Earnings call transcript Q2 2023

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Operator

Good morning, and welcome to the Acorn Energy 2023 Second Quarter Conference Call. At this time, all participants are in a listen-only mode. After some prepared remarks, we will conduct a question-and-answer session.

As a reminder, today’s conference is being recorded.

I will now turn the call over to Tracy Clifford, CFO of Acorn Energy and COO of its OmniMetrix operating subsidiary. Ms. begin. please Clifford,

Tracy Clifford

welcome, and today’s call. Thank everyone, you to

remarks a forward-looking. answers and many uncertainties. Such the reminder, of that and to risks are to follow subject As statements various questions may be

as and example, financial years renewal operating business as strategy, executing competitive future to well operations financial For customer subject customer and operating performance the growing from XXXX in is disruptions company with landscape, associated in customer and its demand, changes maintaining rates technology, environment. of its risks and economic high and in to base from company the the the the

Act Forward-looking information XXXX. on currently management’s Harbor based statements to pursuant and Reform the Safe are Private the of using available the provisions assumptions made of beliefs Litigation Securities

or revisions no company will statements such management’s in assurances to achieve XXXX Acorn disclose goals The to future today. events periods. circumstances are to able to that growth obligation occurring be in after or or forward-looking reflect no OmniMetrix undertakes There

A factors measures affect included press under to non-GAAP GAAP the metrics XX-K uncertainties in in provided in the our full of company risk that may financial risks company’s release section of website filed A reconciliation and the is with corresponding SEC. of Investor discussion today’s available the is as and the Relations at acornenergy.com.

of our OmniMetrix and Acorn operating turn now CEO to call the Jan? Loeb, I’ll Jan over subsidiary.

Jan Loeb

taking everyone you, and Thank and for this time call morning you thank Tracy. joining today. Good

a carriers it negative which growth consolidated consecutive because support the demonstrates technology. impact of second It second quarter. XG Acorn monitoring important their profitability, quarter returned we following of positive have trend the in growth, revenue was achieved and wireless for to that excellent topline sunsetting cash monitoring growth, flow monitoring our is

second the on the quarter. in first XX% X% building revenues grew a growth in quarter, Monitoring

be impact that continue on balance exploration. of revenues, year revenue monitoring Also, is ARR, over this of gross an twice typically, margin and bottom about to We because annual its recurring line growth monitoring their our margin has revenues renew of outsized Because performance. or the realized upon to the XX% our expect our on service hardware, trend plans we consider beyond. over

QX Our benefited C&I large loss public the revenue in for industrial customers in demand back-up QX commercial revenue Overall, contributing net costs XX% QX and allowed from in cover hardware profit strong achieved generator performance our of also a from a increase growth overhead us to customers versus consolidated or monitors, XXXX. XX% to a TrueGuard in period. company and net

our QX -- On of and has growth compared as XXXX. cash a $X.X cash basis, increased basis the was XXXX million to XX% first in in million QX grew $X.X even for to better half XXXX, X% rose revenue

to that call more and building pattern our last and normal this year We into said return weakest quarter QX business with on a QX. sales expected we likely QX our

belief Our cash performance XX% this for full our XXXX. supports far can achieve year and growth so has the goal that our annual basis pattern we revenue followed

for expect consolidated fiscal also flow positive to goal, a achieve and meet we If we'd profitability the our XXXX. on basis growth cash year full

environmental growing call are and requirements. we with and constraints that what facing return We have pressures, customers investment costs, rising of on a base C&I fuel industrial, labor budget increasing commercial and along

array making solutions an us a each partner businesses. provide in Our areas, of broad ideal benefits for of these

environmental to and to impact. carbon minimizing remote are increasingly footprint the prudent benefits providing customers the attracted of a them Our monitoring, path reduction

significantly residential past sales. dealers quarter combined when generator supports trend, We ROI, in were our down efforts. development business compelling believe was our very visible this with This effort our in which C&I this

up XX% and One sales residential were XXXX. the quarter, sales the XX% quarter down to second their product their that compared in were reported second leading of the C&I generator of manufacturers product

We segment residential increase. are the continue segment the the and see to demand rebound C&I in that bullish will we a in will

have remote gas number We newer mitigation a excellent or have our AC is of for pipelines. RAD solution disconnect solutions believe prospects. One that we

them devices have overhead These created reconnected corrosion caused periodically be generally need by installed from manual Pipelines to by voltage process. a disconnected is protect which devices lines. AC and inspection, for to power typically

employee network connected Our delivers environmental by human meaningful solution RAD reduces reconnects The product expenditures, RAD safety involvement. the satellite devices, these and truck need benefits company reducing via cellular remotely rolls. for disconnects increases significantly eliminating and

generators, CPower Response backup very had energy as Demand manage is for also The a also as to demand. with for well in generators to compensates peak progress standby which partnership operators loads on during our owners OmniMetrix program on enabling program Energy. We -- turn help we good grid made very generator

OmniMetrix growing to employ to provides demand better Demand power blackouts. peak additional for enabling remotely meet operators helps and the reporting This backup turned and allow to source brownouts added be technology power of required provide to grid generators on or programs. Response

response and and needed programs residential for have a their are generators. of amount to be enhanced as is there this customers, between our working accomplished who efficient branded deployed with customers this demand Generator fair CPower. generator that software capability, program C&I a OmniMetrix We're base back-end of development available dealers was energy and to that new work will market

development our work We now have generators to plus these their together. This and monitor now dealers connectivity proven customers. our to our systems us allows validated find

generator to opportunity their serve the educate of It value provides their cost the compelling in the financial to generating Response and they while owners we their and dealers also income time offset run. long programs, customers benefits our that to this in installation on Demand generate but believe community participation win-win take for will a

of from value that proposition, as us expect to end control addition compared and monitoring our the our our enable monitoring customer will Importantly, and main demand response we the to response profitability each points. revenue traditional double to solutions

an in adoption, important we expect it do revenue that DR profitability. accretive to recognize to revenue Demand early is be is revenue and monitoring our revenue to an annual of It's important growth Response it's for recurring stream. too to pace very and similar Though long-term estimate it the that driver

We see will drive in our the continue solutions secular that to demand future. trends for

the example, by power conventional and fossil grid investment States For continuously in an favorable its and of United lack solar. dispatchable power supplies fuels as of and power nuclear wind power but a in supplies intermittent aging has favor environmentally such

population demand by electric are At XX% in a most and projected the same from increase electronics which we represent and of dramatic usage time, electric XXXX. vehicle anticipated importantly, vehicles, products, sales to electricity new of growth

as challenges in continued created our grids as coming increasingly managing in energy expect provide believe we on power power harsh the sound outages to of business trends through and result, quarters a very As stress backdrop demands growth patterns. by for a the years. We meet weather peak well these

has to further sales this historically expand market in relatively we big opportunities backup market, weather. been To our its market reach which manager mild pursue West given power for a in a May, Coast not hired generators

of given orders growth. a now potential opportunity However, future power gained outages for backup very as interest of extreme sales impact believe sales and traction, represents and already causing in for initiated fires, attractive such a manager lot West interest has forest business. Coast we it generators generating of events a the is number has been

positioned growth We flow Acorn business positive also build and organic believe and opportunities closed million of is other months. to well company $X.X in QX shareholder cash, six the the for explore XXXX to with value. no cash further and quarter debt

to evaluate We opportunities. value-creating continue potential and growth

of current we We lines aligned ensure to are business and value. this shareholder creating that effort in with remain very disciplined our in focus on order

priority us meet we this high Our strategic and first in the believe to have opportunities. value is for process. external created create discipline growth value our on executing hurdle a we protecting in But

call and I'll review provide for Tracy of on to back pass insights operations. financials the Tracy? her that, With our the

Tracy Clifford

Thanks Jan.

SEC. to In addition release, this press XX-Q morning our also filed we the our with

we I'll to provide the results call an our overview Now, before questions. of your open

The numbers GAAP discuss revenue, we to is non-GAAP that measure GAAP except our consolidated press are that basis reconcile in a revenue on which cash basis, a we'll release.

for our and in from hardware national control generator C&I backup both revenue, across monitoring generators. $X.X customers. primarily strength board a revenue customers XXXX business million, by driven particularly and rose and XX% monitors large XX% of seen QX remote to TrueGuard for in We've the increase residential for

million, of our majority six amortize first it over in XX% strength. revenue the months, the currently, revenue accordance and period. three-year sales deferred increased $X.X the We've reflecting as noted to Through hardware record before ratably revenue we a GAAP with into that

which balance, the collected of and term and we plan, cash monitoring typically The however, monitoring the accounting million at second a hardware which from shipment sales a to the defer XX of with accordance value $X.X in within time it one in based level XX ago. a of up in of is revenue monitoring year. is Similarly, days. treatment services, amortize and over revenue in current results payment deferred record year $X.X The quarter, the million terms reached

Internally, revenue GAAP recognized. year-over-year focus a to basis revenue be is of measure future trends because cash we of more sales give quantitative primary we the on indicator and

the XX% $X.X to million million in As Jan rose And first mentioned, to million XXXX XXXX. $X.X from X% basis revenue in cash XXXX. months in our revenue $X.X basis increased cash QX six of QX

slight the margin to QX XXXX revenue XX% XX% Gross gross XXXX. compared profit in million, the of hardware $X.X million on gross in profit increased a Gross gross XXXX and reflecting XXXX and margin monitoring in of margin margin QX of was XXXX. in XX% margin and mix. XXXX reflects hardware price decline in QX $X.X gross to a as XXXX. QX A more on QX XX% gross a with QX in XX%

decreased reflecting $XX,XXX and in in $X.X in million QX XXXX, development prior expenses a lower XXXX in and research Operating period XXXX. the X.X% charge year $X.X software expenses onetime to QX modestly impairment from million QX

cost costs new well the and and We due to consulting additions increase staff for other staff augmentation half projects XXXX and personnel IT do initiatives. in as to IT expect of second SG&A as

R&D have introduce continue and and activities new to enhancements. solutions Investments leader share, remain product also investments to These in to C&I where business. grow allow market product our in us segment, the and IT allowed a in the particularly OmniMetrix technology we

Net $X.XX reflecting and per Acorn income or strong share in revenue XXXX, expenses. per share attributable growth QX or of from to $XXX,XXX to in $X.XX operating $XX,XXX improved XXXX lower stockholders a loss QX

or $XX,XXX ended in share loss the to of income six $X.XX period XX, $XXX,XXX net $X.XX of per six-month the for improved per months or a Likewise, first versus share XXXX, XXXX. June

attributable from of XXXX, $XXX,XXX cash noncash operating activities plus six months ended the generated in June to net income Acorn expenses.

launch for of XXXX, We monitoring quarter. their upgrades as in also June the the user is to data, investment and hardware to XX, in minor for our continued new view in technology in Omni development customers purchases, ended the refer and which six interface planned invested months X.X the software fourth $XX,XXX technology for we

In ability customers for terms as new $XXX,XXX still $X.X to inventory consolidated of at year-end. June product inventory some our we $X.X to large increased sheet, to and August to million and We're of delays increase volume maintaining our mitigate $XXX,XXX any XXth, at from delivery Xth balance growth. cash had debt. of million facilitate We had excess with in

control believe fronts demand necessary solid updating sheet and/or our longer call. of be the the the forward our these strong in all Overall, next opportunistic investments. term. We progress and remote our on on very for including our balance provides strategy, second look growth and for prospects you to solutions, half over We including response on to support excited continue monitoring about we

questions. please operator, open investor that, with the call for And

Operator

will We begin the [Operator question-and-answer now session. Instructions]

comes with ROTH first go from Searle ahead. question Please MKM. Our Scott

Scott Searle

the some Thanks to -- just Jan, nice afternoon, good C&I to me start, us revenue quarter? could calibrate the of like for and base was about of an towards the excuse skewing how versus driver. Good C&I us us residential And idea recurring. add It standpoint, a and you questions that from taking is in installed what monitoring the the net kind give give looks sounds maybe, like? mix definitely idea morning. But see maybe

inventory channel doing here? line the Is what headwinds Is the else? the predominantly that been are with something recovery residential front, have And then time interest the front? expected forward looking rates? issues Or this what's it -- on and that of they're there on

Jan Loeb

thank Scott, you for questions. Okay your

we Firstly, in are versus today, terms of a residential roughly C&I. and XX% C&I of residential, XX% company as

because the larger can but of In quarter that of terms but size generation. especially residential tell residential the quarter, the you just I'm of it residential, to going substantially you give -- predominance than substantial was monitoring I revenue base the number, our the the once is side, -- C&I in of in it not does so, the on our was

the in is And financed, out pop what $XX,XXX generators not yes, and large. very we're of all just pocket something terms In factor. by a marketplace, big interest seeing out of rates are are almost

residential the on talking I'm Again, side.

have So, a interest been factor. rates

you I terms is of view time think residential general more the luxury because a care People of than been a generator somewhat have factor. think generators the over of if that We economy item -- grid. in as the a in viewed necessity. changes

side, necessity is the much luxury. On C&I more a certainly a it's today it than so

So, I factor. think the economy a also plays

saying of you can needed. out, manufacturers I think, tap of get a the the saying but -- dealer, areas, generator by an certainly, not still customers get large, if can generators get product you're and by they every ability and you I'm for terms there today. in large, I that, our but are, if In think dealer, lot inventory our to that a certain the dealers are is there's backlog,

Scott Searle

you. I with And if could you. more. Got just follow-up Thank one

Looking guidance growth of forward of cash the XX%. to

new as think factors this year DR an and RAD it that Thanks. on early to how but like guidance that really then You've out as of in sounds the could second building idea XXXX? I'm closer as of of days, that pipeline you how it's in into and well the coming got terms the solutions give some we us is wondering [ph], half both visibility front if pipe start about

Jan Loeb

really don't now going I'm those So, in XXXX. previous on of and saying that any that are factor be I'll either big calls, factors reiterate in I -- to factors think

we end they've bigger And become they of as process. time, there's the especially kind towards XXXX. start on factors over side, the an think said, of education DR I

know don't we going So, adoption how fast is be. the to

Generator a at the will ISOs us you October October they Xst can be and on Industry in CPower, the the is with is us which that company the I to has tell largest and EGSA power at providing which the Conference, the with presentation Conference conference, Xnd, booth.

to our best So, get the we're word out. certainly trying

will that have for I our think a impact dealers. major

So, no I so quite thereafter. is large. cumulatively renewable an it And it But impact can the in as in really numbers XXXX. think said, has it and stream It XXXX. we've annual builds builds be revenue

for program grows. [ph] be the paying somebody megawatt, look a if what And at $XX,XXX sign Arcot generator standby numbers you quite can per the is program to on up of as for large

and product that our industry of again, terms a for the trials has sales. RAD, have lead-times long we In out, an still new in takes time

is So, has -- I that, again, very a XXXX impact nice in think and beyond.

Scott Searle

you. Thank Great.

Operator

go from next Our question ahead. comes Edward Gilmore, private investor. Please

Unidentified Analyst

that any the in AI able there on wondered metrics going everything horizon data beneficial be might call collected. Jan, be kind that's you. the to see Hi do and good to and product had nice the intelligence. monitoring and you the But if see just that, Thank this for suite? perspective morning kind artificial results on wondering question of the was on it's the I thanks good of your a on I can and for the opportunities taking morning. general

Jan Loeb

it. I the we see second, don't write

on have it. our eyes are We certainly

pieces data XX,XXX We data pulling actual equipment. of are from

company. So we a data risk are

want And focused certainly we works, that more light, [ph] obviously, the doesn't our and more analytics more need in on data. we're who work, seeing can business, the past what C&I had acquiring on people light, green red I'm supply, had people it we the call monitors, dumb the and

impact impact. game. early an and too right have could for But us, now, it's so AI time, over the think we So, a positive in

Unidentified Analyst

or to how there inventory year. go backlog, It's the for the to much great. I I just backlog another the rest of existing to Thank you. actually on that backlog of great committed then fill demand the Okay, may. question is And wondered there? you. And Thank just see the able so XX% high if

Jan Loeb

in have -- go boards inventories, every year, I might have full inventory we to inventory we I were products. the mean tell continuing of have PC of you different can't you that for order. that that antennas but

a have out. a amount order continuously of inventory and that I significant coming tell and you inventory have of So, we we amount can we in going significant

Tracy Clifford

need I I is might inventory that. he's think is that If backlog, to really no to add on response, speaking for there what actually fulfill

units those already a have revenue orders. a backlog function So, and for of the installed That is that been just gap. aren't of it's deferred

So, Does backlog because deferred not actual inventory that filled. satisfy the none to question? that to revenue answer it's of required of existing an be is orders your

Unidentified Analyst

Yes. it. you, Thank Appreciate had. the Thank Jan. questions you, Tracy. Thank very you That's much. all I

Jan Loeb

Thank you.

Operator

[Operator Instructions]

Bill Jones

Operator, this Jones, Investor is Bill Relations.

e-mailed was may. a I if have private from question We that investor

Operator

ahead. Please go

Bill Jones

from is it the to split investor. stock reverse you're And recent the authority that noticed split. reverse he's a do gist the to proxy Tom, is Okay. is, The -- requesting in question -- materials, private of says asking stock you question

had and have split why not given stock would to the so. not explain not You've allow more date, Could to reverse a could chosen people the that do that would potentially you it's authority stock? penny or to you buy if

Jan Loeb

Okay.

had definitely order said that and it the do permission So, purchase firms to customers correct. a number because don't buy make number investors of allow that brokerage the in us should to reverse to We've to we of stock easier to stock stock. have

I after been split. the historically the years So, typically value hesitant have because Wall use do in in reverse XX-plus past, reverse that the stock that to Street, I've split on been the

that. So, hesitant been to do I've

and did we our but -- have that good gain of give and reverse go events, one confidence usually that for There's news stocks that rather only come, some me ahead split would with this past is reason value I've to that value, kind in news not string company. will And good the meaning good to a the of it. said that if lose

do confident until coming. we that have I've the Tom's hesitant I what the so and time, rest good into some split, answers think But announced assured that future. can feel reverse stock reverse very about to a do going news we But and that to we split, we'll see hope one do we question. if stock so it. a And I far that been happens future, we're

Bill Jones

Thank you, Jan.

Operator

This to remarks. concludes I Loeb Mr. call the closing the over turn now question-and-answer Jan back for his will session.

Jan Loeb

in for developments. your update QX interest And in we via our We press everyone any you forward investors as Energy. with interim Thank on material look conference you call. will always, Acorn updating releases to the

We appreciate or with investors your investors and to happy about our speak support company. I'm prospective

our press or to our thank ask myself in set up for best. today. Tracy we information Until then, release. IR a today's you and can all You is question contact his call team, the a who's All call with joining

Operator

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

now disconnect. may You

Acorn Energy (ACFN) 10 Aug 232023 Q2 Earnings call transcript