This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk00: Greetings and welcome to the Simtrex second quarter 2024 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. While these forward-looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place any reliance on these forward-looking statements, which reflect our opinions only as of the date of this presentation. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events. Throughout today's discussion, we will attempt to present some important factors relating to our business that may affect our predictions. You should also review our most recent Form 10-K and Form 10-Q for a more complete discussion of these factors and other risks, particularly under the heading Risk Factors. A press release detailing these results was issued this afternoon and is available in the Investor Relations section of our company's website, simtracks.com. Your host today, Sagar Govil, Chief Executive Officer, and Paul Wyckoff, Chief Financial Officer, will present an audited result of operations for the second quarter ended March 31, 2024. At this time, I will turn the call over to SEMTREX Chief Executive Officer, Sagar Govil. Please go ahead.
spk01: Thank you, Operator. And good afternoon, everyone. I'm pleased to welcome you to today's second quarter 2024 financial results conference call. The second quarter of our fiscal year 2024 was highlighted by new technology deployments and continued overall growth across our business. For the second quarter, Semtrex had revenue of $17.2 million, an increase of 7%, and our gross margin was 40%. Operating loss for the second quarter was $1 million, compared to operating income of $0.4 million a year ago. Operating loss for the six-month period was $1.8 million compared to $1.5 million in the prior year, despite higher sales. However, these results include approximately $1 million in one-time expenses from employee-related charges and legal expenses that we do not anticipate incurring in the future. Our goal of reaching a full-year operating profit remains, and we are working hard to drive revenue and maintain tight cost controls. Revenues in our security segment in the second quarter decreased by 18% to $8.1 million. The decrease was due to the delay of certain projects with security segments, products, and services. Despite the delay in some of the Vicon projects, the segment is still showing year-over-year growth for the first half of the fiscal year. Vicon continued to introduce new technologies and products, including the deployment of Inavio, Vicon's innovative new cloud security platform. Inavio enables users to manage their access control, video, and intercom via a single tool, to streamline and ultimately achieve complete situational awareness and control. Some of the new features of Inavio include face authentication that ensures only authorized people can access facilities and a powerful person of interest feature whereby users can forensically track a specific person or multiple people throughout a facility. We continue to invest in our sales and marketing resources in the security segment with the goal of driving sales growth over the next several quarters. We are also striving to increase operational efficiency and have reduced inventory by over 1 million for this fiscal year. With the launch of Anabio, along with new technologies and continued improvements to our core software platform, Valeris, we expect to drive further growth and see additional opportunity to grow gross margin in 2024. Revenue for our industrial services segment, AIS, increased 47% to 9.1 million. mainly due to increased demand for our services as well as additional business from the highly synergistic acquisition of Heisen Mechanical. We believe the segment will produce a record year of revenue driven by new orders from leading companies and a robust growth pipeline. We continue to believe with additional orders ahead, AIS has the potential to reach more than 30% annual growth in fiscal year 2024. During the second quarter, AIS secured orders including a $1.6 million order for two relocation projects from the leading printing and graphics company and a half a million dollar order to remove existing equipment for an engineering and construction company, which affirms AIS's commitment to delivering excellence across its service offering.
spk03: I'll now turn the call over to Paul Wyckoff, our CFO, to discuss financials. Thank you, Sagar.
spk02: Revenue for the second quarters of 2024 and 2023 were $17.2 million and $16.1 million, respectively, an increase of 7%. The security segment revenues for the first quarter of fiscal 2024 decreased by 18% to $8.1 million. The security segment decrease was due to a delay of multiple projects for the segment's products and services. The industrial services segment revenues for the quarter increased by 47% to $9.1 million, mainly due to increased demand for the segment services, as well as additional revenue due to the highly acquisition completed during the fourth quarter of fiscal year 2023. Gross profit for the second quarter of 2024 was $6.9 million, or 40% of revenues, as compared to gross profit of $7.3 million, or 46% of revenues, for the second quarter of 2023. Total operating expenses for the three months ended March 31st, 2024 were $8 million compared to $7 million in the prior year's quarter. Operating loss for the second quarter of 2024 was $1 million as compared to an operating income of $0.4 million for the second quarter of 2023. The operating loss was primarily due to a decrease in gross profit in our security segment and overall increased payroll expenses. Net loss for the second quarter of 2024 was $1.6 million as compared to a net loss of $0.6 million in the second quarter of 2023. Cash, cash equivalents, and restricted cash totaled $4.1 million at March 31, 2024, as compared to $6.3 million at September 30, 2023. Subsequent to the second quarter, the company closed a firm commitment underwritten public offering with gross proceeds to the company of approximately $10 million. Inventories decreased to $7.4 million at March 31, 2024, from $8.7 million at September 30, 2023.
spk03: I will now turn the call back to Sagar for a review of our 2024 outlook. Thank you, Paul.
spk01: Looking ahead, we are well positioned to build on our momentum and remain focused on our goal to achieve positive operating income in fiscal year 2024 on a full year basis. We have strengthened our balance sheet from the $10 million upsized underwritten public offering we closed, of which a portion of the proceeds were used to pay off some of our indebtedness. We continue to explore acquisition opportunities that have the potential to enhance our market reach and service capabilities and further drive growth in the months and years ahead. We remain focused on delivering incremental growth and positive operating results along with diligent balance sheet management, and we are committed to achieving positive operating income for the full year, fiscal year 2024. Thank you all for attending, and now I would like to answer your questions. Operator?
spk00: Thank you. And ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, simply press the star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press the star followed by the number two. One moment, please, for your first question.
spk04: And once again, if you would like to ask a question, please press store followed by the number one on your cell phone keypad.
spk00: And your first question comes from the line of Jared Cohen with JM Cohen and Company. Your line is open.
spk03: Hello.
spk04: And again, if you would like to ask a question, please press the star one.
spk00: And we currently have no questions at this time. I would like to turn it back to Sagar Govil for further remarks.
spk03: Thank you, operator.
spk01: I would like to thank each of you for joining our earnings conference call today and look forward to continuing to update you on our ongoing progress and growth. If we were unable to answer any of your questions, please feel free to reach out to our IR firm, MZ Group, who would be more than happy to assist. Thank you.
spk00: Thank you, presenters. And ladies and gentlemen, this concludes today's conference call. Thank you all for participating in me now disconnect.
Disclaimer