- Cemtrex Inc. (NASDAQ: CETX, CETXP), an advanced security
technology and industrial services company, has reported its
unaudited financial and operational results for the fiscal second
quarter ended March 31, 2024.
Key Second Quarter FY 2024 and
Subsequent Highlights
- Revenue for Q2’24 increased 7% to
$17.2 million, compared to revenue of $16.1 million for Q2’23.
- Security segment revenues decreased
18% to $8.1 million in Q2’24 due to the delay of certain projects
for the segment’s products and services.
- Industrial Services segment
revenues for Q2’24 increased 47% to $9.1 million, on increased
demand and additional revenue from the Heisey Mechanical
acquisition completed in Q4’23.
-
Security segment revenues for the six months ended March 31, 2024,
increased 2% to $17.3 million compared to $16.9 million for the six
months ended March 31, 2023. This increase was due to an increased
demand for the Security segment’s products and services.
-
Industrial Services segment revenues for the six months ended March
31, 2024, increased 51%, to $16.8 million compared to $11.1 million
for the six months ended March 31, 2023.
- Closed $10 million upsized
underwritten public offering to conduct operations, increase
marketing efforts, invest in existing business initiatives and
products, and for the partial repayment of indebtedness.
- Cash, cash equivalents and
restricted cash as of March 31, 2024 was $4.1 million.
Management Commentary
Cemtrex Chairman and CEO, Saagar Govil,
commented on the results: “The second quarter was highlighted by
new technology deployments and continued overall growth in our
business. Revenue in the quarter grew 7% to $17.2 million, driven
by strong demand for AIS products and services, with Industrial
Services segment revenue increasing 47% to $9.1 million. For Vicon,
although the quarter was affected by the delay of some of its
projects, for the half fiscal year the segment is still growing
year over year. Operating loss for the second quarter was $1.0
million, compared to operating income of $0.4 million a year ago,
mainly due to decreased gross profit in our Security segment and
increased payroll expenses. The operating loss for the six month
period was $1.8 million compared to $1.5 million a year ago,
despite the 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 incurring in
the future. Our goal of reaching a full year operating profit
remains and we are working hard to drive revenue and maintain tight
cost controls.
“Turning to our Security segment, Vicon
continued to push the deployment of new technologies and products,
including its innovative new cloud security platform Anavio. The
platform enables users to manage their access control, video, and
intercom via a single tool, so there’s no shuffling between
separate security systems in order to achieve complete situational
awareness and control. New features 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 people) throughout a
facility. We continue to make investments into our sales and
marketing resources in the segment to drive further sales over the
next several quarters. We also were able to reduce our inventory by
over $1 million of this fiscal year as we strive to make our
operations more efficient. With the launch of Anavio along with new
technologies and continued improvements to our core software
platform Valerus, we expect to drive further growth and see
additional opportunity to grow gross margin in 2024.
“AIS and our Industrial services segment
captured new orders from leading companies, building a pipeline of
growth that we believe will produce a record year of revenue. We
continue to believe with additional orders ahead, AIS has the
potential to reach more than 30% annual revenue growth in FY’24.
During the quarter AIS secured orders including a $1.6 million
order for two relocation projects from a leading printing and
graphics company, and a $0.5 million order to remove existing
equipment for an engineering and construction company, affirm AIS’
commitment to delivering excellence across its service
offerings.
“Looking ahead, strengthened by an improved
balance sheet from our $10 million upsized underwritten public
offering, of which a portion of the proceeds were used to pay off
some of our indebtedness, 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
continue to explore acquisition opportunities that can enhance our
market reach and service capabilities, and further drive growth in
the months and years ahead,” concluded Govil.
Second Quarter FY 2024 Financial
Results
Revenue for the three months ended March 31,
2024, and 2023 was $17.2 million and $16.1 million, respectively,
an increase of 7%. The Security segment revenues for the three
months ended March 31, 2024, decreased by 18% to $8.1 million. The
Security segment decrease was due to the delay of multiple projects
for the Security segment’s products and services. The Industrial
Services segment revenues for the second quarter increased by 47%
to $9.1 million, mainly due to increased demand for the segment’s
services as well as additional business from the Heisey acquisition
completed during the fourth quarter of fiscal year 2023.
Gross Profit for the three months ended March
31, 2024, was $6.9 million, or 40% of revenues, as compared to
gross profit of $7.3 million, or 46% of revenues, for the three
months ended March 31, 2023.
Total operating expenses for three months ended
December 31, 2023, were $8.0 million, compared to $7.0 million in
the prior year’s quarter.
Operating loss for the second quarter of 2024
was $1.0 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 the Security segment and
overall increased payroll expenses.
Net loss for the quarter ended March 31, 2024
was $1.6 million, as compared to a net loss of $0.5 million in
2023.
Cash, cash equivalents and restricted cash
totaled $4.1 million at March 31, 2024, as compared to $6.3 million
at September 30, 2023.
Inventories decreased to $7.4 million at March
31, 2024, from $8.7 million at September 30, 2023.
Second 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: |
Tuesday, May 14, 2024 |
Time: |
5:00 p.m. Eastern time, 2:00 p.m. Pacific time |
Toll-free dial-in number: |
1-800-717-1738 |
International dial-in number: |
1-646-307-1865 |
Conference ID: |
1182838 |
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=1668765&tp_key=084fe1071c
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 May 28, 2024.
Toll-free replay number: |
1-844-512-2921 |
International replay number: |
1-412-317-6671 |
Replay ID: |
1182838 |
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
SubsidiariesCondensed Consolidated Balance
Sheets
|
|
(Unaudited) |
|
|
|
|
|
|
March 31, |
|
|
September 30, |
|
|
|
2024 |
|
|
2023 |
|
Assets |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
2,916,120 |
|
|
$ |
5,329,910 |
|
Restricted cash |
|
|
1,172,416 |
|
|
|
1,019,652 |
|
Short-term investments |
|
|
13,853 |
|
|
|
13,663 |
|
Trade receivables, net |
|
|
11,535,880 |
|
|
|
9,209,695 |
|
Trade receivables, net - related party |
|
|
1,479,703 |
|
|
|
1,143,342 |
|
Inventory, net |
|
|
7,397,747 |
|
|
|
8,739,219 |
|
Contract assets, net |
|
|
1,979,679 |
|
|
|
1,739,201 |
|
Prepaid expenses and other current assets |
|
|
1,910,415 |
|
|
|
2,098,359 |
|
Total current assets |
|
|
28,405,813 |
|
|
|
29,293,041 |
|
|
|
|
|
|
|
|
|
|
Property and equipment,
net |
|
|
8,902,051 |
|
|
|
9,218,701 |
|
Right-of-use operating lease
assets |
|
|
2,193,011 |
|
|
|
2,287,623 |
|
Royalties receivable, net -
related party |
|
|
440,049 |
|
|
|
674,893 |
|
Note receivable, net - related
party |
|
|
761,585 |
|
|
|
761,585 |
|
Goodwill |
|
|
4,381,891 |
|
|
|
4,381,891 |
|
Other |
|
|
2,161,862 |
|
|
|
1,836,009 |
|
Total Assets |
|
$ |
47,246,262 |
|
|
$ |
48,453,743 |
|
|
|
|
|
|
|
|
|
|
Liabilities & Stockholders’ Equity |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
5,741,091 |
|
|
$ |
6,196,406 |
|
Accounts payable - related party |
|
|
9,214 |
|
|
|
68,509 |
|
Sales tax payable |
|
|
37,487 |
|
|
|
35,829 |
|
Revolving line of credit |
|
|
4,019,234 |
|
|
|
- |
|
Current maturities of long-term liabilities |
|
|
914,170 |
|
|
|
14,507,711 |
|
Operating lease liabilities - short-term |
|
|
792,141 |
|
|
|
741,487 |
|
Deposits from customers |
|
|
207,708 |
|
|
|
57,434 |
|
Accrued expenses |
|
|
2,676,079 |
|
|
|
2,784,390 |
|
Contract liabilities |
|
|
1,899,409 |
|
|
|
980,319 |
|
Deferred revenue |
|
|
1,404,608 |
|
|
|
1,583,406 |
|
Accrued income taxes |
|
|
404,288 |
|
|
|
388,627 |
|
Total current liabilities |
|
|
18,105,429 |
|
|
|
27,344,118 |
|
Long-term liabilities |
|
|
|
|
|
|
|
|
Long-term debt |
|
|
21,553,920 |
|
|
|
9,929,348 |
|
Long-term operating lease liabilities |
|
|
1,462,545 |
|
|
|
1,607,202 |
|
Other long-term liabilities |
|
|
317,093 |
|
|
|
501,354 |
|
Deferred Revenue - long-term |
|
|
654,617 |
|
|
|
727,928 |
|
Total long-term liabilities |
|
|
23,988,175 |
|
|
|
12,765,832 |
|
Total liabilities |
|
|
42,093,604 |
|
|
|
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
2,272,002 shares outstanding as of March 31, 2024 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 March 31, 2024 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 March 31, 2024 and
1,045,783 shares issued and outstanding at September 30, 2023 |
|
|
1,056 |
|
|
|
1,046 |
|
Additional paid-in capital |
|
|
68,936,696 |
|
|
|
68,881,705 |
|
Accumulated deficit |
|
|
(66,806,600 |
) |
|
|
(64,125,895 |
) |
Treasury stock, 136,051 shares of Series 1 Preferred Stock at March
31, 2024 and 64,100 shares of Series 1 Preferred Stock at September
30, 2023 |
|
|
(217,996 |
) |
|
|
(148,291 |
) |
Accumulated other comprehensive income |
|
|
2,773,784 |
|
|
|
3,076,706 |
|
Total Cemtrex stockholders’ equity |
|
|
4,689,398 |
|
|
|
7,687,614 |
|
Non-controlling interest |
|
|
463,260 |
|
|
|
656,179 |
|
Total liabilities and
stockholders’ equity |
|
$ |
47,246,262 |
|
|
$ |
48,453,743 |
|
Cemtrex, Inc. and
SubsidiariesCondensed Consolidated Statements of
Operations (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended |
|
|
For the six months ended |
|
|
|
March 31, 2024 |
|
|
March 31, 2023 |
|
|
March 31, 2024 |
|
|
March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
17,159,595 |
|
|
|
$ |
16,073,397 |
|
|
$ |
34,037,761 |
|
|
$ |
28,043,639 |
|
Cost of revenues |
|
|
10,220,179 |
|
|
|
|
8,734,916 |
|
|
|
20,015,946 |
|
|
|
15,662,543 |
|
Gross profit |
|
|
6,939,416 |
|
|
|
|
7,338,481 |
|
|
|
14,021,815 |
|
|
|
12,381,096 |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
|
7,020,157 |
|
|
|
|
5,318,267 |
|
|
|
13,992,123 |
|
|
|
10,482,605 |
|
Research and development |
|
|
951,400 |
|
|
|
|
1,615,341 |
|
|
|
1,800,205 |
|
|
|
3,445,054 |
|
Total operating expenses |
|
|
7,971,557 |
|
|
|
|
6,933,608 |
|
|
|
15,792,328 |
|
|
|
13,927,659 |
|
Operating (loss)/income |
|
|
(1,032,141 |
|
) |
|
|
404,873 |
|
|
|
(1,770,513 |
) |
|
|
(1,546,563 |
) |
Other (expense)/income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income/(expense), net |
|
|
144,765 |
|
|
|
|
376,504 |
|
|
|
223,176 |
|
|
|
359,421 |
|
Interest expense |
|
|
(592,804 |
|
) |
|
|
(1,335,138 |
) |
|
|
(1,176,487 |
) |
|
|
(2,463,372 |
) |
Total other (expense)/income, net |
|
|
(448,039 |
|
) |
|
|
(958,634 |
) |
|
|
(953,311 |
) |
|
|
(2,103,951 |
) |
Net loss before income
taxes |
|
|
(1,480,180 |
|
) |
|
|
(553,761 |
) |
|
|
(2,723,824 |
) |
|
|
(3,650,514 |
) |
Income tax expense |
|
|
(100,004 |
) |
|
|
|
- |
|
|
|
(170,755 |
) |
|
|
- |
|
Loss from Continuing
operations |
|
|
(1,580,184 |
|
) |
|
|
(553,761 |
) |
|
|
(2,894,579 |
) |
|
|
(3,650,514 |
) |
Income/(loss) from
discontinued operations, net of tax |
|
|
10,463 |
|
|
|
|
14,232 |
|
|
|
20,955 |
|
|
|
(3,225,389 |
) |
Net loss |
|
|
(1,569,721 |
|
) |
|
|
(539,529 |
) |
|
|
(2,894,579 |
) |
|
|
(6,875,903 |
) |
Less (loss)/income in
noncontrolling interest |
|
|
(96,510 |
|
) |
|
|
55,265 |
|
|
|
(192,919 |
) |
|
|
(3,898 |
) |
Net loss attributable to Cemtrex, Inc.
stockholders |
|
$ |
(1,473,211 |
|
) |
|
$ |
(594,794 |
) |
|
$ |
(2,680,705 |
) |
|
$ |
(6,872,005 |
) |
(Loss)/income per share -
Basic & Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing Operations |
|
$ |
(1.46 |
|
) |
|
$ |
(0.82 |
) |
|
$ |
(2.62 |
) |
|
$ |
(4.70 |
) |
Discontinued Operations |
|
$ |
0.01 |
|
|
|
$ |
0.02 |
|
|
$ |
0.02 |
|
|
$ |
(4.09 |
) |
Weighted Average Number of
Shares-Basic & Diluted |
|
|
1,055,636 |
|
|
|
|
815,498 |
|
|
|
1,051,630 |
|
|
|
788,265 |
|
Cemtrex, Inc. and
SubsidiariesCondensed Consolidated Statements of
Cash Flows(Unaudited)
|
|
|
|
|
|
|
|
|
For the six months ended |
|
|
|
March 31, |
|
|
|
2024 |
|
|
2023 |
|
Cash Flows from Operating Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(2,873,624 |
) |
|
$ |
(6,875,903 |
) |
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net
loss to net cash used by operating activities |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
673,190 |
|
|
|
448,388 |
|
Gain on disposal of property and equipment |
|
|
- |
|
|
|
64,908 |
|
Noncash lease expense |
|
|
389,125 |
|
|
|
420,411 |
|
Bad debt expense |
|
|
35,213 |
|
|
|
(1,543 |
) |
Share-based compensation |
|
|
15,116 |
|
|
|
66,577 |
|
Income tax expense |
|
|
(96,750 |
) |
|
|
- |
|
Interest expense paid in equity shares |
|
|
- |
|
|
|
32,145 |
|
Accounts payable paid in equity shares |
|
|
40,000 |
|
|
|
102,500 |
|
Accrued interest on notes payable |
|
|
657,355 |
|
|
|
1,290,615 |
|
Non-cash royalty income |
|
|
(26,564 |
) |
|
|
- |
|
Gain/(loss) on marketable securities |
|
|
(190 |
) |
|
|
58 |
|
Amortization of original issue discounts on notes payable |
|
|
- |
|
|
|
883,467 |
|
Amortization of loan origination costs |
|
|
36,267 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Changes in operating assets
and liabilities net of effects from acquisition of
subsidiaries: |
|
|
|
|
|
|
|
|
Trade receivables |
|
|
(2,317,074 |
) |
|
|
(1,870,729 |
) |
Trade receivables - related party |
|
|
(178,980 |
) |
|
|
(408,464 |
) |
Inventory |
|
|
1,341,472 |
|
|
|
(73,209 |
) |
Contract assets |
|
|
(240,478 |
) |
|
|
(12,597 |
) |
Prepaid expenses and other current assets |
|
|
483,043 |
|
|
|
(141,562 |
) |
Other assets |
|
|
(225,853 |
) |
|
|
(185,165 |
) |
Accounts payable |
|
|
(455,315 |
) |
|
|
256,584 |
|
Accounts payable - related party |
|
|
408 |
|
|
|
(15,765 |
) |
Sales tax payable |
|
|
1,658 |
|
|
|
90,204 |
|
Operating lease liabilities |
|
|
(388,516 |
) |
|
|
(356,176 |
) |
Deposits from customers |
|
|
150,274 |
|
|
|
1,618 |
|
Accrued expenses |
|
|
(108,311 |
) |
|
|
701,414 |
|
Contract liabilities |
|
|
919,090 |
|
|
|
554,966 |
|
Deferred revenue |
|
|
(252,109 |
) |
|
|
(86,106 |
) |
Income taxes payable |
|
|
(146,422 |
) |
|
|
(37,698 |
) |
Other liabilities |
|
|
(184,261 |
) |
|
|
(231,998 |
) |
Net cash used by operating activities - continuing operations |
|
|
(2,752,236 |
) |
|
|
(5,383,060 |
) |
Net cash provided by operating activities - discontinued
operations |
|
|
- |
|
|
|
2,488,144 |
|
Net cash used by operating activities |
|
|
(2,752,236 |
) |
|
|
(2,894,916 |
) |
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities |
|
|
|
|
|
|
|
|
Purchase of property and
equipment |
|
|
(355,308 |
) |
|
|
(263,732 |
) |
Proceeds from sale of property
and equipment |
|
|
- |
|
|
|
11,026 |
|
Investment in
MasterpieceVR |
|
|
(100,000 |
) |
|
|
- |
|
Net cash used by investing activities |
|
|
(455,308 |
) |
|
|
(252,706 |
) |
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities |
|
|
|
|
|
|
|
|
Proceeds on revolving line of
credit |
|
|
19,360,672 |
|
|
|
- |
|
Payments on revolving line of
credit |
|
|
(15,413,971 |
) |
|
|
- |
|
Payments on debt |
|
|
(2,429,743 |
) |
|
|
(544,370 |
) |
Payments on Paycheck
Protection Program Loans |
|
|
(20,242 |
) |
|
|
(10,033 |
) |
Proceeds on bank loans |
|
|
28,331 |
|
|
|
- |
|
Payments on bank loans |
|
|
(204,802 |
) |
|
|
(365,724 |
) |
Purchases of treasury
stock |
|
|
(69,705 |
) |
|
|
|
|
Net cash provided by/(used by) financing
activities |
|
|
1,250,540 |
|
|
|
(920,127 |
) |
|
|
|
|
|
|
|
|
|
Effect of currency
translation |
|
|
(304,022 |
) |
|
|
(126,593 |
) |
Net decrease in cash, cash
equivalents, and restricted cash |
|
|
(1,957,004 |
) |
|
|
(4,067,749 |
) |
Cash, cash equivalents, and
restricted cash at beginning of period |
|
|
6,349,562 |
|
|
|
11,473,676 |
|
Cash, cash equivalents, and restricted cash at end of
period |
|
$ |
4,088,536 |
|
|
$ |
7,279,334 |
|
|
|
|
|
|
|
|
|
|
Balance Sheet Accounts Included in Cash, Cash Equivalents,
and Restricted Cash |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
2,916,120 |
|
|
$ |
6,634,037 |
|
Restricted cash |
|
|
1,172,416 |
|
|
|
645,297 |
|
Total cash, cash equivalents, and restricted
cash |
|
$ |
4,088,536 |
|
|
$ |
7,279,334 |
|
Investor Relations
Chris Tyson
Executive Vice President – MZ North America
Direct: 949-491-8235
CETX@mzgroup.us
www.mzgroup.us
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