Cemtrex, Inc. (CETX) Announces Results for Fiscal Year Ending September 30, 2018
January 02 2019 - 6:32PM
– Cemtrex Inc. (Nasdaq: CETX, CETXP, CETXW), manufacturer of
the SmartDesk, the world’s most advanced workstation, and a leading
multi-industry technology company that is driving innovation in a
wide range of consumer and commercial sectors, announced its
financial results for the fiscal year ending September 30, 2018.
HIGHLIGHTS
• Generated revenue of $89,936,519 • Adjusted EBITDA of
$1,658,438• Electronic manufacturing segment backlog of
$52,000,000• Advanced Technology segment backlog of 815 orders for
flagship IoT product, SmartDesk • Gross profit increased from 33%
of revenue to 35% of revenue • Listed on Deloitte’s Fast 500 for
5th Year• Acquired 46% of surveillance tech developer Vicon
Fiscal 2018 was both a transformational and transitional year
for Cemtrex. While revenue in the electronics manufacturing (EM)
segment decreased by 18% due to the loss of two customers, the EM
segment currently has a $52,000,000 backlog, which should boost
revenue for fiscal 2019.
The Company’s Industrial Technology (IT) segment revenues were
also lower, as this business segment continues to experience
weakness in new orders in its environmental instruments and control
products markets, both domestically and internationally. As fewer
projects are being decided and awarded due to the relaxation and
non-enforcement of environmental regulations under the current
administration, the Company has taken steps to reduce its operating
expenses to bring them in line with anticipated revenues. The
Company will continue to reduce its presence in the environmental
control products markets in the coming year and shift its focus
into smart devices and virtual reality applications.
The Company invested heavily in R&D in fiscal 2018, spending
over $5.5 million to expand its proprietary technology base
including advances its smart devices and virtual and augmented
reality. The Company expects these critical investments will yield
strong revenue growth and higher margins as it continues its
transformation from an electronics contract manufacturer to a
higher-margin technology innovator.
Cemtrex’s Advanced Technology (AT) segment anticipates that
demand for its flagship Internet of Things (IoT) product,
SmartDesk, will continue to rise as it increases its marketing
efforts and as deliveries start taking place. With SmartDesk’s
average selling price of $5,000 per desk, the AT segment
anticipates selling about 5,000 SmartDesks in fiscal 2019, thus
generating an estimated $25 million in new revenue at over 30%
gross margins.
In March 2018, Cemtrex acquired 46% of security technology
developer Vicon, a company with a 50-year track record and annual
revenues of roughly $26 million.
Results of Fiscal 2018:
- Sales: Net sales for the 12 months ending
September 30, 2018 were $89,936,519 as compared to $120,628,299 for
the 12-month period ending September 30, 2017, a decrease of 25%.
- Cemtrex’s Advanced Technology (AT) segment revenues were
$1,765,106 in the fiscal year ending September 30, 2018, compared
to no revenue in the fiscal year ending September 30, 2017. The
Company’s AT division markets software development services, and
these revenues in fiscal year 2018, do not contain any sales from
SmartDesks. The Company began taking reservations for the SmartDesk
in May 2018, with most customers starting to receive delivery of
the SmartDesk in the second quarter of fiscal 2019. The Company has
received a total number of 815 reservations for SmartDesk as of
December 15, 2018. The Company expects to convert these
reservations into orders and thus sales in fiscal 2019.
- The Electronics Manufacturing (EM) segment revenues in fiscal
2018 decreased by $11,527,951, or 18%, to $52,530,983 from
$64,058,934 for fiscal year 2017. The primary reason for the
decrease was the loss of two customers, one as a result of their
consolidation and the other due to the obsolescence of their
product. However, currently, the Company’s EM backlog is
approximately $52 million, and the Company expects sales to grow in
this segment over the next 12 months.
- The Industrial Technology (IT) segment revenues in fiscal 2018
decreased by $20,928,836, or 37%, to $35,640,430 from $56,569,266
for fiscal 2017. This decrease was primarily due to the decrease in
demand for environmental control products as a result of the
relaxation of environmental regulations by the current
administration and globally.
- Research and Development (R&D) Expenses:
The Company invested heavily in research and development, incurring
R&D expenses of $5,558,682 in fiscal 2018. The Company had no
R&D expenses in fiscal 2017. The Company plans to spend
approximately $1.5 million on R&D during fiscal 2019 to
increase the depth as well as range of its offering in “smart”
products and virtual reality applications.
- Gross Profit: Gross profit for the fiscal year
ending September 30, 2018 was $31,385,257, or 35% of revenues, as
compared to gross profit of $39,913,552, or 33% of revenues, for
the fiscal year ending September 30, 2017. The increase in gross
profit percentage in the year ending September 30, 2018, as
compared to the previous year, was a direct result of products and
services with higher profit margins.
- Adjusted EBITDA: Adjusted EBITDA (non-GAAP)
was $1,658,438 for the fiscal year ending September 30, 2018 as
compared to $8,455,477 for the fiscal year ending September 30,
2017.
- Net Loss: The net loss for the 12 months
ending September 30, 2018 was $10,945,717 as compared to a net
income of $4,389,915 for the 12-month period ending September 30,
2017. Net loss in this period was due to (i) lower sales in the EM
segment, (ii) lower sales in the IT segment, (iii) higher one-time
R&D expenses, (iv) higher sales and marketing expenses due to
the launch of the SmartDesk, and (v) the inclusion of Cemtrex’s
share of Vicon’s loss (Vicon is a minority owned
subsidiary).
- Earnings per share: Earnings per share for the
12 months ending September 30, 2018 were ($1.06) as compared to
$0.31 for the 12-month period ending September 30, 2017.
Adjusted EBITDA
In the table below, the Company provides certain financial
measures on both a U.S. GAAP basis and on an adjusted non-U.S. GAAP
basis. These non-GAAP measures are not in accordance with or an
alternative for GAAP and may be different from non-GAAP measures
used by other companies. The company encourages investors to
carefully consider its results under GAAP, as well as its
supplemental non-GAAP information and the reconciliation between
these presentations, to more fully understand its business.
Reconciliations between GAAP and non-GAAP results are presented in
the tables of this release.
|
|
For the Twelve Months Ending |
|
|
Sept. 30 of Each Year |
|
|
2018 |
|
2017 |
Net (loss)/income (U.S.
GAAP) |
|
-10,945,717 |
|
4,389,915 |
Interest expense |
|
1,248,394 |
|
923,952 |
Depreciation and
amortization |
|
4,181,120 |
|
3,141,610 |
Stock option
expense |
|
401,300 |
|
0 |
Vicon equity investment
loss |
|
1,214,659 |
|
0 |
Research and
development expenses |
|
5,558,682 |
|
0 |
Adjusted EBITDA
(Non-GAAP) |
|
1,658,438 |
|
8,455,477 |
Earnings before interest, taxes, and depreciation and
amortization (EBITDA) and Adjusted EBITDA are non-GAAP measures. In
defining Non-GAAP EBITDA, the Company excludes the impact of
non-cash stock-based compensation and other non-recurring items,
such as R&D expenses and equity interest loss. EBITDA has
limitations as an analytical tool and should not be evaluated in
isolation or as a substitute for analysis of results as reported
under U.S. GAAP. Management utilizes this metric as a basis for
evaluating our ongoing operations, and believes investors'
understanding of our performance is enhanced by including this
non-GAAP financial measure as a reasonable basis for evaluating our
ongoing results of operations, without the effects of interest,
taxes, depreciation, and amortization and other non-recurring
expenses.
Cemtrex’s Chairman and CEO, Saagar Govil, commented on the
results, “We had an overall decrease in sales, mainly due to lower
sales in our IT segment arising from a weakness in environmental
markets. However, we have reduced our ongoing expenses to bring
them in line with anticipated revenues and thus expect to have
positive cash flow from our legacy businesses. Our focus on the
Advanced Technologies segment will start to pay off as we shift
into businesses with higher margins and attractive market
opportunities.”
“Our progress in launching the SmartDesk and securing orders in
2018 gives us assurance to reach our strategic goal of making
SmartDesk a vital part of the modern workspace globally. I am proud
of our team of dedicated employees and the culture we have created
that has worked hard to create and launch this revolutionary
product so quickly. We continue to invest in research and
development, which will reduce our earnings in the short-term but
will provide long-term benefits."
“We have always taken a long-term approach to the strategy at
Cemtrex and generated an extremely high return on equity on average
over the last eight years as a result. Over any three-year period
since 2010 we have been able to deliver exceptional results, and I
expect that trend to continue well into the future. I continue to
feel excited about our prospects and am highly confident the steps
we are taking today will put us on pace to grow exponentially in
the years to come,” continued Mr. Govil.
About Cemtrex
Cemtrex, Inc. (NASDAQ:CETX) is the manufacturer of the
SmartDesk, the world’s most advanced workstation. Cemtrex is a
diversified technology company that is driving innovation in a wide
range of sectors, including smart technology, virtual and augmented
realities, advanced electronic systems, industrial solutions, and
intelligent security systems. Website: www.cemtrex.com
Safe Harbor Statement
This press release contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995, including statements relating to our new product offerings 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. These risks and uncertainties
include, but are not limited to: operational losses and negative
cash flows; any need for additional financing; market acceptance of
our products; our ability to manufacture and develop effective
products and solutions; indebtedness to our lenders; current and
future economic conditions that may adversely affect our business
and customers; potential fluctuation of our revenues and
profitability from period to period which could result in our
failure to meet expectations; our ability to maintain adequate
levels of working capital; our ability to incentivize and retain
our current senior management team and continue to attract and
retain qualified scientific, technical and business personnel; our
ability to expand our product offerings or to develop other new
products and services; our ability to generate sales and profits
from current product offerings; rapid technological changes and new
technologies that could render certain of our products and services
to be obsolete; competitors with significantly greater financial
resources; introduction of new products and services by
competitors; challenges associated with expansion into new markets;
and, other factors 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.
For further information, please contact:
Investor Relations
Cemtrex, Inc.
Phone: 631-756-9116
investors@cemtrex.com
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