Q3 2023 Cemtrex Inc Earnings Call
Greetings and welcome to the some trucks third quarter 2023 financial results conference call.
At this time all participants are in a listen only mode a.
A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded.
Before we begin the formal presentation I would like to remind everyone that statements made on the call and webcast may include predictions estimates or other information that might be considered forward looking while these forward looking statements represent our current judgment on what the future holds they are subject to risks and uncertainties that could cause actual results to differ materially you are cautioned not to place.
Undue reliance on these forward looking statements, which reflect our opinions only as of the date of the presentation.
Please keep in mind that we are not getting ourselves to revise or publicly release. The results of any revision to these forward looking statements in light of new information or future events.
Throughout today's discussion we will attempt to present some important factors relating to our business that may affect our predictions.
Would also review our most recent Form 10-K and Form 10-Q for more complete discussion of these factors and other risks, particularly under the heading risk factors.
A press release detailing these results was issued today and is available on the Investor Relations section of our company's website subtract Stockholm.
Your hosts today are sad saga, Gogo, Chief Executive Officer, and Paul <unk>, Chief Financial Officer will present results of operations for the third quarter ended June 32023.
At this time I will turn the call over to Suntrust, Chief Executive Officer Saga Gogo.
Okay.
Thank you operator, and good afternoon, everyone.
I'm pleased to welcome you to todays third quarter 2023 financial results Conference call.
The third quarter of fiscal year 2023 was highlighted by a second consecutive quarter of operating profit driven by the company's realignment operating performance power.
Continued sales execution by icon with multiple large orders resulted in revenue growth of 36% year over year.
In combination with operational improvements.
The quarter led to a gross margin improvement of 200 basis points to 44%.
We continue to expect increases in our gross margin over the next couple of quarters as we make further enhancements in viacom's business.
Overall operating income was positive for the second quarter in a row at point 1 million compared to an operating loss of $1 5 million a year ago.
Our quarterly performance is now reflecting our shift in focus to the Viacom and advanced industrial services.
Businesses.
With the actions, we have taken to drive business improvements and the increasing demand for security solutions, we expect to achieve full year operating profit for fiscal year 2024.
We also believe that there's room within our inventory now to draw extra liquidity in order to continue to maintain a healthy cash position.
As a reminder, we have now modified our financial presentation into three segments security consisting of icon industrial services convinced consisting of advanced industrial services and <unk> corporate.
Year over year, improving revenues in our security segment were led by <unk> with a 36% increase to 9 million driven by strong demand from customers for its award winning rough neck cameras, and Polaris video management software solutions.
<unk> orders included a follow up $1 1 million dollar order from a current large border protection customer in Texas to expand its security technology system with New security solutions, a follow on to its $1 5 million order earlier in the year.
Increasing modernization of the current security infrastructure is accelerating the growth of the border security market driven by the rise in geopolitical instabilities and an increase in border threat assessments.
Another point 8 million dollar order for a new prison being built in the U K includes a full end to end system of icon surveillance products, including hardware and software and equipped with the latest smart technologies to better protect prisoner staff and the public.
We see demand in the U S and internationally from corrections facility as a growth driver for us as they are increasingly focusing on deploying the latest and greatest technologies.
With icon on track to launch more products. This year as well as continued improvements to our core software platform blurry, we expect to drive further growth.
Through the first nine months of our fiscal year <unk> has delivered $25 9 million in revenue, which is already more rapidly than we achieved.
Of $23 6 million for the full year fiscal year 2022.
We believe our Rev.
As for bike on based on our current demand will exceed our early expectations of 28 million for fiscal year 2023, giving given the growing demand for our products and services.
Yeah.
Additionally, we see further opportunity to grow our gross margin percent in fiscal year 'twenty four.
Shifting to our industrial segment revenue for our industrial services segment.
Increased 5% during the quarter, mainly due to increased demand for our services.
Recently, we closed out a highly synergistic acquisition of highly mechanical based in Columbia, Pennsylvania, which is focused on steel fabrication and contracting primarily to the commercial and industrial wastewater treatment market as well as other service industry.
He provided the water treatment industry with a variety of fabricated vessels and equipment, including ASME pressure vessel heat exchangers mixed tanks reactors and other specialized fabricated equipment.
The acquisition brings over 11 6 million and immediately accretive annual revenue at approximately 775000 adjusted EBITDA when averaged over the last four years.
With its client list of a commercial and industrial facilities, a seasoned team and extensive manufacturing equipment we.
The transaction to be accretive in the fourth quarter of fiscal year 2023.
Looking ahead, we believe <unk> will continue to expand revenues and clearly exceed our original 30% target of $21 8 million for fiscal year 2023, driven by continued strength in the industrial services market as well as one quarter of revenue with the acquisition consolidated.
The gross profit margin for <unk> improved to 36% for the quarter compared to 30% for the prior year quarter, driven by increased pricing and lower subcontract sub contractor costs.
The gross margin percent is expected to maintain or need approximately 34% for the fiscal year 2023 for AI.
I will now turn the call over to Paul <unk> CFO to discuss the financials Paul.
Thank you Sabra.
Revenues for the three months ended June 30th.
23, and 2022 was $14 7 million and $12 1 million respectively.
An increase of 22%.
Revenue for the nine months ended June 30th 2023, and 2022 was $42 8 million and $33 3 million respectively.
An increase of 29%.
This increase was mainly due to the increased demand for the company's products and services.
The security segment revenues for the three months ended June 32023 increased by 36% to 9 million.
The security segment increase was due to increased demand for the security technology products under the <unk> brand.
The industrial services segment revenues for the quarter increased by 5% to five 7 million, mainly due to increased demand for the segments services.
Gross profit for the third quarter of 2023 was $6 5 million or 44% of revenues as compared to gross profit of 5 million or 42% of revenues.
At the same period a year ago.
Mainly attributable to the increased demand for our products and services.
Along with each increased prices and a lower subcontractor costs.
Total operating expenses for the three months ended June 30th 2023, with $6 4 million compared to $6 6 million.
For the prior year's quarter.
The decrease was due to a reduction in research and development expenses for the period.
Operating income for the third quarter of 'twenty two 'twenty three was <unk> 1 million as compared to an operating loss of $1 5 million for the third quarter of 'twenty to 'twenty two.
The increase was primarily due to an increase in gross profit for the period.
Net loss for the quarter ended June 32023.
$1 1 million as compared to a net loss of <unk> 7 million in 2022.
An increase of 68%.
Net loss increased in the third quarter as compared to the same period last year.
I'm Mary due to a decrease in other income.
Cash and cash equivalents and restricted cash totaled $6 4 million at June 30 of 2023 as compared to $11 4 million at September 30th once in 'twenty two.
Inventories increased to $8 7 million at June 30th 'twenty to 'twenty three from $8 5 million at September 30th 'twenty to 'twenty two.
I will now turn the call back to saga for a review of our 'twenty to 'twenty three outlook.
Yeah.
Thank you Paul in summary, with approximately $6 4 million in cash or restructuring complete.
Year over year revenue growth of almost 30%.
Increasing margins and two sequential quarters of positive operating income we believe we are well positioned to drive profitable growth.
Looking ahead, we are highly focused on <unk> ability to disrupt the status quo of how the security industry. Traditionally operates with its upcoming next generation version of state of the art surveillance camera than VNS software. Additionally, we are looking to build on this growth leveraging the resurgence of manufacturing demand in the U S and seeking out for.
Other acquisition opportunities.
After achieving operating profit for the second and third fiscal quarters. We are optimistic we can achieve full year operating positive a full year of positive operating income in fiscal year 2024, while driving attractive topline and bottomline growth.
We look forward to providing additional updates in the months to come as we accelerate our efforts to build long term value for our shareholders and thank you all for attending and now wed like to open it up for questions operator.
We will now begin the question and answer session to ask a question you May Press Star then one you touched on film.
If you're using a speakerphone please pick up your handset before pressing the keys.
To withdraw from the question queue. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Yeah.
Okay.
Yeah.
Again, if you have a question. Please press Star then one.
Okay.
Yes, we have no questions. This concludes our question and answer session.
I'd now like to turn the call the conference back over to soccer golf Lu for any closing remarks.
Thank you operator, I would like to thank you each of you for joining our earnings conference call today and look forward to continuing to update you on our ongoing progress.
If we were unable to answer any questions today, please feel free to reach out to our IR firm MZ group, who would be more than happy to assist you can also email us that investors at <unk> Dot com.
You all.
Okay.
Conference has now concluded. Thank you for attending today's presentation you may now disconnect.