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Acorn Energy Announces Q4 and Fiscal Year 2013 Results

Companies mentioned in this article: Acorn Energy, Inc.

WILMINGTON, Del., March 17, 2014 /PRNewswire/ -- Acorn Energy, Inc. (NASDAQ: ACFN) today announced its results for the fourth quarter and fiscal year periods ended December 31, 2013.

For the fiscal year 2013 period, revenue increased $2.3 million, or 12%, to $21.8 million, compared to $19.4 million in the corresponding 2012 period. The net loss for 2013 was $29.7 million, or $1.57 per share, compared to a net loss of $16.7 million, or $0.93 per share, in 2012. Results for the year include a non-cash charge of $6.7 million ($0.36 per share) for impairment of goodwill and other intangibles and $1.4 million ($0.07 per share) for restructuring charges.

For the fourth quarter of 2013, Acorn revenue increased 21% to $5.8 million compared to $4.8 million in the 2012 fourth quarter. The net loss for the quarter was $5.3 million, or $0.24 per share, compared to a net loss of $5.4 million, or $0.30 per share, in the corresponding 2012 period.

John Moore, President and CEO of Acorn Energy stated, "In 2013, all four of our businesses made great progress in developing their technologies and growing their customer bases. USSI positioned itself as the leader in the emerging field of advanced microseismic monitoring by winning a pivotal trial conducted by one of the supermajor oil companies. DSIT was recently awarded the largest order in its history for the detection of underwater terrorism.

"Acorn increased backlog 157% from $7.2 million in the third quarter to $18.5 million at the end of the fourth quarter. We made adjustments to our corporate expenses which will reduce cash corporate overhead going forward by 35%. We strengthened the balance sheet, ending the year with $15.8 million in corporate cash and no debt at the parent level.

"In addition, 2014 has gotten off to a good start. GridSense has received $2.8 million of new business, as its early-alert monitoring system for key equipment on the electric grid is receiving greater recognition. OmniMetrix secured orders for nearly half of its 2014 planned units as the need for backup generators grows in the face of increasing outages in the electric utility industry. Joe Musanti assumed the role of COO at Acorn after dramatically reducing the cash needs at both companies. We are excited about 2014. We are actively developing another major opportunity for USSI and look forward to updating you on our progress in the future."

Portfolio Companies

U.S. Seismic Systems, Inc. (USSI)
USSI has developed the first cost-effective fiber optic sensor system for mapping traditional as well as unconventional oil and gas fields. More effective mapping leads to increased production. The technology is also applicable for monitoring production to avoid environmental problems.

Recently it was reported that unconventional methods such as hydraulic fracturing accounted for 35,000 new wells annually in the U.S. Approximately 40% of the fracturing jobs occur in very high temperature wells, in which it is difficult to impossible for legacy seismic equipment to function. USSI's fiber optic technology has been designed to operate in these harsh conditions, as well as low to mid temperature applications. Furthermore, over 70% of the operating companies queried in a recent survey reported the failure of fracturing jobs to meet performance expectations was due to a lack of understanding of the subsurface.

During 2013, USSI invested in testing its technology with producing and service companies. In each test, USSI gleaned important information about its sensors and peripheral equipment. The in-field applications have led to refinements and changes as customers and the USSI team work collaboratively towards the commercialization of the first major product change in seismic mapping.

Revenue in 2013 was $1.5 million; about the same as 2012's revenue and was primarily generated from testing. Fourth quarter revenue of $320,000 in 2013 increased $173,000 over the 2012 fourth quarter revenue of $147,000. The losses reflected in the financial statements with respect to USSI primarily represent purposeful spending on our part to perfect the USSI tool and to set the stage for commercialization.

DSIT
DSIT Solutions Ltd., based in Israel, develops and produces advanced underwater sonar detection systems to protect critical harbor and offshore assets against terrorist and other attacks. Primary markets for its systems are navies, homeland security agencies, oil and gas (O&G) companies, nuclear power facilities and port authorities. The technologies are also attracting interest from owners of offshore oil and gas platforms.

The company generated revenue in 2013 of $13.1 million vs. $13.6 million in 2012. Fourth quarter 2013 revenue was $3.4 million, compared to $3.6 million in the prior year. The decreases were primarily due to the winding down of a major project. Lower revenues and margins were due in part to unanticipated delays and installation complications for a major project.

In the fourth quarter, the company closed an $11.2 million contract which raised the backlog entering 2014 to $13.4 million, an increase of $3.8 million from the $9.6 million reported on December 31, 2012. The contract includes approximately $3.2 million for maintenance and support beginning in late 2015 and the potential of an additional $3.2 million for testing trials.

GridSense(®
)
GridSense develops and markets remote monitoring systems for electric utility companies. The systems are used for outage management, power quality measurement, systems planning, trouble-shooting and maintenance. During the second quarter of 2013, GridSense restructured its operations in the U.S. and Australia to improve efficiencies and cut costs. The company's focus is on the early detection of problems on power lines and transformers and the prevention of power outages. There are thousands of transformers in the U.S. utility industry, most of which are approaching or past their expected life expectancies. Compared to manual inspections, the use of remote monitoring can save time and money and alert the utilities to problems and possible failures. In addition, closer monitoring and maintenance can help extend the usable lives of transformers, whose replacement costs are prohibitive.

New management has realigned sales and engineering to focus on customers in the pipeline or in those pilot programs which are viewed as having the greatest potential to provide near-term revenue. As a result, revenue in 2013 grew 37% to $5.0 million from 2012. Recently the company obtained orders from five utilities for a total of $2.8 million, nearly one-half the total sales in 2013. Gross margins improved from 26% to 36% and are expected to be maintained or increase in 2014.

OmniMetrix(TM)
OmniMetrix was acquired by Acorn in 2012. It has developed the most advanced system for wirelessly and remotely monitoring back-up generators to prevent failures. The system collects key data continuously and alerts the equipment manager to signs of trouble. In 2013, OmniMetrix coupled its data analysis capabilities with an active voice call center providing customers with a high caliber support system as well as creating a new high margin revenue stream.

The U.S. installed base of generators is estimated to be 2 million. In addition industry sources indicate that 100,000 commercial generators and 200,000 residential generators are sold annually. In early 2013, the Environmental Protection Agency (EPA) required that certain large generators collect and report data on running times and emissions or face significant civil penalties. This new regulation should increase the need for monitoring.

In 2013 new management changed the marketing plan, particularly in regard to pricing and a focus on end-users. Management is also focusing on the residential market, especially since new home construction is increasing, and power outages from storms are drawing greater generator interest. As a result, OmniMetrix revenue increased from $0.7 million in 2012 to $2.2 million in 2013. Fourth quarter revenue was $0.6 million as compared to $0.3 million in 2012. Gross margin in 2013 was 56% and was driven by the margin on monitoring revenue which was 71% in 2013. Expenses were high in 2013 due to a buildup in personnel begun in mid 2012 and a subsequent reorganization. In 2014, a close association is being developed with GridSense on terms designed to cut costs and through cross selling, intended to boost revenue.

Conference Call Information
The Company will host an investor conference call on Tuesday March 18, 2014 at 11am EDT to discuss its fourth quarter 2013 results and developments.

Participants can pre-register for the conference call by accessing this link: http://dpregister.com/10042389. 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" (no pass code required). 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 9:00am EDT April 18, 2014 by dialing (877) 344-7529 or International (412) 317-0088 and entering access code 10042389.

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(TM) remotely monitors emergency back-up power generation systems to increase their reliability. US Seismic Systems 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 most recent 10-K filed by the Company with the Securities and Exchange Commission.

Investor & Press Contact:
F. Kent Leacock
Acorn Energy
(925) 698-1431
kleacock@acornenergy.com

Financial Tables to Follow

                                     ACORN ENERGY, INC. AND SUBSIDIARIES

                                    CONSOLIDATED STATEMENTS OF OPERATIONS

                           (IN THOUSANDS, EXCEPT NET INCOME (LOSS) PER SHARE DATA)


                                                                      Year ended December 31,
                                                                      -----------------------

                                                                     2013                      2012     2011
                                                                     ----                      ----     ----

    Revenues:

     Projects                                                     $14,128                   $14,651  $11,368

     Products                                                       5,962                     3,880    7,049

     Services                                                       1,666                       888      511
                                                                    -----                       ---      ---

     Total revenues                                                21,756                    19,419   18,928
                                                                   ------                    ------   ------

     Cost of sales:

     Projects                                                      12,225                    10,749    7,886

     Products                                                       3,931                     2,996    3,730

     Services                                                         444                       471      399
                                                                      ---                       ---      ---

     Total cost of sales                                           16,600                    14,216   12,015
                                                                   ------                    ------   ------

        Gross profit                                                5,156                     5,203    6,913

     Operating expenses:

     Research and
      development expenses,
      net                                                           8,175                     6,590    2,995

     Selling, general and
      administrative
      expenses                                                     19,816                    19,361   11,952

     Impairment of goodwill
      and intangibles                                               6,731                         -        -

     Restructuring and
      related charges                                               1,389                         -        -
                                                                    -----                       ---      ---

     Total operating
      expenses                                                     36,111                    25,951   14,947
                                                                   ------                    ------   ------

        Operating loss                                            (30,955)                  (20,748)  (8,034)

     Finance expense, net                                             122                        57      (26)

     Gain on sale of
      HangXing                                                          -                         -      492
                                                                      ---                       ---      ---

     Loss before taxes on
      income                                                      (30,833)                  (20,691)  (7,568)

     Income tax benefit
      (expense)                                                      (156)                    2,956   12,767
                                                                     ----                     -----   ------

     Net income (loss) from
      continuing operations                                       (30,989)                  (17,735)   5,199

     Loss from discontinued
      operations, net of
      income taxes                                                      -                         -   (1,948)

     Gain on the sale of
      discontinued
      operations, net of
      income taxes                                                      -                         -   31,069

     Non-controlling
      interest share of loss
      from discontinued
      operations                                                        -                         -      540
                                                                      ---                       ---      ---

     Net income (loss)                                            (30,989)                  (17,735)  34,860

     Net loss attributable
      to non-controlling
      interests                                                     1,275                     1,024      549
                                                                    -----                     -----      ---

     Net income (loss)
      attributable to Acorn
      Energy, Inc.
      shareholders                                               $(29,714)                 $(16,711) $35,409
                                                                 ========                  ========  =======


    Basic net income (loss) per share attributable to
     Acorn Energy, Inc. shareholders:

        From continuing
         operations                                                $(1.57)                   $(0.93)   $0.33

        From discontinued
         operations                                      $              -           $             -    $1.70
                                                         ----------------           ---------------    -----

     Basic net income (loss)
      per share attributable
      to Acorn Energy, Inc.
      shareholders                                                 $(1.57)                   $(0.93)   $2.03
                                                                   ======                    ======    =====

     Weighted average number
      of shares outstanding
      attributable to Acorn
      Energy, Inc.
      shareholders - basic                                         18,916                    17,891   17,462
                                                                   ======                    ======   ======


    Diluted net income (loss) per share attributable to
     Acorn Energy, Inc. shareholders:

        From continuing
         operations                                                $(1.57)                   $(0.93)   $0.32

        From discontinued
         operations                                      $              -           $             -    $1.67
                                                         ----------------           ---------------    -----

     Diluted net income
      (loss) per share
      attributable to Acorn
      Energy, Inc.
      shareholders                                                 $(1.57)                   $(0.93)   $1.99
                                                                   ======                    ======    =====

     Weighted average number
      of shares outstanding
      attributable to Acorn
      Energy, Inc.
      shareholders - diluted                                       18,916                    17,891   17,743
                                                                   ======                    ======   ======


     Dividends declared per
      common share                                                 $0.035                    $0.140   $0.085
                                                                   ======                    ======   ======

                                              ACORN ENERGY, INC. AND SUBSIDIARIES

                                                  CONSOLIDATED BALANCE SHEETS

                                        (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)


                                                          As of December 31,
                                                          ------------------

                                                                             2012          2013

                         ASSETS

    Current assets:

    Cash and cash
     equivalents                                                          $26,147       $17,279

    Restricted deposit                                                        699           306

    Accounts receivable,
     net                                                                    5,481         5,710

    Unbilled revenue                                                        5,213         6,421

    Inventory, net                                                          5,106         4,540

    Other current assets                                                    3,547         1,695
                                                                            -----         -----

    Total current assets                                                   46,193        35,951
                                                                           ------        ------

    Property and equipment,
     net                                                                      927         2,432

    Severance assets                                                        3,165         3,539

    Restricted deposit                                                        115             -

    Intangible assets, net                                                  9,561         3,735

    Goodwill                                                                6,630         4,429

    Other assets                                                              745           870
                                                                              ---           ---

    Total assets                                                          $67,336       $50,956
                                                                          =======       =======

                 LIABILITIES AND EQUITY

    Current liabilities:

    Short-term bank credit
     and current maturities
     of long-term debt                                                       $153        $2,303

    Accounts payable                                                        2,631         3,086

    Accrued payroll,
     payroll taxes and
     social benefits                                                        2,420         2,527

      Deferred revenue                                                      3,323         2,764

    Other current
     liabilities                                                            1,708         3,191
                                                                            -----         -----

    Total current
     liabilities                                                           10,235        13,871
                                                                           ------        ------

    Non-current
     liabilities:

    Accrued severance                                                       4,491         4,973

    Other long-term
     liabilities                                                              665           600
                                                                              ---           ---

    Total non-current
     liabilities                                                            5,156         5,573
                                                                            -----         -----

    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
     22,957,859 shares at
     December 31, 2012 and
     2013, respectively                                                       188           229

    Additional paid-in
     capital                                                               83,469        93,943

    Warrants                                                                   55           526

    Accumulated deficit                                                   (29,733)      (59,447)

    Treasury stock, at cost
     - 801,920 shares at
     December 31, 2012 and
     2013                                                                  (3,036)       (3,036)

    Accumulated other
     comprehensive income                                                     716           184
                                                                              ---           ---

    Total Acorn Energy,
     Inc. shareholders'
     equity                                                                51,659        32,399

    Non-controlling
     interests                                                                286          (887)
                                                                              ---          ----

    Total equity                                                           51,945        31,512
                                                                           ------        ------

    Total liabilities and
     equity                                                               $67,336       $50,956
                                                                          =======       =======

SOURCE Acorn Energy, Inc.