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Acorn Energy Announces Third Quarter and Nine Month 2013 Results



       Acorn Energy Announces Third Quarter and Nine Month 2013 Results

PR Newswire

WILMINGTON, Del., November 12, 2013

WILMINGTON, Del., November 12, 2013 /PRNewswire/ -- Acorn Energy, Inc.
(NASDAQ: ACFN), today announced the results for the third quarter and
nine-month periods ended September 30, 2013. 

For the nine-month 2013 period revenues were $15.9 million compared to $14.6
million in the 2012 nine-month period.  The net loss was $24.5 million, or
$1.35 per share compared to $11.3 million or $0.63 per share. 

Losses for the 2013 nine-month period were primarily due to losses at
OmniMetrix of $10.8 million, which includes a non-cash loss on the impairment
of goodwill and intangibles of $6.7 million as well as restructuring charges
of $0.8 million; USSI losses of $6.8 million and GridSense losses of $3.5
million which also include restructuring charges of $0.6 million.

For the third quarter ended September 30, 2013, revenues were $5.0 million
compared to $4.7 million in the third quarter of 2012.  The net loss for the
quarter was $12.3 million (which includes the non-cash loss on the impairment
of goodwill and intangibles and a restructuring charge at OmniMetrix of $5.6
million and $0.8 million, respectively), or $0.68 per share (of which $0.35
per share was attributable to the aforementioned impairments and restructuring
charges) as compared to $3.9 million or $0.22 per share in the comparable 2012
period.  

Cash and cash equivalents as of September 30, 2013 were $7.4 million.
Subsequent to the end of the quarter, the Company announced the closing of a
public offering and overallotment sale of approximately 4.0 million shares of
its common stock at $2.85 per share, netting the Company $10.5 million after
transaction costs. 

John Moore, CEO of Acorn Energy said, "While not reflected in our operating
results, the third quarter was an important period of progress at our Company.
We own four energy infrastructure technology companies and each made progress
in advancing their technology and obtaining key reference customers or trials.

"DSIT is in the running to win a multi-million dollar project and if we are
selected, this will add another important naval relationship.  If we win this
tender, we will have beaten some of the world's largest defense companies on
this high profile project, further expanding our brand as a technology leader
in this fast developing marine security technology market.

"GridSense is beginning to realize commercial success based on its past
investment in the TransformerIQ® and GridInsite™ products.  The company was
substantially restructured by Joe Musanti, its new CEO, and its revenue
breakeven point was lowered from $13 million to approximately $7.5 million. 
The cost cutting has resulted in a substantially more focused company.  For
example our Australian operations were reduced to 8 from 21 employees and they
just won the region's first commercial-scale pilot for the TransformerIQ from
a local utility in a trial against two competitors.    I am also very
impressed how the team under Joe's leadership has managed to focus on ten of
the nearest term and what we expect are the most likely major opportunities
among our fifty current pilot projects. Strong on-going support for these
pilots is critical to turning them into larger deployments.  The most
potentially rewarding of these has been the deployment of hundreds of LineIQ®
and TranformerIQ units in multiple overseas countries.  These projects
required our team to work very closely with our local partners to implement
our systems using GridInsite. 

"OmniMetrix has been restructured.  Joe has both reduced cost as well as
changed the previous marketing focus from dealer sales to large end-users who
are beginning to be impacted by new pollution regulations covering their
generators.  Preparing our product to serve as a compliance tool will require
some engineering investment but Joe's goal is to run GridSense and OmniMetrix
at a combined cash neutral rate in 2014.

"US Seismic Systems has entered into another Master Services Agreement with an
independent oil company which is partnered with one of the world's largest
foreign oil companies to perform a live frac job using our seismic tool in the
first quarter of 2014.  This agreement is in addition to the previously
announced MSA with a super major and with a services company.

"US Seismic has continued to invest in making its fiber optic geophones a
commercialized product. Fracking has been called the biggest positive economic
driver of the US economy since the internet.  It is incumbent on USSI to solve
the final technical objectives and  to commercialize the product as specified
by our customers. One of our customer trials has experienced an oil field site
delay and another customer experienced a technical delay.  However, our
customer relationships remain very solid and we will keep investors apprised
of our progress as we expect new developments to unfold in the fourth quarter.
  

"Finally, plans have been put in place to lower our corporate overhead
approximately 35% in 2014.  I have voluntarily reduced my salary by 25%
effective October 16th of this year. Director cash compensation has been
similarly reduced.  In addition, after six years of service to the Company,
Richard Rimer has volunteered to reduce his contractual compensation and
resign from the Board in order to help us meet our cost cutting commitment to
the shareholders. Following our cash raise, we entered the fourth quarter with
nearly $17 million in corporate cash with no corporate debt.  In addition,
today we received a tax refund check in the amount of $1.685 million.  I feel
confident in our ability to realize shareholder value in the coming periods."

DSIT
DSIT develops and markets unique underwater detection systems to prevent
attacks on harbor and off-shore energy installations. Headquartered in Israel,
the technologies upon which they are building were developed for the Israeli
Navy. Currently the company is expanding its worldwide footprint for
governments and commercial customers. DSIT is awaiting the results of a bid
process for a major multi-million dollar project which are expected shortly.
If DSIT wins, we believe DSIT will be able to report significantly greater
revenue in the fourth quarter of 2013 as compared to the third quarter.

DSIT reported revenue in the first nine months of 2013 of $9.6 million, which
is $0.4 million lower than the $10.0 million reported in the first nine months
of 2012. Revenue for the third quarter of 2013 was $2.9 million reflecting a
decline of $0.4 million compared to third quarter 2012 revenue of $3.3
million.  Gross profit of $3.6 million was reported for both the first nine
months of 2013 and 2012 despite the reduction in revenues in 2013.  Gross
profit for the third quarter of 2013 was $1.0 million as compared to $1.1
million in the third quarter of 2012.

GridSense
GridSense's previously referenced new orders are additional confirmation that
many aging utility substations need better and affordable monitoring.  We
believe that they  validate the company's recently up-dated strategy to
concentrate on pilot programs with the highest probability of near term
commercialization rather than simply expanding the number of  pilots in the
pipeline, many of which have large potential but longer sales cycles. New
management's major goals are to reduce costs and build revenue to reach cash
flow positive in the fourth quarter of this year.  

In the first nine months of 2013, GridSense increased revenue from $2.9
million in 2012 to $3.5 million.  Third quarter revenue was up slightly from
$1.0 million in 2012 to $1.1 million in 2013. Gross profit increased by $0.3
million and $24,000 for the first nine months and the third quarter of 2013,
respectively, as compared to prior year same periods.

OmniMetrix
OmniMetrix monitors power generators for home and commercial backup
electricity during failures as well as monitoring large commercial generators
used for emergency backup power.  Following Acorn's purchase of OmniMetrix in
February 2012, it invested heavily to expand market penetration. The prime
targets were generator dealers and distributors which were offered monitors
below cost to build a recurring revenue opportunity from fixed term monitoring
contracts. This strategy has not universally resonated with the dealer
marketplace. New management is currently revising marketing efforts to include
large end-users as well as identifying dealers with substantial customer
maintenance services. Joe Musanti, who took over the reins at GridSense, is
combining resources of the two companies for cost savings and the marketing of
machine to machine monitoring. The new goal is for the two companies to be
cash neutral in 2014. A major boost to generator monitoring is a new
requirement by the EPA for every commercial generator exceeding a specific
size to collect and report annual emissions or face significant civil
penalties.

In the first nine months of 2013, OmniMetrix recorded revenue of $1.6 million
as compared to $0.4 million since our acquisition in February of 2012. Third
quarter 2013 revenue was $0.5 million as compared to third quarter 2012
revenue of $0.2 million. Gross profit for the first nine months of 2013 was
$874,000 as compared to $72,000 in the 2012 period since our acquisition.
Gross profit for the third quarter of 2013 was $273,000 as compared to
$101,000 in the third quarter of 2012.

In the third quarter of 2013, following the change in the top-level management
at OmniMetrix, it engaged in restructuring its operations to better align
expenses with revenues as now projected by its new management. As a result,
during the third quarter of 2013, OmniMetrix recorded a total restructuring
charge of $0.8 million.

As revenue at OmniMetrix in 2013 and expected future revenues have been
significantly adversely impacted by the inability to make expected penetration
in the marketplace, future projections for the segments have been adjusted.
Following an impairment analysis based upon expected discounted cash flows,
Acorn Energy's Audit Committee determined that both the goodwill and other
intangible assets recorded upon OmniMetrix's acquisition by Acorn were fully
impaired and an impairment charge of $5.6 million was recorded in the third
quarter of 2013.

US Seismic Systems (USSI)
USSI is developing fiber optics sensor systems for unconventional oil and gas
exploration and recovery as well as applications for monitoring oil and
gas reservoirs with 4D seismic systems. By improving the understanding of the
subsurface and detecting as well as locating microseismic events during
fracking, the USSI technology is expected to increase oil and gas production,
especially in harsh conditions such as very high temperatures. To-date all
sales have been for trials or pilot projects. As a result of recent customer
trials, management believes it is in the final steps toward commercial
production. USSI has experienced various design and deployment problems but
feedback from several customers indicates the data from the sensors meets or
exceeds specifications. To accelerate the marketing efforts, USSI is offering
potential customers rental contracts for utilizing the fiber optic systems
which we understand is common in the industry when introducing a new
technology. These contracts can vary to include the costs incurred by USSI to
lease/sale options. USSI anticipates beginning to recognize revenue on leased
equipment when the equipment is delivered to a customer. One such lease is
scheduled to begin in the fourth quarter this year and another in the first
quarter of 2014.

In the first nine months of 2013, USSI reported revenue of $1.1 million vs.
$1.3 million for the same period in 2012. Third quarter revenue was $513,000
in 2013 vs. $234,000 in 2012. In the first nine months of 2013, gross profit
was a negative $1.5 million vs. a negative $0.8 million in 2012. Approximately
$1.0 million of the negative gross profit in the first nine months of 2013 was
attributable to adjustments of sensor systems built-to-lease and inventories
to net realizable values.

Conference Call Information
Acorn Energy will host a conference call on Wednesday, November 13, 2013 at
11:00 AM, EST to discuss its third quarter 2013 results and developments.
Participants can pre-register for the conference call and webcast by clicking
here.  Please note that registered participants will receive their dial-in
number upon registration.  Pre-registering gives one immediate entry into the
call, zero wait time and will automatically populate your outlook calendar
with an invitation.   Participants that would like to join the conference
call, but have not registered can do so by dialing US Toll Free: (866)
652-5200, International Dial in (412) 317-6060 and asking for the "Acorn
Energy Conference Call".   If you are unable to participate in the live call,
a digital replay of the call will be available two hours after the end of the
live call through 9:00 am EST on December 13, 2013 by dialing US Toll Free
1-877-344-7529 or International Toll 1-412-317-0088 and entering access code -
10036868.

About Acorn Energy, Inc.
Acorn Energy, Inc. is a holding company whose four portfolio companies help
their customers achieve greater productivity, reliability, security, and
efficiency—factors which can lead to greater profitability.  GridSense
provides monitoring for all critical points along the electricity delivery
system. OMNIMETRIX remotely monitors emergency back-up power generation
systems to increase their reliability. US Seismic supplies fiber optic sensing
solutions to increase oil/gas production and lower costs. DSIT provides
security solutions from underwater threats to naval and marine based energy
assets.  For more information visit: http://www.acornenergy.com.

Safe Harbor Statement
This press release includes forward-looking statements, which are subject to
risks and uncertainties. There is no assurance that Acorn Energy, Inc. or its
operating companies will continue to grow their respective businesses, or that
any of them will meet the expectations or execute the initiatives described or
referred to above. A complete discussion of the risks and uncertainties which
may affect Acorn Energy's business generally and the businesses of its
subsidiaries is included in "Risk Factors" in the Company's Form 10-Q for the
third quarter of 2013 to be  filed by the Company with the Securities and
Exchange Commission.

Investor & Press Contact:
Paul G. Henning
Cameron Associates
(212) 554-5462
Paul@cameronassoc.com

 

ACORN ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                                         As of               As of
                                         September 30, 2013  December 31, 2012
ASSETS
Current assets:
Cash and cash equivalents                $       7,369       $     26,147
Restricted deposit                       799                 699
Accounts receivable, net                 4,507               5,481
Unbilled revenue                         6,236               5,213
Inventory                                5,271               5,106
Other current assets                     3,369               3,547
Total current assets                     27,551              46,193
Property and equipment, net              2,056               927
Severance assets                         3,419               3,165
Restricted deposit                       -                   115
Intangible assets, net                   3,936               9,561
Goodwill                                 4,497               6,630
Other assets                             938                 745
Total assets                             $     42,397        $     67,336
LIABILITIES AND EQUITY
Current liabilities:
Short-term bank credit and current       $       1,212       $          153
maturities of long-term debt
Accounts payable                         2,889               2,631
Accrued payroll, payroll taxes and       2,012               2,420
social benefits
Deferred revenue                         1,732               3,323
Other current liabilities                2,450               1,708
Total current liabilities                10,295              10,235
Long-term liabilities:
Accrued severance                        4,835               4,491
Other long-term liabilities              594                 665
Total long-term liabilities              5,429               5,156
Commitments and contingencies
Equity:
Acorn Energy, Inc. shareholders
Common stock - $0.01 par value per
share:
Authorized – 30,000,000 shares; Issued
–18,870,526 and 18,892,456 shares at     188                 188
December 31, 2012 and September 30,
2013, respectively
Additional paid-in capital               83,886              83,469
Warrants                                 44                  55
Accumulated deficit                      (54,194)            (29,733)
Treasury stock, at cost – 801,920 shares
at December 31, 2012 and September 30,   (3,036)             (3,036)
2013
Accumulated other comprehensive income   318                 716
Total Acorn Energy, Inc. shareholders'   27,206              51,659
equity
Non-controlling interests                (533)               286
Total equity                             26,673              51,945
Total liabilities and equity             $     42,397        $     67,336

 

ACORN ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
                             Nine months ended September  Three months ended
                             30,                          September 30,
                             2013           2012          2013         2012
Revenues:
 Projects                    $     10,519   $     11,017  $            $      
                                                          3,278        3,399
 Products                    4,198          2,985         1,323        1,034
 Services                    1,214          621           381          280
 Total revenues              15,931         14,623        4,982        4,713
 Cost of sales: 
 Projects                    8,535          8,241         2,972        2,468
 Products                    2,609          1,837         839          637
 Services                    331            371           112          120
 Total cost of sales         11,475         10,449        3,923        3,225
 Gross profit                4,456          4,174         1,059        1,488
 Operating expenses: 
 Research and development    6,336          4,771         2,219        1,754
expenses, net of credits 
 Selling, general and        15,221         13,891        4,995        5,272
administrative expenses 
 Impairment of goodwill and  6,731          -             5,615        -
intangibles 
 Restructuring and related   1,366          -             772          -
charges 
 Total operating expenses    29,654         18,662        13,601       7,026
 Operating loss              (25,198)       (14,488)      (12,542)     (5,538)
 Finance income (expense),   80             (53)          (9)          (160)
net 
 Loss before income taxes    (25,118)       (14,541)      (12,551)     (5,698)
 Income tax benefit          (228)          2,476         (143)        1,487
(expense), net 
 Net loss                    (25,346)       (12,065)      (12,694)     (4,211)
 Net loss attributable to    885            737           382          276
non-controlling interests 
 Net loss attributable to                                 $            $    
Acorn Energy, Inc.           $    (24,461)  $   (11,328)  (12,312)     (3,935)
shareholders 
 Basic and diluted net loss
per share attributable to    $              $             $            $      
Acorn Energy, Inc.            (1.35)        (0.63)        (0.68)       (0.22)
shareholders 
 Weighted average number of
shares outstanding
attributable to Acorn        18,086         17,843        18,091       17,934
Energy, Inc. shareholders –
basic and diluted 
 Dividends declared per      $       0.035  $             $            $      
common share                                0.105          -           0.035

 

SOURCE Acorn Energy

Website: http://www.acornenergy.com
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