Cemtrex Reports Third Quarter 2021 Financial Results

Brooklyn, NY, Aug. 16, 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 third quarter ended June 30, 2021.

Third Quarter 2021 Financial Results

Revenue for the three months ended June 30, 2021, and 2020 was $10.3 million and $8.4 million, respectively, an increase of 22%. This increase is mainly due to an improvement in economic conditions from the impact of the COVID-19 crisis during the same period last year. Revenue for the nine months ended June 30, 2021, and 2020 was $28.4 million and $32.8, respectively, a decrease of 13%. The Advanced Technologies segment revenues for the three months ended June 30, 2021, increased by 17% to $5.8 million, and the Industrial Services segment revenues for quarter increased by 29%, to $4.5 million.

Gross Profit for the third quarter of 2021 was $4.1 million, or 40% of revenues as compared to gross profit of $3.3 million, or 39% of revenues for the year ago period. Gross profit increased due to higher sales and varied from product to product and from customer to customer.

Total operating expenses for three months ended June 30, 2021, were $6.4 million, compared to $5.7 million in the prior year’s quarter.

Operating activities for continuing operations used $6.2 million for the nine months ended June 30, 2021 compared to using $3.4 million of cash for the nine months ended June 30, 2020.

Net income for the quarter ended June 30, 2021 was approximately $1.1 million, as compared to a net loss of $4.2 million in 2020. Net income increased in the third quarter as compared to the same period last year primarily due to overall economic improvement from the impact of the COVID-19 crisis during the same period last year and the result of PPP Loan forgiveness.

Cash and cash equivalents totaled $12.9 million at June 30, 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 third quarter of 2021 we continued to see a renewed improvement in our segments, with revenue for the quarter up 12% sequentially from the second quarter. We remain optimistic that our revenue will continue to trend upward as the economic uncertainty due to the pandemic recedes.”

“Throughout the year we have striven to remain at the forefront of innovation by continuing to invest in the development of our roadmap including 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. While we experienced some delays due to the pandemic, we believe that as we continue to roll out our exciting new products and solutions over the next year that our outlook remains positive.”

“Despite the challenges of the pandemic, we believe this focus on the evolution of our core technologies, and a commitment to driving top line growth, has put us in a strong position as our market returns to normal and customers reopen for business and resume purchasing.”

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.

Cemtrex, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets

   (UNAUDITED)  (Restated)
  June 30, September 30,
Assets  2021   2020 
Current assets    
Cash and equivalents $12,879,278  $19,490,061 
Restricted cash  1,690,873   1,582,798 
Short-term investments  452,175   887,746 
Trade receivables, net  5,234,216   6,686,797 
Trade receivables - related party  1,505,789   1,432,209 
Inventory –net of allowance for inventory obsolescence  8,669,397   6,793,806 
Prepaid expenses and other assets  2,164,367   1,188,317 
Total current assets  32,596,095   38,061,734 
     
Property and equipment, net  7,236,755   6,961,751 
Right-of-use assets  3,098,523   2,728,380 
Assets held for sale  8,323,321   8,323,321 
Goodwill  5,886,096   4,370,894 
Other  1,094,429   744,207 
Total Assets $ 58,235,219   $ 61,190,287  
     
     
Liabilities & Stockholders' Equity (Deficit)    
Current liabilities    
Accounts payable $2,888,144  $2,857,817 
Short-term liabilities  6,381,047   7,034,510 
Lease liabilities - short-term  840,016   721,036 
Deposits from customers  39,227   29,660 
Accrued expenses  2,476,812   2,392,487 
Deferred revenue  1,794,187   1,651,784 
Accrued income taxes  331   89,318 
Total current liabilities  14,419,764   14,776,612 
     
Long-term liabilities    
Loans payable to bank  1,046,504   1,871,201 
Long-term lease liabilities  2,261,148   2,027,406 
Notes payable  3,079,743   6,029,999 
Mortgage payable  2,282,409   2,355,542 
Other long-term liabilities  1,078,752   1,063,733 
Paycheck Protection Program Loans  2,871,161   2,169,437 
Deferred Revenue - long-term  449,563   467,329 
Total long-term liabilities  13,069,280   15,984,647 
     
Total liabilities  27,489,044   30,761,259 
     
Commitments and contingencies  -   - 
     
Shareholders' equity    
Preferred stock , $0.001 par value, 10,000,000 shares authorized,     
Series 1, 3,000,000 shares authorized, 1,885,151 shares issued and    
outstanding as of June 30, 2021, and 2,156,784 shares issued and    
outstanding as of September 30, 2020 (liquidation value of $10 per share)  1,885   2,157 
Series A, 1,000,000 shares authorized, zero shares issued and outstanding at    
June 30, 2021, and 1,000,000 shares issued and outstanding at September 30, 2020  -   1,000 
Series C, 100,000 shares authorized, 50,000 shares issued and outstanding at    
June 30, 2021, and 100,000 shares issued and outstanding at September 30, 2020  50   100 
Common stock, $0.001 par value, 50,000,000 shares authorized,    
18,711,463 shares issued and outstanding at June 30, 2021, and    
17,622,539 shares issued and outstanding at September 30, 2020  18,711   17,623 
Additional paid-in capital  58,846,576   60,221,766 
Retained earnings (accumulated deficit)  (30,660,550)  (32,520,084)
Treasury stock at cost  (148,291)  (148,291)
Accumulated other comprehensive income (loss)  1,624,673   1,777,112 
Total Cemtrex stockholders' equity  29,683,054   29,351,383 
Non-controlling interest  1,063,121   1,077,645 
Total liabilities and shareholders' equity $ 58,235,219   $ 61,190,287  
     

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

  For the three months ended For the nine months ended
  June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020
Revenues $10,326,431  $8,440,867  $28,422,892  $                  32,774,797 
Cost of revenues  6,198,715   5,161,015   16,360,822   18,800,355 
Gross profit  4,127,716   3,279,852   12,062,070   13,974,442 
         
Operating expenses        
General and administrative  5,670,019   5,347,718   16,337,200   15,380,199 
Research and development  757,966   331,936   2,033,688   1,113,455 
Total operating expenses  6,427,985   5,679,654   18,370,888   16,493,654 
Operating income/(loss)  (2,300,269)  (2,399,802)  (6,308,818)  (2,519,212)
         
Other income/(expense)        
Other income/(expense)  3,901,658   158,134   6,532,590   830,251 
         Settlement Agreement – Related Party       -   -   3,674,165   - 
Interest Expense  (433,009)  (1,982,101)  (1,891,026)  (3,812,921)
Total other income/(expense), net  3,468,649   (1,823,967)  8,315,729   (2,982,670)
         
Net loss before income taxes  1,168,380   (4,223,769)  2,006,911   (5,501,882)
Income tax benefit/(expense)  (40,759)  (7,658)  (168,190)  (197,201)
Net income/(loss) $                   1,127,621  $                   (4,231,427) $                    1,838,721  $                  (5,699,083)
         
Less income in noncontrolling interest  29,608   (35,751)  (20,813)  151,312 
Net income/(loss) attributable to Cemtrex, Inc. shareholders $1,098,013  $(4,195,676) $1,859,534  $(5,850,395)
         
Net income/(loss) $1,127,621  $(4,231,427) $1,838,721  $(5,699,083)
Other comprehensive income/(loss)        
Foreign currency translation gain/(loss)  (193,554)  154,443   (234,045)  161,460 
Defined benefit plan actuarial gain/(loss)  -   -   87,895   - 
Comprehensive income/(loss)  934,067   (4,076,984)  1,692,571   (5,537,623)
Less comprehensive income/(loss) attributable to noncontrolling interest  (35,731)  41,266   14,524   (118,623)
         
Comprehensive income/(loss) attributable to Cemtrex, Inc. shareholders $969,798  $(4,118,250) $1,678,047  $(5,419,000)
         
Income/(loss) Per Share-Basic $0.06  $   (0.38) $0.10  $(0.82)
Income/(loss) Per Share-Diluted $0.06  $   (0.38) $0.10  $(0.82)
         
Weighted Average Number of Shares-Basic  18,711,463   10,933,926   18,368,274   7,161,785 
Weighted Average Number of Shares-Diluted  18,711,463   10,933,926   18,368,274   7,161,785 
         

Condensed Consolidated Statements of Cash Flows
(Unaudited/Restated)

  For the nine months ended
  June 30,
Cash Flows from Operating Activities  2021   2020 
  (unaudited) (restated)
Net income/(loss) $1,838,721  $(5,699,083)
     
Adjustments to reconcile net loss to net cash provided/(used) by operating activities:    
Depreciation and amortization  972,186   1,343,207 
Gain on disposal of property and equipment  18,583   457 
Amortization of right-of-use assets  653,175   352,691 
Change in allowance for doubtful accounts  (161,101)  126 
Share-based compensation  110,904   167,312 
Income tax expense/ (benefit)  168,190   (197,201)
Interest expense paid in equity shares  818,348   2,505,924 
Accrued interest on notes payable  64,748   308,748 
Amortization of original issue discounts on notes payable  575,000   757,278 
Gain on marketable securities  (2,407,841)  (607,103)
Settlement Agreement - Related Party  (3,674,165)  - 
Discharge of Paycheck Protection Program Loans  (3,349,700)  - 
     
Changes in operating assets and liabilities net of effects from acquisition    
of subsidiaries:    
Accounts receivable  1,613,682   1,654,383 
Accounts receivable - related party  (78,594)  5,510 
Inventory  (1,875,591)  (1,384,453)
Prepaid expenses and other current assets  (976,050)  (514,580)
Other assets  149,778   (1,017,337)
Other liabilities  15,019   (117,667)
Accounts payable  30,327   (1,205,851)
Operating lease liabilities  (650,535)  (296,892)
Deposits from customers  9,567   2,003 
Accrued expenses  (78,851)  383,230 
Deferred revenue  124,637   (99,354)
Income taxes payable  (88,987)  272,925 
Net cash used by operating activities    (6,178,550)   (3,385,727)
     
Cash Flows from Investing Activities    
Purchase of property and equipment  (1,113,658)  (4,541,537)
Investment in Virtual Driver Interactive  (1,075,428)  - 
Investment in MasterpieceVR  (500,000)  - 
Investment in related party  -   (500,000)
Proceeds from sale of marketable securities  9,134,159   22,720,132 
Purchase of marketable securities  (6,290,747)  (23,479,038)
Purchases of treasury stock  -   (190,483)
Net cash used by investing activities    154,326     (5,990,926)
Cash Flows from Financing Activities    
Proceeds from notes payable  -   4,485,000 
Payments on notes payable  (2,145,257)  (726,640)
Proceeds on bank loans  -   5,947,101 
Payments on bank loans  (957,186)  (224,196)
Proceeds from Paycheck Protection Program Loans  2,942,285   - 
Proceeds from securities purchase agreements  -   12,462,648 
Payments on capital lease liabilities  (20,061)  (13,838)
Expenses on securities purchase agreements  -   (840,728)
Revolving line of credit  -   (425,812)
Net cash provided/(used) by financing activities   (180,219)   20,663,535  
     
Effect of currency translation  (298,265)  128,771 
Net increase in cash, cash equivalents, and restricted cash  (6,204,443)  11,286,882 
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 $ 14,570,151   $ 14,273,738  
     
     
     
     
Balance Sheet Accounts Included in Cash, Cash Equivalents, and Restricted Cash    
Cash and equivalents $12,879,278  $12,939,493 
Restricted cash  1,690,873   1,334,245 
Total cash, cash equivalents, and restricted cash $    14,570,151   $    14,273,738  
     
Supplemental Disclosure of Cash Flow Information:    
Cash paid during the period for interest $432,930  $240,971 
     
Cash paid during the period for income taxes $88,987  $75,724 
     
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 $    -  $428,538 
Stock issued to pay notes payable $2,187,837  $6,933,924 
     


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

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