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Acorn Energy, Inc. (ACFN) SEC Filing 10-Q Quarterly report for the period ending Saturday, March 31, 2018

Acorn Energy, Inc.

CIK: 880984 Ticker: ACFN

 

 

 

 

Acorn Reports Q1 with Continued Growth and Margin Expansion in

 

Remote Monitoring & Control of Industrial Assets (IoT)

 

Dial-in Number for Investor Call Wednesday, 5/16 at 11:00 am EDT is 844-834-0644

 

Wilmington, DE –May 15, 2018 –

Acorn Energy, Inc. (OTCQB: ACFN), a provider of remote monitoring and control systems and services for generators, pipelines and other industrial assets, today announced results for its first quarter ended March 31, 2018. Acorn will host a conference call tomorrow at 11:00 a.m. EDT (details below) to review its results and outlook.

 

Jan Loeb, President and CEO of Acorn, commented, “We demonstrated solid operating progress in the first quarter with new orders increasing 12% and revenue rising 10% versus a year ago, in what is generally our seasonally slowest selling period. We were also successful in expanding our gross margin to 62% from 56% in the first quarter of 2017, generating a 21% increase in Gross Profit. Our OmniMetrix industrial monitoring and control subsidiary trimmed its operating loss to $55,000 in the first quarter from $196,000 in the first quarter of last year.

 

“We also completed the sale of our remaining stake in DSIT Solutions in the first quarter, a significant milestone for the Company. Proceeds from the sale allowed us to pay off our debt and provided approximately $1.9 million in net cash, after withholding taxes, transaction costs and the repayment of loans, to fund operations and growth. We are now fully focused on the expansion of our IoT business, both organically and through the purchase of attractively-valued, complementary technologies or lines-of-business.

 

“Remote monitoring and control is an exciting and high-growth area, benefitting from IoT innovation with a clear and compelling value proposition. The strong growth, recurring revenue and attractive margin profile of this business provides a solid foundation on which to build value. Beyond growth, we are also focused on moving Acorn to our goal of cash-flow-breakeven and ultimately to profitability and believe we can accomplish the first goal over the next year. Once profitable, we have over $60 million of tax loss carryforwards to shelter us from income taxes.

 

“In summary, this is a very exciting time for Acorn. Over the past two years, we successfully streamlined the business and its overhead, exited loss-making businesses, eliminated corporate debt and raised cash through strategic divestments, all of which substantially improved our operating results. With a clear path to growth and profitability, we believe Acorn is well positioned to build shareholder value.”

 

 

 

 

Financial Results

 

Reflecting OmniMetrix’s results, first quarter 2018 revenue increased 10% to $1,209,000 from $1,096,000 in the first quarter of 2017. As shown in the table below, the improvement was driven principally by increased sales of monitoring services.

 

($ in thousands)  Q1’18   Q1’17   % Increase 
Hardware revenue  $567   $554    2%
Monitoring revenue  $642   $542    18%
Total revenue  $1,209   $1,096    10%

 

On January 1, 2018, the Company adopted ASC 606 for revenue recognition. The adoption of ASC 606 did not have a material impact on OmniMetrix’s financial results, however, OmniMetrix did update the estimated unit life of its hardware from two years to three years, which had a negative impact on hardware revenue recognized during the first quarter of 2018.

 

OmniMetrix’s first quarter 2018 gross profit grew 21% to $745,000, reflecting an in increase in gross margin to 62%, compared to first quarter 2017 gross profit of $614,000 and a gross margin of 56%. The margin increase was principally due to the rollout of higher-margin, next-generation products in the Power Generation segment, which helped raise the overall hardware margin to 37% in the first quarter of 2018 from 27% in first quarter of 2017.

 

OmniMetrix’s first quarter 2018 SG&A expenses decreased $47,000 versus first quarter of 2017 due to certain one-time marketing initiatives in 2017, while R&D expenses increased $37,000 versus first quarter of 2017, related to the continued development of next-generation Power Generation and Cathodic Protection monitoring technology.

 

Higher revenue and gross profit, combined with lower operating costs, allowed OmniMetrix to trim its operating loss to $55,000 in the first quarter of 2018 from $196,000 in the first quarter of 2017.

 

On a consolidated basis (including corporate costs), Acorn’s operating costs increased by $162,000 to $1,113,000 in the first quarter of 2018, versus $951,000 in the first quarter of 2017. The increase was due to a $167,000 benefit from a settlement with a professional service provider recorded in the first quarter of 2017. Accordingly, Acorn’s consolidated operating loss increased to $368,000 in first quarter 2018 from $337,000 in the first quarter of 2017. Excluding the impact of the 2017 settlement, Acorn’s first quarter loss would have decreased by $136,000 versus the first quarter of 2017.

 

 

 

 

Acorn reported a first quarter 2018 net loss attributable to shareholders of $1,222,000, or $0.04 per share, compared to a net loss attributable to shareholders of $220,000, or $0.01 per share, in the first quarter of 2017. The first quarter of 2018 included a $829,000 loss on Acorn’s sale of DSIT. Excluding this loss, Acorn would have reported a first quarter 2018 loss of $393,000 or $0.01 per share. The first quarter 2017 loss of $220,000 included a $167,000 benefit from a settlement reached with a professional service provider on an outstanding invoice. Absent this benefit, the first quarter 2017 loss would have been $387,000 or $0.01 per share.

 

Liquidity and Capital Resources

 

The February 2018 closing of the DSIT transaction provided Acorn with approximately $1.9 million in cash after transaction costs, taxes, and debt and interest repayments to directors and DSIT. Acorn’s corporate cash balance on May 9, 2018, was approximately $2.0 million. The Company has no long-term debt.

 

In the fourth quarter of 2017, OmniMetrix renewed its Loan and Security Agreement, providing OmniMetrix with access to accounts receivable formula-based financing of the lesser of 75% of eligible receivables or $1 million. Under this facility, approximately $160,000 was outstanding as of May 9, 2018, with approximately $500,000 of additional availability.

 

Conference Call Details

 

Date/Time:   Wednesday, May 16th at 11:00 am EDT
Dial-in Number:   844-834-0644 or 1-412-317-5190 (International)
Online Replay/Transcript:   Audio file and call transcript will be posted to the
    Investor section of Acorn’s website when available.
Email Option for Q&A:   acfn@catalyst-ir.com – before or after the call.

 

 

About Acorn (www.acornenergy.com) and OmniMetrix™ (www.omnimetrix.net)

Acorn Energy, Inc. owns an 80% equity stake in OmniMetrix, Inc. and consolidates its assets, liabilities and results of operations. OmniMetrix is a pioneer and leader in machine-to-machine (M2M) and Internet of Things (IoT) wireless remote monitoring and control for gas pipelines and stand-by generators used in cell towers, medical facilities, data centers, public transportation systems and for other critical equipment, including at federal, state and municipal government facilities. OmniMetrix offers proven, cost-effective solutions for making critical systems more reliable with thousands of monitored assets and thousands of customers, including 23 in the Fortune 500 or Fortune Global 500.

 

 

 

 

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. A complete discussion of the risks and uncertainties, which may affect Acorn Energy’s business, including the businesses of its subsidiaries 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.

 

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Investors Hangout

Twitter: @Acorn_IR

 

Investor Relations Contacts

William Jones, 267-987-2082

David Collins, 212-924-9800

Catalyst IR

acfn@catalyst-ir.com

 

 

 

 

ACORN ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(IN THOUSANDS, EXCEPT PER SHARE DATA)

 

   Three months ended March 31, 
   2018   2017 
         
Revenue  $1,209   $1,096 
Cost of sales   464    482 
Gross profit   745    614 
Operating expenses:          
Research and development expense   129    92 
Selling, general and administrative expense   984    859 
Total operating expenses   1,113    951 
Operating loss   (368)   (337)
Finance expense, net   (52)   (34)
Loss before income taxes   (420)   (371)
Income tax expense   -    - 
Net loss after income taxes   (420)   (371)
Share of income in DSIT   33    36 
Impairment of investment in DSIT   (33)   - 
Loss on sale of interest in DSIT, net of withholding taxes and transaction costs   (829)   - 
Loss before discontinued operations   (1,249)   (335)
Income from discontinued operations, net of income taxes   -    65 
Net loss   (1,249)   (270)
Non-controlling interest share of net loss   27    50 
Net loss attributable to Acorn Energy, Inc. shareholders  $(1,222)  $(220)
Basic and diluted net income (loss) per share attributable to Acorn Energy, Inc. shareholders:          
Continuing operations  $(0.04)  $(0.01)
Discontinued operations   -    0.00 
Total attributable to Acorn Energy, Inc. shareholders  $(0.04)  $(0.01)
Weighted average number of shares outstanding attributable to Acorn Energy, Inc. shareholders – basic   29,513    29,335 
Weighted average number of shares outstanding attributable to Acorn Energy, Inc. shareholders –diluted   29,513    29,323 

 

 

 

 

 

ACORN ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

 

  

As of

March 31, 2018

  

As of

December 31, 2017

 
ASSETS          
Current assets:          
Cash and cash equivalents  $2,421   $481 
Accounts receivable, net   1,011    1,103 
Inventory, net   202    229 
Investment in DSIT       5,800 
Deferred charges   963    999 
Other current assets   144    91 
Total current assets   4,741    8,703 
Property and equipment, net   122    139 
Other assets   438    380 
Total assets  $5,301   $9,222 
LIABILITIES AND EQUITY (DEFICIT)          
Current liabilities:          
Short-term credit  $503   $313 
Accounts payable   328    489 
Accrued expenses   542    466 
Deferred revenue   2,758    2,753 
Due to Acorn directors   312    1,690 
Due to DSIT   116    1,624 
Other current liabilities   192    185 
Total current liabilities   4,751    7,520 
Non-current liabilities:          
Deferred revenue   840    811 
Other non-current liabilities   69    139 
Total non-current liabilities   909    950 
Commitments and contingencies          
Equity (Deficit):          
Acorn Energy, Inc. shareholders          
Common stock - $0.01 par value per share: Authorized – 42,000,000 shares; Issued – 30,320,750 and 30,302,271 shares at March 31, 2018 and December 31, 2017, respectively   303    303 
Additional paid-in capital   99,830    99,819 
Warrants   1,600    1,600 
Accumulated deficit   (99,285)   (98,215)
Treasury stock, at cost – 801,920 shares at March 31, 2018 and December 31, 2017   (3,036)   (3,036)
Total Acorn Energy, Inc. shareholders’ equity (deficit)   (588)   471 
Non-controlling interests   229    281 
Total equity (deficit)   (359)   752 
Total liabilities and equity (deficit)  $5,301   $9,222 

 

 

 

 


The following information was filed by Acorn Energy, Inc. (ACFN) on Tuesday, May 15, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Inside this 10-Q Quarterly Report

Document And Entity Information
Condensed Consolidated Balance Sheets (unaudited)
Condensed Consolidated Balance Sheets (unaudited) (parenthetical)
Condensed Consolidated Statement Of Changes In Equity (deficit) (unaudited)
Condensed Consolidated Statements Of Cash Flows (unaudited)
Condensed Consolidated Statements Of Operations (unaudited)
Basis Of Presentation
Discontinued Operations
Discontinued Operations (tables)
Discontinued Operations - Schedule Of Financial Information (details)
Equity
Equity (details Narrative)
Equity (tables)
Equity - Schedule Of Stock Options Fair Value Assumptions Estimated Using Black-scholes Pricing Model (details)
Equity - Summary Of Stock Option Activity (details)
Equity - Summary Of Warrant Activity (details)
Investment In Dsit Solutions, Ltd. ('dsit')
Investment In Dsit Solutions, Ltd. ('dsit') (details Narrative)
Investment In Dsit Solutions, Ltd. ('dsit') (tables)
Investment In Dsit Solutions, Ltd. ('dsit') - Schedule Of Condensed Consolidated Statements Of Operations (details)
Investment In Dsit Solutions, Ltd. ('dsit') - Schedule Of Equity Investment Balance In Dsit (details)
Loans From Directors And Other Commitments
Loans From Directors And Other Commitments (details Narrative)
Recent Authoritative Guidance
Restructuring And Related Charges
Restructuring And Related Charges (details Narrative)
Revenue
Revenue (details Narrative)
Revenue (tables)
Revenue - Schedule Of Deferred Charges Activity (details)
Revenue - Schedule Of Deferred Revenue Activity (details)
Revenue - Schedule Of Disaggregates Of Revenue (details)
Revenue - Schedule Of Sales Commissions Contract Assets (details)
Segment Reporting
Segment Reporting (tables)
Segment Reporting - Schedule Of Reconciliation Of Segment Data To Consolidated Net Loss Before Income Taxes (details)
Segment Reporting - Summary Of Segmented Data (details)
Short-term Credit Facility
Short-term Credit Facility (details Narrative)
Subsequent Events
Subsequent Events (details Narrative)
Subsequent Events (tables)
Subsequent Events - Schedule Of Payments Of Dividends Accrued On Preferred Stock Payable (details)
Ticker: ACFN
CIK: 880984
Form Type: 10-Q Quarterly Report
Accession Number: 0001493152-18-007041
Submitted to the SEC: Tue May 15 2018 4:02:42 PM EST
Accepted by the SEC: Tue May 15 2018
Period: Saturday, March 31, 2018
Industry: Engineering Services

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