earnings call transcript