Earnings call transcript Q4 2022

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Operator

Greetings and welcome to the Cemtrex Fourth Quarter and Full Fiscal Year 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.

As a reminder, this conference is being recorded.

Before we begin the formal presentation, I would like to remind everyone that statements made on the call and webcast may include predictions, estimates or other information that might be considered forward-looking.

differ represent are judgment uncertainties subject cause results statements future what that forward-looking actual they holds, to to these our on current the could While materially. risks and

statements released place to not You are which light our events. revise obligating in in this ourselves only opinions mind reliance these of publicly the of date Please forward-looking to reflect the information undue results as presentation. new cautioned revision or statements, on that forward-looking of to any not keep of we or are future

discussion, Throughout important may our will affect today's relating that we some attempt to business factors present our predictions. to

under recent a press A heading detailing You relations should on available Risk these and discussion release most our on issued investor results the is and section particularly Form website factors and Form of more our December company's the complete in XX-Q XX, for also Factors. these review was risks, XX-K centrex.com. other

Officer, Chief ended September Saagar for and year Govil, fiscal Your results will full the fourth Paul operations Financial and Chief XX, host of present Officer quarter today, Executive Wyckoff, XXXX.

time, the I will ahead. to over Chief Officer, this Saagar Please go call Executive Govil. At Centrex's turn

Saagar Govil

several operating brands. XXXX We help near shift on maximize will good and non-core income to escalating assets term and AIS this significant conference positive in Smartdesk the and full the operator, I'm value businesses you, over subsidiaries and welcome to our accelerating fourth everyone. quarter focus you capture believe reach The by call. thank Great, year XXXX us next shareholder for to for to transformative today's divesting Cemtrex, years. pleased and Vicon quarter results fourth see demand these afternoon, focus fiscal financial was to and highly opportunities VR

operating an over restructuring go basis. million forward on reduction in of expected result to $X.X per This year expense a is

reduction that going will our transformation markets will million to 'XX. result We capital were $X.X another access our in approximately fiscal in growth in not be expense overhead 'XX execute to year from November XXXX. identified to from that be sheet strategy. expenses forward operating This realized in strong incurred accounting fiscal and also and deliver balance development year incurred a corporate million believe have will We legal, in

believe Our solutions, demand dominant Vicon its growing over hospitals, million We move in advanced in opportune couple as recurring surveillance leader applications. $X in and leveraging focus businesses, the solutions safeguard award and as comes across of Vicon on on seeing cities schools, time focus cameras is million and municipalities, a solutions. industrial software world. at V-SaaS can Vicon management global towards for cloud it and building for security technology and an winning AI video to rapidly brands security a $XX commercial, revenue Valerus technologies government is the roughneck technology next years

CAGR is today's will SaaS billion video to is shifting solutions XXXX a solutions and of environment. the and leveraging The AI reach technology industry surveillance Research Market XX.X% by XXXX, highly XXXX. rapidly dynamic predicting V-SaaS between and market $XX Allied over with global cloud for

to security company's commitment the customer deliver Vicon's deepen physical Costar operational as welcome excellence teams and companies experience. like in leader industry years COO, of on the and industry world COO bringing we He's class engineering XX an global is operations quarter, experience sales Shane and leading the Shane to During accomplished as support CTO, delighted Industries. Vicon the and Pelco. CTO were support in now over at leading Compton to and and a

high and provider the well as predictive positioned company a demand services AIS the industrial maintenance years and industrial reshoring industrial to in to manufacturing we over premier offer also contractor is repeat are as due equipment. our more the industry and optimistic gears and sheet empowering of With for and advanced services reputation to complexity increasing single the increase back strong on business, comprehensive Shifting of monetize cash industrial XX to services incredibly in strong source services. balance ability has flow AIS is equipment. contracting has a a the of a business, and significant source inventory U.S.

AIS and potential significant bolt-on U.S. acquisitions. thrive, in with As the industrial to the economy expansion, has particularly manufacturing continues for we believe

prospective next a website thinking approach important better made Relations to a believe mark compelling an informed reflect case We to serve to also our site communications the this the opportunity with strategic better to be announcement taken transformation, the and to Cemtrex going to over keep will live of few progress make To will our our the an we and both generation tool investors community. next have days This shareholders investment and there's the site accordingly. investment and as and vision. enhance current invaluable we will launch forward Investor brand be

now Paul call the I'll turn to Wyckoff. over

to Our discuss Paul? CFO financial. the

Paul Wyckoff

you, Thank Sagar.

and $XX.X increase under of revenue and Our and ended Technology fiscal increased The services. compared the XX%. the products for year-over-year. XXXX segment in $XX.X increase brand. years The for revenue due technology increase of year Advanced due revenues of for for an year million, to million, Technology the revenue Advanced respectively, XX% for demand were full an XXXX was Vicon of increase the September million $XX.X XX company's XXXX totaled increased security year to full the year XXXX, products was demand segment The to million for $XX.X the a

$XX.X increase by demand the services. their full the to for segment in year million, Service increased Industrial revenues to XXXX XX% due primarily for

a ended for the gross for result prior of XXXX. costs to XX% and as of profit those revenues of as XX% XXXX, gross XXXX year, as XX, September $XX goods a was for decrease transportation to for of costs costs million September year the percentage revenues increased to for or was compared increased as The a goods. or profit year-ended the or XX, compared due XX revenues $XX.X September Gross increased million, year-ended of profit the in revenues

million to XXXX. in in primarily development costs, research were $XX.X and expenses and operating million, costs. operating personnel increases increase $XX.X legal, was with Total by insurance, expenses driven travel, for compared The XXXX total

Operating totaled loss September compared XX, million of year XXXX, for loss fourth XXXX million was $XX.X million the ended and $XX.X September activities to million of $XX.X cash at for million for compared XXXX in operations million, XXXX in quarter to $X.X June the a quarter loss year the as Cash net of XX, and million September XX, $XX.X continuing of of the Net XXXX in ended using compared Net $XX $XX.X XXXX. used at for loss $X.X totaled million September as XX, full to the XXXX. year million, fourth net a cash equivalents compared of to at $X.X XX, XXXX. XXXX.

by XX, sales to to on purchase maintain at the and of September September million XX% the security The our inventories from delays XXXX. attributable XX, increased million, overcome supply or to Advanced million of to $X.X $X.X Inventories issues. stock hand for sufficient XXXX Technology at to inventory business chain company's recent $X.X increase in segment

our the back over a XXXX call will to of turn I outlook. review for now cyber

Saagar Govil

shareholders. Vicon AIS, strong Thank performance you, are create Paul. complete for well summary, we restructuring and with and In for to long-term positioned our our value

$XX demand sales launch as increase should for solution, for we believe 'XX, opportunities. by Industries revenues product additional core to fiscal current on given to our Valerus, AI-based more based our ahead, million as XX% analytics Vicon improvements of approximately Looking year the our well

services revenues by to expand also AIS continued believe market. by driven million, approximately the continue industrial will in We to $XX.X X% strength

based on company expected Additionally, to taken has that percent XXXX, during XX%. increase approximately margin Vicon is gross this fiscal steps year profit for to

profit percent improve made, to for for AIS on believe XX%, we operational Similarly, approximately the to is fiscal margin AIS. year gross based improvements for XXXX expected

corporate at level next be overall steps in quarters actions to drive all well taken, the the expenses. have over believe as improvement expenses operating operating to We our loss reduce combined four million. timing to taken the Cemtrex fully. restructuring, With of we the March expect changes December to to under effects we the of quarter The and due the quarter these demonstrated more improvement in the be $X.X performance our reflect will performance partially our

the the offset over inventory the loss improve. loss over course seen we obtained fiscal next that quarters more cash the cash of chain by of year as on we believe reduce This have will million by burden from constraints us expected reducing allow the also We than cash couple overall supply inventory, $X.X position. 'XX, can operating the to from reduction in our the

operationally focus need With approximately term we believe expenses, a roadmap, and both for have near and $XX in hand financially on dramatic on capital reduction million the executing on our the capital. we immediate in without to sufficient cash in

reach a company year the in Our operating expectation that fiscal is positive XXXX. income

a provide long-term on long-term in work the for will to to position to shareholders providing growth, updates the with for continue sustainable and financial company We our path term. look believe which near model I further we a forward shareholders. to our value

I now it we'd for open like up questions. attending. thank to you for all And Operator.

Operator

Thank you.

session. be first Please Our Kolbert from Instructions] question. will your proceed now We question-and-answer conducting [Operator Jason is with a James. question with Dawson

Jason Kolbert

little the about comprehensive Vicon, like tremendous it just big like really picture for opportunity an the ask bit of a Vicon some to terms to When AIS, exists we detail appreciate of for AIS versus the like update and a end. seems think I Thanks, the questions. guys. numbers. Thanks and some seems in means growth

the looking you from? future So spending, I'm how you're just looking growth and how trying at you're see business, the capital to understand where coming at

Saagar Govil

sure. Yeah,

is of for compelling is share. place creates near for being organic to by the lot replaced next Vicon The high growth, security. to generation disruption there's which with And technology, physical the So think market an to respect more take in there's question need term taking opportunity the a pretty due no that opportunity. I technology industry incumbent demand

our we opportunity think terms more big So we'll where investment quickly. And driven on there in side the picture, a be in focusing to will business. I see that of be certainly grow of that an

respect opportunities will driven be I by acquisitions. more think to the with AIS,

gain I finding think good more that opportunities. opportunity with acquisition there's respect to to through AIS, scale,

see I of for been have think couple relative fair starting value last down. businesses to unusually to these valuations high think come valuations years, we is for And types. what we're of the

we're wouldn't Vicon. that exclusively thinking I say of So about sort

growth both. seeing think looking opportunistically to both I we're drive at and businesses in opportunities

Jason Kolbert

me that that AIS, on telling it's what right. because you it and is helpful, cash very flow, you'll actually opportunity build if free opportunistic be see can That's the Okay. is

Saagar Govil

That's right.

Jason Kolbert

out and can little in camera competitive fact given and Vicon the the of what are about, understand to products, such going of you it's of market? that what you're a in like some of terms new, And competitive you? bigger a software at contracts you installed a how bit to gives that some to highly looking little bit kind is edge And Okay. there? the talk your I'd take base really get the intelligence

Saagar Govil

absolutely. Yeah,

has Vicon for So industry years. been XX in the

So a we strong brand. have

really the So a lot that credibility, know when of of with other in terms industry. customers market. folks our in the helps with we in us compete And

and foremost, first So recognize people us.

our the in then substantially. a And three we product spend lot investing portfolio last quite secondly, years of

So set. And invest we as our right compare them pricing, there. competitors, are line it that terms in as of product advantage of they continue products, far to our the when feature in against terms in competitive to there ensure gets you the

We're technology that we've leveraging rolling latest that's this analytics analytics month. out also AI the homegrown our And, AI there. out built,

are of in just that pay to the starting off investments the take advantage of lot today. and a is it we've really market opportunities made So

doing of made basis. on then combination investments we've a it's an So people, also right. in that And ongoing

on hired of the end the individuals over months, from XX the made summer, competitors. a last So brought announcement, Hiam. an talented where really number We of we near we've our

product obviously, recently has just other helps Haim So And we've tremendous a well. joining of got, that that value and a bring number manager a folks product of as a to from is, mind, lot perspective. great the Shane,

competitive So value a helping lot that chart space have brought course and in and guys lot competitors of terms and to market own all our us perspective from bringing our the creates these best continue advantages. in practices of many of a a of

of that. that's, a again, So lot

the that end-to-end just solution. sell other other really The thing we is

complete competitors, world how looking of we our a many a selling an in end-to-end ourselves. market, really on portion a that's And the a solution. going the solution. solution. the And Vicon especially So enterprise is of differentiate And of for they're generally portion, is lot generally the to market

make us a the it's these of really So be helping sales that to of continue all growth. things combination drive really market in competitive is and

Jason Kolbert

Yeah, so update. perfect. Thank Really the you Thanks, much. appreciate Saagar.

Saagar Govil

Sure.

Operator

Our is a question questions. Richard next proceed Please your from who's with private Arnold, investor.

Unidentified Analyst

to Wyckoff. directed is My question Mr.

Paul Wyckoff

Yes, sir.

Okay. you. for that, I answer With

Unidentified Analyst

to That and from by cost [ph] your was the a develop divulged divested purchase Do article an divestiture. purchased by the last were Govil? you and led that quote know assets that Mr. management

Paul Wyckoff

I top provide can get the don't know you this I off head, call and that back of figure off my to --

Unidentified Analyst

a Can you give roundabout me number?

Paul Wyckoff

Cost in neighborhood probably of $X to develop the million.

Unidentified Analyst

cash was Govil, assets? in lead divested much those how received And Mr. for his management from Cemtrex by

Paul Wyckoff

was, of was combination revenues. within and deal a cash publicly The it and on the Smart company their opportunity royalties also disclosed. investment And was Desk

Unidentified Analyst

And people. his how management Govil by Mr. and much cash was Centrex given to

Paul Wyckoff

I believe was the amount $XX,XXX.

Unidentified Analyst

So assets of him $X group? worth sold million and were to his

Paul Wyckoff

Well, those the assets your companies, the I was were? much first cost question develop mean not much how how to

Unidentified Analyst

And asset assets divested value net how the was when the much of purchased?

Paul Wyckoff

About billion dollars.

Unidentified Analyst

may of then or $XX,XXX, million not dollars for assets, something that he may got a worth of some So, happen. and promises

Saagar Govil

can it. I Yeah, generally sort so with I may you're can understand of think Richard, where going so if interject. I

a when losing at of we these were options lot different And company of I'll options. One is the the before money all So a assets, explored couple say things. looked businesses.

were there things. buyers lining for up so no these And

company So talked meaning to that, not different about bankers, were the for the readily -- different be to they advisors opportunity we they're options. the that available and not about to company, swift approached to we I want various just and the that investment clear changes make

for because lot So these to of get opportunity lot of were there them. money, an cash companies losing a a wasn't

So deal up, sweetheart it's I'm There's right? the mean, not I that's getting reality. like no here. lining buyers a

Okay.

market second less company's thing was the The than is, cap cash.

XXXX. of part big a for of So most

Cemtrex the is less value. that trading seven when of market collection the the wasn't so, these umbrella of under this about the recognizing brands, under than businesses cash, a umbrella And not value -- different think you was that

and an strategic in we're announcement it was make what need of quickly. that company level discussed And we terms and at doing the the about decisions length so to was And had around had some this do discussed this the we made make And strategic to in some at changes board here. to company --

Unidentified Analyst

announcement that myself on the know I don't make I XX-XX. was clear.

Would You abstaining directors, abstained. had the vote? been on of board it of these a shareholders' And purchases? not you asset have you to have from vote which that vote from better

Operator

Please next GRF Investors. proceed Mishkin is Richard question with your from Capital Our with question.

Richard Mishkin

Yeah.

So, good afternoon.

couple a the the of of not questions of So, actually I have mundane the some but company, about about operating stock transaction.

with around I've been you investor, an I've clients since in can hopefully, Vicon me. or invested So help XXXX.

working stock. with many preferred have So years, Cemtrex, I with Vicon and the

to do a answer of me, have couple you questions So a for moment quick just please?

Saagar Govil

best would kinds that I be not think sure those of I'm questions the be best directed would offline. for that. form this

Richard Mishkin

agree But I back. never your a Investor through contact company and made no less to And certainly that. call directly, received I attempts with I've than Relations. five

of would me And thought But questions. get I I these own? that somebody what So then maybe two to back just if can some time, be asked fine. do percentage you approximately, Vicon

Saagar Govil

XX% Around

Richard Mishkin

much? How

Saagar Govil

Around XX%.

Richard Mishkin

holders. minority of XXX% X% I the very and outstanding them them Vicon? there, own XX% minority done call to so placate you'd of and are it that can the you What make still guess shares out be

Saagar Govil

question sure take we I cards. be about best not that to if had is necessarily -- you a it's But, the think I it in discussion I'm should, further offline. something that would think that's

Richard Mishkin

stock a for is understand. last part you got Well XXXX, secondary the were of is never I've not some going a One because obligation Cemtrex in unregistered as were participate that? on. your saw stock, Pbviously, question holders I here there there since. to of year preferred grapes dividend, daylight in dividend sour but Vicon the in some asked a shares settled you that reason question,

Saagar Govil

of out now was up a has a mixed that sorted little been bit actually. Yeah, it

after opinion there's out this Paul an to reach get available -- we for So can and we call [indiscernible] those if unrestricted. can you

is that So --

Richard Mishkin

Yes, my I That appreciate account. in that. is havoc causing

this hold charged at year now. point, we to So get $XX a it

Saagar Govil

Yeah, address we can we that. can

Paul Wyckoff

You can the agent transfer is contact transfer our agent, ClearTrust.

Richard Mishkin

hundreds opinion and already. to get I've done and done. an dollars that it pay I attorney, an hire me need They tell hundreds get of to

Saagar Govil

their sure in not but was, I'm how ago possession [indiscernible] that's all long The there. that

Operator

with is question. [ph], who your question investor. from proceed Please is next Our private a Steven Brickner

Unidentified Analyst

the painting along picture of actually a of roadmap your for were questions really lines early concerned the as two of My rosy as and for But made AR/VR investors. Yeah. Game. think -- fall million that of the making StarForce Desk, you the you're then there. around last I'm another it $XXX,XXX namely products, your XXXX, in I $X Smart February, Masterpiece Studios, And a was investment right investment that

to divest all you And announced AIS. of Vicon May, units, focus business going then you're as and as on in and these early

why of six lack picture like going could I'm just to lack foresight, real company your and father seems your just rosy your was than a that that So got then We in the perplexed, you those? you're fall, was in against a no, later, reasoning a expand in of you the the divest painting to, foresight, temporary you're SEC working. when you and isn't action just little in or your months on it it less Or decision? could

Saagar Govil

a So there reasons that. of couple are for

think that I well, say primary, and -- I the appreciate for primary question, I was driver that really the won't Steve.

reflected was and were appreciate they that very the all didn't the in pretty, seven result, brands, an everything And things Cemtrex as with different after the price. get simultaneously. was doing the it a speaking the did I with owner understand impression And as complicated was associated we to think that So attributed many those things value doing. company, stock my story. And many an not of seven business investors, this value for of

doing we're would creating a in at a an as board, that, on on impact board shareholder the great what length to was better direct discussed bringing in have focus value. this And bringing new organization

all end we of price the despite into the was that declining doing. were exciting XXXX things XXXX, these of from substantially share So

wasn't sort just So respect a the alone, out my and of to whim overall what recognizing actually here, place was taking a this result price, share and of was it forth. of with unilaterally changing so to combination decision seeing business,

things Desk want The I the consume they will long a other cash. liked lot and just of and opportunities, of we've about thing Smart is, those out to all point really that are VR, term

difficult. the going and that to And continually more is price to if, be so company them, which raising order dilution. in means do more makes capital, just stock if it the And down, needs more

where price we're is need So, I stock in drive the direction we focusing get right. And in can Does most where flow, the result and of nearest that, time. mean, going nearest with one, where cash from not right And that endless more can things dilution that the we drive more the viewed growth amount upside the we shareholders shareholders. referendum is for to sense? make that is, meant back that time. on in to would a we in and the of not on focusing amount And

Unidentified Analyst

you it you at going at for we're say sure cost XXXX, No, time, it's is And kept And Rob father. And Smart you looking do product. because How some and sure and the about reported it you're make to what and can in just your out I'm VR sold to then rid to your going want a million never then big June one, in refocus this then Desk, best third carrying be? then of time, you split. I And start does, on that meant you that to Cemtrex, everybody in you debt. reverse teasing just happened. them $XX $XX right flagship eight million I last got I since Filters make to you be? since just that throwing then this you losses, it split calling your Griffin And XXXX, that want and game mean, stock

Saagar Govil

we know is the to be. don't going No, what rate

Unidentified Analyst

So investment dollar. is my initial pennies the on

how million. a describes as Are And tax fraudulent the factor a for little it in write where comment up that repay the for in company? mean, I that you basically now this $X.X mean, filing finally running to a would you've then you like write-off anywhere? mean, SEC to like but I it's I or company, I So is off, I comes some just bit. does their conduct? that see been SEC to I and cost on is another the company. mean, would you going that So, accountability

Saagar Govil

the I matter. on really Yeah, comment can't SEC

has I already been think had disclosed matter. everything that that on we to say

of me running that there's a that into running core It's get company of for to bill, legal distraction anytime business with that situation all the implications come SEC, the a really to as a nothing more have add. with for of a you mindful size. the where you our legal So, and battle to a be

to that's on So that. really comment I'm all going

taken the on move amount I company right the going now, But an direction. we've that based to of direction right think we're enormous in steps this

improvement a board are new our all fit our this growth market translate on focused to businesses focused we're and in helping two and business moved have making much and established opportunity money all that to growth for We for board, overall with opportunities auditors. that we're of value create real losing that product shareholders. more shed and We came members in the on new market. the driving operations, very have And well very

And And And on. under turn that to to I that's I focused has and direction. XX been we're all that really XXX% the guide doing around. over everything do been think, we're XX same we've what now this to continue months, think that last to going

Operator

over are Govil Mr. further his turn questions now back to remarks. call would at There to this closing no the time. I for like

Saagar Govil

than of your update earnings feel our to more to Thank operator. and out reach of regroup unable to you IR assist. to thank If on free for I continuing and ongoing and be progress you, questions, any we firm happy our our conference Thank to to forward today growth. please you you. would call like answer we'd were each look to joining

Cemtrex (CETX) 5 Jan 232022 Q4 Earnings call transcript