Cemtrex, Inc. (NASDAQ:CETX) Q1 2024 Earnings Call Transcript February 12, 2024
Cemtrex, Inc. misses on earnings expectations. Reported EPS is $-1.15 EPS, expectations were $-0.86. Cemtrex, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Greetings, and welcome to the Cemtrex First Quarter 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. 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. 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 predictions. 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 are, Saagar Govil, Chief Executive Officer; and Paul Wyckoff, Chief Financial Officer, will present unaudited results of operations for the first quarter ended December 31, 2023.
At this time, I will turn the call over to Cemtrex’s Chief Executive Officer, Saagar Govil.
Saagar Govil: Thank you, Operator, and good afternoon, everyone. I'm pleased to welcome you to today's first quarter 2024 financial results conference call. The first quarter of fiscal year 2024 was highlighted by the company's realignment and operating performance improvement. For the first quarter, Cemtrex had revenue of $16.9 million, an increase of 41%. For the first quarter, our gross margin held at 42%, supported by operational improvements. We continue to expect increases in our gross margin going forward over time as we make further enhancements in our business. During the quarter, we took additional steps to reduce operating expenditures, including a $1 million reduction in our overhead in our security segment that should start to be realized in our fiscal second quarter going forward.
Operating loss for the first quarter improved to $0.7 million, compared to an operating loss of $2 million a year ago. We also believe that there's room within our inventory and asset base to draw extra liquidity in order to maintain a healthy cash position. Revenues in our security segment were led by Vicon with first quarter revenues improving 31% to $9.2 million. Vicon orders during the first quarter 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. Vicon's award-winning Roughneck cameras and Valerus video management software solutions are being chosen to meet the unique challenges and locations ranging from border protection, correction facilities, and schools that require an advanced solution of technologies to monitor people and protect areas.
Increasing modernization of the current security infrastructure is accelerating the growth of the border security market, driven by the rise of geopolitical instabilities and an increase in border threat. As customers seek to modernize their current security infrastructure, Vicon continues to stand out with its advanced technologies and products. 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 overtime by evolving Vicon into a recurring revenue business model. Additionally, with AI at the core of our roadmap and Anavio, we're excited to layer in new capabilities and benefits for our customers to deliver the most cutting-edge security solutions over the months and years to come.
An aerial view of a modern data center, its server racks humming with activity.
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 percent in 2024. Revenue for our industrial services segment, AIS, increased 55% to $7.7 million. The increase was mainly due to an increased demand for our services and supported by the close of our highly synergistic acquisition of Heisey Mechanical. This continued growth was 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 technology company.
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. I'll now turn the call over to Paul Wyckoff, CFO, to discuss financials. Paul?
Paul Wyckoff: Thank you, Saagar. Revenue for the first quarter of 2024 and 2023 was $16.9 million and $12 million, respectively, an increase of 41%. The Security segment revenues for the first quarter of 2024 increased by 31% to $9.2 million. The Security segment increase was due to an increase for demand for security technology products under the Vicon brand. The Industrial service segment revenues for the quarter increased by 55% to $7.7 million, mainly due to increased demand for the segment services as well as additional revenue due to the Heisey acquisition. Gross profit for the first quarter of 2024 was $7.1 million, or 42% of revenues, as compared to gross profit of $5 million, or 42% of revenues, for the first quarter of fiscal year 2023.
Total operating expenses for the three months ended December 31, 2023, were $7.8 million compared to $7 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 million for the first quarter of 2023. The improvement was primarily due to an increase in the gross profit for the period due to growing revenues in both segments of our business. Net loss for the first quarter of 2024 was $1.2 million as compared to a net loss of $6.3 million in the first quarter of 2023, an improvement of $5.1 million. Cash and cash equivalents and restricted cash totaled $4 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 September 30, 2023.
I will now turn the call back to Saagar for a review of our 2024 outlook.
Saagar Govil: Thank you, Paul. Looking ahead, we are highly focused on delivering larger operating profits by driving top-line growth while maintaining tight cost control measures in our two operating businesses. Vicon has the ability to disrupt the status quo of how the security industry traditionally operates with its Anavio next generation, state-of-the-art surveillance cameras, and VMS software. Along with its next-generation technology, Vicon's 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 recent acquisitions. We also continue to explore additional acquisition opportunities that could drive further growth and expansion within our business segment.
Looking ahead, we are focused on delivering attractive operating results, 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 are confident that as we stay on this path, we can deliver strong long-term value for our shareholders going forward. Thank you all for attending, and now I would like to answer your questions. Operator?
