Press Release & Investor Call
Acorn, Provider of Remote Industrial Monitoring and Control, IoT Solutions,
Reports Revenue Growth in Q4 and Fiscal Year 2022
Dial-in: 1-844-834-0644 for Today’s 11am ET Investor Call
Wilmington, DE – March 16, 2023 – Acorn Energy, Inc. (OTCQB: ACFN), a provider of
remote monitoring and control solutions for stand-by power generators, gas pipelines, air
compressors and other industrial equipment, announced results for its fourth quarter (Q4’22) and
full-year periods ended December 31, 2022, with higher revenue, gross profit and improved
gross margin in both of the respective periods. Acorn will host a conference call today at 11:00
a.m. ET to review its results and outlook and answer investor questions (call details below).
Summary Financial Results – GAAP Basis
($ in thousands)
Q4’22
Q4'21
Change
2022
2021
Change
Hardware revenue
$ 847
$ 754
+12.3%
$ 3,088
$ 2,746
+12.5%
Monitoring revenue
$ 998
$ 1,000
-0.2%
$ 3,912
$ 4,030
-2.9%
Total revenue *
$ 1,845
$ 1,754
+5.2%
$ 7,000
$ 6,776
+3.3%
Gross profit
$ 1,352
$ 1,225
+10.4%
$ 5,071
$ 4,899
+3.5%
Gross margin
73.3%
69.8%
72.4%
72.3%
* 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
Q4'22
Q4'21
2022
2021
($ in thousands)
Total GAAP revenue
$ 1,845
$ 1,754
$ 7,000
$ 6,776
Less:
Amortization of deferred revenue
(1,633)
(1,484)
(6,205)
(5,886)
Plus:
Sales recorded to deferred revenue
1,751
1,766
6,983
6,725
Other adjustments and write-offs
(48)
(2)
(16)
(17)
Total cash-basis revenue **
$ 1,915
$ 2,034
$ 7,762
$ 7,598
Year-over-year growth
-5.9%
2.2%
**See definition of non-GAAP measure below.
CEO Commentary
“I’m pleased that Acorn was able to grow in a challenging 2022 macro environment that
included higher interest rates, high inflation and weaker overall economic activity. The company
not only experienced increased labor and operating costs but also dealt with the sunsetting of 3G
technology by mobile carriers, which led to some customer churn. In the face of these
headwinds, we grew revenues by 3.3% on a GAAP basis and 2.2% on a cash basis. We also
maintained our gross margin at 72.4% versus 72.3% in 2021 by focusing on driving sales of
next-generation products in higher-margin commercial and industrial markets. We were able to
generate positive cash flow from operating activities for the year – and in fact, we generated
$342,000 of cash from operating activities in Q4, due in part to strong receivables collections as
well as by our phased reduction of safety stock and gradual return to par inventory levels as
supply chains normalize.
“Though some economic uncertainties persist, 3G sunsetting, which negatively impacted our
high-margin monitoring revenue growth in 2022, is behind us. In fact, in Q4, our monitoring
revenue was essentially flat versus Q4’21, after being down in each of the first three quarters of
2022. We expect monitoring revenue growth to return and align with historical growth trends in
2023, which we benchmark at greater than 20%. In fact, I’m very bullish that our overall growth,
which we define as cash-basis revenue growth, will also exceed this target. Our confidence stems
from current discussions and sales orders in early 2023, as well as from the potential of increased
monitoring revenue and profitability from “demand response” programs. In July 2022, we
announced a partnership between OmniMetrix, CPower Energy Management and Power
Solutions Specialists TX, to help homeowners who install new standby generators to earn
compensation for grid relief, which is known as demand response. Under the program,
homeowners are compensated just for signing up and possibly supplying grid offload by running
their generators for up to 12 hours per year, during periods of extreme demand, when the grid is
stressed. We anticipate this partnership will begin generating revenue in late 2023.
“It is also important to note that if we meet our target growth, we’d expect to move to positive
profitability in 2023. More than $70M of operating loss carryforwards (NOLs) would largely
shield the company from cash taxes and benefit the company’s cash flow and cash position in
2023 and future periods.
“As customers deal with increasing labor and energy costs, destructive weather events, and
growing pressure for more eco-friendly operations, we remain well-positioned for growth. Our
solutions increase productivity, reduce downtime due to enhanced analytics, and reduce human-
mediated activities like manual inspections and unplanned repairs. Reduced personnel time,
travel and fuel costs not only boosts operating efficiency but also lowers carbon emissions and
helps customers achieve their sustainability goals. Environmental and electric grid issues will
only grow in 2023 and for the foreseeable future. We will continue to build awareness of our
industry leading Internet of Things (IoT) technologies and expanding use cases, as we grow our
client base. Our remote monitoring and control solutions are much less expensive and
significantly more effective than perpetual, in-person inspection of industrial assets that are often
located in remote locations.
“Given OmniMetrix’s technology leadership and the ongoing innovation of our product
engineering and design team, we see an abundance of opportunities for growth in under-
penetrated industrial markets, in 2023 and in the long-term, and we have a strong financial
footing to support growth. We currently have approximately $1.5M of cash and no debt
outstanding. We will also continue to search for attractive, complimentary acquisitions in the
monitoring, IoT space, which we’d like to close in 2023.
“For these reasons, I am very excited about our prospects both near-term and longer-term, and I
look forward to stronger and more profitable growth in 2023.”
Additional Financial Highlights
• Revenue rose 3.3% to $7.0M in 2022 from $6.8M in 2021, with a 12.5% increase in
hardware and accessories (HW) and a 3% decrease in monitoring revenue. In 2021,
OmniMetrix recorded $112,000 in revenue from the sale of custom TrueGuard Pro units that
were designed to large customer specifications and monitored by the customer; thus, the
revenue was not deferred. In 2022 the company did not have any custom unit orders.
Excluding revenue from custom units, HW revenue growth was 17%. The increase in HW
revenue benefitted from a higher percentage of commercial and industrial (C&I) customers
versus residential customers and C&I products having a higher average price per unit. HW
sales also benefitted from the sunsetting of 3G monitoring units in 2022. However, with sales
of new units primarily replacing sunsetting units, monitoring revenue did not increase ratably
with HW sales.
• Q4’22 revenue increased 5.2% to $1.85M from $1.75M in Q4’21, as hardware revenue grew
12.3%, while monitoring was relatively flat. Monitoring revenue stabilized in Q4; with
sunsetting complete, the company expects monitoring growth to resume in 2023.
• Gross profit grew to $5.1M in 2022, reflecting a 72.4% margin, which compares to $4.9M
and a 72.3% gross margin in 2021. Gross margin on HW improved to 48% in 2022 vs. 44%
in 2021, reflecting a product mix that included a greater percentage of next generation C&I
units with more value add and higher average price points. Gross margin on monitoring
revenue was 92% in 2022, compared to 91% in 2021. Overall gross margin was particularly
strong in Q4’22 at 73.3% versus 69.8% in Q4’21, again benefitting from a revenue mix that
included a greater percentage of higher-margin C&I product.
• Total operating expenses increased to $5.7M in 2022 vs. $4.9M in 2021 due to increases in
both selling, general and administrative (SG&A) expenses and research and development
(R&D). Higher SG&A included increases of $356,000 in personnel costs, travel expenses,
and sales commissions in the aggregate; $212,000 in technology related expenses; $45,000 of
additional depreciation; $26,000 of higher corporate expenses; and a software impairment
charge of $51,000 in 2022. R&D expenses increased by $106,000 for the continued
development of next-generation products and the exploration of new potential product lines.
• Primarily reflecting higher operating costs due to investments in personnel and technology,
net loss attributable to Acorn stockholders increased to $633,000 in 2022 versus $21,000 in
2021. In Q4’22, the company had a net loss attributable to stockholders of $77,000,
compared to a loss of $66,000 in Q4’21, as revenue and gross profit growth offset increased
expenses.
Liquidity and Capital Resources
Consolidated cash and cash equivalents were $1,450,000 at December 31, 2022, compared to
$1,722,000 at December 31, 2021, with the change primarily due to net cash used in investing
activities. The Company continued to invest in technology and software development, using
$292,000 in 2022 and $317,000 in 2021. The 2022 investments primarily relate to the
development and design of the company’s new Microsoft Azure cloud infrastructure to host its
OmniView data servers. The new infrastructure provides a more modern, agile and cost-effective
environment to grow IoT connections and services. The new cloud infrastructure was completed
and launched in May 2022.
Net cash generated from operating activities was $31,000 in 2022, as compared to $132,000 in
2021, with the difference attributable to a greater net loss due primarily to personnel and
technology expenses, partially offset by a decrease in net working capital with strong collections
of accounts receivable and less investments in inventory.
Acorn currently has no debt. Acorn may pursue a line of credit to support internal growth or
acquisitions in future periods.
Investor Call Details
Date/Time: Thursday, March 16
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.
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,
reaching profitability, or maximizing the value of its operating company and other assets. Acorn
reminds investors that its operations could be materially affected by continued supply chain
disruptions, new outbreaks of COVID-19 or variants, and the overall economic environment,
which could include material adverse impacts on the Company’s operations, financial position,
cash flows and reported results.
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
Investor Relations Contacts
Catalyst IR
William Jones, 267-987-2082
David Collins, 212-924-9800
ACORN ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT NET LOSS PER SHARE DATA)
Year ended
December 31,
Three months ended
December 31,
2022
2021
2022
2021
Revenue
$
7,000
$
6,776
$
1,845
$
1,754
Cost of sales
1,929
1,877
493
529
Gross profit
5,071
4,899
1,352
1,225
Operating expenses:
Research and development expenses
845
739
208
207
Selling, general and administrative expenses
4,804
4,168
1,219
1,082
Impairment of software
51
―
―
Total operating expenses
5,700
4,907
1,427
1,289
Operating loss
(629
)
(8
)
(75
)
(64
)
Finance expense, net
(2
)
(5
)
(1
)
―
Loss before income taxes
(631
)
(13
)
(76
)
(64
)
Income tax expense
―
―
―
―
Net loss
(631
)
(13
)
(76
)
(64
)
Non-controlling interest share of income
(2
)
(8
)
(1
)
(2
)
Net loss attributable to Acorn Energy, Inc.
stockholders
$
(633
)
$
(21
)
$
(77
)
$
(66
)
Basic and diluted net loss per share attributable to
Acorn Energy, Inc. stockholders:
Net loss per share attributable to Acorn Energy,
Inc. stockholders – basic and diluted
$
(0.02
)
$
(0.00
)
$
(0.00
)
$
(0.00
)
Weighted average number of shares outstanding
attributable to Acorn Energy, Inc. stockholders –
basic
39,698
39,688
39,716
39,688
Weighted average number of shares outstanding
attributable to Acorn Energy, Inc. stockholders –
diluted
39,698
39,688
39,716
39,688
ACORN ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
As of December 31,
2022
2021
ASSETS
Current assets:
Cash
$
1,450
$
1,722
Accounts receivable, net
597
876
Inventory, net
789
617
Other current assets
288
229
Deferred cost of goods sold
887
799
Total current assets
4,011
4,243
Property and equipment, net
653
517
Right-of-use assets, net
298
399
Deferred cost of goods sold
807
714
Other assets
215
169
Total assets
$
5,984
$
6,042
LIABILITIES AND DEFICIT
Current liabilities:
Accounts payable
$
243
$
457
Accrued expenses
171
164
Deferred revenue
3,984
3,541
Current operating lease liabilities
116
107
Other current liabilities
58
34
Total current liabilities
4,572
4,303
Long-term liabilities:
Deferred revenue
2,187
1,852
Noncurrent operating lease liabilities
220
336
Other long-term liabilities
16
12
Total long-term liabilities
2,423
2,200
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 – 39,722,589
and 39,687,589 shares at December 31, 2022 and 2021, respectively
397
397
Additional paid-in capital
102,889
102,804
Accumulated stockholders’ deficit
(101,267
)
(100,634
)
Treasury stock, at cost – 801,920 shares at December 31, 2022 and
2021
(3,036
)
(3,036
)
Total Acorn Energy, Inc. stockholders’ deficit
(1,017
)
(469
)
Non-controlling interests
6
8
Total stockholders’ deficit
(1,011
)
(461
)
Total liabilities and stockholders’ deficit
$
5,984
$
6,042
ACORN ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
Year ended December 31,
2022
2021
Cash flows provided by operating activities:
Net loss
$
(631
)
$
(13
)
Depreciation and amortization
122
75
Impairment of software
51
—
Impairment of inventory
41
22
Non-cash lease expense
124
117
Stock-based compensation
80
75
Change in operating assets and liabilities:
Decrease (increase) in accounts receivable
279
(268
)
Increase in inventory
(213
)
(403
)
Increase in deferred cost of goods sold
(181
)
(207
)
Increase in other current assets and other assets
(105
)
(172
)
Increase in deferred revenue
778
839
Decrease in operating lease liability
(130
)
(121
)
(Decrease) increase in accounts payable, accrued expenses,
other current liabilities and non-current liabilities
(184
)
188
Net cash provided by operating activities
31
132
Cash flows used in investing activities:
Investments in Azure cloud hosting environment and other
technology and software
(292
)
(317
)
Other capital investments
(16
)
(7
)
Net cash used in investing activities
(308
)
(324
)
Cash flows provided by (used in) financing activities:
Short-term credit, net
—
(149
)
Stock option exercise proceeds
5
—
Net cash provided by (used in) financing activities
5
(149
)
Net decrease in cash
(272
)
(341
)
Cash at the beginning of the year
1,722
2,063
Cash at the end of the year
$
1,450
$
1,722
Supplemental cash flow information:
Cash paid during the year for:
Interest
$
2
$
6
Income taxes
$
—
$
—
Non-cash investing and financing activities:
Accrued preferred dividends to former CEO of OmniMetrix
$
4
$
4
Definition of Non-GAAP Measure
OmniMetrix monitoring systems include the sale of equipment and of monitoring services. The
majority of the sales of OmniMetrix equipment do not qualify as a separate unit of accounting.
As a result, revenue (and related costs) associated with sale of equipment are recorded to
deferred revenue (and deferred charges) upon shipment for PG and CP monitoring units.
Revenue and related costs with respect to the sale of equipment are recognized over the
estimated life of the units which is currently estimated to be three years. In the rare instance that
a specific sale of OmniMetrix equipment does qualify as a separate unit of accounting (the unit is
custom designed and sold without monitoring), the revenue is recognized when the unit is
shipped to the customer and not deferred. 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.
