ACFN - Earnings call transcript Q4 2023

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Operator

Good morning, and welcome to the Acorn Energy 2023 Fourth Quarter Conference Call. [Operator Instructions] As a reminder today's conference is being recorded.

Now I'll hand the call over to Tracy Clifford, CFO of Acorn Energy and COO of its OmniMetrix operating subsidiary. Ms. Clifford, you may begin.

Tracy Clifford

Good morning, and thank you all for joining today's call.

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

uncertainties on that assurances may forward-looking our now of operations financial included company occur circumstances the reflect goals. The that Act is to company or XXXX. forward-looking the example, to to from full discussion the pursuant customer high able XXXX achieve the in provisions of renewal operating in to the either Commission. I'll and no obligation statements operating Factors business disruptions call operating potential periods available data after based to For and no to and which landscape over of company Jan? Loeb, CEO well Securities statements and company Jan competitive Securities environment. Such economic this Acorn as of the are call our available is in There executing the Risk disclose changes the beliefs risks as of XX-K, its under plan, assumptions that to Reform revisions to company online growth turn the as to performance and the and rates associated and base with the is today. be A will Exchange or of Litigation events subsidiary. filed customer affect with risks OmniMetrix undertakes its its financial currently and demand, risks harbor maintaining and made related management's are technology, subject Private the customer using safe information future growing and

Jan Loeb

our you, Tracy, joining call today. and Thank everyone, thanks, for

the other accomplishments progress profitability long-time achievement Acorn congratulate the OmniMetrix a QX of few sustainable very touch year on goal. let and full in in both particularly of has key the year I and for been million company, Reaching me annual of our $X on team First, revenue. to for another XXXX. profitability entire want solid a

following decline were growth, to XXXX, the and into X% lost the some customer in was older a related XG We units QX which to monitoring path wireless technology. of in return able to we XXXX revenues revenue a to in to monitoring even related impact of of churn sunsetting due First, XXXX, XXXX, increasing with X% sunsetting. some mainly

that However, revenue expect above build to before of now monitored our we impact number are that now endpoints. in total sunsetting. With monitoring we XXXX double-digit to XXXX action in growth of base continue return we endpoints of had us, the monitoring behind as in the we to

enable sign Response that's operators that grid it, up the brief backup the generator for OmniMetrix' generators and on of we our monitoring Demand gross operating control monitoring Given demand. driver turn the The to the and Response margin and to available links to service high during -- line. Building offering XXXX, is or technology revenue business. hardware we grid sales on is new to to margin approximately double DRs compensation incremental from that and a flow drops value periods peak to critical support income remote monitoring a largely as that of annuity recurring it generators. functionality new automatically nature advance on provides for during DR for initiative. their our rollout the revenue, continue view offering cash -- we model, owners endpoints and monitoring that Demand making revenue enables this receive of for call our key offers

providing proposition double endpoint. revenue monitoring DR and additional we our potential generator top service controlled this, of customer to each profitability our For enrolled and earn the stickiness, on strengthens further revenue. Accordingly, that we our on value conventional believe

solutions. our and sales business expect the to that model further could support generator also overall incentivize DR promote We dealers

initial Texas worked XXXX, in of and in response a in now main grid our summer time customers. test, for market XXX first ERCOT, the the operator typical demand. These peak the approved in During have demand formalize year grid residential programs, help enrollment these we customers late resulting been to by

continues customers network the in dealer to Our on currently, work this in of pick we pace with XXX up. to approximately the program up capacity generated signing hours kilowatt and expect activity

a cost from a We purchase. more generators purchase approximately installation backup for The units on particularly are that based new expecting linked solution, meaningful for commercial units a gradual contribution installed residential a size. on XXXX next-generation adoption XX,XXX and is substantially of and modest as revenue DR energy-efficient required plants path demand in to one normal asset for depending

are pleased customers. first this business for launch and an completed represents our program we and value the all have We roll move to driver very our growth We work DR as important forward. believe to

we number have to generator customers. Beyond large of executed reseller one with per industrial nonexclusive opportunities with with time. largest substantial commercial dealers agreement of We and Demand meaningful multiregional over Response, generate the growth believe new monitoring we QX, connections could generator or C&I been working a nation's develop agreement a dealers. commercial In and this year

fully to The fees hardware annually, operational. sales, start-up relationship potential million $X contribute and more the or revenue of once annual program has initial the managing is

base fully not this volume their it train yet to as to under significant optimize the of and take expect orders several may quarters agreement have started its on benefits. dealer and program We we any receive

constraints. environmental to Turning offers costs, pressures increasing solutions. customers budget reporting rising who OmniMetrix compelling and C&I and facing are

solutions locations. control benefits by and to Our and reduction monitoring reducing cost regular and meaningful environmental rolls remote truck visits provide site

quality air state increasing be We regulations. also provide with may and required compliance reporting that for environmental

we commercial is favorable there our working on larger industrial some very opportunities. business and and are backdrop a for development believe efforts, We

of customer these larger time to course, Of approvals. opportunities work through layers take diligence and

of that course, some meaningful that disclose to want clear the do XXXX, hard our For it progress. in predict and we of will, timing success. large see I it's potential any But the reason, make to we did for opportunities

stock with of the XXXX a September public X-for-XX raising split intention completed our our in to Turning investors. of stock Acorn make price to potential to equity. We a share broader reverse successfully accessible group

on know, face investors investing low-priced increasing below limitations particularly those many may stocks, you As $X. in

We Acorn split new with are and reverse and share higher we share help the attract as to top on post-split price investors our believe that performance. of resiliency volume continue the should pleased our price bottom-line build to to

event, I opening, are in build well customers. down sales our As of residential proud very purchases Acorn result and upon that beyond. X% OmniMetrix XXXX that profitability capital of were said year-over-year dealers profitability rates positioned believe delayed and into fact reaching achieved XXXX of In by as we our our at our cash despite the we goal to the any and I'm into has XXXX certain and a interest high inflation our impacted XXXX C&I and

several operating liability net profits carryforwards, next over future the NOLs cash from shareholder shield enhancing Acorn's Importantly, flows are our close loss largely and value. tax $XX future should to which years million,

Our long-term goal line remains average the top XX% achievement annual growth. of

actively revenue current of each with we to of operational which expected XXXX will for incremental business the dollar opportunities margins position cost that EBITDA Tracy impact debt solid XXXX XX%, of can and revenue organic has gross growth a and with each in our we a should accretive in We value OmniMetrix manage the we currently that have XXXX seek no investments on initiatives approximately dollar. cash cash to $X.X infrastructure approximately our enable importantly, fall work and focused that We very process $X.XX in EBITDA remain business us expansion, OmniMetrix add continue was our line. of support achieved approximately closed incremental in to believe of inventory in million. Acorn financial we opportunities would the will despite XX% hard to Though acquisition With grow we range development for breakeven achieve bottom-line to bolt-on million initiatives. address. to and goal. and to And believe shareholders. growth, flow

We very to on discussions a any are opportunities. To out to growth remarks, targets its not opportunities value our maintain risk attractive in investors. we with prudent about and have and we we of we my will business for yet support result, acquisition are effort close the M&A but growth will have and grateful prospects, date executed and confident seek this and excited as external the management criteria strict continue

cost relatively will our for limited the is Our the mitigation risk another in Response stream market our shareholders. our growth with value service outlook bullish believe creation efficiency, and and to potentially substantial reduction, penetration. adds that revenue environmental rooted we support further combined Demand benefits solutions of attractive offerings

our turn me details performance. insights and let over Tracy? on financials and for more the Now Tracy to operational call

Tracy Clifford

this are Thanks, wanted filed all not was to if our XX-K you with aware already Jan. you SEC make morning. I the that

results, significant year that developments Now then the latter I'll particularly some questions. In half open investor after we'll call the quite important initiatives QX been full to the for and XXXX, we year, our which discuss completed some on some time. working in and of we've review

delivers service XX. products of functionality OV have OmniView products OmniMetrix First to capability new in our extends updated a interface, our they beta on user our period only feel became our of data functionality our we and quality and more compliance XXXX, have provides more provides ahead and of appealing Patriot by a our themselves devices. as X, launch planning data features, about our that X.X monitoring that excellent, to products of utilize and of being new access range customers edge or design allows our since with that user all September of results relating functionality data treated X.X. option customers how in OV been that rolling X interface provided to been a aesthetically Hero be OmniView or customers. Overall, has version access user monitor are our including customers the that hardware call to monitoring support OV products to This mode. we've XXXX the reporting March air new new very We're these provider. Historically, should the purchase development, lengthy us a a customer versions on and choose include for X, or to We'll much OV offerings. modern customer experience. available excited better that X, October X.X XXXX, monitoring The as for we in our developing another us of all, services. monitoring distinct forward. Also XXXX. response AirGuard, moving to and TrueGuard, launched to as After keep self-service making our and more new and able and services regulatory portal it, to of X.X competition modern new to worked customers X.X a run competitive The OV about out

updated version the been amortized of sales result, X with cost upon estimated the devices X of revenue, Revenue than hardware the services and monitoring years related amortized year. historically a commissions ratably sales is was for prior life as deferred As of over hardware. which recognition term which goods had over of our is the rather contract, unit, the and the shipment are of the typically recognized on product still of service case

Turning revenue not to monitoring which design and to deferred The our with sales $X.X customer. units rose our $XXX,XXX hardware was XX% in custom million XX% of revenue hardware C&I versions, from from XXXX of Full product $XXX,XXX was in increase results. rising driven year sales by one X%. revenue and revenue new increasing

in by monitoring hardware hardware. returned by XX% endpoints revenue to $X.XX growth following mentioned, technology, in the QX of quarter X% both growth revenue and $X carriers and million decrease in XX% increase same monitoring sunsetting 'XX legacy mobile to margin the due Jan in of as full XG revenue impacted XXXX, The a increase revenue year. Gross grew As the improvements. 'XX driven fourth reflecting XX% in monitoring increase in in to in for XG drivers profit increase increased driven monitoring a the XXXX, was XXXX which to million, revenue a revenue.

margin hardware profit $XXX,XXX of increase tend to XXXX, million gross from to XX.X% points. sell XX% including gross XXXX. custom X% profit expenses, or price in reflects to our XXXX. higher-value due expenses to to $X.X margin with to in of primarily at reverse an which growth. Total hardware improved related margin units, million, gross $X.X in versus to improvement X-for-XX in rose higher split XX.X% and sales new products QX Our line The in increased XX% stock $XXX,XXX revenue operating XX%

reflecting $XX,XXX split XXXX. QX both increases bonuses. stock $XX,XXX in expenses, would million, increase have reverse 'XX versus a expenses increased salaries or R&D primarily in $XXX,XXX Excluding in operating namely onetime total X% total increased expenses increase to and and operating XX% personnel-related including only SG&A $X.X a expenses,

$XX,XXX increases. in profit share XX% to into $X.XX split. QX split to assets to income our a stock and revenue $X.XX our noncash 'XX. $XX,XXX will that to per investments hardware, from net department, generated for during Acorn liabilities, or per sets and attributable XXXX attributable by $X.XX cybersecurity per a mainly for QX continue 'XX software and per X-for-XX operating from in expenses, in in of to $X.XX loss or share or Additionally, driven plan, reflect we've the we to net shareholders and expanded improved The in per our adjusted used of $XX,XXX income investments skill in to expenses operating operating share development Note the $XXX,XXX $X.XX share for profitability stockholders mainly gross swing exceeded -- We execute invested share which cash $XXX,XXX investment improved that software $XX,XXX IT our or expense upgraded net of XXXX. Net reverse X.X. loss growth share capital. figures less XXXX. per our residual in stock net other are includes OV activities in to year, related capital attributable reverse plus to working This including XXXX, income XXXX. was the from

million no these to XX, XXXX. and X, position at into our XX, also heading XX, approximately $XXX,XXX company balance December XXXX, of on at December December million XXXX, order in had cash to The $X.XX $X.XX at compared March to potentially sheet, our in to XX, and in large invested to XXXX. at versus Inventory periods. debt inventory XXXX, We Looking as in XXXX. $XXX,XXX $X.XX support had consolidated company outstanding at growth XXXX Acorn volume December fulfill increased orders objectives the million

to of believe growth coming progress you the let's strongly financial in that session. proceed model strategy now months. Operator Q&A will our and I forward facilitate updating to position execution longer on continue term. our business XXXX We and our the look the to in

Operator

Chapman, [Operator investor. Bill private Instructions] Today's first question from comes

Unknown Attendee

going in the I is with? company feel and Jan, you is guys with the manufacturer DR at the was industrial amount financial the -- that program, is ERCOT, to provided, or incentivized arrangement curious, between it CPower, split comfortable get the participate CPower the between that's level been you to

Jan Loeb

who the parties transaction. the with there's this sure there what operator, are with generator, referring CPower can manufacturing. has the the and owner/dealers. you're about relationship the not I'm us who grid Generally, in the controlling to tie then X involved generator There's CPower, there's together generator by

deal the So discount his to purchase, them his maintenance give money his might and the dealer the contracts. rebate our with might customer, original and on refund is dealer typically a might service

is each and end are providing. the involved parties take a there user. different operator the are the dollars X So percentage this for grid that might those that the But dealer certain X things do parties the transaction of in of those all

Unknown Attendee

financial dealers, incentive in enough them the get financially the to it arrangement judgment? of And Okay. an for is involved? Is your for enough

Jan Loeb

I think I well. tell the there's the will as But the speed which But program is. time takes of environmental an it to also, think as aspect off. all

think Texas, electrical don't to people, expenses their want have that to bill. fail, I added in don't their have grid especially want to to

do to state. side monetary there's also think that I incentive their incentive what's just the besides the for some on So best

Unknown Attendee

and have Okay. signed so Approximately then are to in work on that around dealers far up how Texas many the this? country

Jan Loeb

don't we Well, have.

program out Firstly, the is not around rolled the state.

states as are is is the Texas now, because are culprit. who the well. So it slowly They the doing most. guys our other main need focus Texas And right

program. members know them. just the them. of dealers a of are don't there exact but of And I number So many Texas in the are dealers the of to the number we're now, right talking

Operator

private next Instructions] [Operator Sosa, investor. The question Richard comes from

Unknown Attendee

So here. shareholder, a my as spreadsheet looking know, you I'm at been I've just

a time, And a generators, where PG it not you So of had it's At really company in cheap. since a it slowly. nice was you expensive pretty this these happened. been monitor was it's never exciting things was time, dominant happening, like that position -- monitoring were in doing sales. some backup million $X.X XXXX, fascinating. always lot There that this ton things has and growing business, but was

business. NOLs. thousand the raised year, the XX% dollars But into think every I surely, we're maybe here, slowly put $X behold, of growth, but at had million in XX%, I of You that hundred couple time, XX% -- known you only sales a you don't in

it's way growth, was is, it's Is there things -- you not you this -- anything to super like that of of these where that company, become about have one So or should say I an extraordinary, question right? what like saying, also I you this was really on little meant that in there my thing got extraordinary conservative. could investor that initiatives, to little, have that, all I you say like that little and you're you if many like these all partnership CEO if of initiatives are have, the there's there And are long-term even about. all there just one thing your be you're of about it's I right, going to my some be? a growth lot that things focused them know cheaper grown feel worry forecast that doing be not little You XX% excited? that these where as but that excited was got opinion. would the for guess be worried demand that I a incremental works response could I also

Jan Loeb

OmniMetrix think that at the sees. and mean that team firstly, to significant upgraded this Well, is of Acorn. really we've actually is I the the me think other at I public -- leads and team Tracy opportunities. most here excites something But OmniMetrix, which we and amount a that really not the thing I

our I wake only now for beginning data think up to the business of to of kind commercial analytics and industrial is the and monitoring. need side really

So started see -- into and its future. I that into real was morphing base was the The push over company and industrial. commercial really residential. think a company is really time, that the I business that, And

to a It's DR product. think big that, but slow a And opportunity. all that is I could sell we don't think meaning I very be So big opportunity. been It's have profit, a almost DR is all software. very

So our falls large percentage a whatever to bottom very generate of line. revenue it we

as to in your question. begins and think I that I leaders field be I we DR hope answers that -- that think up pick So could products will are over we do, time. in benefit big we the a

Unknown Attendee

great. that's Yes,

Tracy Clifford

I'd Richard, like one also. to add thing,

the I C&I bit even better for them think future and I being doing Jan in in to of partner compliance in about alluded months are And customers that can remarks provide. regulatory we them to, we the last my a reporting. and job XX with alluded services team to tune listen really that that our to trying with and a little

it's the their with compliant ability revenue that really enhance consultants and build to we money to, alluded additional payroll the dollars. and streams to a to being to and that without the Jan that also move to with partner able become help spending forefront I way a additional stronger that be data along provide we environmental critical them along services those lot to customers. on more analytics using relationship provide opportunity going of and be restrictions lines and as believe And I forward think our C&I there's do

Unknown Attendee

Okay.

a -- not it's a my It's question, thing. last more Let's of request. it's

sales over these million. $XX Let's get

we So stock $XXX price. see can

and few see excited I'll next the for hope over years. really be to So that that

Jan Loeb

take anytime. PO [indiscernible] and we'll your

Operator

I am [Operator any -- not showing Instructions] am showing further the I time, At time, questions at to this phone. this

Unknown Executive

Okay.

couple from private were would a investor like have of e-mailed We questions put a that I to that in.

with First Demand do -- these have Response.

the impression it The there do made under recurring as when DR explain. Response, upon sounds an you or utilized get website, payment actually when that is maybe is Could signs is but end were sign-up a paid when it customer parties was your for from first like they they're quarterly participating and both? then perhaps the up Demand or the

Jan Loeb

In -- Yes. months gets And and X Texas, and X paid we of of season. each a year are fall X are months everybody seasons that particular each. end winter spring there at the summer and

only but winter obviously, and the and are -- is. that's seasons, versus have biggest some So when X they X because peak X big summer the months very because demand not being

just for in would summer, the example, So expect in November payment for the we season. summer

a like will for doesn't when paid needs month expect because because it signs just mean season call upon the see or done sure gets So that, we kind the know provide after ready needs to up, so he is person to they it customer money. And the the that would be operator grid running to of generators electricity. and ends, the

a So get and little that it's end after bit usually of each the paid. about season people month a

Unknown Executive

the initial response Thank sign-up second that. I'd C&I Okay. different residential account customer. per be double you this demand it you your was bit answered but question that? the a says, And Could number capacity three. differences. sounds for think the the due like I to jump guess will question dynamics versus to fee could The and for more so I'll address Does customers also profitability than

Jan Loeb

Yes.

much kilowatt used. typical customer, numbers C&I is in a different your that definitely, greater being are or you have So because the generator megawatt

DR as the in pretty So payments profitable expense. prepared my The remarks not numbers we one I -- all in the prepared in are question but equipment greater. remarks have is -- my much dollar that said almost of don't or are because answer any

road. definitely program and as it again, endpoint we really is once So of the double the running amount an could potential up the see the profitability down and that generating customer,

it is and marketplace the happen. formula generators sell and energy-efficient will our get the dealers to program, we to possible execute just get the there. need definitely and it's So into

Unknown Executive

operator. that. from e-mail Okay. Thank Well, have side. we all you, you for That's thank the

You may go ahead?

Operator

back the questions, time, Okay. Q&A Thank conclude for to Jan remarks. this closing you. so At session. turn we'll At call showing further time, still I'll this Loeb are our no we

Jan Loeb

are interest happy you Energy. Once We and appreciate in always investors. shareholders with Acorn or your we all support, speak again, your prospective to for thank

arrange can us or information team. us today. thank This call release. All for QX to best. forward ask spending a press contact our with You call in in again Until May. IR updating on you is We the today's with look a you then, question our time through

Operator

conference now has your for you Thank concluded. The participation.

You may disconnect now your lines.

Acorn Energy (ACFN) 7 Mar 242023 Q4 Earnings call transcript