Q1 2024 Cemtrex Inc Earnings Call

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Greetings and welcome to the Suntrust first quarter 2024 financial results Conference call.

This time all participants are in a listen only mode. A question and answer your question 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.

Subject to risks and uncertainties that could cause actual results to differ materially.

Cautioned not to place undue reliance on these forward looking statements, which reflect our opinions only as of the date of this presentation.

Please keep in mind that we are not obligating ourselves to revise publicly released statements anywhere.

These forward looking statements in light of new information or future events.

Throughout today's discussion we will attempt to provide some information factors relating to our.

It may affect our predictions you should also review our most recent Form 10-K and Form 10-Q for a more complete discussion of these factors and other risks, particularly under the heading risk factors.

A press release detailing these results was issued this afternoon and is available on the Investor Relations section of our company's website <unk> com.

Your host today.

Our global Chief Executive Officer, Paul Lytle, Chief Financial Officer will present unaudited results of the operations for the first quarter ended December 31, 2023 at this time I will turn the call over to Suntrust, Chief Executive Officer, Paul Grint Basel.

Thank you operator, and good afternoon, everyone.

I'm pleased to welcome you to today's first quarter 2024 financial results Conference call.

The first quarter of fiscal year 2024 was highlighted.

By the company's realignment and operating performance improvement.

For the first quarter <unk> had revenue of $16 9 million an increase of 41%.

For the first quarter, our gross margin held at 42% supported by operational improvements. We continue to expect increases in our gross margin going forward over time as we make further enhancements in our business.

During the quarter, we took additional steps to reduce operating expenditures, including a $1 million reduction in our overhead and our security segment that should start to be realized in our fiscal second quarter going forward.

Operating loss for the first quarter improved to one 7 million compared to an operating loss of $2 million a year ago.

We also believe that there's room within our inventory and asset base to draw extra liquidity in order to maintain a healthy cash position.

Revenues in our security segment were led by Viacom with first quarter revenue, improving 31% to $9 2 million.

By kind of orders during the first quarter, reflecting its ability to capture repeat customers with a recent point 8 million dollar second phase order from a current school district customer in New Jersey to developing security technology system with new solutions.

Landing on the customer's previous order.

The icons of award winning Roughneck cameras and hilarious video management software solutions are being chosen to meet the unique challenges in locations ranging from border protection correction facilities and schools that require an advanced solution that technology to monitor people and protect areas.

Increasing modernization of the current security infrastructure is accelerating the growth of the border security market driven by the rise of geopolitical instability and an increase in border threat.

As customers seek to modernize their current security infrastructure icon continues to stand out with its advanced technologies and products.

<unk> launched a new cloud security platform called Navios that integrates video access and intercom in one easy to use system powered by AI and faith faith based authentication.

New cloud platform allows us to create more value in our business over time by evolving by car into a recurring revenue business model. Additionally, with AI at the core of our roadmap and then RVO, we're excited to layer in new capabilities and benefits for our customers to deliver the most cutting edge security solution over the months and years to come.

With the launch of a navios along with continued improvements to our core software platform the Larry.

We expect to drive further growth and see additional opportunity to grow gross margin percent in 2024.

Okay.

Revenue for our industrial services segment.

Increased 55% to $7 7 million the increase was mainly due to an increased demand for our services and supported by the close of our highly synergistic acquisition of pilot hygiene mechanical.

This continued growth was highlighted by our recent announcement of $3 $8 million in new orders for two projects, including a $2 $2 million Waterford geothermal system update for our North Eastern School District, and a $1 6 million order for the fabrication of a key component for our motion control technologies company.

<unk> continues to grow profitable revenue growth with additional wins, new government and industrial verticals in a variety of service initiatives and new geographies.

I'll now turn the call over to Paul <unk> CFO to discuss financials Paul.

Thank you Sabra.

Revenues for the first quarter of 'twenty, 'twenty, four and 2020 three.

$16 9 million and $12 million respectively.

An increase of 41%.

The security segment revenues for the first quarter of 2024 increased by 31% to $9 2 million.

The security segment increase was due to an increase for demand for security technology products under the buy Com brand.

The industrial service segment revenues for the quarter increased by 55% to seven 7 billion.

Mainly due to increase demand for the segment services.

As well as additional revenue due to the Hiseq X the acquisition.

Gross profit for the first quarter of 2024 was $7 1 million or 42% of revenues as compared to gross profit of 5 million or 42% of revenues for the first quarter of fiscal year 2023.

Total operating expenses for the three months ended December 31st 2023 or.

7.8 million compared to 7 million in the prior year's quarter.

Operating loss for the first quarter of 2024 was <unk> 7 million as compared to an operating loss of $2 million for the first quarter of.

It was 2023.

The improvement was primarily due to an increase in the gross profit for the period.

Due to growing revenues in both segments of our business.

Net loss for the first quarter of 'twenty 'twenty, four was $1 2 million as compared to a net loss of $6 3 million in 'twenty.

First quarter of 2023, an improvement of $5 1 million.

Cash and cash equivalents and restricted cash totaled $4 million at December 31, 2023, as compared to $6 3 million at September 30th 2023.

Inventories decreased to $7 9 million at December 31st 2023 from $8 7 million at September 30th 2023.

I will now turn the call back to soccer for a review of our 'twenty 'twenty four outlook.

Yes.

Thank you Paul looking ahead, we are highly focused on delivering larger operating profits by driving topline growth, while maintaining tossed tight cost control measures in our two operating businesses <unk> has the ability to disrupt the status quo of how the security industry. Traditionally operates with it's a novel next generation version.

Our state of the art zero this camera than Dms software along with its next generation technology Viacom's evolution into recurring revenue business model will help drive additional market share gains.

Aif is rapidly expanding into new markets and customer opportunities supported by its recent acquisition. We also continue to explore additional acquisition opportunities that could drive further growth and expansion within our business segments.

Looking ahead, we are focused on delivering attractive operating results driving growth and combined with tight expense control are committed to achieving positive operating income in fiscal year 2024 on a full year basis we.

We are confident that as you stay on this path, we can deliver strong long term value for our shareholders going forward.

You all for attending and now I would like to answer your questions operator.

Thank you we will now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad. The confirmation tone will indicate your line is in the question queue.

<unk>, if you'd like to remove your question from the queue for participants using speaker equipment and they'd be necessary to pick up your handset before pressing the star keys, one moment. Please poll for questions.

Our first question is from Larry column.

<unk> family Office. Please proceed with your question.

Thanks for taking my question and just want to say congratulations on the Q1 top line performance. My question is for the security and industrial segments, what drove the strong performance and do you see the same trends continuing in the fiscal second quarter.

Thanks for the question Larry.

So I think within both of our businesses.

Maybe I'll start with each one one at a time so in our security segment.

I like to look at things both at the macro level and the micro level. So at the macro level, we continue to see strong tailwind.

As organizations, both big and small continued to make security a priority and that's just a reflection of the environment that we live in and the time.

So security continues to remain.

A big Big priority and we're continuing to see investments made you upgrade security solutions expand security infrastructure.

And continued to invest in the latest and greatest technologies.

I think thats whats happening in the background at the organization level I think Viacom is doing a lot of great things.

We're continuing to put out new products upgrade all products and continue to stay really competitive in the market with our award winning roughneck cameras.

Valero is continuing to win the hearts and minds of our customers.

And so we're seeing a lot of expansion opportunities that that core product that we've been continuing to make better every day and then in RVO.

Really we just started the marketing and sales activities for <unk>. So we're starting to ramp that up really this quarter.

So we're already getting interest from customers.

We're starting to ramp that up and so all of these things are kind of layering on top of each other to build a really positive momentum for the company. So.

So we're excited about that and I think that allows us to have confident going forward that Viacom will continue to grow.

On the order of 15% to 20% on average over the next couple of years.

So we're feeling really good about that.

On the industrial side of our business.

We continue to see at the macro level demand for industrial services continues to trend higher.

We're not seeing any weakness from that regard, which gives us again confidence that the outlook remains positive for us.

As you know.

<unk> manufacturing batch of United States investment in <unk>.

Infrastructure here in the U S. All contribute to the growing demand for industrial services and capabilities, which are Aaas is a leader in and so that's really what's happening at <unk>.

And sort of the larger picture.

And then organizationally again is operating on all cylinders.

The integration of the acquisition has gone really well and we're continuing to see that.

Drive growth at the topline as well as at the operating income line with the business. So overall, we're quite pleased with the results and we're optimistic and hopeful that that'll continue to happen as we go forward.

We're going to continue to look for additional bolt on acquisitions that could continue to drive further growth in that segment as well. So I think it's on both sides of the business. There's a lot to be excited about.

Great. Thank you my second and last question.

How should we think about operating income for Q2, given the slight sequential decline.

And then because I think we targeted the third consecutive quarter of operating income in the last reporting period.

Yeah.

Yeah. So.

So a couple of things to point out there.

Operating income didn't land.

And wherever you were hoping it would and there were some one time expenses.

That we encountered in this past quarter some of them around payroll expenses and so forth. So I think.

In general the quarter was a little bit higher than the prior three quarters from an opex perspective.

That certainly contributed to that I don't expect subsequent quarters to have as high of an opex because of the timing of some of those expenses.

And then on top of that we did reduce.

Overhead by about $1 billion and change or so give or take so.

That should also continue to make.

Profitability, a little bit more.

Manageable in a little bit as we continue to grow and really take those profits into our belts. So.

Uh huh.

In terms of how we think about it so I think overall, we remain committed to.

Having an operating profit this fiscal year.

Our business is unfortunately, a little bit lumpy. So it's always hard to predict exactly when.

Orders will land and get booked and invoice but.

Based on the overall macro picture and the overall environment, we still feel good about that despite the loss in the first quarter.

Alright, thank you.

Okay.

As a reminder, if you'd like to ask a question. Please correct durable.

Thank you there are no further questions at this time I would now like to hand, the floor back over to Mr. Goldman for me.

Closing remarks.

Thank you operator.

I would like to thank each of you for joining our earnings call today and look forward to continuing to update you on our ongoing progress in growth. If you have any further questions. After this call. Please feel free to reach out to our IR firm MZ group, who would be more than happy to assist and get your questions answered. Thank you for your time.

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