Press Release & Investor Call
Acorn Q3 EPS Rises to $0.01 vs. Loss of ($0.08) on 17% Revenue Increase;
Signs Generator Dealer Agreement That Could Drive Significant Growth in 2024
Investor Call Today at 11am ET – Dial-in # 1-844-834-0644
Wi
lmington, DE – November 9, 2023 – Acorn Energy, Inc. (OTCQB: ACFN), a provider of remote
monitoring and control solutions for backup power generators, gas pipelines, air compressors and other mission-
critical assets, announced results for its third quarter ended September 30, 2023 (Q3’23). Acorn generated
positive net income and operating cash flow on Q3’23 revenue growth of 17%. Acorn also announced a
significant new reseller agreement with a leading US generator dealer. Acorn will host an investor call today at
11:00 a.m. ET (details below).
Summary Financial Results
($ in thousands) Q3’23 Q3'22 Change 9M’23 9M'22 Change
Monitoring revenue $ 1,083 $ 958 +13.0
% $
3,172 $ 2,914 +8.9
%
H
ardware revenue
(1)
$ 1,004 $ 825 +21.7% $ 2,637 $ 2,241 +17.7%
T
otal revenue
(2)
$ 2,087
$ 1,783 +17.0% $ 5,809 $ 5,155 +12.7%
Gross profit $ 1,550 $ 1,215 +27.6% $ 4,356 $ 3,719 +17.1%
G
ross margin 74.3% 68.1%
7
5.0% 72.1%
(1
) Q3’23 and 9M’23 include $150,000 of revenue from sales of the new version of our products with update
d
functionality that was launched September 1, 2023, for which the revenue is recognized when the unit is
shipped.
(2) All of Acorn’s revenue is derived from its 99%-owned operating subsidiary, OmniMetrix.
Non-GAAP Measure
Reconciliation of GAAP Revenue to Cash-Basis Revenue**
($ in thousands)
Q3’23
Q3'22
9M’23
9M'22
Total GAAP revenue $ 2,087 $ 1,783 $ 5,809 $ 5,155
Less:
Amortization of deferred revenue (1,711) (1,589) (4,993) (4,572)
Plus:
Sales recorded to deferred revenue 1,555 2,007 5,033 5,232
O
ther adjustments and write-offs 2 1 57 32
T
otal cash-basis revenue **
$ 1,93
3 $ 2,202 $ 5,906 $ 5,847
Y
ear-over-year change -12.2%
+
1.0%
*
*See definition of Non-GAAP measure below.
CEO Commentary
Jan Loeb, Acorn’s CEO, commented, “Acorn achieved its second consecutive quarter of positive cash flow and
net income in Q3’23 with a 17% increase in total revenue, demonstrating the strength and resiliency of our
value proposition and the growing scale of our recurring revenue model. Our performance was achieved despite
$102,000 of one-time expenses (approximately $0.04 per share) related to the 1-for-16 reverse split successfully
completed during the quarter.
“As we have noted, the reverse split was intended to make our common stock accessible to a broader base of
investors. Given our strong operating results, growth outlook and sound financial position, we believe Acorn
has reached the point where we could benefit from a materially higher share price, while also better positioning
our company for our longer-term goal of up-listing to a major exchange.
“Importantly, our recurring high-margin monitoring revenue continues to gain momentum, increasing 13% in
Q3’23 and 9% year-to-date, and we expect this momentum to continue into 2024.
“Our Q3’23 gross margin returned to a more typical level of 74%, up from 68% in Q3’22 which reflected the
year-ago impact of inventory obsolescence related to the sunsetting of 3G monitoring units and the healthy
rebound in our monitoring revenue this year. Given the revenue and gross margin improvements, Q3’23 gross
profit grew 28% over Q3’22. Importantly, Acorn was able to report a net profit for the third quarter and first
nine months of 2023, and we believe we are on track to achieve more meaningful profitability in future periods.
Given Acorn’s net operating loss carryforwards (NOLs) of over $70M, future profits would be largely shielded
from tax liability, potentially further benefitting our cash flows.
“In Q3’23, our cash-basis revenue declined 12% vs. Q3’22, following 33% growth in Q2. Some of this relates to
weakness from residential generator dealers sales due to higher interest rates and some of it is due to the timing
of larger commercial and industrial orders.
“Our long-term goal remains the achievement of 20% average annual top-line growth. Although we are below
that level on year-to-date basis in 2023, we have a range of business development initiatives in process that we
believe should help us reach that goal going forward. Underlying our growth objectives are the substantial
efficiency, cost reduction, risk mitigation and environmental benefits that our solutions provide to both
commercial and residential customers.
Reseller Agreement with Leading Commercial Generator Dealer
“This week we finalized a non-exclusive reseller agreement with one of the nation’s largest multi-regional
commercial generator dealers. We believe this agreement could yield 2,500 to 3,000 new monitoring
connections per year for OmniMetrix, which could represent hardware sales, activation fees and monitoring
revenue totaling between $1-2 million per year. Importantly, endpoints added from this relationship are
expected to make a meaningful contribution to the growth of our base of recurring monitoring revenue. We
expect initial revenue from this relationship to start in the first quarter of 2024 and to build as the program is
rolled out across their dealer network.
Demand Response
“In addition, we also see substantial growth potential in leveraging our monitoring and control capabilities for
standby-generators to support electric grid operators in meeting peak power demand through Demand Response
programs or “DR”. We have partnered with C-Power to build out our DR capabilities that enable generator
owners to sign up and receive compensation for making their generators available for grid operators to turn on
automatically for brief periods when they need grid support.
“It has taken some time to formalize these programs and we are proud to announce that we enrolled our first DR
customers in October, who we anticipate will provide approximately 600 kilowatts of back-up power. These
customers must now be approved by ERCOT, the grid operator in Texas, a process that we expect to take a few
weeks. As we have mentioned, we believe DR is a very compelling add-on to our business in several respects.
In addition to providing a revenue stream that helps offset the cost of adding backup generators for end
customers, it also provides an additional, long-term economic benefit for our services with the potential to
double the profitability of each enrolled generator endpoint. Accordingly, we remain very excited about DR
becoming an important top line and bottom line driver for our business going forward.
“We also believe that the launch of our new customer interface to our data portal known as OmniView2 or OV2,
which offers more benefits to our customers such as self-service reporting options, is a significant value-add to
current and potential customers. We launched OV2 on October 1
st
and believe it will be an important
competitive advantage in 2024 in attracting new business.
“Overall, feedback from our sales and marketing team and talks with existing and potential new partners and
customers guides our confidence, not only for 2024 but also in our long-term growth prospects.”
Financial Review
Q3’23 revenue of $2,087,000 rose 17.0% from Q3’22 revenue of $1,783,000, with the increase attributable to
monitoring growth of 13% and hardware growth of 22%. The hardware increase was due to the sale of
equipment, including custom True Guard
®
generator monitors, new product sales and installation income,
partially offset by a decrease in Hero
®
pipeline product sales. For the nine months ended September 30, 2023,
revenue increased over the prior-year period by 13% to $5,809,000, which was driven by the same factors as in
Q3’23.
Gross profit grew 28% to $1,550,000, reflecting a gross margin of 74% in Q3’23, as compared to gross profit of
$1,215,000 and gross margin of 68% in Q3’22. Gross margin on hardware revenue was 54% in Q3’23,
compared to 43% in Q3’22, with the increase primarily due to a write-off of $31k of obsolete inventory in the
prior-year period. Gross margin on monitoring revenue was 93% in Q3’23 vs. 90% in Q3’22, due to prior-year
monitoring rebates given to two large customers, which did not recur in Q3’23.
Total operating expenses increased 8.2% to $1,542,000 in Q3’23 versus $1,425,000 in Q3’22, primarily due to
$102,000 of reverse stock split expenses incurred in Q3’23 and slightly higher other SG&A costs, partially
offset by lower research and development expenses.
Net income attributable to Acorn Energy, Inc. stockholders improved to $24,000, or $0.01 per share, in Q3’23
from a net loss of $210,000, or ($0.08) per share in Q3’22, as growth in revenue and gross profit outpaced
growth in operating expenses. For the nine-month period ended September 30, 2023, net income attributable to
stockholders improved to $35,000, or $0.01 per share, vs. a net loss of $556,000 or ($0.22) per share, during the
first nine months of 2022. Per-share figures have been adjusted to reflect the 1-for-16 reverse stock split.
Liquidity and Cash Flow
Excluding deferred revenue ($4,270,000) and deferred cost of goods sold ($890,000), which have virtually no
impact on future cash flow, net working capital was $2,867,000 at September 30, 2023 as compared to
$2,536,000 at December 31, 2022. This included cash and cash equivalents of $1,749,000 at quarter end vs.
$1,450,000 at year end.
Acorn generated $366,000 of cash from operating activities and used $72,000 for hardware, software and other
capital investments in the nine-month period ended September 30, 2023. Cash generated from operating
activities was attributable to the company’s net income plus non-cash expenses, including depreciation and non-
cash lease expense, adjusted for changes in operating assets and liabilities.
Investor Call Details
Date/Time:
Thursday, November 9
th
at 11:00 am ET
Dial-in Number:
1-844-834-0644 or 1-412-317-5190 (Int’l)
Online Replay/Transcript:
Audio file and call transcript will be posted to the
Investor section of Acorn's website when available.
Submit Questions via Email:
acfn@catalyst-ir.com – before or after the call.
About Acorn (www.acornenergy.com) and OmniMetrix
TM
(www.omnimetrix.net)
Acorn Energy, Inc. owns a 99% equity stake in OmniMetrix, a pioneer and leader in Internet of Things (IoT)
wireless remote monitoring and control solutions for stand-by power generators, gas pipelines, air compressors
and other industrial equipment, serving tens of thousands of customers including 25 Fortune/Global 500
companies. OmniMetrix’s proven, cost-effective solutions make critical systems more reliable and also enable
automated “demand response” electric grid support by enrolled back-up generators. OmniMetrix solutions
monitor critical equipment used by cell towers, manufacturing plants, medical facilities, data centers, retail
stores, public transportation systems, energy distribution and federal, state and municipal government facilities,
in addition to residential back-up generators.
Safe Harbor Statement
This press release includes forward-looking statements, which are subject to risks and uncertainties. There is no
assurance that Acorn will be successful in growing its business, increasing its revenue, increasing profitability,
or maximizing the value of its operating company and other assets. A complete discussion of the risks and
uncertainties that may affect Acorn Energy’s business, including the business of its subsidiary, is included in
“Risk Factors” in the Company’s most recent Annual Report on Form 10-K as filed by the Company with the
Securities and Exchange Commission.
Follow us
Twitter: @Acorn_IR and @OmniMetrix
StockTwits: @Acorn_Energy
Investor Relations Contacts
Catalyst IR
William Jones, 267-987-2082
David Collins, 212-924-9800
acfn@catalyst-ir.com
ACORN ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
Nine months ended
September 30,
Three months ended
September 30,
2023
2022
2023
2022
$
5,809
$
5,155
$
2,087
$
1,783
1,453
1,436
537
568
4,356
3,719
1,550
1,215
expense
614
637
212
227
(SG&A) expense
3,746
3,585
1,330
1,198
—
51
—
—
4,360
4,273
1,542
1,425
(4
)
(554
)
8
(210
)
46
(1
)
19
—
42
(555
)
27
(210
)
—
—
—
—
42
(555
)
27
(210
)
(7
)
(1
)
(3
)
—
Acorn Energy, Inc. stockholders
$
35
$
(556
)
$
24
$
(210
)
per share attributable to Acorn
Energy, Inc. stockholders*:
$
0.01
$
(0.22
)
$
0.01
$
(0.08
)
– basic and
2,484
2,481
2,485
2,481
2,506
2,481
2,532
2,481
*Includes effects of a 1-for-16 reverse stock split.
ACORN ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
As of
September 30, 2023
As of
December 31, 2022
(Unaudited)
(Audited)
ASSETS
Current assets:
Cash
$
1,749
$
1,450
Accounts receivable, net
583
597
Inventory, net
909
789
Deferred cost of goods sold (COGS)
890
887
Other current assets
343
288
Total current assets
4,474
4,011
Property and equipment, net
610
653
Operating right-of-use assets, net
220
298
Deferred COGS
642
807
Other assets
209
215
Total assets
$
6,155
$
5,984
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable
$
444
$
243
Accrued expenses
127
171
Deferred revenue
4,270
3,984
Operating lease liabilities
121
116
Other current liabilities
25
58
Total current liabilities
4,987
4,572
Long-term liabilities:
Deferred revenue
1,941
2,187
Operating lease liabilities
129
220
Other long-term liabilities
19
16
Total long-term liabilities
2,089
2,423
Commitments and contingencies
Stockholders’ deficit:
Acorn Energy, Inc. stockholders
Common stock - $0.01 par value per share: Authorized – 42,000,000
shares; issued and outstanding
– 2,484,791 and 2,482,604 shares at
September 30, 2023 and December 31, 2022, respectively*
25
25
Additional paid-in capital*
103,312
103,261
Accumulated stockholders’ deficit
(101,232
)
(101,267
)
Treasury stock, at cost – 50,178 and 50,178 shares at September 30,
2023 and December 31, 2022*
(3,036
)
(3,036
)
Total Acorn Energy, Inc. stockholders’ deficit
(931
)
(1,017
)
Non-controlling interest
10
6
Total stockholders’ deficit
(921
)
(1,011
)
Total liabilities and stockholders’ deficit
$
6,155
$
5,984
*Includes effects of a 1-for-16 reverse stock split.
ACORN ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED) (IN THOUSANDS)
Nine months ended
September 30,
2023
2022
Cash flows provided by (used in) operating activities:
Net income (loss)
$
42
$
(555
)
Depreciation and amortization
115
83
Impairment of inventory
9
31
Impairment of software
—
51
Non-cash lease expense
96
93
Stock-based compensation
46
69
Change in operating assets and liabilities:
Decrease (increase) in accounts receivable
14
(41
)
Increase in inventory
(129
)
(317
)
Decrease (increase) in deferred COGS
162
(158
)
Increase in other current assets and other assets
(49
)
(62
)
Increase (decrease) in accounts payable and accrued expenses
157
(91
)
Increase in deferred revenue
40
660
Decrease in operating lease liability
(104
)
(97
)
(Decrease) increase in other current liabilities and non-current
liabilities
(33
)
23
Net cash provided by (used in) operating activities
366
(311
)
Cash flows used in investing activities:
Investments in technology
(70
)
(286
)
Other capital investments
(2
)
(6
)
Net cash used in investing activities
(72
)
(292
)
Cash flows provided by financing activities:
Stock option exercise proceeds
—
5
Warrant exercise proceeds
5
—
Net cash provided by financing activities
5
5
Net increase (decrease) in cash
299
(598
)
Cash at the beginning of the year
1,450
1,722
Cash at the end of the period
$
1,749
$
1,124
Supplemental cash flow information:
Cash paid during the period for:
Interest
$
2
$
1
Non-cash investing and financing activities:
Accrued preferred dividends to former CEO of OmniMetrix
$
3
$
3
Definition of Non-GAAP Measure
OmniMetrix sells hardware (monitoring devices) and monitoring services. Prior to the launch of a new
version of its products on September 1, 2023 that includes new functionality, OmniMetrix’s hardware
could not function as a distinct product from OmniMetrix’s monitoring services. As a result, revenue
and COGS from the sale of PG and CP hardware was recorded to deferred revenue (and deferred
COGS) upon shipment. This deferred revenue and related COGS was recognized over the estimated
life of the units which was deemed to be three years. The new functionality in the new version of the
TrueGuard, AIRGuard, Patriot and Hero products results in OmniMetrix’s hardware and monitoring
being capable of being each a distinct product and service. OmniMetrix recognizes revenue, COGS,
and commissions from the sale of the new version of our hardware products sold when the product is
shipped instead of being deferred and amortized over the estimated time that the unit is in service for
the customer. Revenues from the prepayment of monitoring fees (generally paid twelve months in
advance) are initially recorded as deferred revenue upon receipt of payment from the customer and
then amortized to revenue over the monitoring service period. Acorn has provided a non-GAAP
financial measure of cash-basis revenue (sales) to aid investors in better understanding our sales
performance. Acorn believes this non-GAAP measure assists investors by providing additional insight
into our operational performance and helps clarify sales trends. For comparability of reporting,
management considers non-GAAP measures in conjunction with generally accepted accounting
principles (GAAP) financial results in evaluating business performance. The non-GAAP financial
measure presented in this release should not be considered as a substitute for, or superior to, the
measures of financial performance prepared in accordance with GAAP.