Q3 2022 Senstar Technologies Ltd Earnings Call

Greetings and welcome to the sensor technologies third quarter 2022 earnings call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded I would now like to turn the conference over to your host Kim Rogers of Hayden IR. Thank you you may begin.

Sure.

Thank you Melissa.

And welcome to our third quarter earnings Conference call with me today are Mr. Dror, Sharon CEO of Sun Star Technology, and Mr. Tomer Hay CFO 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 proof.

These statements are only predictions and sunstar cannot guarantee that they will in fact O'connor Kenneth started 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 onion.

Anticipated an unknown effect of the Corona virus, including 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 this 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 accordance with Reg G requirements. You can also refer to our web site 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 guitar Dror. Please go ahead.

Thank you Kim.

Joining us today to review sensor technology third quarter financial results.

Third quarter revenue increased by 5% to $97 million compared to last year's third quarter.

Bookings were particularly strong in the quarter compared to last year. Despite.

Despite long ago like across the industry.

Thank you know Canadian and European businesses, but also contract award delay for government.

We try to put the funding from the U S and the effect of colon and lung.

Those related to Covid, which was then similar.

Similar challenges in the U S.

Asia Pacific.

While it was pleasing to see.

You can say, we are seeing and you're.

Oh don't cancel and then are you optimistic about the.

The opportunities with that.

Oh pipeline.

The strong back logo.

We believe that the majority of it over the next 12 months.

A lot of the projects that they've developed a negotiation with the expected closing of the coming months.

That's why people don't ignore for homeless people.

<unk> is down due to delays in front of her budget.

That's helpful.

Collection.

Well.

They're doing the living the most closest previously has been the hardest hit by the fed.

Government budget delays as the current administration, we believe we can do.

Correct coaching facility spending away from the stockpile.

These are contracts that have been awarded but primarily due to an extended the closing side.

But let's.

That's the whole edible oils and Dow ethylene from Dow.

The chip into further quarters.

Okay.

The U S has been an active mutual Boston in the MLP sector, we recently closed.

When you put the two cohorts.

So what you saw on the importance of oil and gas reserve will suit us well in the final negotiation.

They love US Orient guests provide that does anticipate welcomed shortly it will become the main volume of Bogo.

Worldwide and fishing well would have most all USA, we are investing in marketing broadly keep voting closes we'll focus on golf.

APAC is another that you're doing.

Yeah.

The condition.

The old policy and related Lockdowns in China isn't bucket is impacted the wait till April .

And being a headwind for Cisco yesterday.

On a positive note with spend though.

A lot of delays in airport that we are in Boston.

Warm.

Two large well known the oldest.

The initial contact including integrated payments and secure this is thinking.

The layer that goes with that.

Thanks Martin.

So since those and the social platform for security management integrated with existing turmoil.

Hum.

But when you stop and go open slowly in the Miss.

The rebound in 'twenty.

Yeah.

The EMEA region was positive news this quarter, starting with the Golar Eskimo.

The oil and gas projects.

Our people truly envision a loved.

One customer in Europe that was awarded in 2019.

Manuel is now moving forward in Memphis began after a long slow down due to COVID-19.

It sounds as though you're being sales capabilities.

Appointment of a new regional sales manager always have spoken before Spain, Portugal and Italy.

Do you think that Steve has already established a great track record of developing the market and the particularly the north and South America being strong field sales engineering and regular since many of them.

Collision.

They still remain remains well positioned to king of the overall market do you see this year, we have added a fifth.

But people really want to maximize our home court advantage.

They increased pulpwood.

It is delivered.

Canada delivered solid performance again in Q2.

And then we learned that the allowance.

Okay.

Phil.

Particularly coal.

It is.

The Cogs on both the colors also contributed to Oh.

Oh.

Let me <expletive> won't in the calendar year to date.

On the marketing and brand development zone.

Participated in the meadows tradeshows in the in the industry events in the third fulfilling all of our regions.

Well, we connected with our existing customers at this event and focus on developing our pipeline.

And I'm more engaged attended.

Compared to last year enable us to identify new opportunities and meet with new prospective customers.

Yeah.

Backlog remains solid at the end of Q3, while our backlog is not growing at this time.

Replenishing it took us that'd be great with the bookings that approximate the revenue recognized.

Smoking from smoking completed.

Last year, we received subsidies.

And there's a few.

Wage subsidy program.

Excuse me give up on formula.

So cool.

The subsidy expired in the third quarter.

Sure.

It was impacted.

The year over year comparison in this quarter in the U S.

The cost of goods sold and looked pretty expensive.

The government vertical production.

Just a continuous improvement.

Improvements of the desktop.

On the call a person platform with the release of those eight portable.

Okay cool.

We're getting positive feedback from customer level customers allow people to loosen.

Oh, Pete devices, with Oh, softball, and some of them.

The size of the well site.

In the better buildings.

We plan to release, two new products in the phone.

But oh really over the course of next year.

We ended the third quarter with cash and that's what people are thinking.

2 million. This compares to 46 well call me all the angles.

Sure.

The use of cash in the third.

Nine months in 2022, well, it's primarily for working capital purposes.

Typically that's little inventory, even though we've increased the bouncer favorably.

To a significant reduction.

Got it.

We're also investing in research and development.

That's helpful.

As long as those as a result, we have developed a valuable competitive advantage with a comprehensive and innovative solutions.

Since our solution.

Especially when I sit down with them.

He says that the global economy the muscle.

Michael.

Benefit totally novel.

Because of clothing, and Nokia and physical infrastructure.

He's an increased sensitivity to that group.

And if you could give the what did you Felicia.

Optical unrest has increased the demand for border security for local.

Likewise, we think volumes of global shipping.

I mean that in.

That's the objective for logistics.

It's consistent.

Sure.

Yeah.

So that's all deliberate and still deliver solutions for each of those critical objectives as an adult Oh, well. That's I mean, we don't need to deploy a good thing for boxers logistic costs alone and the oldest sites worldwide.

And some of them.

A solid balance sheet with no debt.

Well the only thing that's the great value with a focus on growth.

I'm committed to delivering product innovation strength.

The strength of our brand in that spending go global footprint.

Ultimately increase shareholder value.

Now I will.

Lots of the cultural CFO Mr. Thomas.

Please go ahead.

Well.

Thank you Joe.

Although revenues for the third quarter of 2022 was $9 7 million.

An increase of five 1% compared with revenues of $9 3 million.

In the third quarter 2021.

Uh huh.

This was primarily due to a new business, finding particularly in Canada as well.

The geographic breakdown as a percentage of revenues for the third quarter 2022, compared to the year ago quarter.

Forum's, North America, 44% compared to 47% York, 70% compared to 26% eight bucks, 22% compared to 24%.

Latin America, 4% compared to 20%.

The third quarter reported gross margin was.

61, 1% hopefully revenues.

Essentially flat compared with 67% in the year.

Good quarter.

The change was primarily due to a shift in the mix of products sold.

During the quarter.

Year to date, our gross profit as a percentage of revenues is lower primarily due to a challenging comparable.

It's 2021 included subsidy granted to our Canadian subsidiaries.

As part of the Canadian emergency wage subsidy plan.

Okay. Good.

Firstly to the coastal good soon.

Additionally cost of goods sold was impacted by higher prices. Despite all of the mitigating some of the increases.

License.

Our reported operating expenses were $4 8 million.

Again.

Centrally flat compared to the prior year third quarter.

On a year to date basis likely increase in the cost of goods like the increase in the cost of goods sold the year over year increases.

Operating expenses is primarily due to a portion of the Canadians subsidies being allocated to operating expenses in the year ago.

Our reported operating income for the third quarter was $1 1 million compared to zero point $8 million in the year ago period.

Financial income was zero point $2 million in the third quarter of this year compared to financial expenses of zero point $4 million in the third quarter last year.

This is mainly a noncash dumped into thick regularly report due to the adjustments to the valuation of our little monitory assets and liabilities denominated in currencies other than the functional currency of the operational entities in the coding.

Gordon with again.

Our reported income for the continuing operation was $1 2 million in the third.

Third quarter of 2022 compared to 44000 in the year.

They go quarter.

The company's reported EBITDA for continuing operations for the third quarter was one $5 million compared to $1 1 million belong in the third quarter of last year.

Net income attributable to sensor technology show up in the third quarter was $1 3 million.

Or six cents per share.

Compared to a net loss attributed to sample technologies are all doing well.

0.2 million Bono.

Oh, one cents per share in the third quarter last year.

The reported net income in the third quarter of a fluff yeah.

<unk> net loss was $266000 for discontinued operation.

This compared to net income.

$2000 from discontinued operations in the third quarter 2022.

And what's your sense to hold position on contribution of the public float form expenses and the amortization of intangible assets from historical acquisitions, the Gulfport and amortization expenses for the third quarter.

Ultimately $1 billion.

The same as in the third quarter of prior year.

Cash and cash equivalents as of September 32022 were $15 2 million.

Oh 65 cents per share.

That concludes my.

Prepared remarks, operator, we would like to open the call to questions now.

Thank you at this time well be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is another question. Kim you May press star two if you'd like to remove your question from the queue for participants using speaker equipment, it may be necessary to pick.

Up your handset before pressing the star key one moment, please pull for questions.

Okay.

Thank you. Our first question comes from the line of Norman where benefits or I'm, sorry, a private investor. Please proceed with your question.

Yes, Cherry picking numbers are for your current earnings and et cetera.

Really don't serve a great purpose.

Revenue for the company is down for the last five years yesterday, the stock market was up 500 points since star stock was down 2%.

You've reached an all time low all time low and your stock value on December 13, Okay 10 days ago.

During this short period of time, there were two attacks on the electrical infrastructure in the United States North Carolina, where are these Oh electric grids were attack now this was the frontline news on <unk>.

Every news channel every newspaper in the country.

Not one word not one suite from Sem Star.

We cored protects against these type of things, we could install equipment, we could protect.

Protects you from these kind of attacks. Okay. You recently appointed a bunch of sales managers, where where are they sitting on their hands. They could I got interviews on every news and all.

The United States and said this is what should have been done. This is what we could have installed to protect you why was that not done.

Okay.

Okay well. Thank you for your question there, but that's it.

The stock market as we know it.

Both in a good shape with something like.

It's a tough market situation.

And we're trying to do many things.

So the physical assets and the other thing that we are trying to do to improve our performance.

Revenue why you think that it can be more accurate because.

And the last I don't see that.

It is below what we did in the last five years from now just to remind you that last year, we still had.

That'll be the us and and Ah.

And to put the project division and the revenue side.

Close to the.

Can we just go because the dividend a little bit.

Went down because of the market and then and.

But this is something goes both in North Carolina.

Look into it.

Sure.

I'm not familiar with this specific.

Issue, usually we are walking.

Really close with them.

With the system integrators that engineering.

And ultimately the end user, but then looking at them with this issue in their local area.

And thinking between us supplying the way I'll check with that.

The guidance is supposed to work with the sales in the U S. What's going on and you know if you want if you have any ideas like this.

You can see it you can always pick up the phone call Neil Goldman will take care of them.

Thank you as a reminder, ladies and gentlemen, its star one to join the question queue. Our next question comes from the line of Mike just start with Amex. Please proceed with your question.

Good afternoon gentlemen.

I'll be brief just I wish to echo the second half of Mr. Opinion says sentiments regarding the free press, we might've been able to get paid.

I had just anybody from Hayden like picked up the phone as well cause it was all over the U S. Regarding the shootings are two different Duke energy power plants in North Carolina.

I wont echo that again I know you'll have people on it immediately I know that utilities being pipelines and utilities being one of the three pillars that verticals pillars that you're going after.

Secondarily to the first part of that question.

They work for us in fact distributions, which tempered the actual price decrease but theres no argument the stock's down but.

Many of our as well.

I wanted to <unk>.

Direct the conversation to really congratulating huh.

The management for being able to weather the storm of Covid.

COVID-19 for the last two and a half years as well as.

The spinoff process, which actually did put cash back in folks' pockets.

And.

That's really all I had to say I. Just think we are we should be a little more aggressive pay more attention globally and since then start basically is doing business out of Colorado as well as Canada and Hayden Your representative heroes all over the United States.

Clearly, there's somebody dropped the ball there because we really could have gotten a lot of.

Free so to speak attention on what we can do.

To help prevent these things from occurring again.

And anyway, I wish you a happy healthy holiday season, and a wonderful successful new year and as always I. Thank you for your time.

Thank you very much.

Yeah.

Thank you.

Ladies and gentlemen, this concludes our question and answer session I'll turn the floor back to Mr. Sherman for any final comments.

Thank you very much and getting them as I said earlier today.

If for some reason one of the investor they.

They wanted to prolong the call.

No.

I'd like to close the Little me call any issue you always look coming through is and you can reach us could be using.

And again on behalf of the management.

I would like to thank you for your continued interest in a long time so cool.

All business.

I look forward to updating you next quarter.

And then hopefully all the best.

The holidays happy holidays, everyone of them. Thank you.

Happy holidays. Thank.

Thank you. This concludes today's conference call you may disconnect. Your lines at this time. Thank you for your participation.