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Acorn Energy Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: August 9, 2011 09:11PM
Acorn Energy Inc. (ACFN) filed Quarterly Report for the period ended 2011-06-30. Acorn Energy Inc. has a market cap of $84.4 million; its shares were traded at around $4.7 with and P/S ratio of 2.4. Acorn Energy Inc. had an annual average earning growth of 8.8% over the past 5 years.
Highlight of Business Operations:
On July 25, 2011, CoaLogix and its subsidiaries entered into an Amended and Restated Loan and Security Agreement with its bank with an effective date of July 1, 2011. Under the agreement, the credit facility was extended for the $4 million formula based line-of-credit. The credit facility was also modified to add a $3 million term loan, and to remove a $1 million non-formula based line-of-credit. Prior to advances on the term loan, CoaLogix is required to receive new equity or subordinated debt from its investors in an amount equal to or in excess of one-third of the amount of such term loan. Acorn and EnerTech have committed to loan such capital to CoaLogix. The formula based line-of-credit matures June 30, 2012 and has an interest rate of the greater of 1.50% above prime rate or 5.50%. The term loan is available through July 15, 2012, matures July 15, 2014, and has an interest rate of the greater of 2.50% above prime rate or 6.50%. The maximum amount of outstanding credit under the facility remains at $5 million.
First half 2011 revenues of $10.4 million represent an increase of approximately $1.0 million or 11% as compared to the first half of 2010. Second quarter 2011 revenues ($6.6 million) also reflects an increase of $1.8 million or 36% compared to second quarter 2010 revenues of $4.9 million and a $2.9 million increase (76%) as compared to the first quarter of 2011. The increase in revenues as compared to the first half of 2010 was due to having the Steele Creek plant operational since August 2010. The increased revenues as compared to the first quarter of 2011 was due to increased demand following the decision by potential customers to temporarily postpone certain catalyst regeneration jobs in the first quarter of 2011. During the quarter CoaLogix applied most of its production capacity toward revenue projects; accordingly, its inventory of modules decreased slightly.
During the first half of 2011, CoaLogix recorded approximately $3.9 million of selling, general and administrative (SG&A) expense as compared to approximately $4.0 million recorded during the first half of 2010. The decrease in SG&A in the first half of 2011 compared with the first half of 2010 was primarily due to the recording of a provision for the settlement of the lawsuit with EES combined with higher lawsuit related legal costs during the 2010 period which offset increased wages expense and other administrative costs associated with continued growth of the company. SG&A costs increased from $1.8 million in the first quarter of 2011 to $2.0 million in the second quarter of 2011. The increase in SG&A costs as compared to the first quarter was due to additional personnel costs and sales commissions during the period.
DSIT reported slightly decreased revenues in the first half of 2011 as compared to the first half of 2010 as well as decreased gross profit, gross margin and net income. DSIT's revenues of $4.8 million for the half represent a decrease of approximately $0.6 million or 11% as compared to the first half of 2010. Second quarter 2011 revenues were unchanged compared to first quarter 2011 revenues ($2.4 million for each quarter). The decrease in revenues from the first half of 2010 was due to decreased revenues in our Energy & Sonar Security Solutions segment which reported first half 2011 revenues of $4.0 million compared to $4.8 million in the first half of 2010. The decrease in revenues was due to the completion of an AquaShieldTM DDS project in the end of 2010 without another project to replace those lost revenues. Furthermore, work on another AquaShieldTM DDS project slowed down in the first half of 2011 due to the delay in an expected follow-up order of a large expansion to the project changing the configuration of the already ordered DDS systems.
During the first half of 2011, DSIT recorded approximately $1.6 million of selling, general and administrative (SG&A) expense, an increase of $0.2 million (14%) over the $1.4 million recorded in the first half of 2010. Second quarter 2011 SG&A expense also increased approximately $270,000 over first quarter 2011 SG&A expense. These increases were due primarily to increased marketing costs which included increased personnel, participation in several exhibitions and product demonstrations.
Corporate general and administrative expense in the first half of 2011 reflected a $1.0 million decrease to $1.6 million as compared to $2.6 million of expense in the first half of 2010. The decrease is due primarily to bonuses recorded in the first half of 2010 combined with increased professional fees associated with the SEC inquiry and our GridSense and USSI acquisitions in that period. Corporate general and administrative expense was $0.9 million in the first quarter of 2011 and $0.7 million in the second quarter. We expect our third and fourth quarter corporate general and administrative costs to increase as a result of increased professional fees and costs associated with our sale of CoaLogix (See Recent Developments – Sale of CoaLogix). We further expect that in 2012, under our current structure and level of activities, our continuing quarterly corporate general and administrative costs will return to current levels.
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