Cemtrex reported a mixed Q2 2024 performance. Revenue reached $17.16 million, up 6.8% year over year, with a gross margin positioned near 40%. However, the company posted an operating loss of $1.03 million and a net loss of approximately $1.47 million, reflecting higher payroll costs and one-time charges highlighted by management. Management underscored a path to positive full-year operating income in FY2024, albeit with important caveats around seasonality and segment mix.
Segment dynamics drove much of the delta in performance. The Security segment declined 18% to $8.1 million due to project delays, while the Industrial Services (AIS) segment surged 47% to $9.1 million, aided by the Heisey Mechanical acquisition completed in FY2023. AIS is viewed as the primary growth engine with management projecting potential >30% annual growth for AIS in FY2024 as order momentum persists. The deployment of new technologies (Anavio cloud security platform) and ongoing improvements to core software (Valerus) are expected to bolster gross margins over time.
Liquidity and capital structure actions are notable. At quarter end, cash and equivalents stood at about $4.09 million, and Cemtrex subsequently closed an approximately $10 million gross public offering to strengthen liquidity and reduce indebtedness. The balance sheet remains leveraged, with total debt around $28.7 million and net debt near $24.65 million. Management emphasized strict cost controls and balance-sheet optimization as levers to reach positive operating income for the full year 2024, while pursuing M&A opportunities to expand market reach and service capabilities.