Acorn Energy, Inc.

Good day and welcome to the Acorn Energy first quarter 2024 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Tracy Clifford, Chief Financial Officer and COO. Please go ahead.

Thank you all for joining our call today. First, I'd like to remind everyone that many remarks that follow and answers to questions may be forward-looking. These statements are subject to various risks and uncertainties. For example, the operating and financial performance of the company in 2024 and future periods is subject to risks associated with potential disruptions to business opportunities and customer demand, risks related to the company executing its operating plan, maintaining high customer renewal rates, and growing its customer base, as well as from changes in technology, the competitive landscape, and the financial and economic environment. Such forward-looking statements are based on management's beliefs and the assumptions using currently available data and information pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. There's no assurances that the company will be able to achieve its growth goals. The company undertakes no obligation to revise or to disclose revisions to forward-looking statements to reflect events or circumstances that occur after today. A full discussion of risks and uncertainties that may affect the company is is included under risk factors in our 10-K as filed with the Securities and Exchange Commission and available on our website, acornenergy.com. I'll now turn the call over to Jan Loeb, CEO of Acorn and our Omnimetrics operating subsidiary. Jan?

Good morning. Thanks, Tracy, and thank you all for joining today's call. It has only been two months since our last call, and most of our business trends in late 2023 continue to Q1 2024. I'll keep my remarks brief. We were off to a promising start in 2024 with Q1 2024 revenue rising to $2.1 million from $1.7 million in Q1 2023 and EPS of $0.03 versus a net loss of $0.03 per share in the prior year period. ACORN moved into profitability in the latter part of 2023 and for the full year 2023. We expect to be profitable moving forward. Given our margin profile and the recurring nature of our remote monitoring control services, we believe we are well positioned to deliver improving bottom-line performance as we move forward. Our large net operating loss, or NOL, position, which will largely shield company profits from federal taxes, should further benefit our future free cash flow. Turning to growth drivers, we've been working to develop meaningful unit volume opportunities with several large commercial and industrial, or CNI, customers, as well as our dealer network. We are pursuing several opportunities selling directly to CNI customers that we believe would have a meaningful impact on our financials if we are successful in our bid to provide monitoring hardware and services to these customers. We are seeing more inquiries and more discussions, including with Fortune 100 and other large national companies. We are particularly excited about these opportunities given both their potential size and their ability to scale at a much faster rate because we're working directly with the end customer versus a dealer network. We executed a reseller agreement with one of the nation's largest commercial-generated dealer networks in the fourth quarter and believe this relationship has the potential to scale to significant annual revenue once the program is fully implemented. We're now working to fully train regional dealers on optimizing the on-metrics program and benefits. While the significant potential remains, the rollout has been slower than we originally projected. The impetus behind many of these opportunities is the fact that companies are realizing that data from their generators can be a crucial source of information in relation to their increasing power requirements and correspondingly the need for reliable power. One factor is the adoption of artificial intelligence, which will drive an exponential increase in the need for computing and electric power for many years to come. This will only place further stress on electric grids and should continue to increase the demand for our hardware and services. Reflecting these trends of increasing power demand, this week, Platinum Equity closed on their acquisition of Kohler Energy. And last week, Pacific Gas and Electric Company announced that they are in talks with KKR, Kohler Kravis Roberts, to acquire a $2.3 billion stake in their power plants through a partnership called Pacific Generations. Omnimetric offers best-in-class power generator and pipeline hardware and monitoring services, as well as customized solutions with unmatched U.S.-based customer service. Across the board, companies are experiencing rising operating costs, increasing environmental pressures, and more onerous reporting requirements, challenging their budgets. Our monitoring solutions provide the cost reduction and the environmental benefits these companies need by reducing the need for truck rolls and personal visits, to remote locations and providing data as a basis for decision-making and to optimize operating efficiencies, providing a favorable backdrop for our business development efforts. We continue to advance some large CNI opportunities in our sales pipeline and, of course, will disclose any significant updates at the appropriate time. We also continue to advance the build-out of our Demand Response Initiative. Demand Response, or DR, is a service offering that enables unmetric customers The sign-ups receive compensation for making the generators available to grid operators to turn on remotely for brief periods, which takes pressure off the grid during peak demand, thereby improving grid reliability while also providing an incentive to the participants. Our metrics provide the critical monitoring control links that enable DR generators providing another revenue stream in addition to our traditional monitoring services with the potential to double our profitability per enrolled user. As the benefits of DR programs are communicated more broadly to potential end users in the coming months, we expect a growing awareness to facilitate our dealers' efforts towards signing new DR customers. We are expecting a modest initial contribution from DR in 2024 based on a gradual expected adoption rate for a new solution. We think DR represents an important growth and value driver for our business moving forward, especially as consumer buy-in broadens. Our first DR customers were approved by ERCOT, the grid operator in Texas, in time for the peak 2024 summer grid demand. Plus, a local utility in the Midwest is running a large DR trial with us. With regard to our outlook and goals, we have a target of 20% average annual revenue growth, and I've discussed some of the initiatives that we believe should help us achieve that goal in 2024 or higher. Of course, it is our aim to bring an increasing percentage of that revenue down to the bottom line. Considering a gross margin contribution of nearly 75%, roughly 50% of each incremental revenue dollar falls to Omni's EBITDA. Our balance sheet and financial liquidity remains strong. We closed Q1 with $1.4 million in cash and no debt, which we believe positions us well to support our internal growth objectives. We also continue to look for accretive M&A opportunities within the road monitoring IoT space to build further value for our company and our shareholders. The date we haven't executed on any opportunities, largely due to our criteria, our value discipline, and our view that Acorns common shares are substantially undervalued relative to our growing base of high margin recurring revenues. Going forward, if equity evaluation continues to improve, we have opportunities could open up to expand our footprint via M&A. Before I turn the call over to Tracy, I'd like to reiterate our excitement for this business and the opportunities in front of us. OnMesh delivers significant efficiency, cost reduction, risk management, and environmental benefits to customers. We operate in underserved, underpenetrated markets for remote monitoring, remote control, and IoT services. Based on new commercial and industrial leads and deal flow from our sales and marketing team and our reputation for providing quality products and services in the power generation marketplace, we are very optimistic about the potential to secure more significant monitoring projects in 2024 and beyond. We are also very grateful for the support of our shareholders. And in particular, I want to acknowledge Mr. Joel Sklar, who recently made a 13G filing to report that he has increased his ownership position in Acorn to 5.7%. Joel is a sophisticated financial professional, a long-time investor, and a former insurance company executive. We are proud to have earned his belief and support in what we are doing at Omni. With that, let me turn the call back to Tracy for more insights on our financial and operational performance. Tracy?