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Acorn Energy Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 9, 2011 10:17PM
Acorn Energy Inc. (ACFN) filed Quarterly Report for the period ended 2011-09-30. Acorn Energy Inc. has a market cap of $89.5 million; its shares were traded at around $5.109 with and P/S ratio of 2.6. Acorn Energy Inc. had an annual average earning growth of 8.8% over the past 5 years.
Highlight of Business Operations:DSIT reported decreased revenues in the first nine months of 2011 as compared to the first nine months of 2010 as well as decreased gross profit, gross margin and net income. DSIT's revenues of $6.7 million for the first nine months of 2011 represents a decrease of approximately $1.9 million or 22% as compared to the first nine months of 2010. Third quarter 2011 revenues of $1.9 million were also significantly below third quarter 2010 revenues of $3.2 million ($1.3 million or 41%) as well as second quarter 2011 revenues ($0.5 million, a decrease of 22%). The decrease in revenues from the first nine months of 2010 was due to decreased revenues in our Energy & Sonar Security Solutions segment which reported first nine months 2011 revenues of $5.7 million compared to $7.7 million in the first nine months 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 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.
In the first nine months of 2011, USSI continued to focus on customer “proof-of-concept” contracts for its major product lines (4D reservoir & shale gas monitoring, fiber optic perimeter security systems and underwater security systems for diver detection). During the third quarter of 2011, USSI continued to deliver on these “proof-of-concept” contracts and recorded $635,000 of revenue ($205,000 in the second quarter and $43,000 in the first quarter). USSI s backlog of contracts continues to grow reaching $1.7 million at September 30, 2011 ($1.1 million at June 30, 2011 and $0.4 million at March 31, 2011). USSI expects to deliver on these contracts over the next 12 months. USSI recorded a gross profit of $190 (30% gross margin) in the third quarter. The gross profit in the third quarter is the result of the completion of a high margin project received in the third quarter. The recording of gross profit in the third quarter reverses a trend from previous quarters where USSI had negative gross profit and gross margin as it works through its “proof-of-concept” contracts and as it transitions from development to production.
Revenues. Revenues in the first nine months of 2011 increased by $2.3 million or 23% from $10.0 million in the first nine months of 2011 to $12.3 million in the first nine months of 2011. The increase in revenues is due to increased revenues recorded by GridSense and USSI. Those increases in revenues were partially offset by decreased revenue at DSIT. GridSense revenues increased by $3.5 million to $4.7 million compared to first nine months 2010 revenues of $1.2 million (GridSense 2010 revenues were only for the period since our acquisition of it in May 2010). USSI continued to show traction as its revenues from “proof-of-concept” projects were nearly $900,000 after reporting only approximately $200,000 revenues in 2010 since our acquisition of USSI in February 2010. DSIT revenues decreased by $1.9 million (22%) to $6.7 million compared to first nine month 2010 revenues of $8.6 million.
Gross profit. Gross profit in the first nine months of 2011 decreased by $0.3 million (6%) as compared to the first nine months of 2010. DSIT's year-to-date gross profit decreased by $1.7 million (43%) as compared to 2010 year-to-date gross profit. The decrease in DSIT's gross profit was attributable to both decreased revenues and decreased gross margins which deteriorated from 45% in 2010 to 33% in 2011. DSIT's decreased gross margins in 2011 were attributable to the slow-down of work on an AquaShieldTM DDS project which caused deterioration in the gross margin associated with that project. In addition, decreased margins in a number of non-Naval projects in our Energy & Sonar Security Solutions segment encountered technological difficulties which caused greater than expected labor costs to bring those projects to completion. In 2011, USSI gross profit continues to be negative ($107,000) as it transitions from development to production while it works through its “proof-of-concept” projects. However, in the third quarter, as a result of increased revenues and increased efficiencies, USSI was able to generate a gross profit of $190,000 (a 30% gross margin on revenues of $635,000). The reduced gross profits of DSIT and the negative gross profit of USSI were partially offset by the gross profit of GridSense of $2.2 million in the first nine months of 2011 (an increase of $1.6 million over 2010 gross profit in the period since our acquisition of GridSense).
Net income (loss). We had net income of $36.5 million in the first nine months of 2011 compared with net loss of $10.8 million in the first nine months of 2010. Our net income in 2011 attributable to gains of $30.7 million and $0.5 million recorded on the sales of CoaLogix and HangXing, respectively. Those gains were offset by losses from our operating companies, corporate operating and tax expenses and losses recorded with respect to discontinued operations of our former CoaLogix subsidiary. DSIT, GridSense and USSI losses for the period were $0.5 million, $0.8 million and $1.9 million, respectively. In addition we recorded corporate operating expenses of $2.6 million and losses from discontinued operations of $1.9 million. Those losses were partially offset by an income tax benefit of $12.0 million, the non-controlling interest share of our subsidiary losses of $0.5 million and the non-controlling interest share of CoaLogix losses of $0.5 million.
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