ACFN - Earnings call transcript Q3 2019

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Operator

Good day, everyone. Thank you for holding, and welcome to Acorn Energy’s Third Quarter 2019 Conference Call. All participants are in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that this event is being recorded.

to conference like Clifford, to now CFO. would hand over the Tracy I go Please ahead.

Tracy Clifford

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

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

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

management beliefs, well are harbor on goals statements safe OmniMetrix in XXXX made Securities pursuant provisions achieve based of Forward-looking in able the to years. that growth Reform assurances as will There to as XXXX. are be Act of to future Private the using management's or assumptions Acorn Litigation no available information or currently their

also affect in Company Acorn's with the forward-looking disclose circumstances XX-K any or events made. obligation undertakes is Company Securities that the the to on Exchange these date reflect to uncertainties may and full after and discussion statements risks A Risk revision of filed Factors the included to no Form The as Commission.

the Now, the over OmniMetrix. of CEO Czarnecki, with Walter? hand Walter I'll that, to call

Walter Czarnecki

today. you, to Thank call joining morning Tracy, and good our those

XXXX. for OmniMetrix increase again $X,XXX,XXX QX consecutive X% X% quarter $X,XXX,XXX, revenue revenue XXXX, second profit. sales quarter quarter the margins, third of cash the During operating a basis an and of over improved positive third achieved growth, gross of and rose

use from tracking revenue basis a hardware performance to in revenue sales financial recognize three to GAAP, know, sales As our our many and measure you Pursuant cash statements. supplement over years of we of reported is monitoring provides though business is on the contracts, year the sales level therefore generally current growth typically completed period trends. in visibility Cash a upfront. even basis our and cash that one was for we received

basis sales QX a basis that division Cathodic continued pipelines, of monitoring and declined to by Generation In over and hires, growth the of completed several In cash attribute sales focuses projected Power we we by division’s XX%, in sales our in impact which quarters. sales XX% better. which on to which the the grew have control we we division, or on Cathodic historical XXXX, coming smaller QX, turnover Our our growth level sales on gas a cash and to Protection Protection remain believe return confident at new potential of of staff. rates

months, built their Despite recent CP sales solid we in in have we progress Cathodic customer our new as to The excellent growth they've the trials a ramped team and impact members of team, in making are disruption pipeline expect continue. Protection. and

example, For in customer time of number we last the trials this currently had we progress year. times at have four than

relatively of disasters been disruption as California Historically, for power to along given generator our catastrophic Historically, temperatures. fires has has believe type market represent demand California systems. drive our mild its Power favorably natural in The disrupt that services. monitoring standby division. Generation by impacted consumer Moving not our strong been the with that weather we could and generator business purchases,

events for We and following in increase U.S. generators generator demand in have Caribbean. monitoring, a weather and seen the meaningful extreme

these to unfortunate and we demand and that spur expect and marketing in opportunities. bolster neighboring this efforts work will pursue to result, situation our sales states, a we As California

about for this other with who municipalities that I Expo. week applications. would Santa in this fire asked Tech monitoring generator I'm and add the spoke several Clara, California, where we week, IoT at exhibited people I departments,

gross to margins. Moving

is designs. improvement in cost software products margin the in taken and deliver This XX.X% primarily the hardware we over innovative enhanced as Our recent that actions to XX.X% both, efficient and to from QX years new, year of develop lower increased result offer gross margin functionality prior more have well period. as

our next continue delivering and monitors. margin generation Monitors, products. higher of continue industrial higher our air to our of very X ship customer of we strategy part receive favorable and exceeding expectations, products, of these Hero meeting are and AIRGuard value, install As products These reviews Rectifier compressor more we and to

and companies adoption costs that technology the of a IoT broadly, key value view of growing and steady solutions acceptance see growth IoT appreciation continue in IoT can industrial Regarding we market that to companies and as priority. a awareness, reduced by provide,

I of from study end, monitoring annual pipeline that AT&T The AT&T's Dallas. was our showcase of client of I in pipeline clients Summit the found case benefits IoT-based week, To event, study last one presented monitoring a of Business an had case and presented a at controls. range that IoT monitoring

also they of In XX/X factors well meaningfully by monitoring enhanced enabled ongoing of costs array broader benefit addition as reporting to capabilities. lower a wireless as from connectivity, monitoring

of to encourage to topics adoption, my I discuss blog where and write I market, colleagues these of the happy the also section. I'm OmniMetrix the real section in IoT you website on visit question-and-answer .net the we top on of Twitter market any further at with on the engage and section and screen. applications news more this the case where and also Navigate world socialize the on click to subject. the Please customer on studies. www.OmniMetrix work us to Blog

CFO, Tracy? I'll review Clifford, to our Now, the financial call to turn highlights. Tracy over

Tracy Clifford

Walter. Thanks,

in million. segment XX% being the up which to X% or was partially in grew that turnover due decline aggregate, Protection by in The grew Protection $XXX,XXX. smaller Generation XXXX. the XX% OmniMetrix year-to-date in CP or in segment. to the offset period in period XX% which segment. driven grew the in XXXX, XX% of Generation, a XXXX, $X.X primarily segment increase in team Power Cathodic for segment, from CP staffed by Similarly, a in area in $XXX,XXX This offset this revenue Power million not partially or decline a resulted $X.X sales in revenue, September in revenue to the $XXX,XXX our was revenue decline as the QX fully revenue largest the our QX Cathodic was in $XXX,XXX by $X.X million from through to by or

Higher by focused monitored services initiatives margin being XQ XXXX, revenue while commercial declined in revenues in the a XX% monitoring margin, the and industrial on grew XX% lower recurring monitoring markets. of period. result driven to number hardware increase The year total revenue of prior sales was units a as larger compared

of profit attributable increase higher sales gross grew hardware monitoring a the provides revenue, Overall, margin rate XX% revenue XXX,XXX in on increased revenue hardware higher a The exceeding of in monitoring increased XQ sales. profit XXXX, was percentage and growth. significantly than to to as margin gross

improved at XXXX margin to versus in $XXX,XXX XQ $XXX,XXX mentioned XQ XQ As XQ as previously R&D, XX.X% in a were XX.X% Total in operating XXXX. essentially including XXXX metrics result, in compared the flat expenses gross XXXX. around to

We $XX,XXX months of a period. XXXX operating loss profit XXX,XXX in in profit the of XQ first of growing reported will in operating we versus generated of sales versus OmniMetrix expect of OmniMetrix IT as nine costs in our teams have faster forward XXXX. operating invest XQ managed a the higher and our of the operating $XX,XXX profit an in prior expansion Through going than systems. an and $XXX,XXX we in profit XXXX, gross expenses, solidly revenue increases With year

the its Acorn public by $XXX,XXX consolidated and costs, year. XXXX, Acorn’s company our in costs to other results. respect reduce prior efforts board personnel XX% With XXXX XQ G&A reduced XQ compared $XXX,XXX reflecting over corporate to to fees to

$XXX,XXX a in As and a in corporate result consolidated of loss XXXX improved XQ compared to Acorn's growth to of XXXX. overhead, $XXX,XXX loss OmniMetrix to XQ lower operating

Net rounded income in related of per XXXX of was or loss per period. share $X,XXX or to XQ which $XXX,XXX net in a attributable in compared $XXX,XXX share gain or $X.XX on our to interest o $X.XX the sale the Acorn's a share DSIT in XXXX, XQ XXXX shareholders of included basis per $X.XX

Acorn's or share share net first versus of on DSIT. in of improved to million the interest of nine prior loss per The $XXX,XXX per loss Acorn's months ended the the a $X.X or sale to September in or $X.XX nine net period $X.XX XX, For shareholders months included prior $XXX,XXX per share loss year attributable of loss a $X.XX XXXX. XXXX,

operating in and that the used Turning on basis. used of in months Acorn $XXX,XXX million first cash to nine consolidated amount the during operation nine expenses. $X.X Acorn XXXX. to activities a $XXX,XXX cash first to Of flow of OmniMetrix related corporate $XXX,XXX versus XXXX $XXX,XXX, of of months this related

by released $X,XXX,XXX, on held XXXX, end. in basis, X, $XXX,XXX had November Also, of as in of we OmniMetrix cash to equivalents expect restricted Israel, outstanding a bank November excluding and consolidated which Xth AR its $XXX,XXX on of had cash As be Acorn cash a approximately line. your

Loeb, That over overview the concludes Acorn's CEO. now Jan? the of I'll Jan my pass call And results. to

Jan Loeb

Tracy. you, Thank

have On at previous as $X.X end of calls, million. discussed we with the closed rights which our QX gross offering proceeds

As priced the a represents of our OmniMetrix, we we years. of very the operational on accrued and beginning or XX% based back to was quarter, purchase growth business dividends, our third as July stake shareholders, attractive the of in four not in transaction value repurchased have did this bringing past over Xst, progress the a We reflect value-creating made it and our XX%. for believe the XXXX, ownership plus

and the to owns corner now mentioned, profits, of losses XX% business. As OmniMetrix turned has Walter from operating that Acorn operating

order even makes success. sense sales more that to in product opportunities. it investing and and we will Walter development to ownership, invest so continue in in we growth on profitable greater touched and are With fact growth the OmniMetrix's do support to resources,

acquisitions deal. and a would but mentioned in past, that are we before, that tuck-in transformational also I looking spur growth perhaps I've at were We acquisitions know considering the our profitability.

opportunities into that focused fit we OmniMetrix easily Now, business. small are on could the

can that improving solid be do future the seeking We’ll financial from cash good position, in to Keep shareholders. fit. have we mind deal NOL large discipline, we and profitability there's a patient a shelter benefits taxes. our right when to afford that and us a opportunity metrics, and Given if

tax beneficial path our our would accessing to the accelerating and shield profitability So, to and company be this shareholders.

as our sometime corporate QX And we costs. cover in we're there year not results, to next have But, we resources yet. goal quite feel do and closer to have consolidated First, see to getting including our reach financial are can we breakeven available is you so. but our costs,

growth the We not next annual mentioned, have Walter of XXXX, positions resources part goal and our fully months. sales of add to turnover below at far team, over the which So, we staffed the to team as to related year. our sales some more two in and that in few filled OmniMetrix, is for formed was expect

investments top-line growth XX% development product continued well these sales feel as return will our goal. in investments to us in We as help

sales Beyond plans expenses prudently. manage to expand efforts, continue to our we

and net consolidated to our recurring As line loss XX% company. are you reduced year continued value. operating can see growth, we our top its We with business building while margins QX path results, provides past grow continuing the building model shareholder and by revenue a in the that bottom about value vehicle the have such the improvements in for high OmniMetrix and feel to

your that, call turn We thank journey. take you we for so to Operator? operator, can support this I back will with your the questions. the in And

Operator

Yes.

question Instructions] We be first will Our an now investor. [ph] Richard begin from Sosa, the question-answer-session. [Operator will

Unidentified Analyst

just of had a I Hello. questions. couple

You in the release. this somewhat mentioned

you the that plan like $XXX,XXX So, quarter. few around next do expense to over Is this the corporate the stick quarters correct? range,

Jan Loeb

Yes.

is I rough think range. that

Unidentified Analyst

Walter then, question comfortable. is -- this maybe for feel the on And and more or then, Jan, whichever Okay.

light is trials customer churn? is the the it that it -- peak base more or times the per is in the off four segment, se -- third that quarter or on trials the is quarter has four usually is CP so, times on most customer usually the third So,

Walter Czarnecki

of terms we throughout year. trials, trials In see the happening

seen half while So, see throughout CP have the the year, we in seasonality year. business, trials typically of the the in we second

Unidentified Analyst

time could AT&T going standing particular I fit conference, for a one and of be lot those mean, Okay. And that room good did only, questions sequential mean a on the and anyone a was just there segment? there of that customers? forward good you was

Walter Czarnecki

OmniMetrix and awareness, general. raising not monitoring IoT great remote brand, was of the of in the event a only from of but It also perspective

there, As still remote in you've out and know don't previous competitors know say of really biggest monitoring, so awareness it’s heard Too our general threat competitive is customers. calls, me companies recent not don't about still our many about IoT. much other

name as last vehicles Expo IoT awareness. so, summit are get as business our this both week, And and week the raise good the there well to out

In spoke and AT&T that addition myself at the several on to just recorded on for I OmniMetrix. the summit, we business and panel that -- did with interviews they

content in and good that bit into see to from media expect of social XXXX we a so, And packaged AT&T.

content So, forward to well, year. look as spreading we that next

Unidentified Analyst

the a historical it's XX% segment do But, again. question XXXX? year Obviously, on feel that able been you'd you segment to in that last rate that CP segment. XX% for be rough confident for get to to my Okay, just back is growth

Walter Czarnecki

market. on they're professional. performance the reputation customers and From good seen we can we more build they're happy. from disruption major as that are get we mentioned, from both familiar are The expecting that with folks are feel The trials, so rates. they're hungry, And put certainly still we're sales we're them. in as improve We very where hired And have we the very growth the doing and the turnover a back in from has great far, historical already you've to and experience work, they've we've field, staff. to product some that great they're been, young, continuing in perspective, two

Unidentified Analyst

Okay. get queue. back and one the And in then just, I'll more I'm sorry,

PG they do and you growth customers not Generac on there that today you and I you neighboring continuing Do you call, there huge expect guys expect a to about Do there market have be the mentioned, a generators. states? I of California. notice business you mean, lot talked for in state did kind -- Just But, and in any segment do awareness that a it the slow, do was in it. today

Walter Czarnecki

there work And further it It's given and here distance look few doing from out. marginal, been customer from been you extends a have We base, for office years. in generates at our Georgia. if the

So, other marginal demand key activity of as the see want. certainly on than the for would We growth country, OEMs us. of the the more it's we and side generator a factor

are I and that in been here what for expo fact just Generac and who has busy the at is in this and Puerto get us. how spoke them, getting California the the first in where weeks folks we've of So, with on Florida going are to sign recent seen monitor first. about going well. we places are need Rico focused the many to that's wave week so And to a capture months the second what that's past them? in then, generators and data the in; And good as is generators other in we we're how So, wave is, we the expecting

Operator

comes from a question Our private August, next Dan investor.

Unidentified Analyst

sales to it going -- the confident the leave don't a the on any elaborate really the departures you the appreciate What that them? Could was more And Yes. little Why be people? circumstances how leading factor, but that. bit what you big sales force, loss able it them up of know explanation. just to you're -- those of like are your drove to the to seems company? I a some replace -- of was so

Walter Czarnecki

and of underway on morning in by replaced two And, that solely departure the both Good who We've left as my two desire to of mentioned, Sure. upgrade I both have performance It's sales people decision, that customers that say were already of Dan. based all, business. was newcomers bringing that team. the would of Walter. of the -- them. first driven with of happy both -- sales we've very and already are of well new the the

Unidentified Analyst

very much. Thanks thanks. Great,

Operator

back conference this for turn As session. would we I closing our have further question-and-answer any will over At the time, this like Loeb Jan questions, to conclude no to remarks.

Jan Loeb

with who thank investors. prospective to any questions for support may I'm questions everyone to appreciate me. Relations today. again or or to happy Acorn. concerns time like our the with set team your about to thank with would a Please about call. investors And I always should again, for reach Once or speak have in today's of interest you up Investor Operator, Company or conclude And your out our direction. that call the We our investors

Operator

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

You disconnect. may now

Acorn Energy (ACFN) 15 Nov 192019 Q3 Earnings call transcript