Acorn Energy Inc. (ticker: ACFN) 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. US Seismic 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. GridSense® and OmniMetrix™ monitor critical points and back-up power generation along the electricity delivery system.
Acorn Energy announced backlog for its services increased to $18.5 million – an increase of 157% from Q4’12’s total of $7.2, according to its Q4’13 earnings release on March 17, 2014. The company holds no debt at the parent level and has $15.8 million in corporate cash. In a conference call following the release, John Moore, Chief Executive Officer of Acorn Energy, said the company has three of its subsidiaries need only minimal working capital and have “terrific” growth prospects for 2014.
U.S. Seismic Overview
U.S. Seismic Systems (USSI) is focused on microseismic monitoring and recently beat out four other companies to conduct a full scale, high temperature fracturing job for a supermajor oil producer in the Eagle Ford formation. USSI’s patented fiber optic geophone is powered only by light and can outperform traditional, outdated geophone technologies in high temperature environments. The company said old systems can miss up to 90% of microseismic events.
Moore detailed USSI’s advantages at EnerCom’s The Oil & Services Conference™ 12. Moore said reports have revealed roughly 40% of frac jobs are conducted in high temperature wells but less than 7% of those frac jobs use microseismic monitoring. As a result, 73% of failed frac jobs are due to insufficient subsurface knowledge, says a poll consisting of more than 200 completion engineers.
“Clearly,” Moore says, “we’re using muscles where we should be using brains in this industry.”
The company believes commercialization of the product is the only restraint, as the schedule of many oil companies is extremely busy and constantly evolving. Moore points out the main goal of USSI is to provide geologic detail, but producers are more focused on the production process. To date, the company has tested only observation wells and no producing wells. However, ACFN says Barclays has determined the worldwide market for seismic tools is $2 billion, and the market for seismic acquisition and processing is another $14 billion.
Remaining Operations Overview
DSIT Solutions Ltd. is based in Israel and uses underwater sonar primarily for homeland security. Offshore oil companies have recently begun inquiring about the technology. Annual revenue of $13.1 million remained flat for 2013, but an $11.2 million contract closed in Q4’13 and added $3.8 million in backlog. Pro forma for testing and maintenance, total backlog entering fiscal 2014 is $13.4 million.
GridSense® is a player in the U.S. utility industry and controls remote monitoring systems. The subsidiary has received $2.8 million in new business for 2014, which is nearly half of all sales completed for the previous year. Since new management restructured the business in 2013, revenue has grown 37% year over year to reach $5.0 million and gross margins increased to 36% from 26%. Management said it expects the upward trend to continue in 2014.
OmniMetrix™ monitors back-up generators to prevent failures and was acquired by ACFN in 2012. The company was restructured in 2013, leading to annual revenue increasing by 200% and revenue doubling compared to 2012. ACFN believes new government regulations, in addition to associating the product with GridSense®, will boost revenue in the upcoming year.
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