Cemtrex Reports Second Quarter 2024 Financial Results

Q2’24 Revenue Increased 7% to $17.2M; Management to Host Conference Call Today at 5:00 p.m. ET

Hauppauge, NY, May 14, 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 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 Subsidiaries
Condensed 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 Subsidiaries
Condensed 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 Subsidiaries
Condensed 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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Source: Cemtrex Inc.