Good morning, and welcome to Acorn Energy's Third Quarter 2024 Conference Call. At this time, all participants are in listen-only mode. After some prepared remarks, we’ll conduct a question-and-answer session. As a reminder, today's conference is being recorded. Now, I'll hand the conference to Tracy Clifford, CFO of Acorn Energy and COO of its OmniMetrix operating subsidiary. Ms. Clifford, please begin.

Thanks everyone for joining us today. Let me first remind you all that the following remarks and answers to questions may be forward-looking. These statements are subject to various risks and uncertainties. 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, competitive landscape and the financial -- and in the financial and economic environments. 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 is no assurances that the company will be able to achieve its goal. The company undertakes no obligation to revise or disclose revisions to forward-looking statements to reflect future events or circumstances that occur after today. A full discussion of risks and uncertainties, which may affect the company is included under Risk Factors in our 10-K filed with the SEC and available on our website acornenergy.com. Now, I'll pass the call over to Jan Loeb, CEO of Acorn and OmniMetrix for further discussion. Jan?

Thank you, Tracy, and thank you all for joining today's call. I'm very proud of the record results Acorn has achieved so far this year with revenue rising 46.1% to $3.05 million in Q3 and up 28.4% to $7.46 million for the first nine months of 2024, which approaches our full year 2023 revenue of $8.06 million. Our strong revenue performance drove Q3 2024 EPS to $0.29, up from $0.01 in Q3 2023 and first nine months EPS of $0.42, also up from $0.01 in the year ago period. Our performance is a direct result of hard work and discipline of our team, which for the past few years has helped us build an efficient high-margin business comprised of annual recurring remote monitoring revenue along with growing revenue from the sales of our proprietary monitoring hardware products. Having achieved profitability in the business last year, we are focused on building on the success of our base business with a model that can deliver meaningful operating leverage on incremental revenue. We had discussed in our call last quarter that we had executed a material contract that we expected to have a significant impact on our financial results for the second half of the year. Our Q3, 2024 revenue benefited in part from the initial shipment of monitoring hardware pursuant to this material contract, which is a two-year, approximate $5 million deal to provide remote monitoring hardware and services for cell tower generators for a leading national wireless telecom provider. We recognized $724,000 in hardware revenue from the contract in Q3. The balance of the contract, which includes hardware bundled with only the first year of monitoring services, is expected to be recognized over the balance of the two-year contract. It's worth noting that even excluding this contract, our Q3 revenue increased…

Thank you, Jan. In addition to this morning's press release, we filed our 10-Q which is accessible on our website and on sec.gov. Let me provide some financial performance highlights and then we'll take investor questions. In terms of our top line performance, Q3 2024 revenue rose 46% to $3.050 million, reflecting a 90% increase in hardware revenue and a 5% increase in monitoring revenue. Material contract that Jan discussed, contributed $724,000 of hardware revenue as a result of shipments that commenced in August. Also bear in mind, that in Q3, we had yet to record any monitoring revenue from the material contract as while the units were shipped, they were not yet installed prior to the end of the third quarter. Once the units are installed, we'll book the first 12 months of monitoring fees to deferred revenue and amortize that amount ratably over the service period of 12 months. As in recent quarters, Q3 2024 also benefited from the recognition of 100% of the revenue from new hardware product versions launched in September of last year. The new product versions have upgraded functionality that allow hardware products to be separable from our monitoring services as separable offerings revenue and associated costs on hardware sales are now recognized on shipment or on acceptance rather than amortized over the useful life of the unit. Monitoring revenue continues to be amortized over the contracted term of the service. Revenue increases were driven by revenue recognized from our TrueGuard product line in our generator monitoring or PG segment offset somewhat by lower sales in our Cathodic Protection or CP our pipeline segment. Similarly for the nine months ended September 2024 revenue grew 28.4% with the same revenue drivers as the quarter period. We talk a lot about our PG segment, which is…

We will now begin the question-and-answer session. [Operator Instructions]

Operator, do we have any questions? Operator

We do. The first question comes from Richard Sosa an investor. Go ahead, please.

Jan, Tracy, good morning. Great quarter amazing. It's very exciting to see as a long-term shareholder. So first and foremost, I want to start with that. I had three quick questions. I think you mentioned on the last conference call or in the Investor Day presentation. I'm not really sure. But you had mentioned you had $2 million of purchase orders on the contract. Is it reasonable to think that the remainder of the $2 million will be in the fourth quarter? Or I shouldn't think about it that way?

No, you should not think that way. Anything is possible, but I think you have to consider that some of it would fall into the first quarter. And also, I would also think that by the time that happens, we have more purchase orders from them as well. So it's an ongoing process. So -- but I don't think you can -- you should consider, you're doing your math that we would get from this customer of $1.3 million worth of revenue in the fourth quarter.

Okay. That's fair. That's what I just wanted to ask. Second question just on demand response. Have you been able to generate any income from that yet? Or is that kind of still a longer-term thing?

No. We have not generated any income from that and it is a longer-term item. It's new. So I think a lot of the different parties which includes the grid operators are getting themselves situated. So it's something that we've not generated any revenue from and should be viewed as a real potential positive but very early in the game.

Okay. And then my last question and I'll turn it over to others. Is -- you're starting to generate income. In terms of the NOLs in your balance sheet, is that impacting accounting at all? Or is that something that you haven't looked at yet?

We would anticipate...

Jan, I can take that actually.

Yeah. Okay. Yeah, Tracy take that.

Yeah. Thanks, Richard for the question. We are actually looking at that. We will be updating our NOL study as of the end of the year -- following the end of the year. So you'll see that impact on the balance sheet come on at the end of the year.

Okay. That's great. And again, great quarter. I mean I've been a long-term shareholder and I'm very excited about what I'll see next.

Well, we appreciate your continued support.

The next question comes from Josh Peters a private investor.

Good morning. And I think congratulations are certainly in order. I'd like to add that to the first questioner here on the line. I'm a relatively recent shareholder, but worried now that I might not own quite enough shares. Could you articulate what you think the total addressable market could look like over the next couple of years for your existing suite of products?

It's very hard, because there are no real statistics as to the number of generators that are in the marketplace, the number of generators that are sold on an annual basis here in the United States. What I can say is we think that the number of generators is growing, meaning, I'm talking about the new sales of generators and that almost all new generators that are being sold are being sold with monitors, some type of monitoring which had not been the case, really up until a short period of time ago. So we think that the market is quite large. But I don't -- if your question is, do I think that there's a large market that's embedded of old generators in the field today that will get generators -- will get generator monitors put on it. I would not go that far. I mean, I think, there certainly is some market for that. But I think really and our focus is on the new generator and new generator sales. And I'm talking right now in the residential space. In the commercial and industrial space, I think that there is a much larger market for generators that are in the field that want to have remote monitoring and control. And that would be for example, the big contract we have with the telecom provider is for both new generators, but the lion's share of that contract is generators that are already out there in the field at cell towers that a customer has decided that they need to make sure they're monitoring it, because they need to have the data and the assurance that the generator is going to be working when power goes out because they can't afford to have a self-service drop if that occurs. So we think that there's a very large market out there, but I can't give you a number for TAM.

Yeah. I guess that's the common phrase for it is TAM. I try to avoid using phrases like that. But...

Total addressable market I apologize.

Yeah. Yeah. Well, we're certainly looking at Rule of 40 type territory who knows maybe better than that here for a while. So I guess we can use all the phrases. My other question is you talk about in the next let's call it, year a couple of quarters whatever it happens to be expanding your sales force, do you have a way to describe how rapidly you're expecting to bring people on and perhaps what you're budgeting for investment through the P&L for that?

Yeah. We can't tell you about budgeting for P&L. But we're looking -- we're not only looking for a salesperson. Really our focus -- and we do hope to add some sales personnel. But our focus right now is on IT and Engineering, because we think that's where we can have the greatest impact. Again, because the competitive nature of our business we always want to lead in terms of the quality and the capability of our product. And that's really where our focus from a cost standpoint is going to be over the next 12 months.

Okay. Well, thank you very much. I appreciate the insight. And I'll let somebody else ask some more questions.

Thank you, Josh. Our next question comes from Chris Tuttle of Retail [ph]. Go ahead please.

Hi there. Thanks for taking my questions. Just a couple, one is what's the lag between when you guys ship and recognize the hardware revenue and when the software and services recurring revenue would start to -- would commence?

Yes, I can take that, Jan. It really varies. It really depends on the customer. It depends on the volume of units that they purchase. It depends on their rollout plan. There can be situations where they purchase inventory stock and shelve it. And so, it's a longer period of time versus purchases that are immediately installed. So it is largely based on the type of customer and their specific rollout plan. There's no recurring lag trend. It really just depends on the individual customer and their rollout plan.

And what would -- in the case of this quarter I believe you noted that it was in conjunction with the -- or a good chunk of it anyway it was in conjunction with this exciting new large contracts you have with the telecommunications company. What would be -- in that case, what's sort of a good potential expectation for that?

Again, we've -- there have been sort of different indications for different regions of the United States on the rollout plan. So there has not been a specific trend. We'll have a flurry and then there won't -- then there'll be a lag and then there'll be a flurry. So there really isn't any finite information that I can give you on what the expectation is through the end of the quarter because it's really going to depend on how many installers that they have deployed and how efficient that deployment is especially over the holidays and what type of support that their deployments need. So, unfortunately, there's not a finite information plan that I can give you on that at this time. Jan, I don't know if you want to add any color on that.

Yes. I would like to add to -- let me -- let me just add that this particular customer as opposed to many other customers of ours, where we ship a product and then they sell it and the monitoring starts right then and there. In this case, because it's such a large number of units, we don't -- the minute it's installed doesn't necessarily mean it's the minute that it hits our revenue line that we do it in chunks. And so that also adds to what Tracy said, it's hard to say, what dollar number or what number of units are going to be in any particular time. But one of the points that I made in my prepared remarks is that, it's only the first year that the $5 million we are only counting the first year of monitoring. Obviously, we expect many, many years of monitoring to continue. That is something that is not in the initial contract, but that we expect to come in every year from them.

Okay. Great. Well listen I appreciate it. I know it's -- I know you don't have perfect visibility on it so I appreciate that. Thank you.

[Operator Instructions]

Okay. Operator if we...

We do. Our next question comes from Joel Skyler, Private Investor. Go ahead please

Okay. Thank you. And Jan, kudos to you and Tracy and the whole OmniMetrix team, a terrific quarter. Just a quick question on, what can you tell us about your expanding geographical reach. You've mentioned in the past about starting to build in California and -- with the wildfires. And then similarly, I think you recently mentioned potential in Canada also due to the wildfire hazard and its accompanying need for generators. And then I'm also curious, whether you do anything in Puerto Rico, which of course has experienced some devastating hurricanes over time. So thank you in advance for that.

Yes. So those are all areas that today we sell a product into. California as I said in the past is kind of a more recent market because they have a temperate climate. And so generator sales have not been big in California that has changed and generator sales now in California are growing quite nicely. Canada had not been a focus of our company in the past, but now we have a salesperson who is focusing on Canada. And we see that's a nice market. I don't think it's going to be a great market for us but I think it's a very nice solid market. And we are in Puerto Rico and have been in Puerto Rico for many years.

Okay. Wonderful. Thank you. And do you think it will be very far off into the future that you would have potential business opportunities in Europe and Asia? I know the time differences can present a challenge for your service operation, but just curious about that?

Yes. As you said time difference, language difference have impacted us and we found that we have enough growth potential domestically for us to move out into Europe. However, some of the people we're talking to about -- with new contracts do have a large foreign footprint and we'll go where our customers go. So if it makes sense for us from a business standpoint we definitely will go international and we'll see what happens with potential customers who we're currently talking to.

Okay. That’s exciting. Thank you, Jan.

Our next question comes from Joe Stein of Oppenheimer. Go ahead, please.

Jan I just want to congratulate you and the team on your growth finally coming through and I hope you get many more towers. I don't have to rush to go international because there are plenty of towers around and I just --- keep up the good work proud to be part of the investment group.

Thank you very much.

Thank you.

Now showing no further questions. This concludes the Q&A session. Now I'll turn it back to Jan Loeb for closing remarks.

Thank you for your interest in Acorn Energy. We appreciate your support and we're always happy to speak with investors. And we'll put out details about our event with the Investor Summit Conference on November 21. You always arrange a call with us or ask any questions through our IR team whose information is in today's press release. We look forward to updating you again on our next call. Thank you again for your time today. All the best.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.