Sustained Top and Bottom Line Growth for Cemtrex
Cemtrex, Inc. (CETX – $3.18), a diversified industrial and manufacturing technology company continues to make outstanding financial and operational progress.
In the first six months of fiscal year 2015, ended March 31, 2015, Cemtrex’ net sales were $28.1 million compared with $20.5 million in 2014, an increase of 37.3%. In addition, net income for the six months ended March 31, 2015 reached $1.47 million, or $0.04 per share, compared with $1.18 million, or $0.03 per share in 2014, a 24% increase in both net income and earnings per share.
Thanks to these results, and its solid balance sheet, Cemtrex was able to uplist to the NASDAQ market a few days ago. Its new ticker symbol is CETX. One of the last remaining steps to meet all the requirements to move to NASDAQ was its stock price, which was trading below one dollar. So the Company effected a 1 for 6 reverse stock split. As a result, the number of outstanding common shares was reduced from 40.7 million to 6.8 million. The stock price reacted positively. The last day before the reverse split, the stock closed at $0.43, which equals $2.58 post-split. Yesterday, the stocks closed at $3.18, up 23%.
Continued Top and Bottom Line Strength
The trend that Cemtrex set in 2014 of growing sales and earnings continues today.
Sales for the first quarter, ended December 31, 2014 increased by 54%, to $13,842,789 from $8,964,380 for the three months ended December 31, 2013. The Company had a net profit of $396,872, for the three months period ended December 31, 2014 as compared to a net income of $416,552 for the three months ended December 31, 2013, representing a decrease of 5%.
Total revenue for the three months ended March 31, 2015 and 2014 was $14,330,940 and $11,548,572, respectively, an increase of $2,782,368, or 24%. Net income for the three months ended March 31, 2015 and 2014 was $1,081,573 and $769,615, respectively, an increase of $278,558, or 36%.
Saagar Govil, Chief Executive Officer of Cemtrex, commented, “We have continued to experience robust top line growth across our business during this second quarter. Despite currency fluctuations and market concerns about emerging economies, we see our core business segments continuing to thrive. Our backlog in our electronics manufacturing and services business continues to increase, so we are bullish over the long term for our prospects there as well.”
Prozess Technologie Agreement
Earlier in June Cemtrex signed a distribution partner agreement with Prozess Technologie, an emerging leader in real-time, in-line process measurement solutions, to sell the Reveal process analyzer product lines.
The Reveal platform uses spectroscopy with built-in chemometrics to measure solids, liquids and gases “in-line” for batch and continuous manufacturing. The Reveal can be customized for even the harshest environments, including certified enclosures for hazardous areas.
“This partnership with Prozess Technologie enables us to immediately deploy some of the most advanced measurement solutions available in the market to our Fortune 500 customers. We see a $500M+ worldwide market potential for these solutions and believe it can be a multi-million dollar revenue stream for Cemtrex over the next few years.” said Saagar Govil, CEO of Cemtrex Inc.
Stefan Beck, Vice President, worldwide sales for Prozess Technologie added, “Cemtrex has the right experience, talent and relationships to help us bring the Reveal solution to U.S. manufacturing.”
Conclusion
Cemtrex has demonstrated strong growth in recent years reaching over $47 million in revenue and $.39 earnings per share up from approximately $13 million in revenue and $.04 earnings per share in its fiscal year 2014 and 2013 respectively. The Company has managed to thrive by focusing on growth markets like emerging economies in Asia, broadening its product portfolio, and honing in on innovative industries like medical devices and wearables.
During the first two quarters of fiscal 2015, the Company has seen sustained growth topping previous year’s sales. With strong end market demand, environmental regulations increasing, and the Company’s commitment to remaining competitive, Cemtrex is aiming for continued compelling growth.
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Cemtrex taking it on the chin today. very strange. great buy under 3.00 in my view.
Graham,
I can’t agree with you more. The Q3 results confirm the positive trend. Cemtrex is a bargain.
None of this is wrong….however, $450k of their pretax income was debt forgiveness for their EM group. In the Dec 31, 2014 quarter, we saw revenue increase but earnings decrease, and w/o the debt forgiveness in the March 31, 2015 quarter, you would have seen the same thing.
Another concern… they’ve issued convertible notes like 7-8x since late 2014, which doesn’t make sense to me…and they’re doing it at 10% interest rates. in a very low interest rate environment. maybe im missing something, but it doesnt make sense.
So, March 31 2015 earnings in-line/slightly lower than March 31 2014 earnings once you adjust for debt forgiveness(despite sales growth). which raises another question…why is their debt being forgiven..? and then as a follow up, why are there so many issuances of short-term convertibles bonds at very high interest rates? I see some red flags on this one…
Admin, quick question for you – I saw their Q3 2015 results from PR NewsWire, but cannot find any SEC filings/press releases on their website. Do you know why this might be?
Hi Win,
Thank you for reaching out. The 10-Q is usually filed a few days after the financials are announced by press release. This is the case with many companies.
In Cemtrex’ case, for example, last year it released third quarter financials on July 30th, and filed its 10-Q on August 6th. So I’m sure that the company will file its 10-Q in the next few days. They have until August 15th to do so.
Looking forward to the 10-Q myself. It is important to look at all the details. Thank you for helping us with that.
Can’t wait to see those results…hope your right. Theyve been growing revenues, but COGS/opex have been growing faster, right through the 3/31/15 quarter.
For the 12/2014 quarter, OpIncome fell from 457k to 400k y/y, despite revenue increase from 8.9 mln to 13.8 mln.
For the 3/2015 quarter, OpIncome fell from 832k to 797k y/y, despite revenue increase from 11.5 mln to 14.3 mln.
Sales are growing, but selling more isn’t good if each additional unit is sold at a loss. Their 10q for the 6/30 quarter could upend this trend…if the # they released is real (e.g., no 1 time 450k unusual income items like the 3/15 quarter).
I will say it looks like they’re doing pretty well managing the working capital acquired from ROB – they’ve cut that down to size. and they are paying down debt. but this operating income #…you can’t really get around it. that’s why im stoked to see their 10q for this quarter!
Released today…
1) Operating income saw further decreases 🙁 They boosted NI again with debt forgiveness for their electronics group
2) pg 15 of the PDF – Electronics manufacturing sales decreased 33% in the quarter to $5.3 million from $7.9 million in the same quarter of 2014. This section of the 10q is worrying for 2 reasons: a) management just acquired ROB, and while they did get it for just $5 million, that’s still too much if the thing loses money…which it now certainly is. bad acquisition = bad mgmt. b) management chalked up the -$2.6 million to FX changes…yea right! that’s a farse.
and it looks like CETX is about to make another acquisition, which will surely destroy shareholder value (if they had just sat with and focused on their environmental products, they would be doing SO much better. this business grew at 69% y/y…from $5.5 million to $9.3 million. in every sense of the word “better,” this company would be doing better, much better, w/o ROB. poor management, no?).
3) pg 10 of the PDF – Not only is CETX issuing convertible notes liek crazy (more than $1 million since December 30, 2014), and paying 8%-10%/annum, but the notes convert to stock at a rate that equals between 65% and 70% of the current stock price…what the actual fuck. can someone explain this to me…? How is that defensible? how badly must they need those loans…
Hi Win,
First of all, thanks for your follow-up. I’m sorry to read you feel this way about Cemtrex. Let me try to clarify a few things.
Don’t forget that the USD increased about 25% compared with the EUR over the past 12 months. This is actually affecting many companies. Next to the exchange rate, sales at ROB were also lower due to the timing of shipments of in-house orders during this quarter as compared to the same quarter a year ago. So the latter should be a one-off issue. As for the currency rate issue, there’s nothing management can do about this, nor did anyone see this coming. So management is certainly not to blame here. In addition, just because revenues are lower in USD doesn’t automatically mean that ROB is losing money.
As for the new acquisition, I wouldn’t be too hasty to draw a conclusion. After all, the press release said that target company’s average revenues and normalized EBITDA over the last two years was approximately $23 million and $2.4 million respectively and that the deal would be highly accretive in nature and driving an immediate impact for shareholders.
Finally, on July 16th, Cemtrex announced the receipt of new orders in excess of $4.2 million across both business groups. The Environmental Products & Systems group received approximately $2.5 million in order for environmental products with deliveries expected over the next 12 months, primarily for projects located in Southeast Asia. The Electronics Manufacturing Services group received approximately $1.7 million in orders for a diverse set of existing European customers in medical, industrial, and automation industries, also with deliveries expected over the next 12 months.
We still have lots of faith in Cemtrex. The company is hurt by currency fluctuations, but overall it’s doing well.