Cemtrex Reports Second Quarter 2021 Financial Results

Rhea-AI Summary

Cemtrex Inc. (NASDAQ: CETX, CETXP, CETXW) reported second-quarter results for March 31, 2021, with revenues of $9.3 million, down 24% year-over-year. The Advanced Technologies segment generated $5.5 million in revenue, while Industrial Services brought in $3.8 million, reflecting declines of 11% and 36%, respectively. Gross profit fell to $3.9 million, or 42% of revenues, compared to 44% a year ago. However, net income increased to $2.5 million from a loss of $1.6 million in 2020, aided by one-time gains. Cash stood at $15.6 million.

Positive

• Net income improved to $2.5 million vs. a loss of $1.6 million in 2020.
• Ongoing investments in core technologies and R&D may position Cemtrex for future growth.

Negative

• Revenue declined by 24% year-over-year, driven by COVID-19 impacts.
• Operating expenses remained flat at $5.9 million, while cash used in operations increased to $2.9 million.

Brooklyn, NY, June 24, 2021 (GLOBE NEWSWIRE) -- - Cemtrex Inc. (NASDAQ: CETX, CETXP, CETXW), 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 second quarter ended March 31, 2021.

Second Quarter 2021 Financial Results

Revenue for the three months ended March 31, 2021, and 2020 was $9.3 million and $12.1 million, respectively, a decrease of 24%. Revenue for the six months ended March 31, 2021, and 2020 was $18.1 million and $24.3, respectively, a decrease of 26%. The decrease in revenue was primarily due to shutdowns and limited operations of businesses due to the COVID-19 crisis. The Advanced Technologies segment revenues for the three months ended March 31, 2021, decreased by 11% to $5.5 million, and the Industrial Services segment revenues for quarter decreased by 36%, to $3.8 million.

Gross Profit for the second quarter of 2021 was $3.9 million, or 42% of revenues as compared to gross profit of $5.3 million, or 44% of revenues for the year ago period. Gross profit decreased due to lower sales and varies from product to product and from customer to customer.

Total operating expenses for three months ended March 31, 2021 were $5.9 million, compared to $5.9 million in the prior year’s quarter.

Operating activities for continuing operations used $2.9 million for the quarter ended March 31, 2021 compared to using $1.4 million of cash for the quarter ended March 31, 2020.

Net income for the quarter ended March 31, 2021 was $2.5 million, as compared to a net loss of $1.6 million in 2020. Net income increased in the second quarter as compared to the same period last year primarily due to other income items including a one-time settlement agreement and unrealized gains on marketable securities.

Cash and cash equivalents totaled $15.6 million at March 31, 2021, as compared to $15.9 million at December 31, 2020 and $19.5 million at September 30, 2020.

Management Commentary

Cemtrex’s Chairman and CEO, Saagar Govil, commented on the results: “In the second quarter of 2021 we continued to see a weakness due to COVID-19 which affected our overall business. Looking ahead we continue to focus on driving top line growth as markets return to normal and spending returns. We continue to further develop our product lines, with ongoing R&D in our Advanced Technologies Segment’s proprietary technology, including Virtual Reality solutions, SmartDesk, and Artificial Intelligence (AI) based, next generation solutions associated with security and surveillance systems software. We believe with ongoing investments in our core technologies and a rebounding economy, we continue to be well positioned for a return to growth that will create long term value for our shareholders,” concluded Govil.

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 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 the offering, gross proceeds from the 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.

Investor Relations
Chris Tyson
Executive Vice President – MZ North America
Direct: 949-491-8235
CETX@mzgroup.us
www.mzgroup.us

Cemtrex, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets

Condensed Consolidated Balance Sheets - USD ($)	Mar. 31, 2021			Sep. 30, 2020
Current assets
Cash and equivalents	$	15,573,734		$	19,490,061
Restricted cash		1,706,926			1,582,798
Short-term investments		522,612			887,746
Trade receivables, net		5,403,292			6,686,797
Trade receivables - related party		1,498,776			1,432,209
Inventory -net of allowance for inventory obsolescence		7,358,808			6,793,806
Prepaid expenses and other assets		1,820,031			1,188,317
Total current assets		33,884,179			38,061,734
Property and equipment, net		7,335,201			6,961,751
Right-of-use assets		2,862,154			2,728,380
Assets held for sale		8,323,321			8,323,321
Goodwill		5,886,096			4,370,894
Other		1,074,861			744,207
Total Assets		59,365,812			61,190,287
Current liabilities
Accounts payable		2,314,545			2,857,817
Short-term liabilities		6,595,935			7,034,510
Lease liabilities - short-term		764,108			721,036
Deposits from customers		96,468			29,660
Accrued expenses		2,676,724			2,392,487
Deferred revenue		1,473,041			1,651,784
Accrued income taxes		553			89,318
Total current liabilities		13,921,374			14,776,612
Long-term liabilities
Loans payable to bank		1,323,989			1,871,201
Long-term lease liabilities		2,106,545			2,027,406
Notes payable		3,154,743			6,029,999
Mortgage payable		2,306,834			2,355,542
Other long-term liabilities		1,075,171			1,063,733
Paycheck Protection Program Loans		5,406,477			2,169,437
Deferred Revenue - long-term		784,667			467,329
Total long-term liabilities		16,158,426			15,984,647
Total liabilities		30,079,800			30,761,259
Commitments and contingencies
Shareholders' equity
Preferred stock value		1,795			2,157
Common stock, $0.001 par value, 50,000,000 shares authorized, 18,711,463 shares issued and outstanding at March 31, 2021 and 17,622,539 shares issued and outstanding at September 30, 2020		18,711			17,623
Additional paid-in capital		58,320,570			60,221,766
Retained earnings (accumulated deficit)		(31,758,563	)		(32,520,084	)
Treasury stock at cost		(148,291	)		(148,291	)
Accumulated other comprehensive income (loss)		1,824,350			1,777,112
Total Cemtrex stockholders' equity		28,258,622			29,351,383
Non-controlling interest		1,027,390			1,077,645
Total liabilities and shareholders' equity		59,365,812			61,190,287
Series A and C Preferred Stock [Member]
Shareholders' equity
Preferred stock value	$	50		$	100

Cemtrex, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss)

Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss) (Unaudited) - USD ($)	3 Months Ended						6 Months Ended
	Mar. 31, 2021			Mar. 31, 2020			Mar. 31, 2021			Mar. 31, 2020
Income Statement [Abstract]
Revenues	$	9,260,385		$	12,113,847		$	18,096,461		$	24,333,930
Cost of revenues		5,331,501			6,767,743			10,162,107			13,639,340
Gross profit		3,928,884			5,346,104			7,934,354			10,694,590
Operating expenses
General and administrative		5,249,985			5,458,071			10,667,181			10,032,481
Research and development		641,497			404,933			1,275,722			781,519
Total operating expenses		5,891,482			5,863,004			11,942,903			10,814,000
Operating income/(loss)		(1,962,598	)		(516,900	)		(4,008,549	)		(119,410	)
Other income/(expense)
Other income/(expense)		1,679,944			447,792			2,630,932			672,117
Settlement Agreement - Related Party		3,674,165						3,674,165
Interest Expense		(849,076	)		(1,348,298	)		(1,458,017	)		(1,830,820	)
Total other income/(expense), net		4,505,033			(900,506	)		4,847,080			(1,158,703	)
Net loss before income taxes		2,542,435			(1,417,406	)		838,531			(1,278,113	)
Income tax benefit/(expense)		(98,477	)		(189,543	)		(127,431	)		(189,543	)
Net income/(loss)		2,443,958			(1,606,949	)		711,100			(1,467,656	)
Less income in noncontrolling interest		(10,174	)		(7,848	)		(50,421	)		187,063
Net income/(loss) attributable to Cemtrex, Inc. shareholders		2,454,132			(1,599,101	)		761,521			(1,654,719	)
Net income/(loss)		2,443,958			(1,606,949	)		711,100			(1,467,656	)
Other comprehensive income/(loss)
Foreign currency translation gain/(loss)		(87,972	)		(749,826	)		(40,491	)		(166,800	)
Defined benefit plan actuarial gain/(loss)		87,895						87,895
Comprehensive income/(loss)		2,443,881			(2,356,775	)		758,504			(1,634,456	)
Less comprehensive income/(loss) attributable to noncontrolling interest		19,625			(897	)		50,255			(214,237	)
Comprehensive income/(loss) attributable to Cemtrex, Inc. shareholders	$	2,424,256		$	(2,355,878	)	$	708,249		$	(1,420,219	)
Income/(loss) Per Share-Basic	$	0.13		$	(0.26	)	$	0.04		$	(0.31	)
Income/(loss) Per Share-Diluted	$	0.13		$	(0.26	)	$	0.04		$	(0.31	)
Weighted Average Number of Shares-Basic		18,559,113			6,250,761			18,195,731			5,292,167
Weighted Average Number of Shares-Diluted		18,629,064			6,250,761			18,200,974			5,292,167

Condensed Consolidated Statements of Cash Flows
(Unaudited/Restated)

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Mar. 31, 2021			Mar. 31, 2020
Cash Flows from Operating Activities
Net income/(loss)	$	711,100		$	(1,467,656	)
Adjustments to reconcile net loss to net cash provided/(used) by operating activities:
Depreciation and amortization		680,004			888,391
Gain on disposal of property and equipment		9,219			311
Amortization of right-of-use assets		438,539			281,758
Change in allowance for inventory obsolescence		(948,733	)		(19,569	)
Change in allowance for doubtful accounts		(137,356	)		(6,416	)
Share-based compansation		65,318			143,208
Income tax expense/ (benefit)		127,431			189,543
Interest expense paid in equity shares		657,329			1,004,518
Accrued interest on notes payable		41,833			291,384
Amortization of original issue discounts on notes payable		475,000			317,667
Gain on marketable securities		(1,869,338	)		(338,057	)
Settlement Agreement - Related Party		(3,674,165	)
Changes in operating assets and liabilities net of effects from acquisition of subsidiaries:
Accounts receivable		1,420,861			(62,013	)
Accounts receivable - related party		(71,581	)		(90	)
Inventory		383,731			(419,711	)
Prepaid expenses and other curent asstets		(631,714	)		(297,176	)
Other assets		169,346			(834,561	)
Other liabilities		11,438			(90,121	)
Accounts payable		(543,272	)		(854,616	)
Operating lease liabilities		(450,102	)		(293,138	)
Deposits from customers		66,808			9,166
Accrued expenses		161,820			(143,160	)
Deferred revenue		138,595			227,172
Income taxes payable		(88,765	)		102,463
Net cash used by operating activities		(2,856,654	)		(1,370,703	)
Cash Flows from Investing Activities
Purchase of property and equipment		(944,601	)		(4,340,023	)
Investment in Virtual Driver Interactive		(900,000	)
Investment in MasterpieceVR		(500,000	)
Proceeds from sale of marketable securities		7,080,375			13,083,547
Purchase of marketable securities		(4,845,903	)		(12,347,199	)
Purchases of treasury stock					(190,483	)
Note Receivable - Related party
Net cash used by investing activities		(110,129	)		(3,794,158	)
Cash Flows from Financing Activities
Proceeds from notes payable					2,990,000
Payments on notes payable		(2,070,257	)		(676,640	)
Proceeds on bank loans					2,476,000
Payments on bank loans		(655,276	)		(133,414	)
Proceeds from Paycheck Protection Program Loans		1,970,785
Proceeds from securities purchase agreements					1,580,100
Expenses on securities purchase agreements					(58,950	)
Revolving line of credit					387,598
Net cash provided/(used) by financing activities		(754,748	)		6,564,694
Effect of currency translation		(70,668	)		(193,974	)
Net increase in cash, cash equivalents, and restricted cash		(3,721,531	)		1,399,833
Cash, cash equivalents, and restricted cash at beginning of period		21,072,859			2,858,085
Cash, cash equivalents, and restricted cash at end of period		17,280,660			4,063,944
Balance Sheet Accounts Included in Cash, Cash Equivalents, and Restricted Cash
Cash and equivalents		15,573,734			2,809,591
Restricted cash		1,706,926			1,254,353
Total cash, cash equivalents, and restricted cash		17,280,660			4,063,944
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest		283,855			342,268
Cash paid during the period for income taxes		88,765			188
Supplemental Schedule of Non-Cash Investing and Financing Activities
Investment in Virtual Driver Interactive		439,774
Stock issued to pay for products and/or services					198,583
Stock issued to pay notes payable	$	1,707,327		$	3,632,518

FAQ

What were Cemtrex's revenue figures for Q2 2021?

Cemtrex reported Q2 2021 revenues of $9.3 million, a decrease of 24% from $12.1 million in Q2 2020.

How did Cemtrex's net income change in Q2 2021?

Cemtrex's net income for Q2 2021 was $2.5 million, compared to a net loss of $1.6 million in the same quarter of 2020.

What are the primary reasons for the revenue decline at Cemtrex?

The revenue decline at Cemtrex was primarily attributed to shutdowns and limited operations due to the COVID-19 crisis.

What is the current cash position of Cemtrex as of Q2 2021?

As of March 31, 2021, Cemtrex had cash and cash equivalents totaling $15.6 million.

What segments contributed to Cemtrex's revenue in Q2 2021?

In Q2 2021, Advanced Technologies segment revenues were $5.5 million, and Industrial Services segment revenues were $3.8 million.