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Acorn Reduces Q3 Operating Loss by 47% with Gross Margin of 66.5% v. 62.2% in Q3'18 in its Remote Monitoring & Control IoT Business; Investor Call Tomorrow at 11am ET - Dial 844-834-0644WILMINGTON, Del., Nov. 14, 2019 (GLOBE NEWSWIRE) -- Acorn Energy, Inc. (OTCQB: ACFN), a provider of remote monitoring and control systems and IoT services for generators, pipelines, compressors and other industrial equipment, through its OmniMetrix subsidiary, today announced results for its third quarter ended September 30, 2019 (Q3'19). Acorn will host an investor call tomorrow at 11:00 a.m. EST to review its results and outlook (see details below for the call and Q&A session). Walter Czarnecki, President and CEO of OmniMetrix, commented, “OmniMetrix delivered another profitable quarter with revenue growth and margin expansion. We achieved a 66.5% gross margin, benefitting from continued deployment of next generation products, including our Hero 2 Rectifier Monitor, as well as our ongoing focus on higher-margin commercial and industrial applications such our TrueGuard-Pro industrial generator monitor. By continuously improving our products and services, we deliver a better, more valuable customer experience to support growth and profitability improvements. This progress is reflected in Q3’19 operating profit of $106,000 versus $21,000 in Q3’18 and $40,000 in Q2’19 for OmniMetrix. “As we’ve seen with weather-related catastrophes in the past, we do anticipate a rise in demand for stand-by generators and related monitoring and control solutions in the wake of California wildfire power blackouts that affected millions of consumers. Going forward, we expect increasing demand, coupled with our ongoing investments in product development and sales and marketing, will continue to drive our growth and profitability to new levels.” Jan Loeb, President and CEO of Acorn, added, “Higher revenue, improved gross margin and overall cost containment, allowed Acorn to further reduce our consolidated operating loss to $121,000 in Q3’19 versus $203,000 in Q2’19. Our consolidated operating loss was reduced by nearly 50% compared to Q3’18. “As anticipated, we were able to reacquire a 19% interest in OmniMetrix for $1.273 million, including accrued dividends, using a portion of the proceeds from our recent rights offering. The purchase, effective July 1, 2019, enabled Acorn to increase our ownership in the business to 99%, on very attractive terms. We believe this was a significant, value-creating transaction for Acorn shareholders, given the steadily improving results and prospects at OmniMetrix and purchase terms that were based on its business profile back in November 2015. “We will continue to make incremental investments in sales and marketing at OmniMetrix in order to leverage its market leadership and to pursue what we believe are substantial growth opportunities. We are seeking and evaluating external opportunities to expand our business and enhance value for our shareholders on an opportunistic basis.” OmniMetrix Summary Financial Results
Q3'19 revenue from OmniMetrix increased 4% to $1,386,000 from $1,337,000 in Q3'18, driven by a 23% increase in monitoring revenue, partially offset by a 17% decline in hardware revenue. Monitoring revenue growth reflects an increase in the number of end points being monitored (units connected), more than 90% of which renew annually. The decrease in hardware revenue reflects the impact of some turnover in the OmniMetrix sales team. Revenue rose 8% for the first nine months of 2019 compared to the first nine months of 2018, again driven by monitoring revenue growth of 21%, partially offset by a decline in hardware revenue of 6%. Gross profit grew 11% in Q3’19 to $922,000, compared to gross profit of $831,000 in Q3'18. Gross margin increased to 67% in Q3’19 from 62% in Q3’18, due primarily to increased monitoring revenue which has a higher gross margin than hardware revenue, as well as to improved hardware margins. Hardware margins benefited from the sale of higher-margin, next-generation monitoring products, enabling hardware gross margins to improve to 39% from 35% in the prior-year period. OmniMetrix's Q3’19 total operating expenses increased only 1% to $816,000 versus $810,000 in Q3'18, on slightly higher selling, general and administrative expenses. Revenue and margin expansion, combined with relatively flat operating expenses, allowed OmniMetrix to generate an operating profit of $106,000 in Q3'19 versus $21,000 in Q3'18 and more than double the $40,000 operating profit level of Q2’19. Acorn Consolidated Financial Results Lower corporate expense, coupled with gross profit growth at OmniMetrix, allowed Acorn to reduce its Q3’19 consolidated operating loss to $121,000 compared to a loss of $230,000 recorded in Q3'18. Net loss attributable to Acorn shareholders was $121,000, or ($0.00) per share, in Q3'19 compared to net income attributable to Acorn shareholders of $4,000, or $0.00 per share, in Q3'18. The prior-year period included a gain of $222,000, or $0.01 per share, on the sale of Acorn’s remaining interest in DSIT, net of withholding taxes and transaction costs. Net loss attributable to Acorn shareholders was $557,000, or ($0.02) per share, in the first nine months ended September 2019 versus a loss of $1.8 million, or ($0.06) per share, in the comparable prior-year period. The prior-year period included a loss of $607,000, or ($0.02) per share, on the sale of Acorn's interest in DSIT. Liquidity and Capital Resources At September 30, 2019, OmniMetrix had $143,000 outstanding under its accounts receivable credit line, with an additional $251,000 available to borrow. At September 30, 2019, Acorn had cash of approximately $1,338,000 (excluding restricted cash of $311,000 held in a bank in Israel). Management believes that the company’s current cash, plus the cash expected to be generated from OmniMetrix operations and borrowings available from lines of credit, will provide sufficient liquidity to finance the operating activities of the company for at least the next twelve months.
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