Acorn Energy, Inc.

Good morning, and welcome to ACORN Energy's second quarter 2024 conference call. At this time, all participants are in a listen-only mode. After some prepared remarks, we will conduct a question-and-answer session. As a reminder, today's conference is being recorded. Now I'll hand the conference over to Tracy Clifford, CFO of ACORN Energy and COO of its Omnimetrics Operating Subsidiary. Ms. Clifford, please begin.

Good morning, everyone, and thank you all for joining us today. First, let me remind everyone that 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 operations 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 or economic environment. 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 goals. The company undertakes no obligation to revise or to disclose revisions to forward-looking statements to reflect future events or circumstances occurring after today. A full discussion of risks and uncertainties that may affect the company is included under risk factors in our 10-K as filed with the SEC and is available on our website at acornenergy.com. Now I'll pass the call over to Jan Loeb, the CEO of Acorn and on the metrics. Jan?

Thanks, Tracy, and thank you all for joining today's call. Our Q2 and first half results reflect continuing trends experienced in recent quarters. We reported an increase in hardware revenue recognized, and we continue to build our base of recurring high-margin monitoring revenue. First half revenue recognized increased 18.4%, approaching our average annual revenue growth target of 20%. Importantly, In June, we secured a new approximately $5 million contract with a leading wireless telecom company to provide monitoring hardware and services for 5,000 to 10,000 cell tower backup generators over the next two years. Omnimetrics was selected in a thorough and competitive process, which we believe confirms the value of our technology, monitoring solutions, and strong customer service commitments. We have approximately $2 million of purchase orders in hand from this contract, and we commenced shipments yesterday. Therefore, we expect to record initial revenues in late Q3 and early Q4 following customer acceptance of hardware installed. This contract represents the largest in Omnimetrics history and a major milestone in our effort to position Omnimetrics for major national, commercial, and industrial businesses. Given our 2023 revenue of $8.1 million, this $5 million award should result in a substantial material contribution to our revenue and cash flow this year and next. It also confirms our belief that On The Metrics monitoring solutions are the best in the business and should bolster the strength of our position in competing for other large opportunities that might arise with this and other large customers. Given the increasingly critical nature of wireless communications, which drives continued demand for network infrastructure, the wireless industry could offer additional revenue opportunities for us going forward. We also expect factors such as increases in severe weather events, growing electricity demand for electric vehicles, the expanded use of electricity to power artificial intelligence, and decarbonization trends leading to more intermittent power sources like wind and solar to place further strain on the electric grid, all of which should support the demand for commercial and residential standby generators and remote monitoring solutions for these generators. As you know, Texas is recovering from windstorms in May and the devastating impacts of Hurricane Beryl that hit Houston in July, impacting multiple Texas markets. More than 2.6 million households and businesses were left in the dark, some reportedly for up to two weeks. And tragically, at least 23 people died from the storm and related power outages. Barrow was the earliest Category 5 hurricane on record. And, of course, another Gulf storm, Debbie, made impact this week, further confirming the risk, the growing risk, of changing weather patterns and violent storms. As you can imagine, significant and prolonged power outages drive awareness and new demand for backup power for homes and businesses, seeking protection from future power outages. Over the past few years, we have grown our installed base significantly in Texas through dealer partners such as Power Solution Services in Houston. As a result of these storms, we expect increased demand for generators and monitoring services over the next several quarters and potentially longer given the severity of the storm's impact and duration. For reference, market penetration of the addressable home generator market is less than 10% nationally, so there's significant opportunity for growth. Typically, a large outage will impact generator sales for two to four quarters and sometimes much longer, as with Hurricane Sandy. One key driver is the duration of the outage, and in the case of Barrow, obviously two weeks is a long time to go without power. Other than Texas, we have been focusing on growth in other areas such as Canada and California, both of which are experiencing significant and early wildfire activity this summer. Wildfires often cause power outages that boost generator and monitoring demand and also impact air quality. As Tracy mentioned on our last call, new user face OmniView 2 provides a range of new efficiency features including air quality index or AQI data, which is used in certain jurisdictions to regulate the use of power generators on days that register bad air quality. The Omnimetrics data provides our customers peace of mind regarding regulatory compliance and avoidance of fines, which we believe represents a competitive advantage for us and a value add for customers, particularly within the commercial and industrial segment. Overall, our team has made notable progress so far this year, and for the reasons discussed, we expect our business momentum to build in the second half of 2024. As a result, our financial results for the second half of the year should significantly exceed the first half of the year, and our full-year performance should exceed our 20% growth goal. Given this growth outlook and our margin profile, we also expect to deliver improved bottom-line performance. From a cash flow perspective, we will have some working capital requirements to support the ramping of hardware shipments, but those are manageable. We also want to mention again the significance of our large NOLs that will shield net income from income tax liability. So given our current cash position and debt-free status, we feel confident we are in a good position to fund internal growth opportunities in our business. Let me now turn the call to Tracy Clifford for a financial review. Tracy?