Third Quarter Revenues Increase 32% to $13.6 Million, Management to Host Webcast and Conference Call Today At 5:00 p.m. ET
Cemtrex Inc. (NASDAQ: CETX, CETXP), a technology company driving innovation in Internet of Things (IoT), security, machine vision & artificial intelligence, and augmented & virtual reality, has reported its financial and operational results for the third quarter ended June 30, 2022.
Key Third Quarter 2022 and Subsequent Highlights
- Revenue increased 32% to $13.6 million compared to $10.3 million in Q3’21, marking third straight quarter of increasing revenue.
- Q3 gross margin up 310 basis points to 43% in Q3’22 from 40% in the prior year quarter and up from 32% in Q2’ 22.
- Net Income was a $983,491 loss for the third quarter FY 22, compared to a $5,082,222 loss in the second quarter FY 22, achieving approximately a $4.1 million reduction in expenses over those sequential periods.
- Announced a strategic shift towards prioritizing its core businesses, in particular Vicon Industries, its security technology brand to maximize shareholder value, drive long term growth, and profitability. In conjunction with the strategy shift to bolster its Advanced Technologies segment, Cemtrex is exploring the divestiture of one or more business units to support its refocus.
Management Commentary
Cemtrex Chairman and CEO, Saagar Govil, commented on the results: “Along with third straight quarter and year over year improving revenues, the third quarter of 2022 was highlighted by continued quarterly improvement in our Advanced Technologies and Industrial Services segments due to increased demand for our products and services. During the quarter we continued to make significant progress in our strategic shift toward refocusing efforts on our core businesses Vicon Industries and AIS going forward. We believe Vicon can move towards $5-10 million of recurring revenue in the next three to five years as a global leader in advanced security and surveillance technology to safeguard businesses, schools, municipalities, hospitals and cities across the world. Vicon is seeing growing demand for its video surveillance and access control technologies as the industry is rapidly shifting to SaaS solutions leveraging AI and cloud technology solutions for today’s highly dynamic environment.
“To support Vicon’s growth, we recently appointed Haim Shain as Senior Vice President of Product Management at Vicon, a dynamic and accomplished leader in the surveillance industry. In this new role, Shain will oversee the strategy and implementation behind Vicon’s expanding product line, from our award-winning Roughneck® surveillance cameras and VAX access control system, to our centralized video management platform, Valerus™ VMS. Under his leadership, Vicon’s product teams will further drive innovation, including cloud-based video management and AI-enabled video analytics solutions.
“Growth driven by an increase in demand for predictive maintenance services and the rise in the complexity of equipment is driving demand for AIS, our single source industrial contractor and premier provider of industrial contracting services including millwrighting, rigging, piping, electrical, welding. With its strong balance sheet empowering the ability to offer more comprehensive services due to inventory of equipment, we believe the company has enormous untapped potential in the industrial services market.
“For Cemtrex, we continue to evaluate a range of operational and financial alternatives including the sale of one or more of the company’s non-core business units. During the quarter we addressed rising costs by increasing prices and reducing overhead where possible. These steps helped to improve gross margins from 32% in the second quarter of 2022 to 43% in the third quarter. Our operating loss came down sequentially in the second quarter due to increased sales, but we see opportunity to reduce overhead in certain areas and plan to do so in the coming months to drive better financial results.
“Looking ahead, we remain focused on disciplined top line growth with room for further gross margin improvement to drive towards positive EBITDA in FY 23. We continue to make strategic investments in our sales and marketing program, ongoing research and development, and advancing our technology partnerships. Vicon is on track to launch a proprietary AI based analytics solution early next year as well as major improvements to its core software platform Valerus, which will further drive growth. We continue to work to position the Company for long-term growth and refocus efforts on our core businesses, which we believe will provide long term value for our shareholders,” concluded Govil.
Third Quarter 2022 Financial Results
Revenue for the three months ended June 30, 2022, and 2021 was $13.6 million and $10.3 million, respectively, an increase of 32%. Revenue for the nine months ended June 30, 2022, and 2021 was $37.0 million and $28.4, respectively, an increase of 30%. This increase is mainly due to an increased demand for the Company’s products and services. The Advanced Technologies segment revenues for the three months ended June 30, 2022, increased by 40% to $8.2 million, and the Industrial Services segment revenues for quarter increased by 22%, to $5.5 million.
Gross Profit for the third quarter of 2022 was $5.9 million, or 43% of revenues as compared to gross profit of $4.1 million, or 40% of revenues for the year ago period, and compared to 32% in the second quarter of FY 2022. Gross profit increased primarily due to price increases implemented throughout the Company in response to rising costs of goods and transportation costs.
The Operating loss for the for three months ended June 30, 2022, was $2.1 million, compared to $3.8 million in the second quarter ended March 31st, 2022, a reduction of $1.7 million or 45%.
Operating activities for continuing operations used $10.4 million for the nine months ended June 30, 2022, compared to using $6.2 million of cash for the nine months ended June 30, 2021.
Net loss for the quarter ended June 30, 2022, was $0.7 million, as compared to a net income of $1.1 million in 2021. Net loss increased in the first quarter as compared to the same period last year primarily due to costs of revenues and operating expenses.
Cash and cash equivalents totaled $11.1 million at June 30, 2022, as compared to $15.4 million at September 30, 2021.
Third Quarter 2022 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:
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=1563547&tp_key=b5b432ffa7 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 29, 2022.
