- 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:
Date: |
Monday August 15, 2022 |
Time: |
5:00 p.m. Eastern time, 2:00 p.m. Pacific time |
Toll-free dial-in number: |
1-844-826-3033 |
International dial-in number: |
1-412-317-5185 |
Conference ID: |
10170222 |
|
|
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.
Toll-free replay number: |
1-844-512-2921 |
International replay number: |
1-412-317-6671 |
Replay ID: |
10170222 |
About Cemtrex
Cemtrex, Inc. (CETX) is a leading multi-industry
technology company that is driving innovation in markets such as
Internet of Things (IoT), Augmented and Virtual Reality (AR &
VR), and Artificial Intelligence and Computer Vision (AI & CV)
in a wide range of sectors, including but not limited to consumer
products, industrial manufacturing, digital applications, and
intelligent security & surveillance systems.
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
an offering, gross proceeds from an 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
SubsidiariesCondensed Consolidated Balance
Sheets
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
June 30, |
|
September 30, |
Assets |
|
|
2022 |
|
|
|
2021 |
|
Current assets |
|
|
|
|
Cash and equivalents |
|
$ |
11,442,487 |
|
|
$ |
15,426,976 |
|
Restricted cash |
|
|
1,518,720 |
|
|
|
1,759,347 |
|
Short-term investments |
|
|
280,571 |
|
|
|
14,981 |
|
Trade receivables, net |
|
|
7,564,382 |
|
|
|
7,810,896 |
|
Trade receivables - related party |
|
|
1,472,514 |
|
|
|
1,487,155 |
|
Inventory –net of allowance for inventory obsolescence |
|
|
8,458,530 |
|
|
|
5,657,287 |
|
Prepaid expenses and other assets |
|
|
2,407,116 |
|
|
|
2,585,652 |
|
Total current assets |
|
|
33,144,320 |
|
|
|
34,742,294 |
|
|
|
|
|
|
Property and equipment,
net |
|
|
6,239,239 |
|
|
|
6,738,944 |
|
Right-of-use assets |
|
|
2,641,960 |
|
|
|
2,940,127 |
|
Goodwill |
|
|
7,821,283 |
|
|
|
7,821,283 |
|
Other |
|
|
1,356,766 |
|
|
|
697,240 |
|
Total Assets |
|
$ |
51,203,568 |
|
|
$ |
52,939,888 |
|
|
|
|
|
|
|
|
|
|
|
Liabilities & Stockholders' Equity
(Deficit) |
|
|
|
|
Current liabilities |
|
|
|
|
Accounts payable |
|
$ |
5,401,538 |
|
|
$ |
4,235,002 |
|
Short-term liabilities |
|
|
17,146,234 |
|
|
|
9,977,972 |
|
Lease liabilities - short-term |
|
|
819,488 |
|
|
|
830,791 |
|
Deposits from customers |
|
|
113,106 |
|
|
|
536,220 |
|
Accrued expenses |
|
|
1,176,787 |
|
|
|
1,621,053 |
|
Deferred revenue |
|
|
2,594,517 |
|
|
|
2,004,170 |
|
Accrued income taxes |
|
|
141,465 |
|
|
|
448,194 |
|
Total current liabilities |
|
|
27,393,135 |
|
|
|
19,653,402 |
|
|
|
|
|
|
Long-term liabilities |
|
|
|
|
Loans payable to bank |
|
|
141,239 |
|
|
|
767,279 |
|
Long-term lease liabilities |
|
|
1,799,002 |
|
|
|
2,017,408 |
|
Notes payable |
|
|
228,893 |
|
|
|
2,350,000 |
|
Mortgage payable |
|
|
2,184,404 |
|
|
|
2,257,785 |
|
Other long-term liabilities |
|
|
825,629 |
|
|
|
839,171 |
|
Paycheck Protection Program Loans |
|
|
97,120 |
|
|
|
1,032,200 |
|
Deferred Revenue - long-term |
|
|
584,003 |
|
|
|
467,967 |
|
Total long-term liabilities |
|
|
5,860,290 |
|
|
|
9,731,810 |
|
|
|
|
|
|
Total liabilities |
|
|
33,253,425 |
|
|
|
29,385,212 |
|
|
|
|
|
|
Commitments and
contingencies |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
Shareholders' equity |
|
|
|
|
Preferred stock , $0.001 par value, 10,000,000 shares
authorized, |
|
|
|
|
Series 1, 3,000,000 shares authorized, 2,079,122 shares issued
and |
|
|
|
|
2,015,022 shares outstanding as of June 30, 2022 and 1,885,151
shares issued and |
|
|
|
|
1,821,051 shares outstanding as of September 30, 2021 (liquidation
value of $10 per share) |
|
|
2,079 |
|
|
|
1,885 |
|
Series C, 100,000 shares authorized, 50,000 shares issued and
outstanding at |
|
|
|
|
June 30, 2022 and September 30, 2021 |
|
|
50 |
|
|
|
50 |
|
Common stock, $0.001 par value, 50,000,000 shares authorized, |
|
|
|
|
26,263,296 shares issued and outstanding at June 30, 2022 and |
|
|
|
|
20,782,194 shares issued and outstanding at September 30, 2021 |
|
|
26,263 |
|
|
|
20,782 |
|
Additional paid-in capital |
|
|
66,522,085 |
|
|
|
61,727,834 |
|
Retained earnings (accumulated deficit) |
|
|
(51,788,053 |
) |
|
|
(41,908,062 |
) |
Treasury stock at cost |
|
|
(148,291 |
) |
|
|
(148,291 |
) |
Accumulated other comprehensive income (loss) |
|
|
2,555,441 |
|
|
|
2,896,452 |
|
Total Cemtrex stockholders' equity |
|
|
17,169,574 |
|
|
|
22,590,650 |
|
Non-controlling interest |
|
|
780,569 |
|
|
|
964,026 |
|
Total liabilities and
shareholders' equity |
|
$ |
51,203,568 |
|
|
$ |
52,939,888 |
|
Cemtrex, Inc. and
SubsidiariesCondensed
Consolidated Statements of Operations and Comprehensive
Income/(Loss)(Unaudited)
|
|
|
For the three months ended |
|
|
|
For the nine months ended |
|
|
|
June 30, 2022 |
|
June 30, 2021 |
|
June 30, 2022 |
|
June 30, 2021 |
|
|
|
|
|
|
|
|
|
Revenues |
|
|
13,630,846 |
|
|
|
10,326,431 |
|
|
|
37,031,550 |
|
|
|
28,422,892 |
|
Cost of revenues |
|
|
7,754,490 |
|
|
|
6,198,715 |
|
|
|
23,233,389 |
|
|
|
16,360,822 |
|
Gross profit |
|
|
5,876,356 |
|
|
|
4,127,716 |
|
|
|
13,798,161 |
|
|
|
12,062,070 |
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
General and administrative |
|
|
6,948,959 |
|
|
|
5,670,019 |
|
|
|
20,318,196 |
|
|
|
16,337,200 |
|
Research and development |
|
|
1,048,246 |
|
|
|
757,966 |
|
|
|
3,474,674 |
|
|
|
2,033,688 |
|
Total operating expenses |
|
|
7,997,205 |
|
|
|
6,427,985 |
|
|
|
23,792,870 |
|
|
|
18,370,888 |
|
Operating income/(loss) |
|
|
(2,120,849 |
) |
|
|
(2,300,269 |
) |
|
|
(9,994,709 |
) |
|
|
(6,308,818 |
) |
|
|
|
|
|
|
|
|
|
Other income/(expense) |
|
|
|
|
|
|
|
|
Other income/(expense) |
|
|
2,072,265 |
|
|
|
3,901,658 |
|
|
|
3,337,365 |
|
|
|
6,532,590 |
|
Settlement Agreement - Related Party |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3,674,165 |
|
Interest Expense |
|
|
(931,059 |
) |
|
|
(433,009 |
) |
|
|
(3,654,045 |
) |
|
|
(1,891,026 |
) |
Total other income/(expense), net |
|
|
1,141,206 |
|
|
|
3,468,649 |
|
|
|
(316,680 |
) |
|
|
8,315,729 |
|
|
|
|
|
|
|
|
|
|
Net loss before income taxes |
|
|
(979,643 |
) |
|
|
1,168,380 |
|
|
|
(10,311,389 |
) |
|
|
2,006,911 |
|
Income tax benefit/(expense) |
|
|
247,941 |
|
|
|
(40,759 |
) |
|
|
247,941 |
|
|
|
(168,190 |
) |
Net income/(loss) |
|
|
(731,702 |
) |
|
|
1,127,621 |
|
|
|
(10,063,448 |
) |
|
|
1,838,721 |
|
|
|
|
|
|
|
|
|
|
Less loss in noncontrolling
interest |
|
|
(50,909 |
) |
|
|
29,608 |
|
|
|
(183,457 |
) |
|
|
(20,813 |
) |
Net income/(loss) attributable to Cemtrex, Inc. shareholders |
|
$ |
(680,793 |
) |
|
$ |
1,098,013 |
|
|
$ |
(9,879,991 |
) |
|
$ |
1,859,534 |
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income/(loss) |
|
|
|
|
|
|
|
|
Net income/(loss) |
|
$ |
(731,702 |
) |
|
$ |
1,127,621 |
|
|
$ |
(10,063,448 |
) |
|
$ |
1,838,721 |
|
Foreign currency translation loss |
|
|
(200,880 |
) |
|
|
(193,554 |
) |
|
|
(341,011 |
) |
|
|
(234,045 |
) |
Defined benefit plan actuarial gain |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
87,895 |
|
Comprehensive income/(loss) |
|
|
(932,582 |
) |
|
|
934,067 |
|
|
|
(10,404,459 |
) |
|
|
1,692,571 |
|
Less comprehensive loss attributable to noncontrolling
interest |
|
|
50,909 |
|
|
|
(35,731 |
) |
|
|
183,457 |
|
|
|
14,524 |
|
Comprehensive income/(loss)
attributable to Cemtrex, Inc. shareholders |
|
$ |
(983,491 |
) |
|
$ |
969,798 |
|
|
$ |
(10,587,916 |
) |
|
$ |
1,678,047 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/(loss) Per
Share-Basic |
|
$ |
(0.03 |
) |
|
$ |
0.06 |
|
|
$ |
(0.41 |
) |
|
$ |
0.10 |
|
Income/(loss) Per
Share-Diluted |
|
$ |
(0.03 |
) |
|
$ |
0.06 |
|
|
$ |
(0.41 |
) |
|
$ |
0.10 |
|
|
|
|
|
|
|
|
|
|
Weighted Average Number of
Shares-Basic |
|
|
25,777,704 |
|
|
|
18,711,463 |
|
|
|
24,316,527 |
|
|
|
18,368,274 |
|
Weighted Average Number of
Shares-Diluted |
|
|
25,777,704 |
|
|
|
18,711,463 |
|
|
|
24,316,527 |
|
|
|
18,368,274 |
|
|
|
|
|
|
|
|
|
|
Cemtrex, Inc. and
Subsidiaries
Condensed Consolidated Statements of Cash
Flows(Unaudited)
|
|
|
For the nine months ended |
|
|
|
|
June 30, |
|
Cash Flows from Operating Activities |
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
Net income/(loss) |
|
$ |
(10,063,448 |
) |
|
$ |
1,838,721 |
|
|
|
|
|
|
Adjustments to reconcile net
income/(loss) to net cash used by operating activities |
|
|
|
|
Depreciation and amortization |
|
|
1,346,383 |
|
|
|
972,186 |
|
Loss on disposal of property and equipment |
|
|
161,814 |
|
|
|
18,583 |
|
Noncash lease expense |
|
|
615,354 |
|
|
|
653,175 |
|
Change in allowance for doubtful accounts |
|
|
(7,584 |
) |
|
|
(161,101 |
) |
Share-based compensation |
|
|
111,402 |
|
|
|
110,904 |
|
Income tax expense/ (benefit) |
|
|
(247,941 |
) |
|
|
168,190 |
|
Interest expense paid in equity shares |
|
|
1,627,046 |
|
|
|
818,348 |
|
Accrued interest on notes payable |
|
|
635,001 |
|
|
|
64,748 |
|
Amortization of original issue discounts on notes payable |
|
|
908,333 |
|
|
|
575,000 |
|
Gain on marketable securities |
|
|
(2,234,478 |
) |
|
|
(2,407,841 |
) |
Discharge of Paycheck Protection Program Loans |
|
|
(971,500 |
) |
|
|
(3,349,700 |
) |
Settlement Agreement - Related Party |
|
|
- |
|
|
|
(3,674,165 |
) |
|
|
|
|
|
Changes in operating assets
and liabilities net of effects from acquisition |
|
|
|
|
of subsidiaries: |
|
|
|
|
Accounts receivable |
|
|
254,098 |
|
|
|
1,613,682 |
|
Accounts receivable - related party |
|
|
14,641 |
|
|
|
(78,594 |
) |
Inventory |
|
|
(2,801,243 |
) |
|
|
(1,875,591 |
) |
Prepaid expenses and other current assets |
|
|
178,536 |
|
|
|
(976,050 |
) |
Other assets |
|
|
(159,526 |
) |
|
|
149,778 |
|
Other liabilities |
|
|
(13,542 |
) |
|
|
15,019 |
|
Accounts payable |
|
|
1,166,536 |
|
|
|
30,327 |
|
Operating lease liabilities |
|
|
(546,896 |
) |
|
|
(650,535 |
) |
Deposits from customers |
|
|
(423,114 |
) |
|
|
9,567 |
|
Accrued expenses |
|
|
(444,266 |
) |
|
|
(78,851 |
) |
Deferred revenue |
|
|
706,383 |
|
|
|
124,637 |
|
Income taxes payable |
|
|
(58,788 |
) |
|
|
(88,987 |
) |
Net cash used by operating activities |
|
|
(10,246,799 |
) |
|
|
(6,178,550 |
) |
|
|
|
|
|
Cash Flows from Investing Activities |
|
|
|
|
Purchase of property and
equipment |
|
|
(1,003,121 |
) |
|
|
(1,113,658 |
) |
Proceeds from sale of property
and equipment |
|
|
51,262 |
|
|
|
- |
|
Investment in
MasterpieceVR |
|
|
(500,000 |
) |
|
|
(500,000 |
) |
Investment in related
party |
|
|
- |
|
|
|
(1,075,428 |
) |
Proceeds from sale of
marketable securities |
|
|
12,182,932 |
|
|
|
9,134,159 |
|
Purchase of marketable
securities |
|
|
(10,214,044 |
) |
|
|
(6,290,747 |
) |
Net cash used by investing activities |
|
|
517,029 |
|
|
|
154,326 |
|
|
|
|
|
|
Cash Flows from Financing Activities |
|
|
|
|
Proceeds from notes
payable |
|
|
8,000,000 |
|
|
|
- |
|
Payments on notes payable |
|
|
(1,176,763 |
) |
|
|
(2,145,257 |
) |
Payments on capital lease
liabilities |
|
|
- |
|
|
|
(20,061 |
) |
Payments on bank loans |
|
|
(920,939 |
) |
|
|
(957,186 |
) |
Proceeds from Paycheck
Protection Program Loans |
|
|
- |
|
|
|
2,942,285 |
|
Net cash provided/(used) by financing
activities |
|
|
5,902,298 |
|
|
|
(180,219 |
) |
|
|
|
|
|
Effect of currency
translation |
|
|
(397,644 |
) |
|
|
(386,160 |
) |
Defined benefit plan actuarial
gain/(loss) |
|
|
- |
|
|
|
87,895 |
|
Net decrease in cash, cash
equivalents, and restricted cash |
|
|
(3,827,472 |
) |
|
|
(6,204,443 |
) |
Cash, cash equivalents, and
restricted cash at beginning of period |
|
|
17,186,323 |
|
|
|
21,072,859 |
|
Cash, cash equivalents, and restricted cash at end of
period |
|
$ |
12,961,207 |
|
|
$ |
14,570,151 |
|
|
|
|
|
|
Balance Sheet Accounts Included in Cash, Cash Equivalents,
and Restricted Cash |
|
|
|
|
Cash and equivalents |
|
$ |
11,442,487 |
|
|
$ |
12,879,278 |
|
Restricted cash |
|
|
1,518,720 |
|
|
|
1,690,873 |
|
Total cash, cash equivalents, and restricted
cash |
|
$ |
12,961,207 |
|
|
$ |
14,570,151 |
|
|
|
|
|
|
Supplemental Disclosure of Cash Flow
Information: |
|
|
|
|
Cash paid during the period
for interest |
|
$ |
483,665 |
|
|
$ |
432,930 |
|
|
|
|
|
|
Cash paid during the period
for income taxes |
|
$ |
306,729 |
|
|
$ |
88,765 |
|
|
|
|
|
|
Supplemental Schedule of Non-Cash Investing and Financing
Activities |
|
|
|
|
Investment in Virtual Driver
Interactive |
|
$ |
- |
|
|
$ |
439,774 |
|
Stock issued to pay notes
payable |
|
$ |
3,993,124 |
|
|
$ |
2,187,837 |
|
Shares issued in connection
with note payable |
|
$ |
700,400 |
|
|
$ |
- |
|
Financing of right of use
assets |
|
$ |
317,187 |
|
|
$ |
- |
|
|
|
|
|
|
Investor Relations
Chris Tyson
Executive Vice President – MZ North America
Direct: 949-491-8235
CETX@mzgroup.us
www.mzgroup.us
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