Cemtrex Reports Second Quarter 2021 Financial Results
Brooklyn, NY, June 24, 2021 (GLOBE NEWSWIRE) -- - (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. .
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
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 | ||
