Q3 2023 Senstar Technologies Ltd Earnings Call

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Ladies and gentlemen, thank you for standing by your conference will begin in approximately two to three minutes again. Please continue to hold your conference will begin shortly.

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Greetings and welcome to the sensor technologies third quarter 2023 financial results Conference call.

At this time all participants are in a listen only mode.

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As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Brett Maas of Hayden IR. Thank you Sir you may begin.

Thank you welcome and thank you for joining us today I want to thank the management of sensor technologies for hosting today's call with us on the call today from the company are Fabian Hulbert interim CEO 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 and other forward looking statements.

Regarding future events or the company's future performance. These statements are only.

Projections, and then start cannot guarantee that they will in fact occur then start 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 Securities and exchange.

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. The most directly comparable GAAP measures in accordance with Reg. It Greg G requirements. You can also refer to our website.

Sunstar technologies Dot com for the most directly comparable financial measures and related reconciliation with that I'll now hand, the call over since start technology CEO Fabian hover paving. Please go ahead.

Thank you Brett.

Thank you for joining the call today.

Today to review, our third quarter financial results.

Starting with an overview of the result, this quarter, we booked revenue of 9 million underscoring where sustained strength in Europe.

And latanya, which have been areas of investment over the past few years.

This growth was tempered by the absence of one off project in Canada, and the U S completed in the third quarter of last year, but did not repeat this year.

Additionally.

Our revenue decline in the APAC region, primarily due to challenging economic conditions in China.

Our gross profit was affected by the delivery of our lower margin legacy projects.

We're working to have our gross margin returning to more normalized levels in the coming quarters.

Deep in revenue and gross margin in the quarter women's and positive operating income and positive EBITDA.

Switching to our performance per region.

We continue to deliver strong growth in Europe, where revenue increased by over 20% year over year for the second quarter.

Thanks to our significant investments in countries like Germany, France, Spain, Eastern Europe, and the Netherlands, we're harvesting the fruits of that focus on taking market share.

We believe we can continue to gain market share in Europe.

And then anticipate that this larger part of the region will be a steady growth engine for us.

Next few years.

As a percentage of revenue.

She is our largest markets. This year, we have experienced a recovery in the corrections business, our largest vertical in the U S market.

Federal budget restriction on relocation impacted this segment in the prior year.

Yeah.

Year to date revenue in the U S H person.

To further expand our market position, we have added a senior executive in the third quarter to continue rebuilding in this critical region.

And accelerates our market share gains in our verticals.

Latam region was also a standout performer with generally delivering 10% growth year over year.

Year to date.

This region was.

Has grown almost 20%.

Looking at their home markets, Canada. That's a reminder, whilst position last year, we had a one off project that closed in the first quarter would just not reoccur this year with the same message.

Lastly, APAC has been a challenging market this year.

Primarily due to the weak Chinese economy. The declines in these markets year to date has been a headwind for adult planned growth.

Now, let me turn to something I'm very excited about.

The original people produce ever lately breakthrough.

<unk> booked a sensor intrusion detection system.

And I would say, it's a good thing.

This integrates five intrusion detection capabilities into a single powerful device.

The multi sensor offers unparalleled situational awareness effectively neutralizing false alarms and.

It's diversified standalone solution expands its potential applications beyond the conventional perimeter intrusion detection use cases.

The remarkable feature of our <unk>.

Innovation lies in its ability to streamline multiple technologies into a single intelligence.

Simplifying intrusion detection installation and significantly enhancing.

Overall performance.

The device is where's the occurance of false alarms next to zero.

Surely.

This innovative solution with just just the need of numerous sensors camera installations.

While this provides substantial event that just for our customers and reducing system complexity.

It also benefits then start considerably.

It will also decrease that's our field costs related to installation management that supports.

And most of the sensor, but I think absolutely eating oldest capabilities within a single year.

Will enable us to decrease our product portfolio range and realize improved operating scale.

Furthermore, this product extends our strategy vision be young I worked children pitch market focus.

With a market, that's where we aim to penetrate the markets by offering the province, the envelope units.

This market may persist well.

Critical security vulnerabilities, but do not constitute critical infrastructure.

Our investment in this project is already paying off student multi sensor receives the platinum award for the best intrusion detection and prevention solution from American Securities today, and you'll start Homeland Security 2023 Awards.

I'm excited to officially announced that he will unveil the multi sensor I yeah west.

In April 24, followed by a full scale launch later in the year.

In summary, our solution protect essentially.

Crucial to the global economy.

Each of our key verticals are benefiting.

My macro trends.

As a result, our products are increasingly deployed in critical infrastructure logistics Correctional and energy side worldwide.

So far remains committed to delivering product innovation improve.

Improving regional platforms and driving growth in key verticals.

No.

Yeah for Tomorrow.

Please go ahead and review the financial results.

Yeah.

Thank you fabia.

Our revenues for the third quarter of 2023 was $9 million a decrease of seven 9% comparable revenues.

$7 million in the third quarter of 2022.

Probably I discussed the decrease was mainly due to a challenging comparison in Canada and the U S. Due to one off projects in the third quarter of last year.

Not repeated this year.

And the continued weakness in China.

Those declines were.

Partially offset by growth in Europe and in Latin America.

The geographic breakdown as a percentage of revenues for the third quarter of 2023.

The year ago quarter is as follows.

America, 43% compared to 50%.

That would be 4% compared to 25%.

$8 16 per cent compared to 19%.

Anti America, 7% compared to 6%.

The third quarter reported gross margin was 56, 5% before the news.

Compared with 61, 1% the year ago quarter.

The change was mainly due to the delivery of the lower margin legacy projects.

Our operating expenses were $4 9 billion.

After modest two 7% compared to $4 8 million.

As you.

Quarter.

On a year to date basis, our operating expenses are essentially flat compared to the prior year period.

Our operating income.

The third quarter was $123000.

Compared to $1 1 million.

Go PD.

Financial expenses was $64000.

Third quarter of this year compared to financial income of $212000 in the third quarter of last year.

This is mainly a noncash accounting effects regulatory reports due to adjustments to the valuation for monitory assets and liabilities denominated in currencies other than the functional currency of the operational entities in the group because of things we've done.

Our loss from continuing operation was.

$122000 over the third quarter of 2023 compared to income from continuing operation of $1 2 million.

A year ago quarter.

The company's EBITDA from continuing operation for the third quarter was $322000 compared to $1 5 million in the third quarter of last year.

Net loss attributed to same store technology show up though in the third quarter was $122000 or negative <unk> <unk>.

Hugh.

Net income attributed to same store technology shareholder.

$1 3 million.

Oh six cents a share in the third quarter of last year.

Reported net income in the third quarter of last year.

<unk> net income of $66000 from discontinued operation.

And the two sensor operational contribution.

Public platform expenses and amortization of intangible assets for historical acquisitions.

The corporate expenses for the third quarter, we're Fortunately zero point $6 million.

Cash and cash equivalent in short term bank deposits as of September 32023 were $12 7 million.

Oh 55 cents per share.

That concludes my prepared remarks, hopefully do well.

Like to open the call to questions now.

Thank you 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.

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Moment, please while we poll for questions.

Okay.

Thank you. Our first question comes from the line of Mike Tessler with Amex. Please proceed with your question.

Yes. Thank you good afternoon gentlemen.

Just regarding the we'd done the ceiling.

Company.

From Israel to Canada is that Ah I assume it's proceeding on time and will that affect the corporate taxes going forward.

Go ahead.

Yeah.

Thanks for the question so yeah, it's going according to schedule.

Going forward operational is the same operational entities.

So each legal entity has its own taxes. So we don't see an ongoing deepak.

Okay. Thank you very much and just the second question I was wondering how the backlog looks going forward. The next three to 12 months.

So so you no problem.

Uh huh.

In past calls we are not this is not the data that we're giving regarding your backlog, but you can say that you know all of the backlog is stable.

Okay.

Okay. Thank you very much all remain in the queue.

Thank you.

As a reminder, if you would like to ask a question press star one on your telephone keypad.

Our next question comes from Jeremy Levine with <unk> Co. Please proceed with your question.

Two questions how many years have you been in operation.

The company has been 40 years.

42 years.

How many years.

42.

42 years.

Revenue for the quarter was $9 million.

Yes indeed.

So would you consider that to be.

Initially Johnny Vo sales revenue for a company that's been around that long.

Yeah.

Alright, I'm sorry, there's some connection there.

Excuse me.

CUNY revenue for a company that's been in business for.

40 years.

Yeah.

Yeah.

We're working hard to create some growth engine to make sure. It's is.

It is getting better.

Okay. That's all my questions.

Thank you we have no further questions at this time I would now like to turn the floor back over to management for closing comments.

So on behalf of management I would like to thank you for your customer interest on long term support of our business and I look forward to updating you next quarter have a good day.

Yeah.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.