Senstar Technologies Corporation

Ladies and gentlemen, thank you for standing by. Welcome to the CINSTAR Technologies fourth quarter and full year 2025 results conference call. All participants are present in a listen-only mode. Following management's formal presentation, instructions will be given for the question and answer session. As a reminder, this conference is being recorded. I would now like to hand the call over to Corbin Woodhull of Hayden IR. Corbin, would you like to begin?

Thank you, LaTonya. I would like to welcome everyone to the conference call and thank Senstar Technologies Management for hosting today's call. With us on the call today are Mr. Fabian Hobert, CEO of Senstar Technologies, and Ms. Alicia Kelly, the CFO. Fabian will summarize key financial and business highlights, followed by Alicia, who will review Senstar's financial results for the fourth quarter and full year of 2025. We will then open the call for a question and answer session. I would like to remind participants that all financial figures discussed today are in U.S. dollars and all comparisons are on a year-over-year basis unless otherwise indicated. Before we start, I'd like to point out 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 Senstar cannot guarantee that they will in fact occur. Senstar 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, 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 the company's website at www.senstar.com for the most directly comparable financial measures and related reconciliations. And with that, I would now hand the call over to Fabian. Fabian, please go ahead.

Thank you, Gordano. And thank you to those joining us today to review Sandstar Technology fourth quarter and full year 2025 financial results. We continue to deliver solid full year performance with growth and revenue, margin expansion, and continued profitability. In 2025, revenue was $36.4 million, gross margin expanded to 65.5%, and we delivered net income of $3.2 million while maintaining a strong balance sheet with $22.5 million in cash and no debt. Those results reflect steady demand across our business and the trends of our operating model. Importantly, revenue from our core verticals grew 5% for the year, supported primarily by continued strength in correction and energy, particularly in North America and EMEA. The performance reinforces the resilience of our business and the relevance of our solutions across critical infrastructure markets. Now, onto a review of quarterly and annual highlights. Moving to the fourth quarter, we encountered more challenging conditions than anticipated. Revenue declined 14% year-over-year to 8.8 million, which also impacted margins in the quarter. The fourth quarter was impacted by several non-recurring and timing-related factors, not a change in the underlying demand. Those factors include delays of government projects, mainly in the U.S. correction verticals following the U.S. federal government shutdown, and a non-recurring European telecom utility project, which will convert to further revenue regeneration in 2026. Most of these projects have shifted into 2026 and further period. This gives us confidence in the strength of our pipeline, which continues to grow, and the overall demand environment, as reflected in our full-year results, where our core verticals grew by 5% despite the fourth quarter timing impacts. Looking more closely at our verticals, we continue to see meaningful opportunities across data centers, energy, utilities, correction, airports, and solar farms. These key verticals are increasingly focused on security and operational intelligence, which aligns well with our technology and capability. Our strategy remains focused on repeatable deployment and scalable account expansion, where we can leverage our install base and deepen relationship with key customers over time to cross-sell our advanced technology solutions dedicated to demanding verticals. On the technology front, 2025 marked a breakout year for LiDAR adoption and customer engagement across multiple verticals, with LiDAR increasingly deployed alongside our traditional solutions with no canalization effects. This is translated into strong LiDAR sales growth, mainly in the fourth quarter. This is an important distinction as LiDAR is expanding our target market, creating new use cases across virtually all our verticals, and enabling SAMSTAR to address a broader range of customer applications. We saw strong growth in LIDAR-related sales and activity with continued momentum and solid pipeline creation. Customer acceptance of LIDAR for both security and operational applications has accelerated dramatically, driving robust pipeline expansion within the strategic initiative. Competing and enhanced at what unraveled peaks and software range. Our 3D LiDAR technology in security application does not compete directly with our current fence detection solution, but with alternative technologies such as thermal cameras, video and analytics, radar, 2D LiDAR, and others. It also addresses further surveillance needs for several other critical points within our vertical market, expanding considerably our addressable market and customer use cases. Our acquisition of Blackfield, completed in the beginning of 2026, represents a transformative step to enhance our competitive position and capture share of this rapid growth market. Our expectation for accelerated growth globally without requiring significant investment is supported by maximizing our global unrivaled sales and technical footprint across its current vertical markets to distillate this groundbreaking technology. On top of that, Blackfield offers high growth perspectives in volume monitoring and traffic application where Blackfield has already developed a footprint. Turning to our geographic performance, U.S. and LATAM remain our strongest market for the full year of 2025 with solid contribution from corrections and energy. Throughout 2025, we secured important new wins across healthcare, utilities, oil and gas, and energy while data centers airports, and increasingly LIDAR continue to generate meaningful pipeline creation. Revenue from the U.S. and LATAM region increased 5% for the year, but declined by 20% in the fourth quarter due to government funding delays following the government shutdown. Encouragingly, most of those projects are still alive, and we have seen some positive activity in support of our review that this was largely a timing issue. Canada was a stand-up performer, returning to growth with over 110% revenue increase in the fourth quarter and 22% for the full year, driven by strong wins in correction and utilities. Our methodical investment in the EMEA region over the last several years are positioning Sansar to capture new opportunities with Q-CAMP and targeted verticals. The region delivered low single-digit revenue growth for the year, reflecting underlying resilience and continued customer demands, though the fourth quarter was impacted by a difficult comparison related to a large-scale non-recurring utility telecom project in the prior year, which is expected to deliver revenue in 2026. We secured major wins in solar farms, energy, data centers, correction, and airports, and together, with from-by creation, we have renewed conviction behind the region's growth prospect in the coming quarters. We're encouraged by the steady demands we see in the region. Supporting a robust pipeline and favorable growth outlook, the EMEA region is experiencing a significant increase in requests for LIDAR applications as well. In Asia-Pacific, performance improved in the fourth quarter with 21% growth. On an annual basis, Asia-Pacific declined 9%, reflecting the impact of a material non-recurring project in Q2 2024. We're optimistic by recent wins and continued pipeline development across the key verticals, including solid wins in data centers and corrections serving as a great source of momentum for quarters and years to come. Across all regions, our business development strategy is gaining traction. We're expanding our presence with Q Council increasing cross-selling opportunities, and building a more diversified and resilient revenue base. Together with Blickfeld, we also secured several promising projects across military and government airport corrections and data centers. Looking ahead to 2026, we're enthusiastic about the opportunities in front of us. We're seeing continued activity across data centers, utilities, energy, and LIDAR, supported by growing pipelines. Our business development strategy is centered on high growth verticals, an appetite for complexity, opportunities for scalability worldwide, and leveraging our pre-existing footprint. Sensar is making inroads with new key accounts and deepening existing customer relationship. Our pipeline is growing, further supporting improved market penetration and enhanced revenue diversification. The addition of Blickfield to our current portfolio will further assist us in expanding our range of solutions and address more security and non-security applications to our current targeted vertical markets. We are also substantially broadening our current addressable markets and strengthening our ability to successfully approach verticals who were not historically present. Importantly, Senstar will actively support and further develop Blickfield's efforts to expand their position and volume in traffic monitoring applications, which are extremely attractive markets combining vertical excellence, high growth margins, and worldwide scalability. I will work together with Blackfield to develop positive synergies with the low group to accelerate its growth. We enter 2026 with an expanding pipeline and are focused on converting that activity into revenue. At the same time, we remain disciplined in cost, ensuring we balance investment and growth, with continued operational efficiency. In summary, we entered the new year with a strong balance sheet, steady demand across our core markets, exciting pipeline, and an enhanced technology portfolio. Our focus is on execution, converting our pipeline into revenue, expanding within key verticals, and driving sustained growth over time. Before turning the call over to Alicia, I would like to thank our employees for their continued dedication. our customers for their trust, and our shareholders for their ongoing support. I will now turn the call over to Alicia for a review of the financial results in more detail.