ACFN - Earnings call transcript Q2 2024

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Operator

Good morning, and welcome to Acorn Energy's Second Quarter 2024 Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded.

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

Tracy Clifford

thank for and us everyone, morning, you joining all today. Good

to remarks me forward-looking. and subject uncertainties. remind let that These risks everyone are be First, may that follow and questions answers statements various to

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

provisions based data future be Securities company statements at is included to on Litigation of using on are revise or and There's undertakes SEC filed and beliefs Reform currently Act statements of company the obligation may the to and the Factors assurances will reflect to of available pursuant affect discussion today. A goal. website company uncertainties available XXXX. disclose that the assumptions its The no harbor the Forward-looking information no able Private management's circumstances forward-looking safe and with achieve to that risks under our revisions to after full is acornenergy.com. occurring our events as XX-K in to Risk the or

Loeb, Jan Acorn Now Jan? to the the CEO of I'll over call pass and OmniMetrix.

Jan Loeb

today's Thanks, Tracy, and call. thank joining for all you

monitoring results reflect our we increase build half revenue. trends continue first an and high-margin in quarters. of and QX recognized reported recurring base in revenue Our continuing experienced recent hardware We to

of our increased XX%. average First annual revenue XX.X%, recognized growth approaching half target revenue

over hardware telecom provide new a with the million next contract in generators years. cell X,XXX the monitoring leading for we company wireless Importantly, services backup XX,XXX to $X X tower June, approximately to and secured

selected commitment. believe solutions monitoring the a customer of and service strong and we competitive which confirms was process, our OmniMetrix thorough in value technology,

in early effort QX orders represents installed. we and from major our we milestone hand acceptance record late hardware customer of the shipments yesterday. Therefore, following approximately businesses. to have purchase position expect and and national, commenced and QX this in major commercial OmniMetrix contract largest a in to for We history OmniMetrix million and $X This industrial of contract, revenues initial

our revenue in this Given and $X.X substantial XXXX of million, also million year $X It should revenue this and flow to contribution our award next. belief our cash confirms result material a large strength the are and with other this our solutions arise the best opportunities that the bolster customers. position should monitoring OmniMetrix for and large competing that of business might other in in

Given the industry network forward. offer the of nature critical wireless for drives could wireless which demand for opportunities us infrastructure, revenue increasingly additional going communications, continued

sources to solutions place on wind standby remote residential the solar demand support commercial expect grid, and for generators and and for use all the vehicles, intermittent power factors electricity intelligence power such expanded growing decarbonization artificial and weather also to as the in We of electric electricity demand like should electric monitoring severe leading generators. increases which events, trends these of for further strain to more

up were earliest know, recovering growing More of markets. of a -- storm impact multiple devastating X.X May windstorms you And confirming this the hurricane the and from Category Barrel was record. course, for households As Hurricane and than power Debbie die risk people XX these, reportedly the the week, the another X risk made in million Gulf Storm X weather related patterns violent changing hit to impacting Texas weeks. in Texas further dark, outages. Barrel of storms. tragically, from and and is July in Houston impacts that businesses the some of left And

outages. businesses you new awareness demand for and backup future for and seeking homes drive power outages power power can significant imagine, As protection and prolonged from

years, our services few through in installed past Houston. dealer Power grown as we the Solutions in base partners Over significantly such Texas have

generators of over demand a and we increased expect storm's monitoring and duration. given storms, services severity the the these the result impact and next of As for potentially several longer quarters

of than XX% less addressable For penetration home generator reference, market the market is nationally.

growth. Typically, there's the So X driver the sales is weeks large long a outage the and time obviously, X of often on Sandy. that to and significant in summer. Wildfires much Texas, One wildfire in will California, early than this and duration and areas air And opportunity focusing as impact quarters for with other Hurricane X power for activity generator go also impact as sometimes of significant we Barrel, longer case have to is generator of a both which key outages without boost Canada and such growth Other quality. demand cause experiencing power. been are outage. monitoring

believe advantage of As discussed, expect fines, register or that our use within call, of on index quality half and business generators quality. The for Tracy of OmniMetrix regulatory for a commercial far peace our new this second the power face to regarding for provides build provides is industrial and customers team data the which and X momentum efficiency has we to data, a mentioned days user competitive particularly AQI features, our bad avoidance we the represents the customers, OmniView Overall, segment. last made in new and so year mind a jurisdictions of progress add used our in range certain us regulate including XXXX. notable air air reasons on of which compliance our value

our performance our for of should the should of full As exceed results half exceed a significantly year our the goal. year, the growth first result, second financial year XX% half the and

improved and line requirements shipments, outlook cash capital some of margin perspective, bottom also From the our a support flow manageable. working but deliver profile, ramping will we are we have to expect performance. to those growth this hardware Given

net to We income from again tax shield want significance will NOLs large our that also mention liability. of income

position to given fund internal good debt-free a position confident and So business. our our cash in in we we growth feel current opportunities status, are

for Tracy? review. to Let me Tracy financial a the Clifford now turn call

Tracy Clifford

Jan. you, Thank

off I'll performance some XX-K start be we also highlights, on filed we'll our and which should then confirming accessible questions. provide by on me our now morning, that take and investor website this Let sec.gov.

mentioned in from late products enables separate updated not standard I've some new to from were hardware hardware products cost monitoring as associated with modifications, products, be our revenue, revenue have year, shipments As hardware revenue calls, functionality. Prior treatment, products our services last useful products of or which been the hardware versions the our our units then over functionality amortizing be separable offerings, the we our of of distinct to these commissions prior launched sales new and date estimated monitoring to our on as deferred acceptance recording which sales goods years. was the and since of upon was life, compared the these launch recognized hardware X on to and prior to

was revenue X continues typically be year. is monitoring Our amortized to over and which contract service, the to determined

our and XX% GAAP June was June protection, both from by revenue period. Gross the X-month in XXXX, In same segment. profit offset 'XX our Similarly, Generation, XX, included which months TrueGuard quarter ended for grew X -- XQ or up the as revenue with for the our increases drivers periods product Arcathodic XX% somewhat monitoring hardware declined QX revenue 'XX $X.XXX revenue few X% $X,XXX,XXX, segment, grew our terms sales a rose increase 'XX, margin recognized XX% XX% PG financial Power in line Gross is our a over 'XX. billion lower were prior pipeline in QX QX versus gross the a XX.X% in CP, margin in in while increase segment, of to points. reflecting results, revenue. Revenue period, gross driven profit year generator which XX.X% by is to and or which a monitoring

in expenses. various hardware primarily R&D QX was in The reflecting QX the profit expense proportion lower decreases of first XXXX expenses. SG&A of X depreciation organization SG&A decline business $X.XXX was versus expenses grew the flat XX.X% including XX% in operating half gross the impact at hardware as to in first travel sales a expense months 'XX our in structural lower and than of category. Likewise, change monitoring a of offset 'XX gross 'XX mix. Operating and gross the attributable the Lower category, carries a in margin and which XXXX, reflects revenue margin other higher gross XX.X% higher billion taxes, and in the margin QX in categories, were

the the increased increases in product X%, flat. X-month in income expenses while X%. or XX,XXX This to QX increasing ahead to SG&A to R&D which or and total extensions existing 'XX line XX% revenue stay share $X.XX total engineering lines gross customer per improvement or and of share period, attributable investment increases and our per $XXX,XXX expenses from diluted product For or or salaries relates operating continue $XX,XXX remaining and XX,XXX to improved of included needs first new respond and continued the 'XX. our R&D Higher to by increasing and in diluted operating $XXX,XXX driven and was QX to $X.XX competitors. Net profit, in team stockholders

a X As have of in XXXX. been stock adjusted XX to share the per September for reflect amounts reminder, split executed reverse

results working operating $XXX,XXX liabilities. in 'XX adjusted ago in $XX,XXX generated our changes versus capital half from of flow, period, terms the and cash for reflects first Acorn cash In assets other activities of operating which and operating in of year the

million. balance, and consolidated our current had is to also which which $X.X XXXX, year-end relatively cash million level the Turning rounds XX, the balance to June also Acorn of cash $X.X at sheet. with with

In cement organic I financial business for infrastructure on and call. year-end. The built we're and strength continues talent we've X cost forward. forward look great about off goods strategy in the of of June progress free. facilitate November various on to business no our and be relatively and excited in $X.X current summary, cash, of successful our growth capital $X in our years and of remainder ever our at updating than in which was leader which in quarter the last execution million to that should of periods revenue model strategy deferred also both generation million come. The with for beyond. technology cloud-based impact industry our the that to was position for industry, as years telecommunications with our sold, conference addition made XXXX the debt-free the deferred or power you to new third of XXXX, We've added the departments debt working net strides contract Excluding moving the building more on XXXX, during the the have the monitoring future level was company position XX, we've our

call questions Operator? the take turn to to I'll the Now operator over from investors.

Operator

[Operator Instructions]

first as investor. a question comes private Anthony Our from Marchese

Unknown Attendee

and can margins of kind share that or have even sure interested again, not the million in I Great like looks going in if you've I'm $X I'm if in quarter, out 'XX line. that -- does and with I'm impacts it how finding just going to -- what quarters. the your have bottom just it, better Congratulations. affect will you're -- you to us see published contract interested that, 'XX? didn't that you're

Jan Loeb

you, to to expect of they will from because are of wide. not with your just contract. that tell get Thank nature their and natural the We've break we Anthony, a it's bit size, But published general, so would relative you because for a a similar size of that for -- -- you of that in it is they dramatic customers. margins our normal the some not think and the would not what little that corporate it's by but be can of size, I margins other grain take question. of not our for of But that just dissimilar they and corporate are -- drop our who salt a little

Unknown Analyst

Got it.

-- of the see great kind contract? I of Well, a don't color. on you want are or equal Okay. every discuss size? is bidding possibility, to X-year this And other once opportunities other Or the can listen, seeing but sort of you

Jan Loeb

large is that and just this no. are data every has power and power one as very don't they're don't meaning more important RFP. without see about we need and customer general, us, particular cell more provide see We trends it. industrial that X is were once not in years. answer be The this that Number And together caught want more and and and towers we to commercial customers this with in X coming want data and

an then us. So want certainly I the large other talking or customers we is also to this that stress And seeing are business. to ongoing customers

the just speak, not monitoring period it's for, X on a time. significant so much years yes, to for hardware, -- of but So it's longer the goes

So therefore, our will grow. ARR just to continue

Operator

comes Our from a next Mike question investor. of Andrews private

Unknown Attendee

hardware -- in size is come I Congratulations are order more? that, one would capacity this on looking as a hardware sort assembly are quarter. the actively good there anything progress -- capacity, a like line have this of one you're The ceiling there Is restraints, regards supply question or in to constraints, put there constraints, on sales? and chain past to that for large that top

Jan Loeb

The easier supply certainly because were chain, explain terms with. to had chain no, our inventory And us and X why. we and supply chain I'll simple issues I follow down answer built of levels on ago, dealt in is come they've because deal that we've firstly, there you call, the up now mean, if much our supply years is of that with.

chain. least external trouble right on now, at So chain, fine in any supply we're supply without the

and fairly help in-house. can with In we've this terms of And large with can us do contractors. our easily, stuff boards more own contract some can people do more to order. more We we outside capacity, and we expand hired

flexibility So the think, even our we ability business grow we I terms have, beyond fairly are to in where of today. good

Operator

with question next Manny from Capital. comes Our [indiscernible] MS

Unknown Analyst

comment I that? how aggressive you that Can had your regards penetration of because question in you description. on in a have you been the see to do data centers in possible

Jan Loeb

Yes.

business. that other have looking a big centers XX/X servers and large, as our at centers customers. so all by of would But few the have. And I data almost So the all that focus essential, manned a all data is we all that equipment, rooms Because say control are not here's their centers have their they equipment and why. data of

don't monitoring remote capability. need have you manned our really XX/X operations, you if So

they data centers monitoring themselves, and manned. those monitor their have we firewall it's -- remote the good it have from XX/X they we because because use some equipment best. equipment ARR so monitor have the our because fire to very really speak, So But us behind and clients behind the don't they are they

Unknown Analyst

the to second half forward look I performance.

Operator

Relations. come Jones will with from Our Akorn's Bill question next Investor

Unknown Analyst

from Jan, vacation. we to the $X approximate but unable million join have there's contract. And a this, to call -- telecom of that that longtime I question shareholders e-mailed you've million paraphrase, on touched to said the going to $X you've million I'm was the related $X question from think relates a due -- -- some XX% X.X by you've approximately as million through to from orders purchase it And POs, past, already EBITDA the contract. to the months. approximate $X first of that in if you've an that X contribution you $X.XX think the mentioned revenue. incremental Is XX% $X.XX, take of correct shares, in done divided then million

of that So back over year $X.XX puts he asks you if for the envelope. the just

or In relate? how terms share of per or cash EBITDA flow, earnings does that

Jan Loeb

of So to that a our envelope share. talk have the the we both from should we -- that I EBITDA past the guidance, drops and high-margin in XX%. drop side hardware monitoring mean never and business side that. at but I is certainly with can't guidance, the revenue incremental line earnings let's argue about not do given per I've back the just said give map OmniMetrix

million the presumably, hand first is that incremental I And have, think, just just OmniMetrix the that's EBITDA and if we $X way, which yes, the is correct. million $X revenue, So math. today, line, let's to POs we say, the by the of could is have math we that in definitely drop half,

can't So with argue that. I

and expenses, Energy earning Energy into have And might so correct, could is to of EPS. so we and the how large, $X.XX gets that Acorn But can changes some see in into consideration. in or you is which this take to so have taking not Acorn -- he I expenses, terms we be definitely consideration math year he's by

Operator

Loeb to questions. session. I'll time, concludes turn This Now this back At closing remarks. Jan the it showing further for Q&A no

Jan Loeb

for your Acorn always happy thank We in to interest speak we're and Energy. your Again, you investors. support, appreciate with

for You with is ask can IR next questions you to information release. updating again arrange any our on forward or care. a spending Take through call press today's you We Thank with time whose our today. again look us call. us in team,

Operator

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

You disconnect. may now

Acorn Energy (ACFN) 8 Aug 242024 Q2 Earnings call transcript