Hauppauge, NY, Aug. 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 third quarter ended June 30, 2024.
Key Third Quarter FY 2024 and Subsequent Highlights
- Revenue for Q3'24 was flat at $14.7 million, compared to revenue of $14.7 million for Q3'23.
- Security segment revenues decreased 31% to $6.2 million in Q3'24 due primarily to the delay of multiple projects for the segment's products and services.
- Industrial Services segment revenues for Q3'24 increased 49% to $8.5 million, on increased demand and additional revenue from the Heisey Mechanical acquisition completed in Q4'23.
- Revenue for the nine months ended June 30, 2024 increased 14% to $48.7 million, compared to revenue in the prior year period of $42.8 million.
- Security segment revenues for the nine months ended June 30, 2024, decreased 10% to $23.4 million compared to $25.9 million for the nine months ended June 30, 2023.
- Industrial Services segment revenues for the nine months ended June 30, 2024, increased 50% to $25.3 million compared to $16.8 million for the nine months ended June 30, 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 June 30, 2024 was $7.6 million, compared to $6.3 million as of September 30, 2023.
Management Commentary
Cemtrex Chairman and CEO, Saagar Govil, commented on the results: "In the third quarter we continued to see momentum in our segments, sustaining revenue year over year at $14.7 million. Significant demand for AIS products and services drove a 49% increase in revenue to $8.5 million, offset by decreases in Vicon revenue due to the delay of multiple projects and a weaker industrywide demand for security solutions.
"Operating loss for the third quarter was $3.2 million, compared to operating income of $0.1 million a year ago, mainly due to decreased gross profit in our Security segment and increased G&A expenses. The operating loss for the nine-month period was $5.0 million compared to $1.5 million a year ago, despite the higher sales. However, these results include approximately $2 million in one-time expenses related to the May 2024 equity financing, employee related one-time charges and legal expenses. Our goal of achieving a full year operating profit remains and we are working hard to drive revenue and maintain tight cost controls.
"In our Security segment, despite project delays, the team at Vicon continues to push the deployment of new technologies and products with investments into sales and marketing resources that we believe will drive sales over the next several quarters. We also were able to reduce our inventory by over $1 million this fiscal year as we strive to make our operations more efficient. We expect with the launch of the innovative new cloud security platform Anavio, along with new technologies and continued improvements to our core software platform Valerus, there is significant further opportunity to grow revenue and gross margin over the next several quarters.
"Our Industrial services segment delivered another strong quarter on 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, with further room for growth in FY 25.
"During the quarter we took the opportunity to improve our balance sheet with a $10 million upsized underwritten public offering, of which a portion of the proceeds were used to pay off some of our indebtedness. Looking ahead, we are now well positioned for additional growth and to reach our goal to achieve positive operating income in the future. The strengthened balance sheet also provides the ability to explore acquisition opportunities that can enhance our market reach and service capabilities, as we continue to seek long-term value for our shareholders," concluded Govil.
Third Quarter FY 2024 Financial Results
Revenue for the three months ended June 30, 2024, and 2023 was $14.7 million and $14.7 million, respectively. The Security segment revenues for the three months ended June 30, 2024, decreased by 31% to $6.2 million. The Security segment decrease was due to the delay of multiple projects for the Security segment's products and services and overall worsening economic conditions in the industry. The Industrial Services segment revenues for the third quarter increased by 49% to $8.5 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 June 30, 2024, was $5.9 million, or 40% of revenues, as compared to gross profit of $6.5 million, or 44% of revenues, for the three months ended June 30, 2023.
Total operating expenses for three months ended June 30, 2024, were $9.1 million, compared to $6.4 million in the prior year's quarter.
Operating loss for the third quarter of 2024 was $3.2 million as compared to an operating income of $0.1 million for the third quarter of 2023. The operating loss was primarily due to a decrease in gross profit in the Security segment and overall increased general and administration expenses.
Net loss for the quarter ended June 30, 2024 was $9.1 million, as compared to a net loss of $1.2 million in the prior year's quarter.
Cash, cash equivalents and restricted cash totaled $7.6 million at June 30, 2024, as compared to $6.3 million at September 30, 2023.
Inventories decreased to $7.5 million at June 30, 2024, from $8.7 million at September 30, 2023.
Third 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: | Wednesday, August 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: | 1123331 |
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=1684288&tp_key=6a1e8a9870 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 August 28, 2024.
| Toll-free replay number: | 1-844-512-2921 |
| International replay number: | 1-412-317-6671 |
| Replay ID: | 1123331 |
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) | |||||||
| June 30, | September 30, | ||||||
| 2024 | 2023 | ||||||
| Assets | |||||||
| Current assets | |||||||
| Cash and cash equivalents | $ | 6,468,197 | $ | 5,329,910 | |||
| Restricted cash | 1,152,028 | 1,019,652 | |||||
| Trade receivables, net | 7,800,883 | 9,209,695 | |||||
| Trade receivables, net - related party | 755,198 | 1,143,342 | |||||
| Inventory, net | 7,531,955 | 8,739,219 | |||||
| Contract assets, net | 1,115,060 | 1,739,201 | |||||
| Prepaid expenses and other current assets | 1,582,026 | 2,112,022 | |||||
| Total current assets | 26,405,347 | 29,293,041 | |||||
| Property and equipment, net | 8,583,113 | 9,218,701 | |||||
| Right-of-use operating lease assets | 1,936,441 | 2,287,623 | |||||
| Royalties receivable, net - related party | 453,330 | 674,893 | |||||
| Note receivable, net - related party | - | 761,585 | |||||
| Goodwill | 4,238,822 | 4,381,891 | |||||
| Other | 2,210,090 | 1,836,009 | |||||
| Total Assets | $ | 43,827,143 | $ | 48,453,743 | |||
| Liabilities & Stockholders' Equity | |||||||
| Current liabilities | |||||||
| Accounts payable | $ | 3,612,634 | $ | 6,196,406 | |||
| Accounts payable - related party | 3,797 | 68,509 | |||||
| Sales tax payable | 37,865 | 35,829 | |||||
| Revolving line of credit | 2,730,325 | - | |||||
| Current maturities of long-term liabilities | 661,271 | 14,507,711 | |||||
| Operating lease liabilities - short-term | 780,423 | 741,487 | |||||
| Deposits from customers | 246,765 | 57,434 | |||||
| Accrued expenses | 2,347,458 | 2,784,390 | |||||
| Contract liabilities | 1,901,606 | 980,319 | |||||
| Deferred revenue | 1,284,688 | 1,583,406 | |||||
| Accrued income taxes | 398,054 | 388,627 | |||||
| Total current liabilities | 14,004,886 | 27,344,118 | |||||
| Long-term liabilities | |||||||
| Long-term debt | 16,893,184 | 9,929,348 | |||||
| Long-term operating lease liabilities | 1,216,184 | 1,607,202 | |||||
| Other long-term liabilities | 299,988 | 501,354 | |||||
| Deferred Revenue - long-term | 631,581 | 727,928 | |||||
| Warrant liabilities | 10,428,397 | - | |||||
| Total long-term liabilities | 29,469,334 | 12,765,832 | |||||
| Total liabilities | 43,474,220 | 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, 2,456,827 shares issued and 2,392,727 shares outstanding as of June 30, 2024 and 2,293,016 shares issued and 2,228,916 shares outstanding as of September 30, 2023 (liquidation value of $10 per share) | 2,457 | 2,293 | |||||
| Series C, 100,000 shares authorized, 50,000 shares issued and outstanding at June 30, 2024 and September 30, 2023 | 50 | 50 | |||||
| Common stock, $0.001 par value, 50,000,000 shares authorized,16,352,270 shares issued and outstanding at June 30, 2024 and 1,045,783 shares issued and outstanding at September 30, 2023 | 16,353 | 1,046 | |||||
| Additional paid-in capital | 73,002,738 | 68,881,705 | |||||
| Accumulated deficit | (75,787,626 | ) | (64,125,895 | ||||
| Treasury stock, 64,100 shares of Series 1 Preferred Stock at June 30, 2024, and September 30, 2023 | (148,291 | ) | (148,291 | ||||
| Accumulated other comprehensive income | 2,962,275 | 3,076,706 | |||||
| Total Cemtrex stockholders' equity | 47,956 | 7,687,614 | |||||
| Non-controlling interest | 304,967 | 656,179 | |||||
| Total liabilities and stockholders' equity | $ | 43,827,143 | $ | 48,453,743 | |||
Cemtrex, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
| For the three months ended | For the nine months ended | |||||||||||||||||
| June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | |||||||||||||||
| Revenues | $ | 14,686,398 | $ | 14,730,140 | $ | 48,724,159 | $ | 42,773,779 | ||||||||||
| Cost of revenues | 8,809,251 | 8,249,497 | 28,825,197 | 23,914,249 | ||||||||||||||
| Gross profit | 5,877,147 | 6,480,643 | 19,898,962 | 18,859,530 | ||||||||||||||
| Operating expenses | ||||||||||||||||||
| General and administrative | 8,192,180 | 5,376,960 | 22,184,303 | 16,456,602 | ||||||||||||||
| Research and development | 864,483 | 1,049,909 | 2,664,688 | 3,895,717 | ||||||||||||||
| Total operating expenses | 9,056,663 | 6,426,869 | 24,848,991 | 20,352,319 | ||||||||||||||
| Operating (loss)/income | (3,179,516 | ) | 53,774 | (4,950,029 | ) | (1,492,789 | ) | |||||||||||
| Other (expense)/income | ||||||||||||||||||
| Other(expense)/income, net | (933,539 | ) | 34,652 | (710,363 | ) | 394,073 | ||||||||||||
| Interest expense | (521,316 | ) | (1,254,185 | ) | (1,697,803 | ) | (3,717,557 | ) | ||||||||||
| Loss on excess fair value of warrants | (7,255,528 | ) | - | (7,255,528 | ) | - | ||||||||||||
| Changes in fair value of warrant liability | 2,807,890 | - | 2,807,890 | - | ||||||||||||||
| Total other expense, net | (5,902,493 | ) | (1,219,533 | ) | (6,855,804 | ) | (3,323,484 | ) | ||||||||||
| Net loss before income taxes | (9,082,009 | ) | (1,165,759 | ) | (11,805,833 | ) | (4,816,273 | ) | ||||||||||
| Income tax expense | (67,294 | ) | (19,641 | ) | (238,049 | ) | (19,641 | ) | ||||||||||
| Loss from Continuing operations | (9,149,303 | ) | (1,185,400 | ) | (12,043,882 | ) | (4,835,914 | ) | ||||||||||
| (Loss)/income from discontinued operations, net of tax | 9,984 | 13,281 | 30,939 | (3,212,108 | ) | |||||||||||||
| Net loss | (9,139,319 | ) | (1,172,119 | ) | (12,012,943 | ) | (8,048,022 | ) | ||||||||||
| Less loss in noncontrolling interest | (158,293 | ) | (25,595 | ) | (351,212 | ) | (29,493 | ) | ||||||||||
| Net loss attributable to Cemtrex, Inc. stockholders | $ | (8,981,026 | ) | $ | (1,146,524 | ) | $ | (11,661,731 | ) | $ | (8,018,529 | ) | ||||||
| (Loss)/income per share - Basic & Diluted | ||||||||||||||||||
| Continuing Operations | $ | (0.29 | ) | $ | (1.36 | ) | $ | (1.06 | ) | $ | (5.90 | ) | ||||||
| Discontinued Operations | $ | 0.00 | $ | 0.01 | $ | 0.00 | $ | (3.89 | ) | |||||||||
| Weighted Average Number of Shares-Basic & Diluted | 31,346,628 | 897,897 | 11,044,569 | 824,689 | ||||||||||||||
Cemtrex, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| For the nine months ended | |||||||||
| June 30, | |||||||||
| Cash Flows from Operating Activities | 2024 | 2023 | |||||||
| Net loss | $ | (12,012,943 | ) | $ | (8,048,022 | ) | |||
| Adjustments to reconcile net loss to net cash used by operating activities | |||||||||
| Depreciation and amortization | 998,641 | 698,269 | |||||||
| (Gain)/loss on disposal of property and equipment | (13,595 | ) | 69,611 | ||||||
| Noncash lease expense | 645,695 | 614,254 | |||||||
| Bad debt expense | 1,429,791 | (155 | ) | ||||||
| Share-based compensation | 22,675 | 93,313 | |||||||
| Interest expense paid in equity shares | - | 276,151 | |||||||
| Accounts payable paid in equity shares | 129,000 | 141,872 | |||||||
| Accrued interest on notes payable | 937,899 | 1,858,631 | |||||||
| Non-cash royalty income | (39,846 | ) | - | ||||||
| Amortization of original issue discounts on notes payable | - | 1,200,200 | |||||||
| Amortization of loan origination costs | 54,400 | - | |||||||
| Loss on excess fair value of warrants | 7,255,528 | - | |||||||
| Changes in fair value of warrant liability | (2,807,890 | ) | - | ||||||
| Changes in operating assets and liabilities net of effects from acquisition of subsidiaries: | |||||||||
| Trade receivables | 1,420,733 | (2,108,384 | ) | ||||||
| Trade receivables - related party | (136,277 | ) | (578,388 | ) | |||||
| Inventory | 1,350,333 | (231,923 | ) | ||||||
| Contract assets | 624,141 | 215,304 | |||||||
| Prepaid expenses and other current assets | 548,129 | (883,018 | ) | ||||||
| Other assets | (274,081 | ) | (246,658 | ) | |||||
| Accounts payable | (1,588,439 | ) | 674,168 | ||||||
| Accounts payable - related party | (5,009 | ) | (15,761 | ) | |||||
| Sales tax payable | 2,036 | 66,121 | |||||||
| Operating lease liabilities | (646,595 | ) | (550,019 | ) | |||||
| Deposits from customers | 189,331 | (38,863 | ) | ||||||
| Accrued expenses | (496,932 | ) | 1,198,788 | ||||||
| Contract liabilities | 921,287 | 369,072 | |||||||
| Deferred revenue | (395,065 | ) | 156,108 | ||||||
| Income taxes payable | 11,942 | (45,773 | ) | ||||||
| Other liabilities | (201,366 | ) | (278,946 | ) | |||||
| Net cash used by operating activities - continuing operations | (2,076,477 | ) | (5,394,048 | ) | |||||
| Net cash provided by operating activities - discontinued operations | - | 2,474,863 | |||||||
| Net cash used by operating activities | (2,076,477 | ) | (2,919,185 | ) | |||||
| Cash Flows from Investing Activities | |||||||||
| Purchase of property and equipment | (429,334 | ) | (761,470 | ) | |||||
| Proceeds from sale of property and equipment | 77,110 | 26,205 | |||||||
| Investment in MasterpieceVR | (100,000 | ) | - | ||||||
| Royalties on related party revenues | 46,000 | - | |||||||
| Net cash used by investing activities | (406,224 | ) | (735,265 | ) | |||||
| Cash Flows from Financing Activities | |||||||||
| Proceeds on revolving line of credit | 26,682,873 | - | |||||||
| Payments on revolving line of credit | (24,025,081 | ) | - | ||||||
| Payments on debt | (7,818,405 | ) | (1,260,837 | ) | |||||
| Payments on Paycheck Protection Program Loans | (30,365 | ) | (20,154 | ) | |||||
| Proceeds on bank loans | 28,267 | - | |||||||
| Royalties on related party revenues | 46,000 | ||||||||
| Purchases of treasury stock | (69,705 | ) | - | ||||||
| Proceeds from offerings | 10,035,293 | - | |||||||
| Expenses on offerings | (935,333 | ) | - | ||||||
| Net cash provided by/(used by) financing activities | 3,867,544 | (1,280,991 | ) | ||||||
| Effect of currency translation | (114,180 | ) | (104,123 | ) | |||||
| Net increase/(decrease) in cash, cash equivalents, and restricted cash | 1,384,843 | (4,935,441 | ) | ||||||
| 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 | $ | 7,620,225 | $ | 6,434,112 | |||||
| Balance Sheet Accounts Included in Cash, Cash Equivalents, and Restricted Cash | |||||||||
| Cash and cash equivalents | $ | 6,468,197 | $ | 5,628,839 | |||||
| Restricted cash | 1,152,028 | 805,273 | |||||||
| Total cash, cash equivalents, and restricted cash | $ | 7,620,225 | $ | 6,434,112 | |||||
| Supplemental Disclosure of Cash Flow Information: | |||||||||
| Cash paid during the period for interest | $ | 1,700,837 | $ | 382,575 | |||||
| Cash paid during the period for income taxes, net of refunds | $ | 196,727 | $ | 45,773 | |||||
| Supplemental Schedule of Non-Cash Investing and Financing Activities | |||||||||
| Shares issued to pay notes payable | $ | - | $ | 1,426,151 | |||||
| Financing of fixed asset purchase | $ | 28,331 | $ | - | |||||
| Purchase of property and equipment through vendor financing | $ | - | $ | 1,125,000 | |||||
| Investment in right of use asset | $ | 294,513 | $ | 186,397 | |||||
Investor Relations Chris Tyson Executive Vice President – MZ North America Direct: 949-491-8235 [email protected] www.mzgroup.us
