Cemtrex Reports First Quarter 2024 Financial Results
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.
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.
02/12/2024 - 04:20 PM
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 , $0.00 1 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, $0.00 1 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
What was the percentage increase in revenue for Cemtrex Inc. (CETX) in Q1’24?
Cemtrex Inc. (CETX) reported a 41% increase in revenue to $16.9 million in Q1’24.
How much did the Security segment revenues increase by in Q1’24 for Cemtrex Inc. (CETX)?
The Security segment revenues for Cemtrex Inc. (CETX) increased by 31% to $9.2 million in Q1’24.
What was the growth percentage in Industrial Services segment revenues for Cemtrex Inc. (CETX) in Q1’24?
The Industrial Services segment revenues for Cemtrex Inc. (CETX) rose by 55% to $7.7 million in Q1’24.
What was the operating loss for Cemtrex Inc. (CETX) 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.
What new order did Vicon receive in Q1’24 for Cemtrex Inc. (CETX)?
Vicon received a $0.8 million order from a school district customer in Q1’24.
What new platform did Vicon launch in Q1’24 for Cemtrex Inc. (CETX)?
Vicon launched the Anavio cloud security platform in Q1’24.
How much in new orders did AIS secure in Q1’24 for Cemtrex Inc. (CETX)?
AIS secured $3.8 million in new orders for two projects in Q1’24.
What was the cash position of Cemtrex Inc. (CETX) as of December 31, 2023?
Cash, cash equivalents, and restricted cash for Cemtrex Inc. (CETX) was $4.0 million as of December 31, 2023.