Q2 2023 Cemtrex Inc Earnings Call
Speaker 1: $24 million as compared to an operating loss of $2.9 million for the second quarter of 2022. The increase was primarily due to an increase in gross profits for the period. Net loss for the quarter ended March 31, 2023, was $0.6 million as compared to a net loss of $4.7 million in 2022. Net loss decreased in the second quarter as compared to the same period last year, primarily due to the higher revenues and higher gross profits.
Speaker 1: Cash-in-cash equivalents totaled $6.6 million at March 31, 2023, as compared to $9.9 million at September 30, 2022.
Speaker 2: With achieving a critical milestone of operating profit for the quarter, we are optimistic for the year ahead from the ability to achieve a full year positive operating income by fiscal year 2024, while driving attractive top line rules. We look forward to providing additional updates in the months to come as we accelerate our efforts to the long-term value for our shareholders. I look forward to providing our shareholders with further updates throughout 2023. I thank you all for attending and now we would like to open it up for questions. Operator.
Speaker 2: We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You can press star two if you would 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.
Speaker 1: One moment please while we poll for questions. Thank you our first question is from Jason Colbert with Dawson James. Please proceed with your question.
Speaker 1: Hi guys, congratulations on the numbers. They look really good. What was the principal driver behind the growth at Ficon? Was it technology? Is it that your reputation is now, you know, you've met a couple of orders and you're seeing reorders? Help me understand the dynamics of that and what it means for the rest of the year.
Speaker 2: Yeah, it's a good question. I appreciate that. I think it's a combination of a lot of things working in sync with us. We think about it as kind of like a flywheel. So we have obviously a solid reputation.
Speaker 2: of mission-critical applications such as corrections and border protection. It's also just the environment, frankly. We're seeing the need for security to be ever-present. And so there's just genuine interest in beefing up security. We have conversations every day with facilities where
Speaker 2: they're just not doing enough on the security side and they think it's time that they start implementing more and more of the technology that's out there modernizing their infrastructure. Right, so CCTV has been around for decades, but a lot of facilities, more than you'd expect, have pretty legacy infrastructure in place. So a lot of it is really about modernizing and bringing it up to speed. And there's no time like the present because there's really novel technologies out there that we offer that.
Speaker 2: companies can start to address even with a rough neck AI cameras, with license plate recognition, things like that. There's a lot of opportunities for upgrades and so forth. Because of the legacy install base, being able to upsell into newer platforms, all of that contributes to our ability to continue to maintain those relationships, able to build confidence.
Speaker 1: How important is AI and competitively what gives you the edge versus others that we're going to be working to catch up?
Speaker 2: So the reality is that
Speaker 2: In the industry, a lot of these AI tools are off the shelf, and many companies deploy them, but they deploy them poorly. One of the things that we take pride on is our software package, Valerius, is considered one of the easiest to use products in the market.
Speaker 2: So you can give customers tools, but if they don't use it, it's of no value, right? And so you generate sales by creating value for your customers. And I think we pride ourselves in organization on being able to give these tools in a way that allows people to use them easily, deploy them quickly, get them up and running.
Speaker 2: And that's really a critical part of the strategy and how we're going to have to compete as we go forward. So a lot of these tools, many of them start out as open source and then they get trained on specific data. I think the other side of it is having access to unique data sets and we're continuing to build a strategy that gives us that ability. So.
Speaker 2: I think at a number of fronts, you know, it's going to be a competitive space, but I think we're in the very early innings of what's possible with AI, and it's a huge, huge opportunity in front of us in terms of the scope and the potential to capitalize on that.
Speaker 1: And my last question has to do with the industrial side of the business. How are you managing the growth on that side? And help me understand kind of how you're going to manage the growth of the company given the fact that you have these two very different divisions, both of which seem to be firing on all cylinders right now. Well, we actually have a really fantastic team at AIS.
Speaker 2: with our leadership team there and the managers underneath. So it's a well-established business. It is firing on all cylinders and they're continuing to find opportunities in the market to grow the business. So the truth is that Lycon and AAS...
Speaker 2: operate completely independently and it works quite well at the corporate level. You know, we're pretty lean from that perspective and we empower our management teams to run the businesses effectively, right? And so the competencies around the nuances specific to each business, a lot of that is done at the management level and we delegate off of that.
Speaker 2: and we're optimistic that that'll continue going forward and we'll exceed probably our earlier expectations around growth. And then we also supplement that with acquisitions, right? So a lot of, you know, we've managed a lot of acquisitions over the years and I think that'll be another area where we're going to leverage a lot of value to that team and continue to scale the business. So I see opportunity there as well. Hmm. The movie. Nino Night
Speaker 1: Thank you so much. Congratulations on the quarter.
Speaker 2: Yeah, thanks Thank you. Our next question is from Alan Rosenthal with Scarlet Knight Capital. Please proceed with your question.
Speaker 3: Just a little bit of the response. The first one is, I think Title 42 ends tonight at midnight. How do you see that affecting Vikon's business one way or the other if at all? That's first and the second question is in the Vikon business, given the new suite of products and solutions that will release, Stovable S.F.O. Months. Can you talk a little bit about the margins in the business?
Speaker 2: being vacated will have enormous ramifications or ensuing chaos is maybe the way to put it lightly. And so there's clearly tremendous opportunity. You know, I can't speak to specifically what the folks down there are thinking, but you know...
Speaker 2: It sounds like a pretty chaotic situation and if things get continue to get worse, that could drive more business for us. There's no doubt about that. Naturally, we don't want bad things to happen, but we're in security and our job is to provide the best solutions to address.
Speaker 2: a growing need for security. There's no question about that. And then could you remind me about the second question?
Speaker 3: Yeah, it was regarding the fact that you had released a new suite of products and solutions, the AI cameras and so on. And just if you could speak a little bit to the margins you see in that business going forward, especially as it continues to grow, it can see an expansion and so on. Do you know what your thoughts were? Sure. Yeah. With respect to growth margins... Uh, yeah, I believe It's good to open up. Yeah.
Speaker 2: Software is going to become a larger part of our revenue as we go forward. And so our perspective is that as that continues to scale and we sell more and more software, that will continue to help move gross margins up. And so we see that over the next, looking into fiscal year 2024, that there will be further opportunities to drive expansion there from that perspective.
Speaker 2: solution, specifically AI-driven software solutions.
Speaker 2: There will be margin expansion. I saw for it becomes bigger and bigger part of our overall revenue share.
Speaker 3: Thank you, that's great. I appreciate it. Great quarter. Looking forward to the next one.
Speaker 2: Thanks. Any other questions? Thank you. There are no further questions with this time. I would like to turn the call back over to Mr. Govon, currently closing comment.
Speaker 2: Thank you, operator. I would like to thank each of you for joining our earnings conference call today and look forward to continue to update you on our progress and growth. If we were unable to answer any questions today, please feel free to reach out to our IR firm and we would be more than happy to facilitate a response. Thank you and have a good evening.
Speaker 2: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.