Q1 2022 Senstar Technologies Ltd Earnings Call

Okay.

Greetings and welcome to send store technologies first quarter 2022 earnings conference call.

At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.

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As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Kim Rogers with Hayden IR. Thank you you may begin.

Thank you guys.

And welcome to the call I want to thank Sunstar technologies management for hosting the call today on the call from the company are the CEO , Mr. Dror, Sharon and the CFO . Mr. Tomer Hay, we will begin with Dror, who will summarize the key financial and business highlights followed by Tomer, who will review <unk> financial results.

For the first quarter of 2022, well then open the call for question and answer.

Before we start I'd like to point out that this conference call may contain projections or other forward looking statements regarding future events or the company's future performance. These statements are only predictions and sunstar cannot guarantee that they will in fact occur <unk> does not assume any obligation to update that.

Information.

Actual events or results may differ materially from those projected including as a result of changing market trends reduced demand and the competitive nature of the security systems industry, the unanticipated and unknown effect of the Corona virus.

<unk> on our operations and our clients as well as other risks identified in the documents filed by the company with the Securities and Exchange Commission.

In addition, during the course of the conference call, we will describe certain non-GAAP financial measures, which should be considered in addition to and not in lieu of comparable GAAP financial measures. Please note that in our press release, we have reconciled our non-GAAP financial measures to the most directly comparable GAAP measures in our core.

Against with Reg G requirements. You can also refer to our website at Www Sunstar technologies Dot com for the most directly comparable financial measures and related reconciliations.

And with that I'd now like to hand, the call over to get your door. Please go ahead.

Hi, everyone. Thank you Kim Thank you for joining us today to review of sensor technologies first quarter 'twenty to 'twenty two financial results.

It's only been a month since we last spoke with you today's comments will be brief just hitting on a few highlights from the past few weeks and the Q1 results.

We closed we've closed large contract in EMEA in the quarter and delivered year over year revenue growth. Despite defense what does differently.

Being a seasonally weaker quarter for our business.

In the first quarter revenue grew by 4% to $6 8 million and gross profit was $4 5 million, which produced a gross margin of 65, 8%.

The improvement in gross margin was due to the sales mix.

Q1 gross margin was due to the August five billing software living it.

Operating expense increased by 8% year over year, mainly due to our renewed marketing activities.

Business travel market activities and trade shows.

Okay.

Due to Covid related shutdowns in the first quarter of 2021.

These expenses will resume in the second half of 'twenty 'twenty. One so you will see it in the next quarter it'll be a comparison.

In Mt. I attended the ISC West trade show in Las Vegas, where we had to book and most of all U S team in attendance.

Let's see what is the largest security industry trade show in the U S with over 30000 security professionals in attendance and new products and technologies cause EBIT ranging from extra control to unmanned vehicles.

ISC West Chester Corporation received its third award for the Central Symphony commonplace in Buffalo.

Oh team also had a strong presence at the intersection show in Dubai doing generally.

The booth was busy we made many new contact can lead to the show.

They chose the marketing activities that are essential to build Tesco Corporation's pipeline.

Is this you know several trade shows in the exhibition that took that look promising for developing new.

The ability to meet face to face with people is a huge benefit and the much more efficient way to exchange ideas and promote our technology.

Overall market starting to open excluding the U S. In some parts of APAC. All other regions increased we have seen a recovery in EMEA and Canada and accept those region and expect those regions to continue to deliver to the U S is recovering more slowly than other regions.

The whole.

Hey, Bob.

This fiction that they'll still delaying the return of a singular business.

The Chinese market the still uncertain there are many regions in <unk>.

Many regions in China not to open until travel of course, the also the current lockdowns assemblies, increasing as the uncertainty of the house.

Look for the region this year.

The rest are faint bucket is recovering and we anticipate the region to be productive area for new business as June 'twenty to 'twenty two.

The global supply chain remains threat due to several factors, including the Lockdowns in China, and then showed as well for them.

They both are still increasing coal imports.

Importantly, we are managing through the supply chain situation and it has been increasing but it's always the issue of continuous customer order fulfillment and maintain our gross margin.

You should read the material are ongoing and changing but we've been increasing in adult and swapping out components. Since you bought them, we have been able to keep shipping.

Supply remains tight, but so far the actions we have taken should support our sales pipeline for 2022 currently with careful planning and in some cases the redesign of the board that we do not we do not anticipate significant.

Oh 2022 women you would do to the electrical material.

Okay.

Right.

In Q in Q1, 2022 positive developments remains on track we plan to release a new photo.

There'll be feel we also have a several products and solutions in development, which we will launching a bit the urgent issue.

Importantly, looking into ongoing pipeline be mindful of our products remain robust and new businesses is supposed to progressing like so many industries business is taking slightly longer to close.

Oh mitigating the mismatch between the supply and demand.

In the first quarter, a major set of opportunities in the U S was delayed to well below.

So our customers cope with the supply chain.

Disruption.

It was targeted to close in the first quarter, but there's no plan for the second one with another large opportunity in Africa.

EMEA, which is anticipated to close in the second or third quarter, well watching this closely and they are still subjected to.

So shifting to.

So our future.

On a standalone basis since the corporation has performed well performing well.

The call point.

Oh go ahead of the parent company. That's a technologist you stripped away. The performance is impressive for the first quarter again seasonally weakest, one Cisco Corporation EBITDA margins rose 9%.

And when potentially as well.

EBITDA margin in the range of five teens to low twenties.

Then on annual basis.

Looking ahead, there's no corporate.

The only thing market show expansion and increase schools, focusing on Q1, because we sell spot plan increasing in one Oh principal geographics.

We have put in the necessary components for growth.

I suppose that's in software streamlines since team and expanded distribution and increased marketing support with trade shows attendance.

That's how corporations industry, leading product and solution.

The global need for more sophisticated I think acuity.

Additionally, we are cross selling and upselling products and solutions to our existing customers customer base. You know full he's got because we are still on track for revenue and pipeline growth this year compared to 2021.

Okay.

Otherwise it doesn't stop them.

Corporations global theme is walking out deliberate of the company's industry, leading reputation with technology reach beats that former no common operating platform.

We see applications for sophisticated security solution in the oilfield ports and when he first joined at a distribution facility as well.

The world.

I want to recognize our worldwide team for their commitment to excellent excellence in product in products and services.

Since the balance sheet with no debt.

And the high cash balance position positioned the company for both profitability and ultimately improving shareholder value.

Now I would like to pass the call to our CFO , Mr. Palmer Hi.

Go ahead and review of the financial results.

Thank you to all of it.

Reported revenues for the first quarter of 2020 268 million Daus, an increase of three 7% compared with reported revenues of $6 5 million.

In the first quarter of 2021.

Increase was primarily due to the improvement in some of our largest markets, including EMEA, Canada and part of it.

The geographic breakdown as a percentage of revenues for the first quarter of 2022 compared to the year ago quarter. He's just photos North America, 41% versus 60% EMEA 30.

38% versus 35% APAC, 16% versus 13% Latin America, 4% versus 2% and other was 1% versus <unk>.

First quarter reported gross margin was 65, 8%.

Revenues versus 62.1.

Since last year.

<unk> gross margin was primarily due to a shift in the mix of products sold during the quarter.

Our reported operating expenses were $5 1 million an increase of eight 3% from the prior year's first quarter operating expenses were $4 7 million.

The year over year increase in operating expenses is due primarily.

Two an increase in marketing and selling expenses related to travel trade shows and <unk>.

Other customer engagements.

Our reported operating loss for the first quarter was zero point $7 million.

Notably unchanged compared to the year ago period.

Our reported loss from continuing operation was <unk>.

$1 1 million.

The first quarter of 2022 compared to a loss from continuing operation was zero point $7 million in the year ago quarter.

The company's reported EBITDA from continuing operations for the first quarter was negative zero point $3 million.

This is negative zero point $4 million in the first quarter of last year.

Net loss starts to do two two since the technology's shareholders in the quarter was $1 1 million or five cents per share versus a net loss of $2 million or nine cents per share in the first quarter of last year.

The reported net loss in the first quarter last year includes a net loss of $1.2 million.

Discontinued operation.

There was no impact from discontinued operation in the first quarter 2022.

Added to same store operational contribution or the public platform expenses and amortization of intangible assets, where historical acquisitions, the copel with animal transition expenses.

First quarter of both 2022, and 2021 1 million.

Cash and cash equivalents as of March 31st 2020 to $24 $2 million or $1 <unk>.

That concludes my remarks operator.

We'd like to open the call to questions.

Thank you, ladies and gentlemen at this time well be conducting a question and answer session. If.

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There are no questions in the queue at this time I'd like to hand, the call back to management for closing remarks.

Okay. Thank you Doug on behalf of the management of sense side, we'd like to thank you for your continued interest and long term support of our business.

I look forward to updating you next quarter. Thank.

Thank you everyone.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation.

Disconnect your lines at this time and have a wonderful day.