Q3 2024 Senstar Technologies Corp Earnings Call
Greetings and welcome to decent start third quarter, 'twenty 'twenty full financial results call.
At this time all participants are in either from the only mode.
A question and answer session will follow the formal presentation.
If anyone should require operator assistance, please pick notebook Christian Star and then zero.
As a reminder, this conference is being recorded.
It is now my pleasure to hand over to Kim Rogers, often Phish simulation. Thank you you may proceed.
Thank you Claudia 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 from the company are Mr. Fabien, <unk> CEO and MS. Alicia Kelly CFO before we start I'd like to point out that this conference call may contain.
Same projections or other forward looking statements regarding future events or the company's future performance. These statements are only predictions and sunstar cannot guarantee that they will in fact occur then start does not assume any obligation to update that information actual events or results may.
Different 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 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 measure.
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 reconciliation.
With that I'll now hand, the call over to Sun Star technologies.
Oh baby and hope that they would be and please go ahead.
Thank you Kim.
Thank you for joining us today to review, our third quarter 2020 full financial results.
With an overview of this quarter's performance our revenue increased by 8% compared to Q3 'twenty to 'twenty three.
This is up 7% year to date compared to the same period last year.
Gross margin was exceptionally strong at 68% representing an 11 four percentage point increase over Q3 'twenty two 'twenty three.
The improvement in the quarter was primarily driven by our ongoing streamlining activities recent price adjustments normalization and the component market.
A favorable product mix.
To date, our gross margin of 63, 9% in line with our expectation to deliver a gross margin of 60 person or better.
Due to diligent expense controls.
Operating expenses decreased by three 6% from Q3 2023.
It's 92% year to date.
Our revenue growth and gross margin expansion.
Combined with the decrease in operating expenses led to a significant increase in our profitability.
We experienced encouraging growth trends in the U S and EMEA, along with a 2% increase in revenue in our core vertical in Q3 'twenty 'twenty four.
And the 98% increase year to date.
Our growth this quarter reflects both our strategy focus.
And high potential sectors and the success of our tailored solutions.
Correctional facilities demand in this sector is growing for enhanced security driven by the increasing and fastest.
Advanced security technology for public safety.
Our integrated solution continued to reason that dwell in this sector, especially in the U S, where correctional facilities or investing in modernization.
Our offering of helps strengthen our position as a trusted partner leading to an increase in contract wins.
Utilities. This vertical continues to be one of our strongest with broad based demand across data centers solar farms energy generation as well as telecom infrastructure.
The security sector is increasingly focused on integrating security and monitoring for critical infrastructure.
And then we're solution address this needs with precision.
In particular data centers and solid bumps have increasingly integrated that we're offering.
Underscoring the reliability and scalability approach technology.
In protecting vital.
This growth also reflects our expanded reach in the EMEA U S and APAC regions, where utilities and large infrastructure project prioritize improved security solutions.
Transports our gross in the trends of the sector has been driven by a mix of established customers and new market entrance, particularly in EMEA were transferred.
Infrastructure development is advancing rapidly.
We've seen strong adoption of our solution in the airport sector, which with a nice as the need for secure monitoring systems.
The market remains a priority as it would technology aligns well with the demand modern transplantation security, particularly in EMEA and Asia.
Logistics and oil and gas water revenue in logistics and oil and gas declined slightly we continue to see opportunities in these sectors as company explore ways to enhance operational efficiency.
Protects critical assets.
We're seeing positive trends in the oil and gas industry, particularly in North America and EMEA.
And we're hoping this will contribute positively in future quarters.
Focusing on called vertical in this critical sectors and fine tuning our solutions to meet their unique needs.
With new products like the multi sensor, we're enhancing customer value and positioning ourselves for sustained growth.
I'm happy to share that initial sale some of the sensor are promising.
Lending products and an atheist impact in the market.
The Fisher and hence our positions and build on this initial momentum we appointed a new VP of project management and marketing with a solid background and proven track record and video technology to help expand their market presents beyond our traditional bedroom major focused solutions.
Our strategy remains focused on business development to expand global market share across key verticals. We aim to bring on new end users in existing markets, while also gaining customers in new regions.
Investments, we've made in established markets already yielding results driving growth in the second half 'twenty 'twenty four.
Likewise, our investment in new territories are beginning to pay off.
That'd be south project.
Be well.
We're seeing strong.
Assistant enabled the Mems probes and are scaling up effort to meet it in conclusion, we are encouraged by our financial progress this quarter and the strides we've made in key verticals.
The sensor team remains dedicated to executing our growth strategy and driving operational efficiency. We're excited to build on the successes as we continue delivering value to our shareholders.
Dancing, our long term goals.
Now I will pass the call to our CFO Alicia Kelly.
Alicia. Please go ahead and review the financial results.
Thank you Fabian our revenue for the third quarter of 2024 was $9 $7 million, an increase of eight 2% compared with the revenue was $9 million in the third quarter of 2023.
We saw sales growth in the U S. A 12% growth was experienced in all four of our key vertical.
Significant growth was reported from fractional sale facilities and Beth it modernization.
Have you ever reported an increase in sales of 26% in Q3 versus the same period last year.
Incremental sales were reported in the oil and gas utility and transportation segments.
Other regions saw slight decline this quarter, but nothing material in nature.
The geographical breakdown as a percentage of revenues for the third quarter of 2024.
To the year ago quarter is as follows.
That's America, 44% versus 43%.
39% versus 34% APAC.
APAC, 14% versus 16%.
And America, 3% versus 70% and all other regions and a change of less than 1% in both groups.
The third quarter reported gross margins of 68% around me.
Uh-huh compared to 56, 5% in the year ago period.
The increase in gross margin was primarily due to product mix and price increases in the fourth quarter of 2023.
Our operating expenses were $4 8 million down three 6% compared to $4 $9 million in the prior year's third quarter.
The decrease is a result of the streamlining of our corporate structure and realignment of our resources that we implemented in 2023.
The strong gross margin and lower operating expenses drove the increase in our operating income for the third quarter to $1 $8 million a significant.
The increase compared to $123000 in a year ago period.
Net income was $111000 in the third period of this year compared to a financial expense of 64000 in the third quarter of last year.
Speaker Change: Is it mainly a non cash accounting effect.
We report due to the adjustment to the valuation of our monetary assets and liabilities denominated in currencies other than the functional currency of our work.
Our operating entities in the group in accordance with GAAP.
Net income attributable to soon start technology shareholder in the third quarter was $1 $3 million for six cents per share compared to a net loss attributable to censor technology shareholders of 122000 or negative one cents per share in the third quarter of last year.
Speaker Change: The company's EBITDA for the third quarter was $2 million compared to $322000 in the third quarter of last year.
Added to sensors operational contribution or the public platform expenses and amortization of intangible assets from historical acquisition and corporate expenses for third quarter were approximately 100.
$1.5 million.
Cash and cash equivalents and short term bank deposits as of September 32024 were $19 $5 million or 84 cents per share.
That concludes my remarks, operator, we would like to open the call for questions now.
Speaker Change: Okay.
Thank you very much at this time, we will be conducting a question and answer session.
You would like to ask a question. Please press Star then one on your telephone keypad.
You May please don't and then two if you'd like to leave you a question from the queue.
Please hold while we poll for questions.
The first question comes from Daniel Levine from <unk> Co. Please proceed with your question Debbie.
I'm happy to see that you were getting a new marketing person in there.
Speaker Change: Because.
Hum.
It's under the radar do you know what the updated our book value per share.
The book value you mean, the bookings are.
The book value per share at this point.
No we don't have that information in front of us at this moment.
Well it seems like.
You are probably trading about even with what I believe.
Based on the new figures book value and you only have a $50 million share float.
Would not take much.
It would probably take one or two fairly exciting and that's the center stock through the roof.
There's just no float there.
No.
So it's good to see that.
One question I have is are you are targeting in the AI sector as far as your.
Is there any demand for companies.
Companies for what your products at all.
Any synergies at all with it.
So basically the AI is in general word for intelligence and light.
Speaker Change: I'm curious in the industry, where they've looping we're working on improving basically the intelligence or devices. So we already had some media intelligence, we under licensing knows the company and art phone disconnected and and we arent connected and we're working basically my apologies there was that and where we were working basically on.
Strengthening our knowledge and performance in AI in general yes.
In terms of AA company. This was there any demand for your products for security purposes.
Their facilities and so forth.
Speaker Change: So yeah I'm trying I'm getting your question, probably the need for a ABCD as requested a bit everywhere from marque customers once solution more and more intelligence and to this extent, we're improving this year were working what's driving at least on increasing the intelligence that we're solutions by you using basically new villas and technologists.
Yeah.
Right.
What I'm trying to ask basically is it.
Sector itself the corporations do they have a demand for your product.
Securing their facilities and so forth.
So what we're I'm not sure I am getting fully your question I do apologize. So we're focusing basically on award made on four to six verticals the maintenance verticals, we're focusing on our utilities correction oil and gas logistics and were very high attention as well on transport airports and military been bought.
Speaker Change: Control and these are the vertical we're serving mostly and yes, those verticals asking us basically to.
Speaker Change: They are expecting us to provide intelligence solutions, which provide more and more intelligence on the way they're using it.
Thank you very much. The next question comes from <unk> Levy from Oppenheimer <unk> Co. Please proceed with your questions Ted.
Hi, this is that Cadbury.
I just wanted to know as far as the multi sensor.
Do you see to be very optimistic.
Do you see a material impact on our growth there.
He had no revenue in 2025 from the bulk high sensor.
So we're not providing forward looking statements, but we can say that the market is reacting extremely positively in the sense of the number of we had some interesting basically for sales and we have generated a lot of interest to different types of customers.
Which we're now addressing so that's just where we are now, but where it's really first of all we're not providing any forward looking statements and secondly, it's too early to pushing our sales in terms of how much we think is going to generate.
Yeah.
As far as profitability given the.
Hello expenses.
Are you comfortable in saying that you expect to be profitable in the fourth quarter.
Speaker Change: Yeah.
Speaker Change: So we're we're not giving basically forward looking statements on where it wasn't going to be in India.
Speaker Change: Okay and.
You bet should send out new areas.
Speaker Change: Market for your verticals.
Could you talk a little bit more about solar farms.
Speaker Change: Yeah.
And the opportunity of a solar farm.
It's a vertical we're currently addressing already which is part of the verticals.
It's okay, we classified within the utilities and basically we see a lot of basically a big race.
Pretty much everywhere in the world of solar from built in we see as well oil and gas company investing it as green energy and we're seeing basically a high demand to protect silicon plants, absolutely and we're addressing these demands.
We see some progress in ourselves there.
Yeah.
Thank you very much ladies and gentlemen, just a reminder, if you'd like to ask a question. Please press star.
And then one if you'd like to ask a question. Please press star and then one we will pause to see if we have any further questions.
Yes.
Okay.
Speaker Change: The next question is a follow up question from Pete Levine from Oppenheimer. Please proceed with your question.
Yes, I wanted to.
Have you expand on what you categorized as data centers.
Yeah.
Oh.
Speaker Change: It's interesting so basically data centers is basically.
All all basically what is the latest centered workplaces, which host.
How does the storage for utilities and distribution.
For video on demand or in the states. So they are the ones that work.
I think it's hard to be a very I think data is everywhere. So the main category of foreseeing the big Internet provider will basically provide storage or basically a video on demand or any cloud. It services and then you have a lot of banking and financial institution, which basically.
Speaker Change: <unk> build their own data centers to provide services, it's a bit limitless I would say.
Everywhere.
Hardly hard disk is for US is touring basically yeah, the data for for different types of customers where.
Confidentiality requires a high level of prediction. These other data or data centers, we're predicting where nothing drifting a small company data centers, where we're the only it's only launch providers providing service to third party, that's where we're focusing today hope I answered your question.
Bob: Yes, you did I have a follow up Bob.
Have you looked at our markets for like.
Speaker Change: Yes, the big coin miners in the data centers.
Pardon me.
Marty did do there or.
Speaker Change: Yes, some of the critical infrastructure for.
Speaker Change:
Some of the companies like Intel and Nvidia.
Yeah.
So we're trying to follow the request everywhere people are building data centers, we didn't focus on those in particular, but amongst others on those as well.
Yeah.
Okay, great. Thanks for your comments.
Speaker Change: Thank you.
Thank you. The next question comes from Joseph Judge who is a private investor. Please proceed with your questions Joseph.
Yes, Hi, Sir I was wondering do you think that your technology will play any role with deporting some illegal immigrants.
Thanks.
Speaker Change: Helping like track them down.
Never directly we're trained to do strive unmaking people safer in the world and what we're doing basically staying with Israel I guess here, you're I'm, hoping that you get like some you know.
Really big contracts with the Israel border too and hopefully you can help secure their border, including ours now because.
Because I know you got it.
Board is occurring in Canada <unk>, Canada.
But not the southern border yet.
Speaker Change: So we're at Canadian entity and were trained in worldwide in every year and on the whole planet to try to make people safer and were working basically on making sure that when there is separation between two countries to area to make sure we can do.
Intrusion attempts and indeed.
Borders is one of the markets, we're covering and what's driving to make them more singles in this direction. So we are the more we can help them or we'll be happy and widespread contribute to it yeah.
Yeah cause.
I believe you also have the technology to say.
Speaker Change: Say look at some People's tags, and will you be possibly helping.
Speaker Change: The like you know law enforcement and <unk>.
Speaker Change: Government to track down certain people are.
Speaker Change: By being able to do this evening when their tags in and are you going to play any part of that.
So not directly what we're doing today is we see during I work for submission basically to try to do.
Detect intrusion wherever it is mainly in our verticals and to report it when we provide this information with living basically to the authorities all the players the duty to drag them in to take any action there.
Speaker Change: Job today is to basically try to.
Understand the seats will provide the situational awareness, whether there is an intrusion I'm not always nature.
Our sensor business you can work together to try to find the best accuracy identify where an attrition attempt is happening and then it goes to other parties, who do the federal Liberals they work.
Thank you. The next question comes from Mike That's clear from a payer mix Holdings. Please proceed with your questions Mike Yes, good afternoon gentlemen.
Speaker Change: Longer than two decade holder.
And shareholder Ive been following the trajectory of the company for a very long time, I'm gratified with the results so well done.
My question really is to just more direct your focus rather than an answer and that is you already have the utility vertical as one of your three primary verticals and these data centers that you spoke of just two questions that go to Ken et cetera, but that you are pursuing.
It seems you have an automatic entre.
Through the utilities, who will be providing the power and therefore, you could be working hand in hand to as they try to garner data center business, you would be providing the security for both the utility as well as the data center themselves I just wanted to.
A point that out.
Speaker Change: I don't mean to sound.
Speaker Change: Patronizing in any way I'm, just a shareholder trying to help out but.
I think the opportunity is vast and <unk>.
Speaker Change: Substantial and I think you guys have the ability now to execute and I wish you luck on that and if you have any comments I'd. Appreciate it. Thank you very much.
Thank you so much for this really great comments, it's exactly why we love data centers because on top of protecting the data centers themselves. They gave indeed, the possibility to see tour as well the infrastructure aiming to transmit the data and to power them. So we're totally aligned with the strategy and that's where we're putting our efforts.
I had no no doubt.
Speaker Change: And thank you for you.
Speaker Change: Trusting us Oh, yes, no. Thank you you guys are doing great I appreciate it.
Thank you.
Okay.
Thank you very much ladies and gentlemen, we have reached the end of our question and answer session I'd now like to turn the call back to <unk> for closing remarks. Thank you Seth.
So on behalf of the management of a sensor I'd like to thank you for your continued interest and long term support of our business. We look forward to sharing more updates with you in the coming quarters have a good day.
Yeah.
Thank you very much ladies and gentlemen that does conclude today's conference. Thank you. So much for joining US you may now disconnect your lines.
Okay.
Hum.
Speaker Change: Uh huh.
Oh.
Uh-huh.
[music].
Hmm.
Speaker Change: Uh-huh.
Speaker Change: [music].