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Acorn Makes Progress Towards Break-even in Q2 on 7% Revenue & 13% Gross Profit Growth, Showing Resilient Business Model in Remote Monitoring & Control (IoT)WILMINGTON, Del., Aug. 12, 2020 (GLOBE NEWSWIRE) -- Acorn Energy, Inc. (OTCQB: ACFN), a provider of Internet of Things (IoT) remote monitoring and control solutions for stand-by generators, gas pipelines, air compressors and other industrial equipment through its OmniMetrix subsidiary, today announced results for its second quarter (Q2’20) ended June 30, 2020. Acorn will host an investor call tomorrow, August 13th at 11:00 a.m. ET to discuss its results and outlook (details below). Jan Loeb, Acorn’s CEO, commented, "First, I want to thank the entire OmniMetrix team for their efforts and commitment amidst the challenges of the COVID-19 pandemic. As a provider of infrastructure support to critical industries, we’ve remained fully operational throughout the pandemic without any layoffs. In Q2, the company achieved 7% revenue growth over Q2’19, a gross margin near 70% and came close to break-even on a consolidated net income basis. This solid performance is rooted in our growing base of high-margin and recurring monitoring service revenue, which rose 19% for the period, driving a 13% increase in overall gross profit. “While uncertainties remain regarding customer behavior as a result of COVID-19 and its potential lasting impacts, we believe our business is particularly resilient given the affordable cost and justifiable safety benefits of remote monitoring for our customers. Regardless of economic conditions or even a serious pandemic, we think that demand for IoT solutions such as remote monitoring and control will continue to grow over the long term, particularly given the relatively low penetration rate of such solutions in the market segments we serve. “Of course we are continuing to see a negative impact on our sales and business development efforts with larger corporate entities, particularly in our Corrosion Protection business for natural gas pipelines. While the value proposition for eliminating in-person inspection of pipelines is even greater in the COVID-19 environment, many companies in this space have postponed vendor meetings. “In the second quarter we launched our new Smart Annunciator product, which provides customers with status updates on critical electric systems. In July, we forged our first distribution relationship outside of North America, with Italy-based Mel Systems S.R.L., opening up sales opportunities in Italy and across the EU for our AirGuard air compressor monitoring solution. We also hope to launch a new Omnimetrix software product upgrade later this quarter offering more features. “We ended the quarter with $1,760,000 in cash, putting us on very strong footing to manage through uncertainty and also better positioning us to potentially take advantage of opportunities that could arise from business or market turbulence in our space. Considering the strength of our business, and despite COVID-19 impacts, we remain very confident in the long-term growth and cash generation potential of our businesses. We believe we have the correct strategy, the right team and enough capital to return to a 20% long-term growth trajectory by 2021.” OmniMetrix Summary Financial Results
Comparing Q2’20 to Q2’19, revenue increased approximately 7% to $1,468,000, driven by a 19% increase in monitoring revenue, due an increased number of endpoints monitored, partially offset by an 11% decrease in hardware revenue due to the impact of COVID-19 business disruptions. Revenue rose 4% for the first six months of 2020 versus the first six months of 2019, similarly driven by monitoring revenue growth of 18%, partially offset by a 16% decline in hardware revenue. Comparing Q2’20 to Q2’19, gross profit grew 13% to $1,022,000 and gross margin increased to approximately 70% in Q2’20 from 65% in Q2’19, primarily due to increased monitoring revenue, which carries a higher gross margin than hardware. Gross margin on monitoring revenue remained strong at 84% in both Q2’20 and Q2’19. Hardware gross margin improved to 42% in Q2’20 from 40% in Q2’19, due to an increasing mix of higher margin, next-generation monitoring products. OmniMetrix's Q2’20 total operating expenses decreased 5% to $822,000 from $861,000 in Q2'19, primarily due to decreased travel expenses related to COVID-19 restrictions and decreased legal fees. However, management anticipates that annual SG&A costs will increase approximately 15% in 2020 as a result of a fully-staffed sales team and continuing IT infrastructure investments. Reflecting higher gross profit complemented with lower operating expenses, OmniMetrix reported Q2’20 operating income of $200,000 versus an operating loss of $40,000 in Q2'19 and an operating loss of $51,000 in Q1’20. Acorn Consolidated Financial Results Q2’20 net loss attributable to Acorn shareholders improved to $33,000, or ($0.00) per share, as compared to a net loss attributable to Acorn shareholders of $199,000, or ($0.01) per share, in Q2'19. For the first six months of 2020, Acorn’s net loss attributable to shareholders improved to $316,000, or ($0.01) per share, versus $436,000, or ($0.01) per share in the first six months of 2019. The first half of 2019 included $30,000 in cost of sales due to an inventory write-off related to discontinued technology. Liquidity and Capital Resources The ongoing global impact of the Coronavirus continues to be uncertain, and the Company’s operations may be materially affected by the Coronavirus pandemic, including a material adverse impact on the Company’s financial position, operations and cash flows. Possible effects may include, but are not limited to, disruption to the Company’s customers and revenue, absenteeism in the Company’s labor workforce, and unavailability of products and supplies used in operations. Conference Call Details
About Acorn (www.acornenergy.com) and OmniMetrixTM (www.omnimetrix.net) Safe Harbor Statement Follow us Investor Relations Contacts ACORN ENERGY, INC. AND SUBSIDIARIES
ACORN ENERGY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
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