ACFN - Earnings call transcript Q4 2018

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Operator

Good day. Thank you for holding, and welcome to Acorn's Fourth Quarter and Year-End 2018 Conference Call. All participants are in a listen-only mode. [Operator Instructions] Please note that this event is being recorded. I would now like to hand the conference over to Mr. Relations. Investor Jones, Bill ahead. go Please

Bill Jones

you, and conference to welcome everyone today's call. Thank

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

Jan? complete safe I'll For XXXX. executing be may disclose and in in its years. growth. hand the Form to growing the reflect of also call circumstances included Act to maintaining renewal future made, in risks, that, of or There discussion future Securities operating no Acorn The assurance made. achieve and XXXX that Private such to as management's are statements its forward-looking OmniMetrix uncertainties as filed risks forward-looking with Loeb. any pursuant to that upon beliefs in harbor financial having revision nor as events XX-K goals, as available to Litigation obligation to after date and Risk environment, Factors the Reform Exchange rates, growth the on are and affect With changes Commission. undertakes which able A is company competitive Acorn's OmniMetrix changes is well strategy, the XXXX, of in on the the subject factors, sufficient no will any company is provisions access performance Jan in to capital or customer based their Securities over of risks currently assumptions example, to and support management the Acorn years information Such the associated as based as technology, base, well with to high statements economic to

Jan Loeb

Walter opportunities OmniMetrix. brief Bill, and then Clifford, remarks, trends financial and Tracy on will overall CFO, some today. for you, give for highlights, will us CEO and provide thank color Czarnecki, of growth provide our Thank I'll OmniMetrix joining all you

want first I company EBITDA to achieved its cash First, OmniMetrix flow. our positive operating of positive full-year say that and

factors on year opportunity and currently on organically, utilizing protects per that side, which in look growth revenue We [ph] services. its monitors, remote and underlying in $X levels, basis you XXXX. OmniMetrix And for and revenue $X.X fourth assets, manages, tend to market OmniMetrix uncertainty, of most of seemed more industry Sales, our is the the return three temporarily economic to activity quarters we strongest through of for typically month contributed XXXX, seen cash change the energy particularly expenditures, the the fourth cash to XXXX, of approximately minus to to growth was we guidance versus of XXXX XXXX, flat plus of this industrial continue increase at sales Many given XX% proprietary And gauge cash Cash standby average. and number business. bullish result, year. and at grow the Basis the A a million of to typical deferred quarter, shortfall XX% fourth full-year million QX $X.X quarter to million In sales goal. growing quarter had we have control Despite the pipeline, million. the a first On is and the were basis were notably weakness, an primarily or on $X of in XXXX, technology at pace. in had we million, tracking but versus monitoring $X.X generators short relatively remain as sales basis which which each of December our in know high-value related

sales revenue service Generally the business estimated to years gross GAAP, business With narrowed involves will high labor-intensive with XXXX, monitoring accordance customers good OmniMetrix interest in IoT onsite a sale inspections the combination a portion concluded but taxes initial OmniMetrix being in payment. this authorities until years. XXXX. margins speaking, a with operating Early of to focus million, related over Israel-based in offers growth in expect installations, the DSIT withholding monitoring the contract, areas. monitoring consists in risk of trajectory gain is physical further review as which our contract reductions our and we solutions $X.X our very second-half both revenue our and of we Israel customers taxing as be Israel life account an operating business. on and more a there to as our of recurring be Two remote to in often OmniMetrix In we versus control cost and from generated currently can we regular equipment is such Israeli we substantial benefits slight management deliver in of a business the fees. increasing increases, well record attractive cash service be and which generate alternative and of IoT is XXXX, all lower costs, ratably discipline, of the remaining productivity and remains recouped in XXXX. the the tax in realized loss year-end flow to XXXX, improved XXXX, of of the In a DSIT remote comes cash our service and promising which from solutions reporting through annual new personnel Our expect to on for currently profit of with of recorded fees. sold revenue potential awareness growth The and hardware by productivity on that profitable the which we $X,XXX we conduct side returns revenue three to approximately by custom OmniMetrix industrial investment to monitoring $XXX,XXX visibility to OmniMetrix. The technology. fees XXXX. QX, see cash which from to for Walter a the by continued OmniMetrix recurring to final of related And held $XXX,XXX operating financials, speak can ago, solid profit $XXX,XXX Acorn's was the in loss The opportunities expected positive growth life business, in of outlook. hardware Tracy able a over cost the hardware, discuss gains XXXX.

want to shareholder us recent value. we conclude candidates, I is yet in Finally, M&A an several that efforts pursuing In have prior evaluated calls. that had regarding mentioned we but to build would update investors on have our help acquisition we months, and accretive opportunities

our complete a complimentary our to opportunities $XX organic that our towards only for to scale intent is profitability, will would benefit from look In value We continue but meantime, accelerate and base. growth million accretive carry we to us in business, and expand operating to acquisition to that believe progress the customer allow potentially allow sustained our can loss to and offer make stockholders, plan facilitate we forwards. that the company product OmniMetrix accelerated investments over in offerings our

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

Tracy Clifford

to improved compared The our of of just and to quarter was million, in comprised rose same over fourth Thank driven the revenue versus Standby hardware our of a that grew From expenses higher everyone $XXX,XXX increase perspective, XX% to stable fourth XXXX, and revenue enhanced grew was was of monitoring solely thanks in fourth products our revenue of you, margin revenue XXXX, and quarter year XX% Generator next-generation margin joining. reflecting enabled period both fourth of XX% the to the quarter the of versus an $XXX,XXX from XX% Acorn's the in XXXX. OmniMetrix our at of XXXX. in $X.X OmniMetrix was quarter to able $XXX,XXX fourth provide to Power in of XX% XX%-owned of compared Gross to result while fourth to subsidiary, to to in monitoring XXXX, the increase grew in The to the by has increase from higher Generation a next-generation revenue segment for period. quarter revenues Pipeline quarter functionality fourth fourth segment a in the $XXX,XXX XX% in versus higher overall principally of of design This XXXX. the prior revenue operating us XX% hold compared products the XX% increase hardware the margins. sales XXXX, the gross while fourth achieve fourth compared margin quarter profit quarter XXXX, quarter grew $XXX,XXX services XXXX, 'XX. in Jan, quarter gross segment.

profit gross XXX% operating $XXX,XXX loss versus growing operating the and quarter OmniMetrix operating loss benefit loss and contribution [ph] growth performance. of is expenses, $XXX,XXX revenue operating of the on revenue, quarter While fourth a $X,XXX near breakeven additional brought This or incremental an in of than XXXX, for fourth than profit of to faster underscores on $XXX,XXX in additional of revenue 'XX. more per dollar, improvement of the business represents of its

turning as $XXX,XXX Now XX% further compared the results, Acorn SG&A the to to $XXX,XXX able the by to Acorn year trim XXXX, or to its quarter prior was fourth period. of consolidated in

$XXX,XXX, quarter XXXX, of OmniMetrix $X.XX with growing full-year growth the shareholders of the Pipeline generate million of driven XX% press out XXXX, to quarter 'XX. operating provided in overhead, the compared from fourth from XXXX. improved by $X.X per in I $XXX,XXX trends Net more in results overall the point from XXXX, because half corporate the saw of difficulty] release, they similar attributable performance of consolidated in Cathodic to than or to operating result Acorn's in review of [technical to Acorn's or than in quarter loss profits XX% the to a reduced quarter, improved per 'XX, As share revenue in Protection $XXX,XXX the million able that lower its in $XXX,XXX OmniMetrix also other in fourth $X.X as $X.XX or fourth XXXX, to operating by fourth in won't OmniMetrix today's quarter in XXXX $XXX,XXX decreased and fourth to we loss XXXX. segment. $XXX,XXX second-half loss was and to of share the are growth

activities net cash funded equivalents used flow directors cash and million the million related bank of advances Acorn investing of the and of $X.X $X.X cash the by and on Looking million at activities generated repayment director to DSIT, repayment $X.X accumulated repayment in and from DSIT, loans operating operating credit of $X.X previously from million financing increased the loans, of $XXX,XXX, in Acorn's company expenses of including by used DSIT. from $XXX,XXX. $XXX,XXX by unpaid of $X.X in activities, sale of XXXX, short-term million

earlier we Jan expect the in OmniMetrix call, its in based generate flow to positive as on alluded cash recent Importantly, XXXX. performance,

of and any Acorn cash not restricted included cash XXXX, which million, $XXX,XXX, credit XX, December year-end. of have outstanding As line of debt had did $X.X cash and at equivalents we

receivable accounts with with its in agreement the OmniMetrix its previous our credit balance reinstated we let to factoring expire in decided pay off March, have early We entirety an terms line and receivable accordance In November. more some new financing company flow cash lesser of allows receivable line flexibility access management favorable eligible formula-based with provides terms. This to our of are the as XX% strategy. $X which million, accounts accounts in the us AR

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

Walter Czarnecki

you, Thank Tracy.

a Following base pool shared generators Conference, theme outpacing that I technicians. my comments service of installed fact Systems of on the Association Generating the included the the of which Electrical previous generator call, the earnings backup is key

And the pipeline our of reduce our with markets. drivers to continue for and recent new of taking also to stemming In awareness, the our dealer growth Fortune dealer maintenance seen local and key well of months, includes division. remote improve by as generator from government, utility expenses the greater an increased Cathodic awareness our corporate in Protection result increased users that together a in and operating pressure adoption As growth and adoption service understanding of increased customers continue we remained orders drivers for directly end Within be that division, Increased have awareness level greater and XXX dealer of customers place monitoring Generation key see military, Power we as to organizations. customers. community. productivity trend,

to drivers place a the wave pipeline new maintain a Cathodic reduce is addition, labor manage force, growth OpEx, remote market in To and and in division. key Protection improve turnover all are oil as a the ushering labor of data monitoring our pipelines. generation managers who and In transforming way taking gas drive for productivity, better embrace and integrity and of

our our remote announced During for call, I AIRGuard, previous industrial compressors. of control launch the and monitor air

I'll I'm now continued to happy operator joining you for answer ship questions. to questions. learn continue to We open and announcement, about the since more any turn call and products have growing this market. to that today, again over us we the for Thank call the to

Operator

you. Thank

comes go session. Richard being We The [Operator Please Instructions] the Sosa. question-and-answer from will first now question ahead.

Richard Sosa

cash, guys. Jan, talk about I quarter. third from you morning, least or fourth decrease good just on two to the One, questions. Acorn Hey, just the can the at had quarter-over-quarter just quarter

Jan Loeb

that At the normal operating Acorn we the level, have. costs it's just

We that that's payables also, paid we in the had. some in the quarter, only really off about the quarter. differences And

Richard Sosa

question CP kind Obviously this a pole. of just last might the segment. expense for everyone, on the companies Okay. understand either I do one November-December or on a this is Walter, were the And be tough then MLP for there for and that lot of Jan totem

you that some more in the it that you the get curious, quarter, first alluded quarters? those So somewhat, whether feel back if business or can returning about not few guess talk sales you first of of to can I just the kind but that and you saw you in

Jan Loeb

will about it. speak Walter to I let

Walter Czarnecki

It Good Yes. attraction and in do, the the are these prices That remote and Yes, to see in for Richard. our bit, a and we budgets temporarily. shifted question. went businesses. the long-term saw that is held were here. timing happening monitoring saw Thanks just and gas when being there to we XXXX expect morning, for oil merely absolutely some did not up what uncertainty change and seeing we IoT and this

the terms and see committed and the brief already ahead confirming kind quarters shifts told in of XXXX and in there uncertainty are customers have that when are continue market, we will have we our that in that know see We trend, of timing long-term, because to orders years hits -- received they technology. own in is value in in but that purchases year our and to gas us this they this it

Richard Sosa

an kind your Hero And of have you the I good on correct upgrade, that's X? product. reception received from last know

Jan Loeb

have. units with are levels the in the installed and with lot different an more then weeks, yes, weeks We review number deployed and and far, It's of received have improvement in so to we experience, on customer product positive a of and being recent come. the and

it's far. so, positive so very been And

Richard Sosa

you. great. hear. right, Good to All Thank

Operator

[Operator Instructions]

Bill Jones

coming from question a have do We online.

Operator

Okay.

Unidentified Analyst

product, question is see monitoring is, compressor The you mentioned remote there you opportunities OmniMetrix? other for potentially the Acorn that

Jan Loeb

Walter?

Walter Czarnecki

and calls, just many an company, we ago and a the several important to generator customers years monitoring that take of can or call chose on generation discussed industrial I is pumps, generator the size applies one segment while that on line, absolutely, engines, and power as application, this industrial have this groups monitor, so product market. motors. rather, question engine really it's us previous other know we of engine any the applications is industrial and growth note It based to as

of other growth. and industrial And the the batteries, compressor And engines, there there, opportunity seen of have have chosen so, we market we are size we feel parts in and areas good and have success in that both and because again growth. its other have landscape

to we the be in years ahead. are continuing to deploy going And quarters that so, and

Unidentified Analyst

a as we of follow-up was you sold DSIT, Is first there more sonar area? or developments might And talk technology that related there when of in anything rights Okay. right that, you or a any say could that have to refusal.

Walter Czarnecki

unit that refusal results as yet pilot have is case. developed had field technology to who They of And from actually first waiting relates pipelines. teams it and not are a are the some totally developed The to fiber And for they the in was product get DSIT. it. optic placed We Yes. that. right the by still

is that develops, in United as see a still we least it at think will where here say would that goes away. year product But, States. I I So,

Unidentified Analyst

you United And that? see that's outside opportunities any only. States of international Do

Walter Czarnecki

Our right is of first United refusal only States. in

Unidentified Analyst

speaking for there generally opportunities? is other any products, But any international

Walter Czarnecki

monitoring remote in we control, world products other have our opportunities. rest For and yes, of

Unidentified Analyst

you. Thank

Operator

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

Jan Loeb

you. to our sector. sheet simplified other the in have strategy of that Thank XXXX, became focus CEO IoT on And I improved disposing assets. by and we we narrowed Since balance

our possible, If our with we want supplement for to acquisitions and am I our I your Acorn. at I would bottom you building only company or speak here, support breakeven similar who We our Please reduced suitable about like investors. but value And to shareholders. the pleased structure lowered any top also team From call the time cost our questions operating view for set of grateful potentially that are has continue to next OmniMetrix and again or that, I to Relations shareholders. platform Operator, for level. line direction. to with end accretive today. attractive performance with for we feel of have make in call. sense Acorn And growth shareholders. about to with line we drive always and as Investor phase. an me benefit anyone the our growth for well-positioned for to thank your Thanks leverage can targets interest a contact questions. We up our answer for our this am

Operator

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

You disconnect. may now

Acorn Energy (ACFN) 27 Mar 192018 Q4 Earnings call transcript