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Cemtrex Reports First Quarter 2024 Financial Results

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Cemtrex Inc. (CETX) reports a 41% increase in Q1’24 revenue to $16.9 million, with the Security segment up 31% and Industrial Services up 55%. Operating loss improved to $0.7 million. Vicon received a $0.8 million order and launched Anavio cloud security platform. AIS secured $3.8 million in new orders. Cash position was $4.0 million as of December 31, 2023.
Positive
  • Revenue for Q1’24 increased by 41% to $16.9 million compared to $12.0 million in Q1’23.
  • Security segment revenues grew by 31% to $9.2 million in Q1’24.
  • Industrial Services segment revenues rose by 55% to $7.7 million in Q1’24.
  • Operating loss improved to $0.7 million in Q1’24 from $2.0 million in the previous year.
  • Vicon received a $0.8 million order from a school district customer and launched Anavio cloud security platform.
  • AIS secured $3.8 million in new orders for two projects.
  • Cash, cash equivalents, and restricted cash stood at $4.0 million as of December 31, 2023.
Negative
  • None.

The reported 41% increase in Q1'24 revenue for Cemtrex Inc. is a significant metric that indicates robust growth, particularly when dissected into its two main segments: Security and Industrial Services. The Security segment's 31% growth, driven by demand for Vicon products and the Industrial Services' 55% increase, fueled by the Heisey Mechanical acquisition, suggest a strong market position and successful integration of new assets.

However, it's important to note the operating loss improvement from $2.0 million to $0.7 million. While still operating at a loss, this improvement reflects better operational efficiency and cost management. The introduction of Anavio, a cloud security platform, could be a strategic move towards a recurring revenue model, which is favorable for long-term financial stability.

Investors should also consider the cash position, which decreased from $6.3 million to $4.0 million. This reduction could indicate cash burn, but given the context of revenue growth and decreased operating loss, it may be part of strategic investments for growth. The inventory reduction from $8.7 million to $7.9 million suggests improved inventory management or increased sales velocity.

The demand for advanced security technology, as evidenced by the 31% revenue increase in Cemtrex's Security segment, aligns with industry trends towards enhanced safety measures in educational and other sensitive environments. The repeat orders from educational institutions underscore the sector's ongoing investment in security infrastructure, which bodes well for Cemtrex's market positioning.

Moreover, the AIS subsidiary's $3.8 million in new orders for projects, including geothermal system updates and motion control technologies, highlights a diversification of revenue streams. This diversification, coupled with geographic expansion and entry into new service industries, indicates a strategic approach to capturing a broader market share.

The emphasis on gross margin maintenance at 42%, despite the revenue jump, suggests operational efficiencies are in place, which is crucial for profitability as the company scales. The gross margin consistency also provides insight into the company's pricing power and cost control measures in a competitive landscape.

The macroeconomic implications of Cemtrex's performance, particularly the substantial revenue growth amidst a challenging economic climate, may signal underlying strength in the industrial services and security technology sectors. The company's ability to grow in these conditions could be indicative of resilience to economic downturns or a reflection of secular trends in security and industrial services demand.

The acquisition strategy, as seen with Heisey Mechanical, is an important factor to consider. If executed well, it can lead to economies of scale and market expansion. However, it also carries risks related to integration and additional leverage. The pursuit of further acquisitions should be monitored as it could impact the company's financial leverage and operational complexity.

Lastly, the focus on transitioning to a recurring revenue model could provide more stable and predictable cash flows, which is a positive signal for economic sustainability and can potentially lead to improved valuation metrics in the long term.

Q1’24 Revenue Increased 41% to $16.9M; Management to Host Conference Call Today at 5:00 p.m. ET

Brooklyn, NY, Feb. 12, 2024 (GLOBE NEWSWIRE) --  - Cemtrex Inc. (NASDAQ: CETX, CETXP), an advanced security technology and industrial services company, has reported its unaudited financial and operational results for the first quarter ended December 31, 2023.

Key First Quarter FY 2024 and Subsequent Highlights

  • Revenue for Q1’24 increased 41% to $16.9 million, compared to revenue of $12.0 million for Q1’24.
    • Security segment revenues increased 31% to $9.2 million in Q1’24 on increased demand for Vicon’s products and services.
    • Industrial Services segment revenues for Q1’24 increased by 55% to $7.7 million, on increased demand and additional revenue from Heisey Mechanical acquisition.
  • Operating loss for the first quarter improved to $0.7 million, compared to an operating loss of $2.0 million a year ago.
  • Vicon Industries subsidiary:
    • Received a $0.8 million second phase order from a current school district customer in New Jersey to develop its security technology system with new solutions, expanding on the customer’s previous order.
    • Launched a new cloud security platform, called Anavio (www.anavio.ai), that integrates video, access, and intercom in one easy-to-use system, powered by AI and face-based authentication.
  • Advanced Industrial Services (“AIS”) subsidiary:
    • Received $3.8 million in new orders for two projects, including a $2.2 million order for a geothermal system update for a Northeastern School District, and a $1.6 million order for the fabrication of a key component for a motion control technologies company.
  • Cash, cash equivalents and restricted cash as of December 31, 2023 was $4.0 million.

Management Commentary

Cemtrex Chairman and CEO, Saagar Govil, commented on the results: “The first quarter continued our momentum with ongoing growth in our Security and Industrial segments. Revenue in the quarter grew 41% to $16.9 million, driven by continued sales execution by Vicon, and strong demand for AIS products and services. Our Security segment revenues increased 31% to $9.2 million, and Industrial Services segment revenues increased by 55% to $7.7 million. For the first quarter, our gross margin held at 42%, supported by operational improvements. We continue to believe there is additional runway for gains in gross margin as we make further enhancements in our business. Operating loss for the first quarter improved to $0.7 million, compared to an operating loss of $2.0 million a year ago. During the quarter we took additional steps to reduce operating expenditures, with an approximately $1 million reduction in overhead in our Security segment that should start to be realized in fiscal second quarter.

“Turning to our Security segment, Vicon orders reflected its ability to capture repeat customers with a recent $0.8 million second phase order from a current school district customer in New Jersey to develop its security technology system with new solutions, expanding on the customer’s previous order. Schools and universities are increasingly utilizing security platforms in their facilities to protect the safety of students and staff. Vicon’s award-winning Roughneck cameras and Valerus 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 of technologies to monitor people and protected areas. To support this growth, Vicon launched a new cloud security platform, called Anavio, that integrates video, access, and intercom in one easy-to-use system, powered by AI and face-based authentication. This new cloud platform allows us to create more value in our business by evolving Vicon into a recurring revenue business model. With the launch of Anavio along with continued improvements to our core software platform Valerus, we expect to drive further growth and see additional opportunity to grow gross margin in 2024.

“Our Industrial services segment, AIS, continues to see strong growth, highlighted by our recent announcement of $3.8 million in new orders for two projects, including a $2.2 million order for a geothermal system update for a Northeastern School District, and a $1.6 million order for the fabrication of a key component for a motion control technologies company. With its expanded capabilities from the acquisition of Heisey Mechanical Ltd, AIS continues to build profitable revenue growth with additional wins in new government and industrial verticals in a variety of service industries and new geographies.

“Looking ahead, Vicon’s next generation version of state-of-the-art surveillance cameras and VMS software, and evolution into a recurring revenue business model, will help drive additional market share gains. AIS is rapidly expanding into new markets and customer opportunities, supported by its acquisition. We also continue to explore additional acquisition opportunities that could drive further growth and expansion within our business segments. Taken together, we are 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 look forward to providing additional updates in the months to come as accelerate our efforts to build long-term value for our shareholders,” concluded Govil.

First Quarter 2023 Financial Results

Revenue for the three months ended December 31, 2023, and 2022 was $16.9 million and $12.0 million, respectively, an increase of 41%. The Security segment revenues for the three months ended December 31, 2023, increased by 31% to $9.2 million. The Security segment increase was due to an increased demand for security technology products under the Vicon brand. The Industrial Services segment revenues for the quarter increased by 55% to $7.7 million, mainly due to increased demand for the segment’s services as well as additional revenue due to the Heisey acquisition.

Gross Profit for the three months ended December 31, 2023, was $7.1 million, or 42% of revenues, as compared to gross profit of $5.0 million, or 42% of revenues, for the three months ended December 31, 2022.

Total operating expenses for three months ended December 31, 2023, were $7.8 million, compared to $7.0 million in the prior year’s quarter.

Operating loss for the first quarter of 2024 was $0.7 million as compared to an operating loss of $2.0 million for the first quarter of 2022. The improvement was primarily due to an increase in gross profit for the period, due to growing revenues in both segments of our business.

Net loss for the quarter ended December 31, 2023 was $1.2 million, as compared to a net loss of $6.3 million in 2022, an improvement of $5.1 million.

Cash, cash equivalents and restricted cash totaled $4.0 million at December 31, 2023, as compared to $6.3 million at September 30, 2023.

Inventories decreased to $7.9 million at December 31, 2023, from $8.7 million at December 31, 2022.

First Quarter FY 2024 Results Conference Call

Cemtrex Chief Executive Officer Saagar Govil and Chief Financial Officer Paul Wyckoff will host the conference call, followed by a question-and-answer period.

To access the call, please use the following information:

Date:Monday, February 12, 2024
Time:5:00 p.m. Eastern time, 2:00 p.m. Pacific time
Toll-free dial-in number:1-877-407-0792
International dial-in number:1-201-689-8263
Conference ID:13744216

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact MZ Group at 1-949-491-8235.

The conference call will be broadcast live and available for replay at https://viavid.webcasts.com/starthere.jsp?ei=1654825&tp_key=8056b6a8eb and via the investor relations section of the Company's website at www.cemtrex.com.

A replay of the conference call will be available after 8:00 p.m. Eastern time through February 28, 2024.

Toll-free replay number:1-844-512-2921
International replay number:1-412-317-6671
Replay ID:13744216

About Cemtrex

Cemtrex Inc. (CETX) is a company that owns two operating subsidiaries: Vicon Industries Inc and Advanced Industrial Services Inc.

Vicon Industries, a subsidiary of Cemtrex Inc., is a global leader in advanced security and surveillance technology to safeguard businesses, schools, municipalities, hospitals and cities. Since 1967, Vicon delivers mission-critical security surveillance systems, specializing in engineering complete security solutions that simplify deployment, operation and ongoing maintenance. Vicon provides security solutions for some of the largest municipalities and businesses in the U.S. and around the world, offering a wide range of cutting-edge and compliant security technologies, from AI-driven video analytics to fully integrated access control solutions. For more information visit www.vicon-security.com

AIS – Advanced Industrial Services, a subsidiary of Cemtrex, Inc., is a premier provider of industrial contracting services including millwrighting, rigging, piping, electrical, welding. AIS Installs high precision equipment in a wide variety of industrial markets including automotive, printing & graphics, industrial automation, packaging, and chemicals. AIS owns and operates a modern fleet of custom designed specialty equipment to assure safe and quick installation of your production equipment. Our talented staff participates in recurring instructional training, provided to ensure that the most current industry methods are being utilized to provide an efficient and safe working environment. For more information visit www.ais-york.com

For more information visit www.cemtrex.com.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to the closing of the offering, gross proceeds from the offering, our new product offerings, expected use of proceeds, or any proposed fundraising activities. These forward-looking statements are based on management’s current expectations and are subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by such forward looking statements. Statements made herein are as of the date of this press release and should not be relied upon as of any subsequent date. These risks and uncertainties are discussed under the heading “Risk Factors” contained in our Form 10-K filed with the Securities and Exchange Commission. All information in this press release is as of the date of the release and we undertake no duty to update this information unless required by law.


Cemtrex, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets

  (Unaudited)    
  December 31,  September 30, 
  2023  2023 
Assets      
Current assets        
Cash and cash equivalents $2,835,216  $5,329,910 
Restricted cash  1,181,516   1,019,652 
Short-term investments  13,307   13,663 
Trade receivables, net  9,904,555   9,209,695 
Trade receivables, net - related party  1,496,692   1,143,342 
         
Inventory, net  7,938,617   8,739,219 
Contract assets, net  1,694,135   1,739,201 
Prepaid expenses and other current assets  1,347,298   2,098,359 
Total current assets  26,411,336   29,293,041 
         
Property and equipment, net  9,170,376   9,218,701 
Right-of-use operating lease assets  2,094,342   2,287,623 
Royalties receivable - related party  498,174   674,893 
Note receivable - related party  761,585   761,585 
Goodwill  4,381,891   4,381,891 
Other  1,990,601   1,836,009 
Total Assets $45,308,305  $48,453,743 
         
Liabilities & Stockholders’ Equity        
Current liabilities        
Accounts payable $4,124,014  $6,196,406 
Accounts payable - related party  68,730   68,509 
         
Sales tax payable  10,713   35,829 
Revolving line of credit  3,357,324   - 
Current maturities of long-term liabilities  15,717,081   14,507,711 
Operating lease liabilities - short-term  728,875   741,487 
Deposits from customers  83,613   57,434 
Accrued expenses  1,842,692   2,784,390 
Contract liabilities  988,725   980,319 
Deferred revenue  1,562,107   1,583,406 
Accrued income taxes  212,249   388,627 
Total current liabilities  28,696,123   27,344,118 
Long-term liabilities        
Loans payable to bank  1,852,620   1,909,739 
Long-term operating lease liabilities  1,426,684   1,607,202 
Notes payable  1,600,000   4,679,743 
Mortgage payable  3,267,355   3,289,303 
Other long-term liabilities  405,624   501,354 
Paycheck Protection Program Loans  40,443   50,563 
Deferred Revenue - long-term  694,245   727,928 
Total long-term liabilities  9,286,971   12,765,832 
Total liabilities  37,983,094   40,109,950 
         
Commitments and contingencies  -   - 
         
Stockholders’ equity        
Preferred stock , $0.001 par value, 10,000,000 shares authorized, Series 1, 3,000,000 shares authorized, 2,408,053 shares issued and 2,343,953 shares outstanding as of December 31, 2023 and 2,293,016 shares issued and 2,228,916 shares outstanding as of September 30, 2023 (liquidation value of $10 per share)  2,408   2,293 
Series C, 100,000 shares authorized, 50,000 shares issued and outstanding at December 31, 2023 and September 30, 2023  50   50 
         
Common stock, $0.001 par value, 50,000,000 shares authorized, 1,055,636 shares issued and outstanding at December 31, 2023 and 1,045,783 shares issued and outstanding at September 30, 2023  1,056   1,046 
Additional paid-in capital  68,929,137   68,881,705 
Accumulated deficit  (65,323,389)  (64,125,895)
Treasury stock, 64,100 shares of Series 1 Preferred Stock at December 31, 2023 and September 30, 2023  (148,291)  (148,291)
Accumulated other comprehensive income  3,304,470   3,076,706 
Total Cemtrex stockholders’ equity  6,765,441   7,687,614 
Non-controlling interest  559,770   656,179 
Total liabilities and stockholders’ equity $45,308,305  $48,453,743 

Cemtrex, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)

       
  For the three months ended 
  December 31, 2023  December 31, 2022 
       
Revenues $16,878,166  $11,970,242 
Cost of revenues  9,795,767   6,927,627 
Gross profit  7,082,399   5,042,615 
Operating expenses        
General and administrative  6,961,966   5,455,833 
Research and development  848,805   1,538,218 
Total operating expenses  7,810,771   6,994,051 
Operating loss  (728,372)  (1,951,436)
Other (expense)/income        
Other income/(expense), net  78,411   (17,083)
Interest expense  (583,683)  (1,128,234)
Total other (expense)/income, net  (505,272)  (1,145,317)
Net loss before income taxes  (1,233,644)  (3,096,753)
Income tax expense  (70,751)  - 
Loss from Continuing operations  (1,304,395)  (3,096,753)
Income/(loss) from discontinued operations, net of tax  10,492   (3,239,621)
Net loss  (1,293,903)  (6,336,374)
Less loss in noncontrolling interest  (96,409)  (59,163)
Net loss attributable to Cemtrex, Inc. stockholders $(1,197,494) $(6,277,211)
Income/(loss) per share - Basic & Diluted        
Continuing Operations $(1.15) $(3.99)
Discontinued Operations $0.01  $(4.25)
Weighted Average Number of Shares-Basic & Diluted  1,047,624   761,571 

Cemtrex, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)

       
  For the three months ended 
  December 31, 
  2023  2022 
Cash Flows from Operating Activities      
       
Net loss $(1,293,903) $(6,336,374)
         
Adjustments to reconcile net loss to net cash used by operating activities        
Depreciation and amortization  368,301   530,830 
Gain on disposal of property and equipment  -   (3,547)
Noncash lease expense  193,281   197,198 
Bad debt expense  1,964   4,510 
Share-based compensation  7,557   39,842 
Income tax expense  70,751   - 
Interest expense paid in equity shares  -   32,145 
Accounts payable paid in equity shares  40,000   - 
Accrued interest on notes payable  327,132   528,100 
Non-cash royalty income  (13,282)  (4,427)
Amortization of original issue discounts on notes payable  -   441,734 
Amortization of loan origination costs  18,133   - 
         
Changes in operating assets and liabilities net of effects from acquisition of subsidiaries:        
Trade receivables  (696,824)  (1,541,371)
Trade receivables - related party  (163,349)  (383,710)
Inventory  800,602   (116,942)
Contract assets  45,066   (260,647)
Prepaid expenses and other current assets  564,373   (410,327)
Other assets  (54,592)  (146,356)
Accounts payable  (2,072,392)  (327,945)
Accounts payable - related party  221   (99)
Sales tax payable  (25,116)  (2,387)
Operating lease liabilities  (193,130)  (132,963)
Deposits from customers  26,179   416,523 
Accrued expenses  (941,698)  977,328 
Contract liabilities  8,406   1,037,897 
Deferred revenue  (54,982)  (95,395)
Income taxes payable  (78,574)  (94,848)
Other liabilities  (95,730)  (225,506)
Net cash used by operating activities - continuing operations  (3,211,606)  (5,876,737)
Net cash provided by operating activities - discontinued operations  -   2,505,853 
Net cash used by operating activities  (3,211,606)  (3,370,884)
         
Cash Flows from Investing Activities        
Purchase of property and equipment  (290,666)  (571,658)
Proceeds from sale of property and equipment  -   3,547 
Proceeds from sale of marketable securities  356   - 
Investment in MasterpieceVR  (100,000)  - 
Net cash used by investing activities - continuing operations  (390,310)  (568,111)
Net cash provided by investing activities - discontinued operations  -   207,329 
Net cash used by investing activities  (390,310)  (360,782)
         
Cash Flows from Financing Activities        
Proceeds on revolving line of credit  11,728,468   - 
Payments on revolving line of credit  (8,371,144)  - 
Payments on debt  (2,204,743)  (294,370)
Payments on Paycheck Protection Program Loans  (10,120)  - 
Proceeds on bank loans  28,331   - 
Payments on bank loans  (100,160)  (306,550)
Net cash provided by/(used by) financing activities  1,070,632   (600,920)
         
Effect of currency translation  198,454   229,243 
Net decrease in cash, cash equivalents, and restricted cash  (2,531,284)  (4,332,586)
Less cash attributed to discontinued operations  -   (714,420)
Cash, cash equivalents, and restricted cash at beginning of period  6,349,562   12,188,096 
Cash, cash equivalents, and restricted cash at end of period $4,016,732  $7,370,333 


Cemtrex Inc. (CETX) reported a 41% increase in revenue to $16.9 million in Q1’24.

The Security segment revenues for Cemtrex Inc. (CETX) increased by 31% to $9.2 million in Q1’24.

The Industrial Services segment revenues for Cemtrex Inc. (CETX) rose by 55% to $7.7 million in Q1’24.

The operating loss for Cemtrex Inc. (CETX) improved to $0.7 million in Q1’24 from $2.0 million in the previous year.

Vicon received a $0.8 million order from a school district customer in Q1’24.

Vicon launched the Anavio cloud security platform in Q1’24.

AIS secured $3.8 million in new orders for two projects in Q1’24.

Cash, cash equivalents, and restricted cash for Cemtrex Inc. (CETX) was $4.0 million as of December 31, 2023.
Cemtrex Inc.

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About CETX

cemtrex, inc. (nasdaq:cetx) is a diversified technology company that's driving innovation in a wide range of sectors, including smart technology, virtual and augmented realities, advanced electronic systems, industrial solutions, and intelligent security systems.