Acorn Energy Inc (ACFN)

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$ACFN Acorn Achieves Net Income and Positive Cash Flow as Q2 Revenue Rises 22% from Remote Monitoring and Control Solutions for Backup Generators and Gas Pipelines

https://www.globenewswire.com/news-release/2023/08/10/2722639/0/en/Acorn-Achieves-Net-Income-and-Positive-Cash-Flow-as-Q2-Revenue-Rises-22-from-Remote-Monitoring-and-Control-Solutions-for-Backup-Generators-and-Gas-Pipelines.html

WILMINGTON, Del., Aug. 10, 2023 (GLOBE NEWSWIRE) -- Acorn Energy, Inc. (OTCQB: ACFN), a provider of remote monitoring and control solutions for stand-by power generators, gas pipelines, air compressors and other critical industrial equipment, announced results for its second quarter ended June 30, 2023 (Q2’23). Acorn generated positive net income and cash flow on Q2’23 revenue growth of 22% and cash basis revenue growth of 33%. Acorn is hosting a conference call today at 11:00 a.m. ET (details below).

CEO Commentary
Jan Loeb, Acorn’s CEO, commented, “Our Q2’23 performance benefitted from strong demand from large national telecom customers for our TrueGuardTM PRO commercial and industrial monitors and True Guard 2 residential monitors for emergency stand-by generators.

“We achieved our second consecutive quarter of monitoring revenue growth, following the end of the revenue impact from the sunsetting of wireless carrier support for 3G monitoring technology. Building upon 3% growth in Q1, monitoring revenues grew 10% in Q2 and we expect positive momentum to continue over the balance of 2023 and beyond.

“Cash-basis revenue grew 33% in Q2’23, also indicative of strength across the business, and we closed Q2’23 with a record backlog of $6.4M. Our backlog is essentially deferred revenue, more than 60% of which will be recognized as revenue within one year under GAAP accounting.

“Our Q2’23 gross margin remained stable at 76%, though down slightly from 77% in Q2’22 due to the relative strength of equipment sales, which carry a lower margin than monitoring revenues.

“Given both the business and environmental benefits of our solutions, we remain confident in our ability to achieve our long-term 20% annual, cash-basis revenue growth goal. We delivered consolidated profitability and positive cash flow in Q2’23, and if we are able to meet our revenue growth goal, we’d expect to be profitable and operating cash-flow positive at the consolidated corporate level for the full year. Our operating company, OmniMetrix, has been profitable since 2019 and remained so through the pandemic.

“We have been working very hard the past several years to position Acorn for sustainable growth and profitability. Given Acorn’s net operating loss carryforwards (NOLs) of over $70M, future profits would be largely shielded from tax liability, further benefitting cash flows as we achieve ongoing profitability.

“With heatwaves, flooding and related power outages this summer, the value of stand-by generators, as well as Demand Response (DR) programs, for electric grid operators has been in the news. We continue to advance our work with our DR partner C-Power and our network of stand-by generator dealers with the goal of enrolling our first DR customers in the second half of this year. We will update you on our progress in this initiative, which we expect to be a very important revenue and profitability driver for our business moving forward.”

Financial Review
Q2’23 revenue of $1,973,000 rose 22% from Q2’22 revenue of $1,621,000, driven by a 39% increase in hardware revenue, primarily for True Guard Pro (C&I) and True Guard 2 (residential) generator monitoring devices. The company has seen strength in its business across the board and particularly from large national customers for remote monitoring and control of standby generators. For the six months ended June 30th, revenue increased 10% to $3,722,000, driven by the same contributing factors as in Q2’23.

Q2’23 gross profit increased to $1,490,000, reflecting gross margin of 76%, as compared to gross profit of $1,246,000 and a gross margin of 77% in Q2’22. The slight decline relates to the relative strength of hardware, which carries a lower gross margin than monitoring, and the revenue mix. Gross margin on monitoring revenue was 93% in Q2’23 vs. 92% in Q2’22 while gross margin on hardware was 55% in both periods.

Total operating expenses decreased 4.2% to $1,407,000 in Q2’23 versus $1,468,000 in Q2’22, reflecting the impact of a $51k software impairment charge in Q2’22 as well as modestly lower research and development (R&D) expenses.

Net income attributable to Acorn Energy, Inc. stockholders improved to $96,000, or $0.00 per share in Q2’23 vs. a loss of $223,000, or ($0.01) per share in Q2’22, reflecting revenue growth and lower operating expenses. Net income attributable to Acorn stockholders improved to $11,000, or $0.00 per share, for the six-month period ended June 30, 2023 vs. a net loss of $346,000, or ($0.01) per share, in the same period in the prior year.

Liquidity and Cash Flow
Excluding deferred revenue and deferred cost of goods sold (COGS), which have virtually no impact on future cash flow, net working capital of $2,848,000, included consolidated cash of $1,573,000 at June 30, 2023. This compares to net working capital of $2,536,000 and consolidated cash of $1,450,000 at December 31, 2022. Acorn has no outstanding debt. Acorn generated $155,000 of cash from operating activities and used $37,000 for hardware and software technology investments in the six months ended June 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.