Cemtrex Reports Third Quarter 2022 Financial Results

Third Quarter Revenues Increase 32% to $13.6 Million, Management to Host Webcast and Conference Call Today At 5:00 p.m. ET


Brooklyn, NY, Aug. 15, 2022 (GLOBE NEWSWIRE) --  - 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 Subsidiaries
Condensed 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 Subsidiaries
Condensed 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  $- 
     

 

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