ACFN - Earnings call transcript Q3 2024

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Operator

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

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

Tracy Clifford

us joining for everyone, today. Thanks,

and its remind Let to company remarks are in that and risks risks following XXXX and is with well high disruptions executing its company from related all answers to customer rates me technology, subject and to renewal the performance to competitive business subject the various as statements financial associated first and operations and These questions the the forward-looking. and customer potential economic customer and operating in changes periods financial growing plan, you may environments. of the uncertainties, as future in to demand maintaining financial be base and risks landscape, operating the --

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

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

Jan Loeb

up $X.XX call. which million full joining $X.XX X has you, to with XXXX, XXXX very approaches Thank QX rising achieved year, you $X.XX this for months today's revenue of year in I'm far revenue the million to first thank for all of our results of and so million. Tracy, proud the record Acorn and XX.X% XX.X%

the XXXX drove performance in months first X up ago QX of and strong $X.XX, period. Our in from QX $X.XX, 'XX $X.XX also year from EPS to $X.XX up EPS revenue

monitoring past for few a along monitoring build us revenue years our comprised discipline an with result with of last the on team, hard business business has efficient remote the the and proprietary our of deliver revenue year, incremental of of meaningful Our model base focused leverage recurring can performance achieved success that our work high-margin helped on building profitability growing direct sales the a products. on hardware is we which business operating in annual of from are revenue. Having

of in our impact expected We call we significant last had that a a for to had our quarter financial we on executed material contract the have year. second half results discussed the that

benefited pursuant tower in shipment part $X mature the from monitoring million which services generators leading and Our revenue wireless a to for for telecom a cell of hardware provider. QX national remote hardware approximate contract, initial provide XXXX is deal monitoring to X-year this

balance from hardware of the year monitoring includes in in expected contract, the balance recognized revenue X-year services the We QX. the first bundled which hardware $XXX,XXX of to of The recognized contract. contract over be with the is only

the double revenue excluding contract of U.S.-based over the OmniMetrix believe is prior in being solution selected. monitor key to generated strong ability customers' and brands technology are in were the to commitment and are and cybersecurity, ongoing differentiators investments all enhancements providing our customer our live service the It's period. that this awarded contract, noting competitive even we year increased was QX worth which a process, our our digits superiority

plus and The services. only of industrial year million rollout ensure execution that and opportunities. We first so this hardware now large powerful contract thousands covers commercial for the case working program as can serve very the the hard $X study monitoring other successful of are of on to purchase it a of monitors

materially correspondingly our recurring expand and total base monitoring connections increase of Importantly, annual our this of revenue. contract will number

is XX-plus the partially a have once to fortunate high of are equipment is monitoring, cost we which reminder, due installed. renewal to on a As percent switching rate

execute relationship the Also, or portion We customer for that for of growth opportunities provides to of further we customers. tower there with believe assuming cell penetration believe expansion only which devices, our our and to continues commercial this the be of with initial and that this potential on national business XX,XXX contract both a footprint. towers, large well the substantial is book other we customer number for and connected in industrial X,XXX

base currently future. have I'll a position key order to new company resources for endpoints. developing within generation department discuss competitive of hardware elevate made This expanding enhanced factors expanding advantage. monitoring tools to to process for to the the investments to some reporting additional enable new our hardware. to In in installation customers be on requests we for our strength, timely and a strategy consistently us are services and work and of when to past moment, the of an demand monitoring IT tech that driving respond objectives our opportunities custom on In our In continue of included our technology to to functionality included and better be the the for support support facilitate arise, our and situating customer we into RFP ease year, work reallocated

OmniView air launched features, that we well business Under available as air attribute EPA user including data. As regulations index a OVX to and updated enhanced quality in is can for facilitate be operating reporting our interface, as or which provides our new can quality generators offer regulatory call we've days, X discussed in prior air customers. OVX valuable compliance navigation self-reporting data useful calls, fined quality bad the on we

It as sending much investment impact ready provide Remote needed. generators ensuring and of periodic failures backup on is remote backup when well environmental while solutions of backup of monitoring the generators, often that power return minor inspections field to benefits and cost into locations. eliminates compelling is technicians environmental our out for as the to reiterate important of

their response turned be and users electricity demand. on demand excess provide incentives grid can such in generators new as by to with generators automatically times control services of remotely In addition, efficient remote in allowing operator

a We incidence caused see with remote combined being events importance extreme backup growth coupled reliable of grid. vulnerability It the to by of solutions aging that work by supported control weather outages is increasing secular as trend with of of and power is widespread the the power. our and and electric by power generation, XX/X driven stress monitoring access having growth remote

weeks. required that wildfires support to in is predict in growth these U.S., millions the and across cloud grow computing many flooding their frequency challenges and people Adding electric of experts less intelligence, Tragically, the proliferation powerful such of unfortunately, to without impacts businesses substantial artificial both hurricanes, to strength. and and And the is electricity vehicles. demand have

across believe the summary, solutions industry-leading we have for problems In we growing solve help U.S. developed that customers

our advanced to and to have XX% our We business revenue enables disciplined roughly EBITDA. model of each business profitability to drop dollar incremental

and company, webcast To November contribution our the be and Acorn a spread across wireless team help and will our to from appreciate time believe story, our XX, can Summit the an are that spread contract, we significant to of further line if on of range financial Investor for in word. awareness join so our growth Thursday, help our performance. and initiatives the participating please It's your growth can contribute large exciting Conference Virtual bottom you interest. and expect we We pursuing the business we our

call COO, CFO her the to me now insights. review Tracy? our financial for over and turn Tracy and Let Clifford,

Tracy Clifford

Thank you, Jan.

to In which accessible website our release, on we press is filed this sec.gov. XX-Q, addition morning's on our and

questions. Let take we'll me performance investor highlights financial provide some and then

increase XX% that revenue our $X.XXX In $XXX,XXX discussed a rose X% August. performance, as to line top contract hardware 'XX contributed a shipments reflecting Material terms revenue QX in of that monitoring of in in hardware commenced of revenue. result XX% increase revenue and a Jan million,

of units Once of are yet period over service mind end we revenue in installed, that installed the material book shipped, record the any they had were Also contract that amount we'll of were as XX the XX in QX, prior monitoring ratably to deferred and the the first bear to units from months the the to while quarter. amortize yet monitoring months. revenue fees third not

product offerings, rather recent than that product monitoring acceptance versions quarters, revenue or on costs to useful amortized separable be be contracted and separable service. hardware from associated allows sales to services of as functionality on of over on year. shipment QX The hardware of last 'XX in the from amortized revenue the of from the also launched term life September revenue are the new the recognized our have continues upgraded products recognition now of over Monitoring new unit. versions As XXX% hardware benefited the in

X the revenue driven our grew ended protection, were the product PG by from in XX.X% lower pipeline drivers in sales segment, line offset as by period. the cathodic somewhat TrueGuard generator same or CP, our XXXX, September or our Similarly, quarter with increases segment. recognized for our Revenue monitoring revenue revenue months

detect remote first-generation PG of to on line the segment, AC is pipelines. tools which AC disconnect We I'd product, growth corrosion. nearly disconnect XXXX and our on talk like a which have about mitigation to lot RAD mitigation segment XXXX, running we remotely the introduced engine current but metallic the an on connect Pipelines CP our of can well. touch XX% revenue our In gas and as company AC our

we generation product feedback, the safety had expense remote trial The in developing allowing prospects second-generation we this currently, RAD about expect We've are are in approximately sales product. the RAD control field tools. pipeline operators of on which product drastically optimistic early and by employee based mitigation a And year. this increase and to first for the XXXX AC the X of product launch for

which performance. $X.X grew lower QX first margin to margin gross XX%, months profit growth to XX% down gross revenue. monitoring to from million, back XX.X% ticked a XX% the Gross in from Turning than margin gross profit financial variance to X QX grew in in in Likewise, XXXX, dipped while carries 'XX. in our the margin was hardware, $X.XXX to to XX.X% million gross while XX% attributable of XXXX gross

million SG&A in technology we categories stock lower by expenses. to in lower 'XX in that sales personnel were primarily expense in a expenses QX SG&A split, operating offset decreases related 'XX our Consolidated slightly nonrecurring in costs decreased to in $X.XXX and which as other increase various due primarily $XXX,XXX executed in reflects organization R&D operating expenses. $X.XXX our an offset higher in million change in XXXX, QX structural to QX reverse to expenses versus Lower addition

expense principally X, R&D effective redesign to to promote of continued salaries our engineering position. increased our competitive line product the expand XXXX, investment and bolster related and is our staff October and Higher to innovation

our in total expand support quarters engineering We in various team as infrastructure to further and For base do we expenses technology operating growing our areas expect were at in to relatively operating increase our to expenses customer make X-month flat investments period, to $X.XXX the and coming staff. million. continue our

Net and by improvement 'XX per increases income $X.XX expenses to per diluted 'XX. stockholders to the in was improved share share $XXX,XXX gross the or essentially in in driven revenue $X.XX or attributable $XX,XXX The QX while remained same. profit total operating from QX

the flow, the for and of versus of In period, terms cash from prior generated first net reflects and cash operating in adjusted activities of increase X in operating the our liabilities. year months operating in changes other which generally assets working $XXX,XXX capital Acorn the income, $XXX,XXX for 'XX

cash $X.X flow. In free operating sheet, is technology our improved end or less cash activities million versus principally This by cash our at position balance year-end. million at terms of to consolidated investments quarter $X.X provided

also we large and Acorn taxes As for income of position million, November shields tax our generating $X.X our of which net have largely no position the purposes, a cash and debt. X, federal from cash enhances NOL enjoys ability. was benefit

business continue in in excited be several we future. very in and up, of years prospects specifically the to XXXX our about double-digit the growth sum the and To last for more the growth

working continue an services them, and to partner. us position assets industry customers their monitor to monitoring, in critical reinforce leader will power and to provide potential a our customers making We our generation savings as cost business with valuable

'XX. We the bright space. -- 'XX our in team given favorable strength into and of long long-term business for and should favor the secular operating prospects remainder breadth performance and strong of trends believe the and position, Our unpenetrated generation drive leverage our in our financial continued and for the the market model 'XX remainder the financial our are secular power of experienced

for on you to to And As Q&A. Thank QX. progress call in always, operator next I you forward call we'll updating look the following very turn over much. our Operator? the our

Operator

[Operator Instructions]

Jan Loeb

we questions? do have Operator, any

Operator

We do.

The an Richard first investor. question Sosa, comes from

Unknown Attendee

quarter, It's exciting see Great as very long-term amazing. to a shareholder.

I X foremost, and with first want So I start to that. quick had questions.

think sure. But be the the quarter? of purchase to $X about in think it contract. on Is presentation. I'm not the mentioned fourth $X or had remainder million mentioned call way? you it of on last had shouldn't you Or reasonable conference think million Investor I the really in the that Day the I orders you will that

Jan Loeb

you the purchase first way. more happens, but possible, that orders think No, as would that think into well. to time would should also, have think is consider I fall by I them the Anything of we also some that you quarter. from not have that it And

So process. an ongoing it's

revenue So -- $X.X don't -- you math doing would but this fourth from the million customer can I quarter. in you that you're should worth think we of of consider your get

Unknown Attendee

That's wanted just That's fair. Okay. to I what ask.

you generate that demand Have Or kind to been able still income longer-term? Second is on of a question, just yet? response. that any from

Jan Loeb

No.

it longer-term and is generated It's have We that from not new. a item. any income

the getting of includes different which situated. a lot operators I So themselves grid parties, are the think

something viewed as game. should from real positive, it's in we've very any that generated potential early be not and a but So revenue the

Unknown Attendee

question, then others, starting turn over my is to income. And Okay. you're last it I'll and generate to

you the looked terms in In at at of yet? your something is that that haven't impacting sheet, all? accounting is balance Or that NOLs

Jan Loeb

We would anticipate... .

Tracy Clifford

that can take actually. I

Jan Loeb

Yes.

that. Yes, Okay. take Tracy

Tracy Clifford

Yes. the question. Thanks, Richard, for

that. looking at We are actually

We year, updating of NOL as study the the of our year. the the will of end be end following

of the the So the you'll sheet on end on balance at impact see that come year.

Unknown Attendee

right. That's shareholder, And I great mean and see about, very I'm excited quarter. I'll been a Okay. long-term next. again, I've

Jan Loeb

your appreciate continued . we Well, support.

Operator

investor. Josh Peters, question private next comes The from from a

Unknown Attendee

to I'd total products? years quite for the now could I worried like Could articulate own of what are might recent here questioner your that like that add certainly but And addressable not suite in the of the shares. the a order. relatively first on think next existing to I'm line. market shareholder, congratulations I look you couple over you think enough

Jan Loeb

basis talking of is I that no sales statistics say are generators sold an marketplace, that about all in the can is we with the new that number on It's are of number are as generators very because there hard real that the I'm being meaning generators monitors. number annual are the being are in the of sold United think new What States. that to generators and the generators growing, almost of here

ago. Some which had really type up a the of of not until case been monitoring, period short time

I there's But I do get generators think the if is old market that's monitors, -- that field question a I'm the generated some on for, I embedded I put your market and residential mean, there that. large in sales, and that large. in the of certainly we the don't generators for and not get right it really, So today is, quite think that I will on focus is -- talking is new will market now new I our generator would But generator space. think think

control. market for have afford lion's to monitoring working out for assurance the example, provider for to already generator that when and field generators at And going the the space, because I decided generators, data. big that but we towers drop need both is there out make are occurs. sure have remote customer the much larger field can't in to goes cell be they're with are be, they to of in the if that contract that they a service telecom that In need want And the has monitoring industrial commercial contract and is to that a because they it that the new generators the is there the power have share think that have is that that would

market TAM. a you give So we a think I large for but out there, number can't there's very that

Unknown Attendee

the cliches that. for that's guess avoid phrase like using it TAM. I I at But... Yes. common

Jan Loeb

total I addressable So apologize. the market

Unknown Attendee

a looking Yes. Yes. at maybe Well, of we're who territory better certainly knows for than Rule XX type here that while.

whatever and be what rapidly couple force. I you're your it to Do all how use of people a you the My you through guess can talk bring for a you're in describe it, perhaps expanding expecting quarters, let's the have question to on that? P&L about budgeting sales next, to year So call way investment is, the happens we for other cliche.

Jan Loeb

next tell quality can focus want you a and budgeting to for hope have and to our P&L. right the the engineering a to only in greatest can't competitive the we're impact of But that's not terms we for again, salesperson. sales some we cost be our really that's where always where capability we the do our looking nature is looking about focus Really, think -- standpoint the over product. our of now our business, We we're personnel. of from XX focus -- is And we add going on and IT But because months. lead because

Unknown Attendee

thank the Well, ask I'll let Okay. insight, some more else somebody and questions. appreciate I very you much.

Operator

Our next question Total Chris . from comes Retail. of

Unknown Analyst

a couple. you to Just commence? and when One would revenue when the would recurring start hardware lag the between -- the is revenue and guys what's services ship software and recognize

Tracy Clifford

I take really of depends on be they plan. can situations varies. Yes, volume There It customer. on that and the where purchase Jan. units that, stock purchase. depends shelve on depends can it. their It inventory It really they It the rollout

it's so installed. are versus longer of that a time purchases immediately period And

plan. on customer and type trend. it specific customer plan. based It their of and lag is There's largely the depends rollout their on the really no So just recurring rollout individual

Unknown Analyst

in of -- it exciting that of it conjunction expectation you case, that good And contracts what noted was telecommunications potential a have I sort this of in in the conjunction that? chunk case -- what with in with the or a good the large anyway, with would this was new quarter, for would -- believe be you what's company, it

Tracy Clifford

of rollout the been -- different on regions Again, indications for plan. States have United of the there different sort we've

been a trend. won't or lag bend has then there'll a a a there'll flurry. and -- not So We'll specific flurry there then be have and be

information give any have especially the the and need. you can it's on what deployed of of really the efficient that going what I there that end deployment their installers that So to support through how holidays over is and really they depend many on isn't that the is, quarter type finite expectation because how deployments

on you there's to that Jan, this that. can not time. if give finite you know any I at that I want plan unfortunately, a So color information on don't add

Jan Loeb

to right -- as minute there. line just I add the customers of In the and revenue then they many ours, minute we let a mean like monitoring it Yes. to the particular product that such do to and we then other opposed in me because of would this this customer that number let is necessarily add me starts and chunks. a -- sell it units, where it case, it's installed hits doesn't we -- our don't large it's that ship

to Tracy number hard adds what in And it's said, any going say what time. of units so particular what also that dollar or are number be to to

but But is the counting we is monitoring million the the not year remarks many, every I made the are come $X is year year to only contract, in prepared them. one in only that expect first That that to the we of many expect my that something first years points that we from monitoring. in of continue. it's that initial Obviously, of

Unknown Analyst

-- I so know that. Great. perfect I know on it. I I visibility have appreciate it's don't appreciate Okay. you it, listen, Well, .

Operator

Instructions] [Operator

Jan Loeb

Operator, we... if Okay.

Operator

do. We

Private Joel Skyler, from Investor. Our next question comes

Unknown Attendee

and you the to whole OmniMetrix a team, kudos quarter. and Jan, Tracy terrific And Okay.

you on, about a reach. geographical can expanding us Just quick your what question tell

and anything And also the and curious Canada, think build hurricanes similarly, the need then hazard mentioned generators. which, to Puerto with time. starting of past then in has wildfire devastating whether some recently You've the mentioned do due And to I also you Rico, in in you its I'm course, wildfires. over accompanying experienced for in California about potential

So that. thank you in advance for

Jan Loeb

Yes.

the climate. a recent all is said market product are more areas have So kind of past, we California, I as temporary sell because those a a into they in that today

focus growing to have is nice sales have been in now past, . but think California I great many Canada. changed in have Canada see been generator our so And company sales And has that Rico on are California a the had going of in market are not very we quite in we it's it's not years. now generator been a nicely. a big who a salesperson and nice a solid market. that's Puerto I market. for for think don't be And Rico in us, and but we Puerto focusing

Unknown Attendee

will can that. future, it your differences think present off opportunities you be would just a the do service business I in you and for that And potential Europe know into challenge Wonderful. have Asia? about time far very Okay. operation, but curious the

Jan Loeb

Yes.

we into difference us growth have move Europe. you time we found have that us, impacted language for potential As and said, difference, enough out domestically to

-- some However, have we're do foreign footprint, to people where we'll customers the of a go and our new large talking with contracts, go. about

for sense business a potential with talking makes customers it us standpoint, if international who and from So we happens what go see to. we'll will we're definitely currently

Operator

Our comes of from question Stein next Oppenheimer. Joe

Joe Stein

part you group. congratulate the just get towers. hope because I be I to through, of of team keep don't I rush the want international and and your work, growth I finally coming on good go to investment just the towers plenty to more proud have have to around you up Jan, many and

Jan Loeb

much. very you Thank

Operator

Now showing further session. no the questions. This concludes Q&A

closing it Loeb to turn Jan I'll back remarks. Now for

Jan Loeb

today. the us or look All our information IR release. to the Acorn whose your appreciate on forward your our you you is Summit Energy. with best. And again for speak on Thank details We again always today's was about updating with for we're next Conference out Thank with call happy Investor you press support, investors. through November range call. our event in your of questions We to XX, interest time and a ask put team, in any we'll

Operator

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

You disconnect. may now

Acorn Energy (ACFN) 7 Nov 242024 Q3 Earnings call transcript