Q2 2024 Cemtrex Inc Earnings Call

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Operator: Greetings and welcome to the Cemtrex Second Quarter 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode.

Speaker Change: Greetings and welcome to the <unk> second quarter 2024 financial results Conference call.

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

Operator: 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.

Speaker Change: A question and answer session will follow the formal presentation.

As a reminder, this conference is being recorded.

Speaker Change: 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.

Speaker Change: 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're.

Operator: You are 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 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 forecast.

Speaker Change: You are cautioned not to place undue reliance on forward looking statements, which reflect our opinions only as of debate at this presentation.

Speaker Change: Please keep in mind, we are not obligating ourselves to revise or publicly release the results of any revision, but he started looking statements in light of new information or future events.

Speaker Change: Throughout today's discussion we will attempt to present some important factors relating to our business that may affect our predictions.

Speaker Change: You should also review our most recent Form 10-K and Form 10-Q for a more complete discussion of these factors and other events, particularly under the heading risk factors.

Speaker Change: A press release detailing its results was issued this afternoon and is available in the Investor Relations section of our company's website in trucks dotcom.

Speaker Change: Your host today Saga go, though chief Executive Officer, and Paul <unk>, Chief Financial Officer will present and audited results of operations for the second quarter ended March 31 2024.

Operator: 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 in the Investor Relations section of our company's website, Cemtrex.com. Your hosts today, Saagar Govil, Chief Executive Officer, and Paul Wyckoff, Chief Financial Officer, will present an audited result of operations for the second quarter ended March 31, 2021. At this time, I will turn the call over to Cemtrex CEO, Saagar Govil. Please go ahead.

Speaker Change: At this time I will turn the call over it does seem touch theme.

Speaker Change: Team trucks, Chief Executive Officer Saturn Go Bell. Please go ahead.

Speaker Change: Thank you operator.

Saagar Govil: Good afternoon, everyone. I'm pleased to welcome you to today's second quarter 2024 Financial Adults Conference. The second quarter of our fiscal year 2024 was highlighted by new technology deployments and continued overall growth across our business. For the second quarter, Cemtrex had revenue of $17.2 million, an increase of 7%, and our gross margin was 40%. Operating loss for the second quarter was $1 million, compared to operating income of $0.4 million a year ago.

Speaker Change: And good afternoon, everyone I'm pleased to welcome you to today's second quarter 2024 financial results Conference call.

Speaker Change: The second quarter of our fiscal year 2020 quarter was highlighted by new technology deployments and continued overall growth across our business for the second quarter contracts had revenue of $17 2 million an increase of 7%.

Speaker Change: And our gross margin was 40%.

Speaker Change: Operating loss for the second quarter was $1 million compared to operating income of <unk> 4 million a year ago operating loss for the six month period was $1 8 million compared to $1 5 million in the prior year despite higher sales.

Saagar Govil: Operating loss for the six-month period was $1.8 million, compared to $1.5 million in the prior year, despite higher sales. However, these results include approximately $1 million in one-time expenses from employee-related charges and legal expenses that we do not anticipate occurring in the future.

Speaker Change: However, these results include approximately $1 million in one time expenses from employee employee related charges and legal expenses that we do not anticipate incurring in the future.

Saagar Govil: Our goal of reaching a full-year operating profit remains, and we are working hard to drive revenue and maintain tight costs. However, revenues in our security segment in the second quarter decreased by 18% to $8.1 million. The decrease was due to the delay of certain projects in the security segments, products, and services. Despite the delay in some of the Vicon projects, this segment is still showing year-over-year growth for the first half of the... BICON continued to introduce new technologies and products, including the deployment of Inovio, BICON's innovative new cloud security platform.

Speaker Change: Goal of reaching our full year operating profit remains and we're working hard to drive revenue and maintain tight cost controls.

Speaker Change: Revenues in our security segment second quarter decreased by 18% to $8 1 million. The decrease was due to the delay of certain projects and security segments products and services.

Speaker Change: The delay in some of the bike on projects. The segment is still showing year over year growth for the first half of the fiscal year.

Speaker Change: Viacom continued to introduce new technologies and products, including the deployment of an RVO.

Speaker Change: Innovative new cloud security platform.

Saagar Govil: Navio enables users to manage their access control, video, and intercom via a single tool to streamline and ultimately achieve complete situational awareness and control. Some of the new features of Inavio include face authentication that ensures only authorized people can access facilities and a powerful person of interest feature whereby users can forensically track a specific person or multiple people throughout a facility.

Speaker Change: And our view, enabling users to manage their access control video and Entercom by a single tool to streamline and ultimately achieve complete situational awareness and control.

Speaker Change: Some of the new features in the Navajo include face authentication that insures only authorized people can access facilities and a powerful person of interest feature whereby users can forensically track a specific person or multiple people throughout a facility.

Saagar Govil: We continue to invest in our sales and marketing resources in the security segment with the goal of driving sales growth over the next several quarters. We are also striving to increase operational efficiency and have reduced inventory by over 1 million units for this year. With the launch of Anavio, along with new technologies and continued improvements to our core software platform, Valeris, we expect to drive further growth and see additional opportunities to grow gross margin in 2021.

Speaker Change: We continue to invest in our sales and marketing resources in the security segment with the goal of driving sales growth over the next several quarters. We are also striving to increase operational efficiency and have reduced inventory by over $1 million for this fiscal year.

Speaker Change: With the launch of Avia, along with new technologies and continued improvements to our core software platform Polaris, we expect to drive further growth and see additional opportunity to grow gross margin in 2024.

Saagar Govil: Revenue for our industrial services segment, AIS, increased 47% to $9.1 million, mainly due to increased demand for our services as well as additional business from the highly synergistic acquisition of Heisman Mechanical. We believe this segment will produce a record year of revenue, driven by new orders from leading companies and a robust growth pipeline. We continue to believe that with additional orders ahead, AIS has the potential to reach more than 30% annual growth in fiscal year 2020.

Speaker Change: Yes.

Speaker Change: Revenue for our industrial services segment, Eas increased 47% to $9 1 million.

Speaker Change: Mainly due to increased demand for our services as well as additional business from the highly synergistic acquisition of heightened mechanical.

Speaker Change: We believe this segment will produce a record year of revenue driven by new orders from leading companies in our robust growth pipeline.

Speaker Change: We continue to believe with additional orders ahead Aaas has the potential to reach more than 30% annual growth.

Speaker Change: In fiscal year 2024.

Saagar Govil: During the second quarter, AIS secured orders including a $1.6 million order for two relocation projects from a leading printing and graphics company and a half a million dollar order to remove existing equipment for an engineering and construction project, which affirms AIS's commitment to delivering excellence across its service offerings. I'll now turn the call over to Paul Wyckoff, our CFO, to discuss.

Aaas: During the second quarter, <unk> secured orders, including a $1 6 million order for two relocation projects from the leading printing and graphics company and a half a million dollar order to remove existing equipment for an engineering and construction company, which affirmed its commitment to delivering excellence across its service offerings.

Paul J. Wyckoff: Revenue for the second quarters of 2024 and 2023 were $17.2 million and $16.1 million, respectively, an increase of 7%. The security segment revenues for the first quarter of fiscal 2024 decreased by 18% to $8.1 million. The security segment decrease was due to the delay of multiple projects for the segment's products and services.

Speaker Change: I'll now turn the call over to Claude <unk>, our CFO to discuss financials.

Claude <unk>: Thank you saga.

Claude <unk>: Revenue for the second quarters of 'twenty, 'twenty, four and 2023.

Claude <unk>: Were $17 2 million and $16 1 million, respectively, an increase of 7%.

Speaker Change: The security segment revenues for the first quarter of fiscal 2024 decreased by 18% to $8 1 million.

Claude <unk>: The security segment decrease was due to a delay of multiple projects for the segments products and services.

Paul J. Wyckoff: The industrial services segment revenues for the quarter increased by 47% to $9.1 million, mainly due to increased demand for the segment services, as well as additional revenue due to the Hy-Zee acquisition completed during the fourth quarter of fiscal year 2023. Gross profit for the second quarter of 2024 was $6.9 million, or 40% of revenues, as compared to gross profit of $7.3 million, or 46% of revenues, for the second quarter of 2023.

Claude <unk>: The industrial services segment revenues for the quarter increased by 47% to $9 1 million, mainly due to increased demand for the segment services as well as additional revenue due to the higher the acquisition completed during the fourth quarter of fiscal year 2023.

Claude <unk>: Gross profit for the second quarter of 2024 was $6 9 million or 40% of revenues as compared to gross profit of $7 3 million or 46% of revenues for the second quarter of 2023.

Paul J. Wyckoff: Total operating expenses for the three months ended March 31st, 2024 were $8 million compared to $7 million in the prior year's quarter. The operating loss for the second quarter of 2024 was $1 million, as compared to an operating income of $0.4 million for the second quarter of 2023. The operating loss was primarily due to a decrease in gross profit in our security segment and overall increased payroll expenses. The net loss for the second quarter of 2024 was $1.6 million as compared to a net loss of $0.6 million in the second quarter of 2023.

Claude <unk>: Total operating expenses for the three months ended March 31, 2024, 8 million compared to 7 million in the prior year's quarter.

Speaker Change: Operating loss for the second quarter of 'twenty 'twenty, four was $1 million as compared to an operating income of four.

Speaker Change: 4 million for the second quarter of 2023, yeah.

Speaker Change: The operating loss was primarily due to a decrease in gross profit in our security segment and overall increased payroll expenses.

Speaker Change: Net loss for the second quarter of 2024 was $1 6 million as compared to a net loss of <unk> 6 million in the second quarter 2023.

Paul J. Wyckoff: Cash, cash equivalents, and restricted cash totaled $4.1 million at March 31st, 2024, as compared to $6.3 million at September 30th, 2023. Subsequent to the second quarter, the company closed a firm commitment underwritten public offering with gross proceeds to the company of approximately $10 million. Inventories decreased to $7.4 million at March 31, 2024 from $8.7 million at September 30, 2023. I will now turn the call back to Saagar for a review of our 2024 outlook.

Claude <unk>: Cash cash equivalents and restricted cash totaled $4 1 million at March 31st what he played four as compared to $6 3 million.

Claude <unk>: 30th 2023.

Claude <unk>: Subsequent to the second quarter the company closed a firm commitment underwritten public offering with gross proceeds of the company of approximately $10 million.

Claude <unk>: Inventories decreased to seven 4 million at March 31, 'twenty 'twenty four for me.

Claude <unk>: $8 7 million at September 30th 2023.

Speaker Change: I'll now turn the call back to saga for a view of our 2024 outlets.

Paul: Thank you Paul looking.

Saagar Govil: Looking ahead, we are well positioned to build on our momentum and remain focused on our goal to achieve positive operating income in fiscal year 2024 on a full year basis. We have strengthened our balance sheet from the $10 million upsized underwritten public offering we closed, of which a portion of the proceeds were used to pay off some of our indebtedness. We continue to explore acquisition opportunities that have the potential to enhance our market reach and service capabilities and further drive growth in the months and years ahead.

Saga: Looking ahead, we are well positioned to build on our momentum and remain focused on our goal to achieve positive operating income in fiscal year 2024 on a full year basis.

Speaker Change: Strengthening our balance sheet from the $10 million Upsized underwritten public offering we close of which a portion of the proceeds were used to pay off some of our indebtedness.

Claude <unk>: We continue to explore acquisition opportunities that have the potential.

Claude <unk>: To enhance our market reach and service capability and further drive growth in the months and years ahead.

Saagar Govil: We remain focused on delivering incremental growth and positive operating results, along with diligent balance sheet management. We are committed to achieving positive operating income for the full year, fiscal year 2020. Operator? And ladies and gentlemen, we will now...

Claude <unk>: We remain focused on delivering incremental growth and positive operating results along with the diligent and balance sheet management and we are committed to achieving positive operating income for the full year fiscal year 2024. Thank you all for attending and I would like to answer your questions operator.

Operator: Thank you. And ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, simply press the star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press the star followed by the number two.

Speaker Change: Thank you and ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question. Please press the star followed by the number two one.

Speaker Change: One moment. Please for your first question.

Operator: One moment, please for your first question. And once again, if you would like to ask a question, please press the star followed by the number one on your cell phone keypad. And your first question comes from the line of Jared Cohen with J.M. Cohen & Company. Your line is open. Hello? And again, if you would like to ask a question, please press star 1. And we currently have no questions at this time. I would like to turn it back to Saagar Govil for further remarks.

Claude <unk>: And once again, if you would like to ask a question. Please press star followed by the number one on your telephone keypad.

Speaker Change: And your first question comes from the line at Jared Cohen with JM Cohen <unk> Company. Your line is open.

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Claude <unk>: Okay.

Speaker Change: And again, if you would like to ask a question. Please press star one.

Speaker Change: And we currently have no questions at this time I would like to turn it back to <unk> for further remarks.

Saagar Govil: Thank you, Alfredo. I would like to thank each of you for joining our earnings conference call today and look forward to continuing to update you on our ongoing progress and growth. If we were unable to answer any of your questions, please feel free to reach out to our IR firm, Enzi Group, who would be more than happy to help.

Speaker Change: Thank you operator, I would like to thank each of you for joining our earnings conference call today and look forward to continuing to update you on our ongoing progress in growth. If we were unable to answer any of your questions. Please feel free to reach out to our IR firm MZ group, who would be more than happy to with it. Thank you.

Operator: Thank you, presenters, and ladies and gentlemen. This concludes today's conference call. Thank you all for participating. You may now disconnect.

Operator: Thank you, presenters. And ladies and gentlemen, this concludes today's conference call. Thank you all for participating. You may now disconnect.

Speaker Change: Thank you presenters, ladies and gentlemen. This concludes today's conference call. Thank you all for participating you may now disconnect.

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Speaker Change: Yes.

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