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Cemtrex Inc (CETX) Q2 2024 Earnings Call Transcript Highlights: Mixed Results Amidst Strategic ...

GuruFocus Research
·4-min read

  • Revenue: $17.2 million in Q2 2024, up 7% year-over-year.

  • Gross Margin: 40% in Q2 2024, down from 46% in Q2 2023.

  • Operating Loss: $1 million in Q2 2024, compared to operating income of $0.4 million in Q2 2023.

  • Net Loss: $1.6 million in Q2 2024, increased from $0.6 million in Q2 2023.

  • Cash and Equivalents: $4.1 million as of March 31, 2024, down from $6.3 million as of September 30, 2023.

  • Security Segment Revenue: Decreased by 18% to $8.1 million in Q2 2024.

  • Industrial Services Segment Revenue: Increased by 47% to $9.1 million in Q2 2024.

  • Inventories: Decreased to $7.4 million at March 31, 2024, from $8.7 million at September 30, 2023.

Release Date: May 14, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Cemtrex Inc (NASDAQ:CETX) reported a revenue increase of 7% to $17.2 million in the second quarter, indicating continued business growth.

  • The industrial services segment, AIS, saw a significant revenue increase of 47% to $9.1 million, driven by increased demand and the synergistic acquisition of Heisey Mechanical.

  • Cemtrex Inc (NASDAQ:CETX) launched Anavio in the security segment, a platform that integrates access control, video, and intercom to enhance situational awareness and control.

  • The company has successfully reduced its inventory by over $1 million this fiscal year, improving operational efficiency.

  • Cemtrex Inc (NASDAQ:CETX) strengthened its balance sheet with a $10 million upsized underwritten public offering, part of which was used to pay off some indebtedness.

Negative Points

  • Cemtrex Inc (NASDAQ:CETX) experienced an operating loss of $1 million in the second quarter, compared to an operating income of $0.4 million in the same period last year.

  • The security segment's revenue decreased by 18% to $8.1 million due to delays in project deployments.

  • Gross profit margin decreased to 40% in the second quarter from 46% in the previous year, reflecting lower profitability.

  • Net loss widened to $1.6 million in the second quarter from a net loss of $0.6 million in the second quarter of the previous year.

  • Cash and cash equivalents decreased to $4.1 million at the end of March 2024, from $6.3 million at the end of September 2023, indicating a reduction in liquidity.

Q & A Highlights

Q: What were the revenue figures for Cemtrex Inc in the second quarter of 2024 compared to the previous year? A: (Paul Wyckoff, CFO) - Revenue for the second quarter of 2024 was $17.2 million, marking a 7% increase from $16.1 million in the same quarter the previous year.

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Q: Can you discuss the performance of the security segment during this quarter? A: (Paul Wyckoff, CFO) - The security segment experienced a decrease, with revenues falling 18% to $8.1 million due to delays in multiple projects. Despite these delays, new technologies like Anavio were introduced, which could drive future growth.

Q: How did the industrial services segment perform in the second quarter? A: (Saagar Govil, CEO) - The industrial services segment saw a significant increase, with revenues up 47% to $9.1 million. This growth was driven by increased demand and the acquisition of Heisey Mechanical, contributing to a robust growth pipeline.

Q: What were the main factors contributing to the operating loss reported in this quarter? A: (Paul Wyckoff, CFO) - The operating loss of $1 million was primarily due to a decrease in gross profit in the security segment and increased payroll expenses, despite the overall revenue growth.

Q: What are the company's expectations for the fiscal year 2024 in terms of growth and profitability? A: (Saagar Govil, CEO) - The company is focused on achieving positive operating income for the full year, driven by strategic acquisitions, enhanced market reach, and diligent balance sheet management. The recent $10 million public offering has also strengthened the balance sheet.

Q: Were there any significant financial transactions after the quarter that might impact the company's financial position? A: (Paul Wyckoff, CFO) - Subsequent to the quarter, Cemtrex closed a $10 million underwritten public offering, which helped improve the company's financial stability by allowing for the repayment of some indebtedness.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.