Acorn Energy, Inc.

Good morning, everyone, and welcome to Acorn Energy's fourth quarter and full year 2025 conference call. All participants are currently in a listen-only mode. Following management's prepared remarks, we will open the call for questions. As a reminder, today's event is being recorded. I'd now like to turn the conference call over to Tracy Clifford, CFO of Acorn Energy and COO of its Omnimetric subsidiary.

Thank you, Operator, and thank you all for joining our call today. First, I'd like to remind you that today's remarks, including responses to questions, contain forward-looking statements. These statements involve a number of risks and uncertainties that could cause actual results to differ materially from those projected. Factors that may impact our future operating results and financial performance include general risks, such as potential disruptions to business operations or changes in consumer or customer demand, as well as specific risks related to our ability to execute our operating plan, maintain strong customer renewal rates, and expand our customer base. Additional risks that may arise from changes in technology, competition, or shifts in the macroeconomic or financial environment. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are based on management's current beliefs, assumptions, and information that is available as of today. There can be no assurances that the company will meet its growth targets or other strategic goals and objectives. The company undertakes no obligation to update or revise such forward-looking statements to reflect future events or specific circumstances that may occur after today. For a more detailed discussion of risks and uncertainties that may affect our business, please refer to the risk factors section of our Form 10-K. which is available online at www.scc.gov or on our own website at acornenergy.com. Now I'll turn the call over to Dan Rose, CEO of Acorn and on the metrics, for further comments, Dan.

Thank you, Tracy, and thank you all for your interest. In 2025, Acorn achieves record revenue, improved operating income, higher cash flow, and a third straight year of profitability. Our performance benefited from a 22% increase in high-margin monitoring revenue, driven by continued growth in our installed base of remote monitoring endpoints. Our year-over-year Q4 and full-year comparisons reflect the benefit of a national cell phone provider contract, the largest in our history. The bulk of hardware revenue for this contract was recorded between Q3 of 2024 and Q2 of 2025. contributing to lower year-over-year hardware revenues in the second half of 2025. The contract also includes one year of monitoring services, relatively over 12 months, following each hardware unit's commissioning. Importantly, we earned very favorable feedback from this customer regarding our technology, monitoring capabilities, and customer service, resulting in what we believe is a solid relationship with future potential. Our 2025 hardware revenue was also tempered by an $885,000 decrease in non-cash deferred revenue amortization from units sold prior to September of 2023, when the majority of our hardware sales were deferred and amortized over three years. Acorn's 2025 results reflected $956,000 in revenue from amortization of deferred hardware revenue, a 48% decrease from the $1.84 million recorded in 2024, but with no impact on cash generation. This revenue impact will end this year as we expect the balance of deferred hardware revenue of $168,000 to be fully amortized by August of 2026. Lastly, our 2025 revenues were also impacted by an industry-wide slowdown in residential generator deployments, which we and other industry participants attributed to high interest rates, fewer major power outages related to hurricanes and other weather events in 2025, as well as inflation and economic uncertainty that impacted consumers' ability or willingness to invest in backup-generated security at a cost of approximately $15,000 for inflation. Our belief is that consumer-generated demand is likely to return to more stark levels as intending factors moderate. Turning to our strategies for growth, we reviewed five complementary core initiatives in today's press release on which I'd like to provide a little more color. One is larger commercial industrial opportunities, which our internal sales teams continue to pursue across various sectors that include healthcare, telecom, real estate, retail, grocery, hospitality, government, and financial institutions. We have a range of ongoing discussions. However, the most significant opportunities are with more large organizations that require budget compliance and also longer, more complex sales cycles. Two is the pursuit of strategic relationships to integrate our technology with OEMs or other strategic partners, for example, through white labeling our products for the OEMs. We have ongoing dialogues with a few industry OEMs to bundle our metric solutions with their product offerings. Currently, our monitors are installed by the dealers in the aftermarket. However, our technology, service leadership, and support for all generated brands puts us in a strong position to partner with one or more OEMs. Their core business isn't providing monitoring services, and by working with us, they can offer a superior solution that offers greater value to their customers, while also providing potential to reduce or eliminate their overhead and investment in an in-house solution. We believe this is the direction our industry is going and we continue to work to advance OEM discussions. However, it's difficult to predict the potential or timing of these efforts. Three is expanding our penetration of the residential and small business markets through an effort of 600 plus generator dealers. While the retail market was slow in 2025, as I mentioned, we are optimistic for a rebound in 2026 given the potential stimulus to secure backup power provided by recent winter storms, as well as moderating interest rates. One of the larger generator manufacturers has publicly stated they expect a 10% increase in residential generator sales in 2026, so we expect a benefit if this does indeed occur. Four is our ongoing investment in research, development, and engineering to enhance existing omnibus products and develop new products. These investments are essential. to maintain our competitive position and expand our value proposition and addressable market. Tracy will review our recent product launches momentarily. Five is the ongoing pursuit of accretive opportunities to expand our product offerings, market reach, and customer base with a focus on businesses that have a meaningful monitoring component to their businesses. The nature of the M&A process is that it takes a lot of work, research, and negotiation to get to the point where you have a solid opportunity at an acceptable price. We are highly motivated to identify and execute on an acquisition to enhance our growth, operating leverage, and monetization of our NOL, but balance this with a disciplined approach to managing deal terms and risk for our shareholders. Our recent strategic partnership with AIO, which stands for All-in-One, emerged through our M&A dialogue. AIO is the global leader in remote monitoring and control solutions for critical infrastructure that have no business operations in the U.S. They provide best-in-class technology and cloud-based business intelligence platforms that are successfully deployed at over 110,000 sites in 15 countries. In this case, we found the best path with secure exclusive North American rights to their proven product suite for what amounts to a model commitment to invest in building out the business. AIO solutions target the full cell phone tower campus, as well as solutions for data centers and utility operations. The monitoring control solutions deliver actionable insights to advanced analytics, machine learning, and comprehensive monitoring of environmental conditions, battery health, security features, energy optimization, microgrids, and more. This technology reduces downtime, three hours maintenance, and provides measurable cost savings and ROI. making it the logical choice for smarter, safer, and more profitable operations. The partnership is a perfect fit for Acorn and our Omnimetrics brand, as it substantially expands our product offerings and addressable markets by integrating AOL solutions with our industry meetings, remote monitoring, and control technology. Our 20-plus year reputation and established U.S. customer base. We see exciting growth potential starting with our existing telecommunication customers, and then expanding to data center and utilities to strengthen our ability to serve rising demand for data-driven infrastructure management with solutions that protect against power issues, theft, and environmental and other risks while maximizing energy utilization. We anticipate that the average sale of OmniMetrics-labeled AIO products will be approximately five to six times the average current Omni sale. As we will be sharing SaaS revenue with AIOs, it is too early to project what our margins will be. We will be selling AIO technology solutions under the OnTheMetrics brand, and from our market research, there are no better existing technologies in the industries they serve. This partnership has the potential to transform our company by expanding the respected OnTheMetrics brand into new end markets with a product that would take us many years and significant R&D dollars to develop. We expect to have our first demo unit installed by the end of the month with a large existing telecom client. AIO has been in existence for 18 years. As we have stated, we do not expect any revenues from this partnership until the second half of 2026. We see secular tailwinds that should support our growth in the coming years as business and consumers take action to ensure uninterrupted access and support for their energy infrastructure management and regulatory compliance needs. Energy demands for AI, data centers, electric vehicles, electrification of buildings, and reshoring of industry are all straining the aging U.S. electrical grid, which is also being disrupted by extreme weather events, forest fires, and other natural disasters. Despite a relatively benign year in 2025, we've already seen a rebound in power outages from winter storms so far this year, including severe ice storms across 12 states and the south of Appalachian in late January, resulting in over 1 million customers without power. Many of them for days and some for weeks amidst winter weather. Even if the nation changed course and started nationally investing in energy resources and infrastructure today, we are so far behind. It would take many years, if not decades, to meet our rapidly growing energy and reliability needs. Given the substantial unmet needs of the markets we now serve, we continue to believe 20% average annual revenue growth over the coming three to five years is an achievable target. Further, given the efficiency and scalability of our model, we believe approximately 50% of each incremental revenue dollar from our existing business should flow through to operating income. As a small company peaks and valleys, in purchasing cycles for major hardware orders will persist, but we believe that our high-margin, capital-like business model positions us very well for the future. With that, I'll turn the call over to Tracy for financial and operational insights. Tracy?