Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue for the third quarter remained steady year-over-year at $14.7 million.
- The industrial services segment saw a significant 49% increase in revenue to $8.5 million.
- The company successfully reduced its inventory by over $1 million this fiscal year.
- A $10 million upsized underwritten public offering improved the balance sheet and allowed for debt reduction.
- Cemtrex Inc (CETX, Financial) is well-positioned for additional growth and aims to achieve positive operating income in the future.
Negative Points
- Operating loss for the third quarter was $3.2 million, compared to an operating income of $0.1 million a year ago.
- The security segment revenues decreased by 31% to $6.2 million due to project delays and economic conditions.
- Total operating expenses for the quarter increased to $9.1 million from $6.4 million in the prior year's quarter.
- Net loss for the third quarter was $9.1 million, compared to a net loss of $1.2 million in the third quarter of 2023.
- Gross profit margin decreased to 40% of revenues from 44% in the same quarter last year.
Q & A Highlights
Q: Can you provide more details on the factors contributing to the operating loss this quarter?
A: Saagar Govil, CEO: The operating loss of $3.2 million this quarter was primarily due to decreased gross profit in our security segment and increased G&A expenses. Additionally, there were approximately $2 million in one-time expenses related to employee-related charges, legal expenses, and bad debt write-offs.
Q: What are the expectations for the Vicon segment moving forward?
A: Saagar Govil, CEO: Despite project delays, we are optimistic about Vicon's future. We are investing in new technologies and products, including the launch of our innovative cloud security platform Anavio and improvements to our core software platform Valerus. We expect these initiatives to drive strong revenue growth in fiscal year 2025.
Q: How did the industrial services segment perform this quarter?
A: Paul Wyckoff, CFO: The industrial services segment saw a 49% increase in revenue to $8.5 million, driven by increased demand for our services and additional revenue from the Heisey acquisition completed in the fourth quarter of fiscal year 2023.
Q: Can you elaborate on the recent $10 million upsized underwritten public offering?
A: Saagar Govil, CEO: The $10 million upsized offering has strengthened our balance sheet, allowing us to pay off some of our indebtedness. This positions us well for additional growth and provides the ability to explore acquisition opportunities that can enhance our market reach and service capabilities.
Q: What are the company's revenue growth projections for the AIS segment?
A: Saagar Govil, CEO: We believe the AIS segment has the potential to achieve more than 30% annual revenue growth in fiscal year 2024, with further growth anticipated in fiscal year 2025, driven by strong orders from leading companies.
Q: How has the company's inventory management improved this fiscal year?
A: Saagar Govil, CEO: We have successfully reduced our inventory by over $1 million this fiscal year, which is part of our efforts to make our operations more efficient.
Q: What are the key financial highlights for the third quarter of 2024?
A: Paul Wyckoff, CFO: Revenue remained flat at $14.7 million. Gross profit was $5.9 million or 40% of revenues, compared to $6.5 million or 44% of revenues in the same quarter last year. Operating expenses increased to $9.1 million from $6.4 million, leading to an operating loss of $3.2 million. Net loss for the quarter was $9.1 million.
Q: What is the company's outlook for achieving positive operating income?
A: Saagar Govil, CEO: With a fortified balance sheet from the recent offering, we are making steady progress toward our goal of achieving positive operating income in the future. We are also consistently evaluating potential acquisition opportunities to further accelerate our growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
