Author Topic: ACFN - Acorn Energy  (Read 3109 times)

knight933

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Re: ACFN - Acorn Energy - CEO buys ~230,000 shares, raises stake +22%
« Reply #10 on: April 02, 2018, 09:29:12 AM »
CEO purchased another 105,000 shares on the open market on 3/29 at $0.30/share. Combined with the prior ~127,000, the CEO has bought 231,694 since the earnings call last week, raising his stake +22% to about 1.3 million shares, or 4.4% of the company. Based on the elevated volume I am still seeing, looks like others are joining in to buy more.


knight933

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Re: ACFN - Acorn Energy - New CEO pay deal means M&A by 2019
« Reply #11 on: April 13, 2018, 08:13:42 AM »
New 8K filed that outlines the CEO’s new compensation agreement. The key change here is that Mr. Loeb will now receive a bonus if he completes an acquisition before Dec 31, 2019. Again, given Acorn's $60M NOL balance (more than 5x the current market cap), almost any deal would be immediately accretive and pure upside to the bull case. Key language below:

"He will be eligible for two additional bonuses during the term of the New Consulting Agreement:

-$150,000 upon consummation of a corporate acquisition transaction approved by the Registrant’s Board

-$150,000 upon consummation of a corporate financing/funding transaction approved by the Registrant’s Board"

Full details here: https://www.sec.gov/Archives/edgar/data/880984/000149315218005081/form8-k.htm

knight933

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ACFN reported a solid 1st quarter and CC. Company should post the transcript within 48 hours to their website, but until then, here are the highlights.

1- Strong Gross Margin expansion: To me the biggest surprise was the big expansion in Gross Margin YoY. In Q1-18 GM was 62% vs. only 56% last year. In my own model I did not project them to reach GM over 60% until 2019. I think this highlights the beauty of the high-margin, asset-light, recurring revenue Monitoring revenue. With Gross Margins over >80%, this business will be quite profitable as it scales. CEO said this new +60% threshold was sustainable due to high ~80% gross margins on monitoring revenue and 35%-40% gross margins on the hardware side. You can tell from the improving margins and shrinking losses that OmniMetrix is on track to be at least breakeven this year which is a big deal.

2-Kept +20% Revenue YoY Growth Guidance: While revenue growth for the Q was about +10% YoY, ACFN feels very confident in their 20% revenue guidance for 2018. During the Q&A (but absent from the press release), the CEO said through the end last month (April 2018), revenue growth (on a cash basis) was up +22% YTD

3-Taking steps to improve current “orphan stock” status: During the Q&A the CEO stated Acorn will be presenting at the LD Micro Invitational (June 4 - 6, 2018). This conference is exclusively focused on highlighting microcap stocks. This will be Acorn’s first conference presentation in 3 YEARS. Hopefully this will bring more eyeballs to the stock.

4-Will rename the company this year: Optics matter, and changing the name from “Acorn Energy” to “OmniMetrix” will also help assuage investor confusion that this is an IoT name and not an energy pure-play 

5-Management has been pursuing accretive M&A: CEO stated that now the DSIT sale is complete, they have more time to scout acquisition targets. As a reminder, the CEO changed his compensation agreement this year to cut his base salary and to pay him a large incentive bonus of $300K if he can find a deal before YE 2019. Almost any deal would be an incremental positive since ACFN has ~$60M in NOL’s

Overall, no change to thesis. Still very long.

spartansaver

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Re: ACFN - Acorn Energy
« Reply #13 on: May 16, 2018, 12:52:36 PM »
I find it rather annoying that a CEO gets awarded to make any acquisition. Seems like one of the easiest bonus checks a CEO could make.

knight933

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Re: ACFN - Acorn Energy
« Reply #14 on: May 16, 2018, 01:07:53 PM »
If we were talking about a large company, I would be inclined to agree; those CEOs can just sit back and collect pitch books from investment bankers.

BUT here we are talking about a nano-cap company with a market cap of only $10 million, which most folks do not know exists. Size alone limits what Acorn can buy. Their depressed share price prevents them form using much (if any) equity as a currency.

What Acorn is looking for is not easy to find. If you speak with the CEO (which I highly recommend), you can tell they are really serious about buying something synergistic. There are not many assets in the IoT or connected device space they can buy that fit the above criteria. Acorn knows they cannot win a banker auction, or go out and acquire their industry neighbor like Disney is hunting FOX.

It will take some time and some creativity to find a good fit. They are looking at not only whole companies but also portions of larger businesses. And besides, I much rather they pay the CEO in cash rather than shares. So for those reasons I am fine with this; Jan has his work cut out for him. But thus far, he has delivered as promised.

knight933

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Re: ACFN - Acorn Energy - First Investor Presentation in 3+ yrs
« Reply #15 on: June 07, 2018, 09:40:52 AM »
It's positive that ACFN is resuming IR outreach now with their balance sheet fixed and the thesis more straightforward. Here is the deck from the LD Micro Invitational Conference in LA (6/6/18). This was ACFN’s first conference attendance of any kind in 3+ years.

https://www.sec.gov/Archives/edgar/data/880984/000149315218008211/ex99-1.htm

FWIW...Acorn management gave their first public assessment of fair value, which they believed to be in the range of $0.53 - $1.10 (Pg. 16) Their math is as follows:

OmniMetrix ($14M - $22M): 1) Cash-basis sales expected >$6M in ’18 and >$7M in ’19, 2) Elecsys (a larger OmniMetrix comp) sold for $70M or 2.5x sales in 2017; today multiples for “IoT’ type companies range from 3x - 6x sales

Cash ($2M)

NOL ($0 - $9M): $60M NOL could generate up to $12.6M in future tax savings at current Federal rate of 21%. Disc back by at least 25% would leave max PV of ~$9M.
 
Potential Value Range based on the above: $16M - $33M ($0.53 - $1.10)
 
[Suffice to say I agree with their assessment]