ACFN - Earnings call transcript Q1 2019

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Operator

Good morning and welcome to Acorn Energy Q1 2019 Earnings Release Investor Conference Call. All participants are in a listen-only mode. [Operator Instructions] Please note, this call is being recorded. I would now like to turn the conference over to Tracy Clifford, CFO. Please go ahead.

Tracy Clifford

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

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

in and to growing in For subject strategy, the as company years such maintaining competitive its its operating as changes risks the high performance in example, to financial changes access and of rates, and support customer financial XXXX base, economic technology, as the well future executing to renewal operating factors, capital is environment, sufficient associated growth. with risks, having

to reflect is the Jan? on of Forward-looking in the company OmniMetrix events XXXX. will as assurances their forward-looking available our the that, well full call that Litigation or statements or Loeb. statements Reform information in There and beliefs, growth achieve that may XX-K company Factors Form goals, hand to disclose with filed included currently Acorn and as Securities Exchange in to also affect discussion Commission. uncertainties management's years. to [technical using Risk based nor are as Jan after management are assumptions provisions the no Private made. be Act A the on date The to Acorn's circumstances any Securities of the to I'll CEO, obligation the of risks future revision made pursuant With XXXX, difficulty] to able harbor safe over

Jan Loeb

our will before questions. with will with Walter? Then your OmniMetrix then and and CEO interest provide will our for the Thank financial an we in conclude remarks CFO thank Clifford, highlights you, call Acorn. of for OmniMetrix. remarks all on Tracy update some open Czarnecki, Tracy, open you I Walter

Walter Czarnecki

Thank everyone call. and you thank for you, to today’s joining Jan,

were for during growth, and the adjusted the adjusted EBITDA. quarter achieved gross the recognized to of We XXXX, million Revenue positive increase GAAP X% was and million, a XXXX. that first basis OmniMetrix improvement, basis an margin are over $X.XXX pleased $X.XXX sales quarter quarter report on continued revenue first cash

you financial statements on focus each hardware from one to of years the performance recognize years for contracts in believe and is and three many cash this GAAP, contracts contract’s most As company basis track we depending of reflective our to measure pursuant the We on business. typically we the term. our revenue given of over sales for of sales to hardware the filed service that three growth service know,

add XX% ago to for the market. back offer year. in inventory an increased the highest This same initiated to competitive we in adjusted to margin and internet our of primarily maintain several to of years $XX,XXX plans continue gross edge to to performing, efficiency prior the write-off due Our quarter products is highest strategic from the XX% things

to remain addition growth, improving delivering innovative us. the most sales and In priorities for products margins

TrueGuard new X for improvement One of and gas Rectifier Monitor. our well as the margin our of market, oil relates Residential HeroX ongoing the the deployment our of Monitor as to Generator drivers

In addition new for fulfilling have products, air to industrial orders begun monitor. these we initial two AIRGuard, compressor our

all We as from these with far evidenced of performance are by customers. thus three the products our pleased feedback of

growth. as to IoT continued serve During the for will trends platform that quarter, a we observe macro in future the market several continued

in years value IoT the increased of within value seven First, IoT monitoring in skeptical are started businesses. we working provided I serve. seeing from remote responses it. industrial commercial platform and a awareness ago, shift When many first of IoT of we of the we markets the real to use customers what were that would is were prospective IoT why I received their and an Companies

response IoT” see to began “What don’t is we need I know to how However, in we deploy we quarters to recent shift it. know a just it, the from

evidence businesses. We’re in large of this of strategies U.S. the shift seeing

a XXX-year-old across and & the has IoT company. Black hired a strategies and Stanley example, industrial For Vice company Decker, oversee science President data to deploy

another company and energy with to are to example, a at recently spoke efficiency. working Senior and with a IoT and I across Executive As deploy they innovation learned drive large their how business us others

We understand risk expect can more gain and traction businesses IoT productivity enhance to see tactics. as this shift management how increase

second see business is labor. driving we the trend The macro

to as and how engineers embraces manage place. markets, with monitoring As their of evidenced familiar and the businesses assets. and and generation it remote the is and and and by in retire take next gas data more data turnover oil This industry to their hungry leverage industrial veterans generation incoming IoT

you a earnings programs that Another recent One a period I shortage the recent end talent on quarter calls, might same hardware address team added to first one final market. the labor service will untapped which IoT year inhibited hires To attract was XXXX. technicians training organizations. which due note at were the sizeable labor recruit commented team. low the We base labor and sales, of markets the decline. incorporate to of potential driving to in this order any answer the is be there customers section. for last country, be relatively labor of to trend shortage. placed broadened existing generator at the with involves is unemployment to to and also the shift shortage, to two are the why awareness entrants our we I’m OmniMetrix to and this further scope planned sales happy ability website This the click It service to are Tight in have positioned of the and my grow more on challenges, the more and generator visit our across these about contracts. screen. of our our of sales blog IoT sales new actions expand optimistic blog we this I we to We’ve and section flat to development encourage on X% the with the timing service Navigate fill where at anyone have that page, important the and to see need. have organizations that installed subject. our interested and is Omni want remote generators well question the of maintenance our or their for colleagues into monitoring coupled on And preventative I topics of IoT, section backup in the from learning discuss www.omnimetrix.net/blog growing deploy top to these of note home to written the

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

Tracy Clifford

first revenue comprised [quarter revenue driven compared from growth to of XX% from revenue to to owned by quarter XX% first in revenue $XXX,XXX OmniMetrix the first In our Walter. revenue the X.X% our cathodic period. increase subsidiary rose year the quarter, XX% our services power you, grew protection the Higher XXXX monitoring XX% and segment in segment prior to a XXXX], Acorn’s in generation hardware to or QX Thank slightly $X.X revenue margin XXX,XXX. XXX,XXX decreased while in of pipeline XXXX, in million, XXX,XXX

replaced profit of $XX,XXX revenue sizeable the the profit that was due impacted quarter with this write-down we XXXX. quarter quarter order first product have upgraded negatively growth. XXXX grew noted, with inventory Gross XX% of first in mentioned first of the of a timing as was Gross the $XXX,XXX to to decline technology. in-line Walter at end of in by XXXX previously primarily As

the in in With to continued were XXXX, blended The higher XXXX Excluding power first than been our QX better overall due XX% the was and profit XXXX inventory than generation XXXX, revenue profit Operating write-off compared was operating for QX slightly reduced and XXX,XXX inventory in provide loss for OmniMetrix investments monitoring to OmniMetrix higher the quarter The XXX,XXX XXXX. principally And have of result functionality in gross would and and XX%. its expenses in write-off of operating XXXX. include personnel $XXX,XXX this of margins XX% primarily yield segment. operating adjusted versus for of write-down, was faster XX,XXX of the loss QX XX,XXX in X%. innovation. previous next improvement likewise margin growing or versus versions. quarter R&D higher These first our that gross add sales generation margin gross adjusted at XX,XXX customers an expenses, for in back QX products products than expenses to X% increase

Now in Acorn XXX,XXX was trim consolidated to turning QX XXXX to compared to or Acorn as its results. able QX corporate XX% XXXX. by XXX,XXX XXX,XXX in to G&A

$XXX,XXX operating $X.XX a our subsidiary. our share and OmniMetrix attributable in Net XXXX, per As prior compared in in million corporate a that consolidated sale to share to QX same decreased to including related or growth to lower in in of a XXX,XXX QX at the metric. included $XX,XXX comparative DSIT the to Acorn’s XXXX. loss $X.XXX $X.XX is of improved the in QX interest year XXXX. period or write-off per $XXX,XXX loss compared XXX,XXX, more XXXX, loss meaningful to shareholders of QX operating The Acorn’s loss Therefore, overhead, result remaining

cash the flow, was XXX,XXX used plus XXX,XXX by Offsetting new year-end facility, XXXX provided decreased of to capital more activities, to eligible net operating The place XXX,XXX in in OmniMetrix working cash line XXX,XXX receivable OmniMetrix accounts receivable Turning of XX% terms. and loss put million. net equivalents The greater accounts activities. $X in credit versus QX December or including cash this, Funding Acorn in of in flexibility XX. by which provides is on based cash receivable manage is the requirement. accounts included with financing was on line March favorable changes. lesser

equivalent $XXX,XXX including restricted we had XX, at cash cash a cash AR on the outstanding As balance also of of million, $XXX,XXX, Acorn line. March approximately and and $X.X a had

balance maintain of with can draws. monthly on an We and timing operating average required which of are vary payments line, outstanding the to $XXX,XXX

my draw call and So, operation, balance. cash outstanding $XXX,XXX least had at down Jan? even required we we me continue now That back the CEO. to over hand concludes to though adequate let review will Acorn’s that Jan, for

Jan Loeb

I our Thank growth recognizing you, average continue will realistic want believe wrap of focus there remarks, forward some reiterate for going XX% the company we goal on remains at up to annualized to driving OmniMetrix growth and that To Tracy. an prepared variation. topline be

our next-generation While first that growth the weather that dollars the first in winter the bit the Walter customers’ This in factors, ability note preparation seasonality, each activity we a quarter business as make we year quarter sales expanding in lowest of we initiate typically opportunities. and end, this goal rate should To new year-end, our were each on segment, by are and intend as our to revenue support remaining will economic of generally this see impact we I in the marketing spend year. December in the the a on of see results budget efforts, above investments and some strong including our we we expect we customer it XXXX, measured below monitoring quarterly the goals, expanding new seek untapped invest a and efforts staffing quarter from the our almost initiatives product vary have undertaking quarter sales well basis. particularly but Generation year. customers to also in were sales as and mentioned to is Power do many innovation. prior in reflecting substantial budgets to growth to services continuing bit

These to operating that sales will in our to are parent to enable and see ability more on tightly and while reflected progressively our efforts, gross the disciplines Beyond not bottom our sales intended cost-effective were the bring expenses company of profit progress to our at to we continue basis, to to performance. expand public we pleased operating plans line, Acorn QX a to that grow. ensure are manage OmniMetrix we inhibiting our

pursue We for opportunities transactions. M&A continue to complementary

make However, that shareholders. identify are our will on challenged available have terms been to we for that businesses sense

Registration path as of rights While shareholder continues to provides mentioned, possible we press as in offering excellent we filed creation. we the are operating statement raise already this and we’ve optimize maximize release value for also to to a an S-X background, it organic $X.X the related million. recently the own performance working references Today’s the process growth seeking which business,

the OmniMetrix OmniMetrix to investors of limited which is to are funding point regulation, currently support motivation to and repurchase the pursue what in that S-X, we release, by as the and can A the provide to offering at press principal we’re other We say this our statement. don't filing. own, announced rights than as initiatives XX% we sufficient well the specified to growth as registration to

limitations without to We will growth excited additional capital. are the pursue about funding of allow this available us

to over call that, operator So, turn let’s with questions. the to the take your

Operator

you. Thank

We Richard Investor. [Operator from go will session. Private ahead. begin question-and-answer Please Sosa, first a now The comes the Instructions] question

Richard Sosa

Hi, see quarter. the good guys. to morning, Nice

big believer know, products you value and I’m the As a proposition. in

what competitors. You guys that cannot – a a replicated services believe, offer collection be of I by your

that I know growth, possibly expect several into Now can in more products? or potential you're technology into you anything going new different that businesses. do or get – that new you investing industries any have

Jan Loeb

and to in. lines in currently is Richard, I’ll chime that business We maybe long-term. Well, there for the start Walter with that pointed out, Walter the think as that have growth, sufficient wants then we

additional can So, I that think the that categories in additional don’t within revenue. businesses are of we see from that customer We base general products going have. that there far-field our bring the we will add

line of focus think extension. on the is base I our So, existing kind customer and really

technology me is the we I going have. afield line the area think don't brand-new to for feel although us. would of – to new just So, a compressor it’s I extension that our some that’s compressor product that monitor the

Walter Czarnecki

this Thanks would the Richard, question. Yes, I and that Walter. just agree echo said. for Jan is everything

made lot operate time of what so of the the in understanding One that products, and the best-in-class key years that’s offer has applications done and monitoring. we and Omni factors with we the be the feel over spend we where is we best can successful generator we've market currently the that the a market the that

expand, we grow now in us a we what compressors, continue currently is and and we market had US, market, develop just market. to in learn there that the doing We've sure plan we are to in yes, well. the and North in so, dominating what continue future. All And to to as the concept, plenty that to to and to market that’s and respect more an plan elsewhere want we’re want operate exciting certainly said, that there some grow first. we initial the where do America for that do we in see success to With just and being winning and but make as markets new

Richard Sosa

Okay. field, you lot this Anything in the for AI? into analytics products can And monitoring have about believe there you a is out products now sensors that have current do your additional there? of or there you you that incorporate

Walter Czarnecki

make understanding best in There a to of customers’ AI. a bit and this and of There is that. we do is this; more of still analytics model matter how a that AI. debate questioning that remarks our out predictive and prepared we business business good and certainly within It’s our organizations and make how can for best my optimize case do in of of terms customers, do of some back use analytics predictive we goes

in move that in to to in continued to direction future. the that direction have we move and We plan continue

we’re so So, progress that. in happy the with far

Richard Sosa

talk awarded of you some about maybe more last Okay, big question, hires Can that and to a Was you this I'm new employees. or Q fan employees? my in just stock current I that. noticed the options that?

Walter Czarnecki

make want is that by all is for starts from sure step colleagues same and each the our on knowing culture, everyone our just factors one been and and that sure – our of and equally incented launch goal key Well, that of a we to our invested and everyone team equally, other the has success to options we also make perspective. that customers, the next

Richard Sosa

just very as Jan, with in Alright, very Walter business. thank a and okay the much. investing excited, you I’m I'm and shareholder

things – if know, You most out of expressed know, obviously there, believe is I only the interesting, but, buy something it’s so OmniMetrix one you interesting that.

much. very you thank So,

Walter Czarnecki

Okay.

Jan Loeb

Thank you, Richard.

Operator

Instructions] [Operator

Bill Jones

that have via Bill. was a Operator this is do sent in question email. We

Operator

Yes, proceed. please

Bill Jones

intended for Walter. I’ll summarize, I question, the think it's So,

would the give in you more nature penetration opportunities share, and can of on size be us and you Generation well touched on color of understand specifically, things Power – that as segment the help maybe opportunity, that the give the helpful? maybe can maybe or as market know, you the You if market

Walter Czarnecki

Sure.

see deal market. earlier mentioned yet go potential to the within I as Power we So, Richard’s a questions, with Generation of great

in look in $X U.S. as to at roughly market, a XXXX, backup the generators. just it billion you XXXX it market addressable in If the overall, was relates

competitors, OmniMetrix to XX% far, our we've various what about there. seen been there's So among and rate XX% penetration

for So, big to continuing of why, expand as market organic driver significant efforts are to the is market. develop we more looking and and said, left and a is that potential to that growth there I in that in and the invest Jan marketing sales said drive

Operator

the any questions conference showing the is this from And not further operator. I’m telephone.

would call I to any like turn So, back for Jan remarks. to the over closing Loeb

Jan Loeb

your with in our questions to like always interest of the speak strategic pleased everyone our investors for would I’m who about support I and I’m the direction. Acorn. has or grateful company for thank anyone to

Just any or your you that, call can this with team call. we contact Thank And to operator, time our set-up investor for me. questions relations again with with today. a end

Operator

Thank for you, you presentation. concluded. Thank sir. The conference has attending now today’s

lines. You may now disconnect your

Acorn Energy (ACFN) 16 May 192019 Q1 Earnings call transcript