Q2 2023 Senstar Technologies Ltd Earnings Call

Hello, and welcome to the Kansas Star Technologies second quarter 2023 financial results conference call and webcast. If anyone should require operator assistance. Please press star zero on your telephone keypad, a question and answer session will follow the formal presentation. You May press star one at any time.

Placed in the question queue. As a reminder, this conference is being recorded its now my pleasure to turn the call over to Kim Rogers of Hayden IR. Please go ahead Ken.

Thank you, Kevin and welcome and thank you for joining US today I would like to thank the management of sensor technologies for hosting today's call with us on the call today from the company are Mr. Fabien Auber interim CEO , Mr. Tomer, Hay, CFO and Michele Lucia Kelly Vice President of Finance.

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 sensor I cannot guarantee that they will in fact occur then 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 as well as other risks identified in the documents filed by the company with the security 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 accordance 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 will now hand, the call over to Sun Star Technology, CEO Gabion Auber avian. Please go ahead.

Thank you Tim.

Good morning, everyone and thank you for joining today's doesn't cool them.

Im delighted to provide an update on the company Stifel.

I think with the second quarter 2016.

Revenue was loved the line with our expectations showing accelerated growth in two key geographies.

Q2, 2023 revenue was eight 4 million% to 7% decline from the same period last year.

Year to date revenue for 2023 totaled $14 9 million compared to $15 9 million, reflecting a decrease of 6%.

Gross margin for Q2 stood at 67 person.

70 basis points year over year.

And 500 basis points sequentially.

The improvement resulted primarily from a shifting product mix.

Which is most people breaking equal and EBITDA in the second quarter, Despite lower revenue helped by lower operating expense.

Expenses.

Notably rubbish.

Emerge from focus on EMEA and U S region due to.

Got your balanced by the absence of the one time project in Asia that boosted last year's Q2 results.

Although the challenging year over year Corporation obscured a original progress, we're making headway in pivotal markets like Europe and the U S.

The Asia projects for the holders of the word unexpected closings.

Closing some variability in APAC.

Looking at our performance regionally the U S and European regions were the best performing geographies.

Representing about 80% of our total revenue.

Kevin.

Up from about 63 person from the same period last year.

Diving into the numbers a little bit deeper.

It's showing an increase of 30% versus Q2 last year.

Year to date the region.

By 2% better than the first half 2022.

The outstanding growth in the second quarter was primarily due to a few major projects across Europe .

And the direct with Phil.

Robust U S investments.

Iberia Eastern Europe and America.

So we'll keep investing in Europe , they've looked at market share mainly at the targeted verticals.

Which helped overcome the coffee challenges and show a high potential to steady growth.

The U S. Your slate multiple growth eight or something.

After an impressive 22% year to date.

Like correction business expansion.

Launching in.

And the targeted verticals through the whole weekend.

Always taking steps to reinforce its because that's been the collection industry.

The strength in the U S sales team further boost its great that you know the largest their victory.

Improve our market share.

Energy logistics of military projects seem to be that.

The U S remains a major market with long term growth.

Actually we're a high tech wells, you're pretty much at the demands in the whole region.

The APAC.

He helped us last year, when we had to slow down the correction owners in the U S.

Which was impacted by lower government funding for bullshit.

Then starts looking closely given the situation.

Looking forward to reinforcing she was part of Asia, where the demand is different the bulk.

Good thing.

Shifting to our performance.

Key vertical.

Collectively over full key vertical.

The 22% increase in billings year over year.

And it represented about 60%.

Got it.

That's the husband language resources and focus on the energy Eucalyptus correction and logistical burden.

Leveraging.

And brand recognition.

This market requires technologically advanced solutions and as a result are a good fit for sensor sensors and information management.

Yeah.

Let me comment on same store.

Relieving park.

We manufacture customized and services offering.

February Multilayer security solutions.

No problem.

Synergize for company.

Please elaborate solution and.

But a.

Are you cutting edge state that visualization and video analytics.

To this extent sensor would communicate shortly I mean, what do you think of the market.

This new generation of sensor technology.

This unique and extremely innovative solutions, taking a step forward in solving challenges intrusion detection.

That's our team remains committed to expanding operational capacity.

Growing market share in key verticals, and reaching our protocol and boosting sales of existing and future customers.

In conclusion, we remain confident in our respective directions and the steps we're taking.

Our market share and drive growth.

By focusing on high value virtual buckets bolt.

<unk> comprehensive vertical solutions and investing in research and development.

We're positioning ourselves for success.

We appreciate your ongoing support.

Now I will pass the call to our CFO tomorrow.

Review the financial results.

Caller. Please go ahead.

Okay.

Thank you Fabio.

Although we posted revenues for the second quarter of 2023 was $8 $4 million.

Seven 5% compared with reported revenues of $9 1 million.

Second quarter 'twenty to 'twenty two.

Probably I mentioned.

Klein was mainly due to one time project in the APAC region.

Q2, 2022.

The geography breakdown.

The revenues will be.

Second quarter of 2023 compared to the year ago quarter.

Yeah.

North America, including let down 50% compared to 43.

Your 40% compared to 28 Bucks simple compared to 29.

Second quarter reported gross margin was 67% compared to 60% last year.

Our reported operating expenses were $5 million.

It decreased six 1%.

Second quarter operating expenses were $5 4 million below.

Did you over the years to keep.

Operating expenses was due primarily to a decrease in general.

Administrative expenses, which was partially offset by an increase in selling.

Selling and marketing expenses compared to the year ago.

Our reported operating income for the second quarter was $83000 compared to 107000 go along the year ago period.

Financial expenses were $74000 in the second quarter.

This compared with 109000 do it all in the second quarter.

Net loss after the first.

Nope acknowledges shoulder.

In the quarter was strong with an 11000 doing so well.

Well one cents per share compared to net income of 164000 dollar one cents per share in the second quarter.

The company's reported EBITDA for the second quarter of 'twenty to 'twenty.

It was strong with a $90000 compared.

Compared to $450000.

Coffeyville.

Cash and cash equivalents and short term bump every week the deposit will live in point 9 million below 51 little share as of June 30.

Okay.

That concludes my remarks.

Operator, we'd like to open the call to questions.

Thank you well now be conducting a question and answer session if you'd like to be placed in the question queue. Please press star one on your telephone keypad.

A confirmation tone will indicate your line is in the question queue. One moment, please while we poll for questions.

We've reached end of our question and answer session I would like to turn the floor back over to management for any further or closing comments.

Yeah.

So you have to imagine rough sense, though I'd like to thank you for your continued interest and long term support of our business I look forward to updating you next quarter have a good day.

Thank you that does conclude today's teleconference and webcast you may disconnect. Your line at this time and have a wonderful day, we thank you for your participation today.

Operator: Hello, and welcome to the Senstar Technology's second quarter 2023 Financial Results Conference calling webcast. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. You may press star one at any time to be placed into question Q. As a reminder, this conference is being recorded.

Kimberly Rogers: It's now my pleasure to turn the call over to Kim Rogers, a paid an IR. Please go ahead, Kim. Thank you, Kevin.

Kimberly Rogers: Welcome and thank you for joining us today. I would like to thank the management of Senstar Technologies for hosting today's call.

Kimberly Rogers: With us on the call today from the company R, Mr. Fabien Haubert, interim CEO, Mr. Tomer Hay, CFO, and Ms. Alicia Kelly, vice president of finance. 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 Senstar cannot guarantee that they will in fact occur. Senstar does not assume any obligation to update that information.

Kimberly Rogers: 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, as well as other risks identified in the documents filed by the company with the Security and Exchange Commission. In addition, during the course of the conference call, we will describe certain non-gap financial measures, which should be considered in addition to and not in lieu of comparable gap financial measures.

Kimberly Rogers: Please note that in our press release, we have reconciled our non-gap financial measures to the most directly comparable gap measures in accordance with RegG requirements. You can also refer to our website at www.senstartechnologies.com for the most directly comparable financial measures and related reconciliation.

Fabien Haubert: And with that, I will now hand the call over to Senstar Technology CEO, Fabian Obert. Fabian, please go ahead. Thank you, Jim. Good morning, everyone.

Fabien Haubert: And thank you for joining today's article. I'm delighted to provide an update on the company's performance. Starting with the second quarter of 2023, revenue was largely in line with our expectation, showing accelerated growth in two key geographies. Q2223 revenue was 8.4 million, a 7% decline from the same period last year. Your today's revenue for 2023 totals 14.9 million compared to 15.9 million reflecting a decrease of 6%. Our gross margin for Q22 stood at 60 to 7% of 70 basis points year over year and 500 basis points sequentially.

Fabien Haubert: The improvements resulted primarily from a sheeting product mix. We achieved positive operating income and EBITDA in the second quarter despite lower revenue helped by lower operating expenses. Notably, revenue growth emerged from focus on DNA and US region in Q22 counterbalance by the absence of the one fund project in Asia that boosted last year's Q22. I'll throw the sounds in Europe and your comparison obscured that original progress were making headways pivotal markets like Europe and the US.

Fabien Haubert: The Asia projects for long orders have been slowly unexpected, posing some variability in a back cell. Looking at our performance regionally, the US and European regions were the best performing geographies, representing that 80% of our total revenue in Q220 wireframe, but from about 63% from the same period last year. Driving into the numbers a little bit deeper, in a shown increase of 30% versus Q2 last year. Here today, the region grew by 2% with the first up 2022.

Fabien Haubert: The outstanding growth in the second quarter was paramilitary due to a few-minute-or-project across Europe. And the data crystal of our past year's investments in the US, Iberia, East and Europe, France and the Netherlands. Senstar will keep investing in Europe to develop its market share mainly in the targeted verticals, which have overcome the copy challenges and show high potential to steady growth. The US displays notable growth of 8% in Q2 and an impressive 22% year to date.

Fabien Haubert: Driven by correction business expansion and large units in the targeted verticals through the whole region. Senstar is taking steps to reinforce its presence in the correction industry, and to strengthen the US self-teen to further boost its presence in our largest territory and improve our market shares in utility energy, logistics and military projects in the region. The US remains a major market where sensors have picked long-term growth as to a high technology offering much of the demands in the whole region.

Fabien Haubert: The APEC region helped us last year when we had the slowdown of correction orders in the US, which was impacted by low government funding for projects. Senstar is looking close to the current situation, and is looking forward to reinforcing its close to a spot of Asia where the demand is currently both the same. Shifting to our performance into 4K verticals, collectively our 4K verticals deliver 22% including billings year-over-year, and represented about 60% of total billing.

Fabien Haubert: Senstar has the line of its resource to focus on the energy, utilities, correction and logistic verticals. Leveraging as a solution and brand recognition. This market required technologically advanced solutions, and as a result of a good fit for Senstar's sensors and information management software. Let me comment and say star in this relieving part of the volume. We manufacture, customize and serve without offering, delivering multi-layered security solutions. Senstar product, synergize for comprehensive facility-level solutions, and hand by AI and cutting-edge data visualization and video and notes.

Fabien Haubert: To this extent, Senstar would communicate shortly and introduce into the market is new generation of Senstar's technology, this unique and extremely innovative solution is taking a step forward in solving challenges in intrusion detection. Senstar team remains committed to expanding operational capacity, growing market share in key verticals and reaching our product climate and boosting sales to existing and future companies.

Fabien Haubert: In conclusion, we remain confident in our strategy directions and the steps we're taking to expand our market share and drive growth by focusing on high value virtual markets, offering comprehensive vertical solutions and investing in research and development, we're positioning ourselves for success. We appreciate your ongoing support.

Tomer Hay: Now, I will pass the code to our CEO, Tomer Hay, to review the financial results. Tomer, please go ahead.

Tomer Hay: Thank you Fabien. I will report the revenues for the second quarter of 2023 with $8.4 million. A decrease of 7.5% compared with reported revenues of $9.1 million in the second quarter of 2022. As Fabien mentioned, the decline was mainly due to one-time project in the APA region, in due to 2022. The geographic breakdown as a percentage of revenues for the second quarter of 2023 compared to the year ago quarter is as follows. North America, including Latin, 50% compared to 43%. Europe 40% compared to 28% and APA 10% compared to 2019. Second quarter reported growth margin was 60.7% of revenue compared to 60% last year.

Tomer Hay: Our report is operating expenses for $5 million. A decrease of 6.1% from the prior year second quarter operating expenses for $5.4 million. The year over year decreased in operating expenses was due primarily to a decrease in general in the business and administrative expenses which was partially offset by an increase in selling and marketing expenses compared to the year ago quarter. Our reported operating income for the second quarter was $83,000 compared to $107,000 in the year ago period.

Tomer Hay: Financial expenses was $74,000 in the second quarter. This year compared with $109,000 in the second quarter last year. Net loss attributed distance-to-technology shareholder in the quarter was $211,000 per share compared to net income of $164,000 per share in the second quarter of last year. The company's reported e-liber for the second quarter of 2023 was $290,000 compared to $460,000 in the second quarter of last year.

Tomer Hay: Cash and cash equivalent and short and bank and reflected deposit will 11.9 million dollars for 51 cents per share as of June 30, 2020.

Tomer Hay: That concludes my remarks.

Operator: Operator, would like to welcome the call to questions now. Thank you.

Operator: Now we can do a new question and answer session. If you'd like to be placed in the question queue, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. One moment please, while we pull for questions.

Management: We've reached end of our question and answer session. I'd like to turn the floor back over to management for any further closing comments. So on behalf of the management of Senstar, I'd like to thank you for your continuous interest and long-term support of our business. I look forward to updating you next quarter. Have a good day. Thank you.

Operator: That does conclude today's teleconference to Webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.