Senstar Technologies Corporation

Ladies and gentlemen, thank you for standing by. Welcome to CENSTAR Technologies' fourth quarter and full year 2024 results conference call. All participants are at present in a listen-only mode. Following management's formal presentation, we will have a question and answer session. Instructions will be given at that time. As a reminder, this conference is being recorded. I would now like to hand the call over to Kim Rogers of Hayden IR. Thank you. You may begin.

Thank you, Sherry. Welcome, and thank you for joining us today. I want to thank the management of SunStar Technologies for hosting today's call. With us on the call today from the company are Mr. Fabian Aubert, CEO, and Ms. Alicia Kelly, CFO. Before we start, I'd like to point out that this conference call may contain projections or other forward-looking statements regarding future events or the company's future performance. These statements are only predictions and CENSTAR cannot guarantee that they will in fact occur. CENSTAR does not assume any obligation to update that information. Actual events or results may differ materially from those projected, including as a result of changing market trends, reduced demand, and the competitive nature of the security systems industry, as well as other risks identified in the documents filed by the company with the Securities and Exchange Commission. In addition, during the course of the conference call, we will describe certain non-GAAP financial measures, which should be considered in addition to and not in lieu of comparable GAAP financial measures. Please note that in our press release, we have reconciled our non-GAAP financial measures to the most directly comparable GAAP measures in accordance with Reg G requirements. You can also refer to our website at www.sunstartechnologies.com for the most directly comparable financial measures and related reconciliations. With that, I will now hand the call over to Sunstar Technologies CEO, Fabian Hobert. Fabian, please go ahead.

Thank you, Kim. Thank you for joining us. today to review our fourth quarter and full year 2024 financial results. Starting with an overview of this quarter's performance, our revenue increased by 14.5% compared to Q4 2023, driven by solid growth across our core geographies, with the USA and EMEA markets expanding by 43% and 44% respectively. During the quarter, we also achieved major wins across the telecom data centers, airports, and correction verticals, which served as important tailwinds for the business heading into 2025. Similar to the prior quarter, growth margin was strong at 64.5%, representing a 7.9 percentage points increase versus Q4 2023. The improvement in the quarter was primarily driven but a combination of her balanced solution mix, pricing adjustments, our continued streamlining of cost-saving initiatives, and normalization supply chain of the component markets. As previously communicated, our growth margin levels are aligned with our expectation to deliver a growth margin of 60% or better. While we remain focused on diligent expense management, Operating expenses increased by 7% compared to Q4 2023, primarily due to higher cost driven by recent headcount additions in both the general and administrative and sales and marketing functions. The combination of revenue growth and growth margin expansions in tandem with diligent investments to drive sales led to a significant increase in our profitability. Accordingly, EBITDA in the quarter reached 1.6 million versus the 0.5 million in the year-ago quarter, while net income improved from 0.4 million to 1.6 million. We continue to experience strong growth in the U.S. and EMEA, and our core verticals have remained as significant growth contributors on the company overall. Our performance this quarter reflects both the 664 execution of our strategic focus on high potential sectors and the continued customer adoptions of our tailored solutions. Turning to our fiscal year of 2024 results, total revenue increased by 9% to $35.8 million, driven by strong performance in our USA, EMEA, and APEC markets. We experienced a healthy growth rate from our targeted vertical. with notable strengths in the corrections, utility, and transportation verticals, along with a great performance in data centers and renewable energy. We continue to focus our efforts on data centers among globally recognized names, which supported an over 30% growth in the utility verticals in 2024. Growth margin for 2024 expanded for 6.6 percentage points, to 64.1% from 57.5% in 2023. The increase in gross margin was driven by price adjustment, streamlining initiatives, and the stabilization of supply chain following a period of constraints related to COVID. Based on streamlining initiatives that we began in 2023, we're continuing to optimize our cost structure and delivered a 5% decline in operating expenses for the year of 2024. As a result of this powerful combination of revenue growth, growth margin expansion, and lower operating expenses, our profit trajectory shows a meaningful improvement. For the full year of 2024, EBITDA reached 4.6 million compared to EBITDA loss of 0.3 million in 2023. and net income improved by 3.9 million to 2.6 million versus net loss of 1.3 million in 2023. Our capital structure remains healthy with a cash balance of 20.5 million along with no debt as of December 31st, 2024. Now turning to vertical sales. Correctional facilities We achieved important wins in the correction verticals driven by steady demand for our advanced security technologies that ensure public safety, mainly in the USA. Our customer and the broader market see value in reliable intelligent threat detections that adapts to complex environments. Leveraging on the power of AI, our multi-sensor product is an example of our advanced perimeter solutions and is uniquely suited to address the modern needs of complex facilities, such as correctional institutions. Our offerings have helped strengthen our competitive position in a trusted partner, leading to an increase in contract wins, particularly in the US market. Utilities. The growth trajectory of this vertical remains one of our strongest, and we experienced a significant breakthrough with data centers across all our core markets in 2024. The EMEA, US, and APAC regions showed notable strengths with broad-based demand across data centers, telecom infrastructure, solar farms, and energy generation. As the utility sector accelerates investments in securing critical infrastructures, we are strategically positioned to capture a growing share of the markets. Our technology is showing increased adoption by operators of of these high-value assets, which demonstrates the scalability and ingenuity of our solutions. Transport. In Q4 2024, we accomplished major wins in the transport sector with a steady flow of demand for upgraded airport infrastructure across a variety of our core markets. The EMEA and APAC region in particular are expanding rapid developments in transport infrastructure and our technology is uniquely positioned to address this market's increasing need for securing monitoring systems. In addition to MEA and APAC, we're continuing to prioritize a broad base of geographies where modern transportation security initiatives are aligned with our innovative and secure solutions. Energy, the vertical was pressured under 2024 with revenue declining versus 2023, however, Our energy offering remains in a competitive position as it enables companies to unlock operational efficiencies while protecting critical assets. The MEA market was the strongest performing region with its vertical in 2024, while North America showed encouraging trends as well. We're optimistic about the trend in the energy industry and remain focused on capturing opportunities that will have a positive contribution in the quarters ahead. In terms of product updates, I'm pleased to share that MultiCentered is experiencing positive initial indicators with continued sales in Q4 2024. This has become the cornerstone of our perimeter technology solution, and initial customer feedback has been overwhelmingly positive, particularly for those in critical infrastructure and high security sectors. As demand grows for comprehensive real-time situational awareness, Multisensor positions us well for continued growth in both domestic and international markets. Our strategy remains focused on business development to expand global market share across key verticals. We're pleased to report a growing share of our sales is being driven by new customers, reflecting successful outreach and acquisition effort. We recently hired a new business development team that is already well established on three major continents to sustain this progression. The business development team has a proven track record and their incentives are in full alignment with the company to improve the revenue ratio of new customer sales. We aim to bring on new end users in existing markets while also acquiring customers in new regions. Likewise, our investments in key territories are coming to fruition as evidenced by the double-digit growth in the USA and EMEA markets. In conclusion, we're encouraged by our performance in 2024, marked by strong revenue growth, material improvement in profitability, and market share gains across our key verticals. The Sensor team remains dedicated to successfully executing our growth strategy, capturing market share, and delivering value to our customers. We're committed to expanding upon these wins as we continue delivering value for our shareholders and generating sustainable long-term growth. Now I will pass the call to our CFO, Alicia Kelly. Alicia, please go ahead and review the financial results.