Genasys Inc.
(NASDAQ:
GNSS), the
leader in Protective Communications, today announced financial
results for the Company’s fiscal second quarter ended March 31,
2024.
Richard S. Danforth, Chief Executive Officer of
Genasys, Inc., commented, “Genasys is finally turning the corner.
The previously announced project in Puerto Rico has been expanded
to $75 million and the final terms and conditions are expected to
be completed before the end of our fiscal third quarter.
Additionally, the CROWS 16 program, which is included in the U.S.
2024 DoD budget, provides further confidence and visibility into
Genasys’ LRAD business for years to come.”
Mr. Danforth continued, “Bookings activity in
our Software business continues to track in line with our
aggressive expectations. Not only does our footprint in California
continue to expand but we are also seeing broader adoption with
Genasys software being utilized in 39 states, The outlook for the
hardware business is outstanding, and the recurring revenues of the
software business rapidly growing. We are more confident in the
long-term health of our business than we have ever been.”
Fiscal 2Q 2024 Financial
Summary
- Revenue of $5.7 million, versus $11.2 million in 2Q 2023
- GAAP operating loss of ($6.9) million, versus ($3.4) million in
2Q 2023.
- GAAP net loss of ($6.9) million versus ($3.4) million in 2Q
2023. GAAP net loss per share ($0.16) versus ($0.09) in 2Q
2023.
- Adjusted EBITDA of ($5.7) million, versus ($2.3) million in 2Q
2023.
Business Highlights
- Expanded project value of previously
announced Early Warning System (EWS) for 37 dams on the island of
Puerto Rico to approximately $75 million.
- Fortified balance sheet through $15
million, two-year term loan agreement. Loan agreement calls for
non-amortizing quarterly interest payments, with pre-payment
optionality.
- Expanded our Board of Directors with
two independent directors with extensive understanding of the
public sector markets for emergency planning, management and
response.
Business Outlook
Over the past several weeks, we have had
numerous constructive conversations with our Puerto Rican customer,
PREPA. As a result of those conversations, we now expect the
project in Puerto Rico to generate approximately $75 million in
revenue to Genasys. The timing of revenue recognition is not yet
clear, however the Company expects to receive an initial award
payment, in addition to the return of the $3.5 million bid bond
shortly after signing the final terms and conditions of the
contract. Design approval and equipment installation is expected to
be broken down into seven separate groups of dams, each with their
own Emergency Operations Center (EOC). While the initial RFP
contemplated completion of all installations within 240 days of the
total project approval, the revised approach of sequentially
approving and installing groups of dams could extend beyond the end
of fiscal 2025.
Regardless of precise timing, the project in
Puerto Rico is expected to generate substantial EBITDA and cash.
Importantly, by breaking down the project into distinct groups, the
cash for deposits, installation, and final approvals is expected to
flow consistently over the duration of the project. This approach
is expected to lead to overall better margins in our hardware
business as overhead absorption should be more distributed,
especially as the CROWS 16 program ramps up.
Today’s announced financing is expected to
provide adequate resources to enable Genasys to continue growing
its software business, while ramping production and deliveries to
our hardware customers. Profits from the Puerto Rico dam project
and future CROWS 16 deliveries are expected to not only enable
timely repayment of the debt obligation, but also strengthen the
Company’s balance sheet.
Entering fiscal 2024, we expected a very back
end loaded year from a revenue standpoint, given the exceptionally
low initial backlog. Though the US DoD budget was passed at the end
of March, we have yet to see related funding and subsequent
purchase orders flow to Genasys. While funding and orders are still
considered likely to progress, and we are very confident that CROWS
16 and the Puerto Rico dam project will drive substantial revenues
in fiscal 2025 and beyond, we no longer expect fiscal 2024 hardware
revenues to meet prior forecasts. Software revenues are still
expected to grow sequentially with ARR at least doubling year over
year at fiscal year end.
Fiscal 2Q 2024 Financial
ReviewFiscal Second quarter revenue was $5.7 million, a
decrease of 48.8% from $11.2 million in the prior year’s quarter.
Software revenue increased 104% while hardware revenue decreased
61%, compared with the fiscal 2023 second quarter. Within software,
quarterly recurring revenue increased 123% year over year, and ARR
finished the quarter at $6.5 million.
Gross profit margin was 37.9%, compared with
43.9% in the second quarter of fiscal 2023. The drop in gross
profit is primarily attributable to lower hardware revenue in this
year’s quarter and the related reduction in overhead absorption.
Software gross margins were lower year on year due to extraordinary
event driven costs incurred in the quarter.
Operating expenses of $9.2 million increased
from $8.3 million in fiscal 2Q 2023. Selling, general and
administrative expenses increased 10% from $6.1 million in the
prior year to $6.6 million in the quarter ended March 31, 2024.
Research and development expenses increased 11% year over year to
$2.5 million primarily due to the acquisition of Evertel and
efforts to increase the features and functionality of our software
offerings.
GAAP net loss in the quarter was ($6.9) million,
or ($0.16) per share, compared with a GAAP net loss of ($3.4)
million, or ($0.09) per share, in the second quarter of fiscal
2023.
Excluding other income and expense, net income
tax expense (benefit), depreciation, stock-based compensation and
amortization of intangibles, Adjusted EBITDA was ($5.7) million for
the second quarter of fiscal 2024, compared with ($2.3) million for
the prior fiscal year period.
Cash, cash equivalents and marketable securities
totaled $6.6 million as of March 31, 2023, compared with $10.1
million as of September 30, 2023. Not included is the
$3.5 million Bid Bond that is reflected in Prepaid Expenses.
We include in this press release the non-GAAP
operational metrics of adjusted EBITDA, which we believe provide
helpful information to investors with respect to evaluating the
Company’s performance. Adjusted EBITDA represents our net loss
before other income and expense, net, income tax expense (benefit),
depreciation and amortization expense and stock-based compensation.
We do not consider these items to be indicative of our core
operating performance. The items that are non-cash include
depreciation and amortization expense and stock-based compensation.
Adjusted EBITDA is a measure used by management to understand and
evaluate our core operating performance and trends and to generate
future operating plans, make strategic decisions regarding
allocation of capital and invest in initiatives that are focused on
cultivating new markets for our solutions. In particular, the
exclusion of certain expenses in calculating Adjusted EBITDA
facilitates comparisons of our operating performance on a
period-to-period basis.
Webcast and Conference Call
DetailsManagement will host a conference call to discuss
the financial results for the second quarter of fiscal year 2024
this afternoon at 4:30 p.m. Eastern Time / 1:30 p.m. Pacific Time.
To access the conference call, dial toll-free (888) 390-3967, or
international at (862) 298-0702. A webcast will also be available
at the following link:
https://www.webcaster4.com/Webcast/Page/1375/50525.
Questions to management may be submitted before
the call by emailing them to: ir@genasys.com. A replay of the
webcast will be available approximately four hours after the
presentation on the page of the Company’s website.
About Genasys Inc.Genasys Inc.
(NASDAQ: GNSS) is the global leader in Protective Communications
Solutions and Systems, designed around one premise: ensuring
organizations and public safety agencies are “Ready when it
matters™”. The Company provides the Genasys Protect platform, the
most comprehensive portfolio of preparedness, response, and
analytics software and systems, as well as Genasys Long Range
Acoustic Devices® (LRAD®) that deliver directed, audible voice
messages with exceptional vocal clarity from close range to 5,500
meters. Genasys serves state and local governmental agencies, and
education (SLED); enterprise organizations in critical sectors such
as oil and gas, utilities, manufacturing, and automotive; and
federal governments and the military. Genasys Protective
Communications Solutions have diverse applications, including
emergency warning and mass notification for public safety, critical
event management for enterprise companies, de-escalation for
defense and law enforcement, and automated detection of real-time
threats like active shooters and severe weather. Today, Genasys
protects over 70 million people globally and is used in more than
100 countries, including more than 500 cities, counties, and states
in the U.S. For more information, visit genasys.com.
Forward-Looking
StatementsExcept for historical information contained
herein, the matters discussed are forward-looking statements within
the meaning of the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995. You should not place
undue reliance on these statements. We base these statements on
particular assumptions that we have made in light of our industry
experience, the stage of product and market development as well as
our perception of historical trends, current market conditions,
current economic data, expected future developments and other
factors that we believe are appropriate under the circumstances.
Forward-looking statements involve risks and uncertainties that
could cause actual results to differ materially from those
suggested in any forward-looking statement. The risks and
uncertainties in these forward-looking statements include without
limitation the business impact of geopolitical conflicts, epidemics
or pandemics, and other causes that may affect our supply chain,
and other risks and uncertainties, many of which involve factors or
circumstances that are beyond the Company's control. Risks and
uncertainties are identified and discussed in our filings with the
Securities and Exchange Commission. These forward-looking
statements are based on information and management's expectations
as of the date hereof. Future results may differ materially from
our current expectations. For more information regarding other
potential risks and uncertainties, see the "Risk Factors" section
of the Company's Form 10-K for the fiscal year ended September 30,
2023. Genasys Inc. disclaims any intent or obligation to publicly
update or revise forward-looking statements, except as otherwise
specifically stated.
Investor Relations Contacts
Brian Alger, CFASVP, IR and Corporate
Developmentir@genasys.com(858) 676-0582
|
Genasys Inc. |
Condensed Consolidated Balance Sheets |
(Unaudited - in thousands) |
|
|
|
|
|
|
|
March 31, |
|
September 30, |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
|
|
|
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
3,544 |
|
|
$ |
8,665 |
|
Short-term marketable securities |
|
|
3,011 |
|
|
|
1,481 |
|
Restricted cash |
|
|
- |
|
|
|
758 |
|
Accounts receivable, net |
|
|
2,820 |
|
|
|
5,952 |
|
Inventories, net |
|
|
6,564 |
|
|
|
6,501 |
|
Prepaid expenses and other |
|
|
6,324 |
|
|
|
1,851 |
|
Total current assets |
|
|
22,263 |
|
|
|
25,208 |
|
Long-term restricted cash |
|
|
346 |
|
|
|
96 |
|
Property and equipment, net |
|
|
1,483 |
|
|
|
1,551 |
|
Goodwill |
|
|
13,251 |
|
|
|
10,282 |
|
Intangible assets, net |
|
|
9,743 |
|
|
|
8,427 |
|
Operating lease right of use asset |
|
|
3,507 |
|
|
|
3,886 |
|
Prepaid expenses and other - noncurrent |
|
|
439 |
|
|
|
455 |
|
Total assets |
|
$ |
51,032 |
|
|
$ |
49,905 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
|
$ |
2,597 |
|
|
$ |
2,785 |
|
Accrued liabilities |
|
|
8,308 |
|
|
|
7,466 |
|
Operating lease liabilities, current portion |
|
|
1,027 |
|
|
|
1,008 |
|
Total current liabilities |
|
|
11,932 |
|
|
|
11,259 |
|
|
|
|
|
|
Other liabilities, noncurrent |
|
|
445 |
|
|
|
551 |
|
Operating lease liabilities, noncurrent |
|
|
3,773 |
|
|
|
4,283 |
|
Total liabilities |
|
|
16,150 |
|
|
|
16,093 |
|
|
|
|
|
|
Total stockholders' equity |
|
|
34,882 |
|
|
|
33,812 |
|
Total liabilities and stockholders' equity |
|
$ |
51,032 |
|
|
$ |
49,905 |
|
|
|
|
|
|
|
Genasys Inc. |
Condensed Consolidated Statements of
Operations |
(Unaudited - in thousands, except per share
amounts) |
|
|
Three months ended |
|
Six months ended |
|
March 31, |
|
March 31, |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
|
|
|
|
|
|
|
Revenues |
$ |
5,739 |
|
|
$ |
11,213 |
|
|
$ |
10,100 |
|
|
$ |
21,700 |
|
Cost of revenues |
|
3,562 |
|
|
|
6,288 |
|
|
|
6,444 |
|
|
|
11,943 |
|
Gross profit |
|
2,177 |
|
|
|
4,925 |
|
|
|
3,656 |
|
|
|
9,757 |
|
|
|
37.9 |
% |
|
|
43.9 |
% |
|
|
36.2 |
% |
|
|
45.0 |
% |
Operating expenses: |
|
|
|
|
|
|
|
Selling, general and administrative |
|
6,640 |
|
|
|
6,054 |
|
|
|
13,158 |
|
|
|
12,439 |
|
Research and development |
|
2,531 |
|
|
|
2,281 |
|
|
|
4,722 |
|
|
|
4,216 |
|
Total operating expenses |
|
9,171 |
|
|
|
8,335 |
|
|
|
17,880 |
|
|
|
16,655 |
|
|
|
|
|
|
|
|
|
Loss from operations |
|
(6,994 |
) |
|
|
(3,410 |
) |
|
|
(14,224 |
) |
|
|
(6,898 |
) |
Other income and expense, net |
|
51 |
|
|
|
15 |
|
|
|
128 |
|
|
|
(4 |
) |
Loss before income taxes |
|
(6,943 |
) |
|
|
(3,395 |
) |
|
|
(14,096 |
) |
|
|
(6,902 |
) |
Income tax (benefit) expense |
|
(5 |
) |
|
|
8 |
|
|
|
(434 |
) |
|
|
8 |
|
Net loss |
$ |
(6,938 |
) |
|
$ |
(3,403 |
) |
|
$ |
(13,662 |
) |
|
$ |
(6,910 |
) |
|
|
|
|
|
|
|
|
Net loss per common share: |
|
|
|
|
|
|
|
Basic |
$ |
(0.16 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.31 |
) |
|
$ |
(0.19 |
) |
|
|
|
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
44,248 |
|
|
|
36,817 |
|
|
|
44,027 |
|
|
|
36,756 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP measures to non-GAAP
measures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
$ |
(6,938 |
) |
|
$ |
(3,403 |
) |
|
$ |
(13,662 |
) |
|
$ |
(6,910 |
) |
Other income and expense, net |
|
(51 |
) |
|
|
(15 |
) |
|
|
(128 |
) |
|
|
4 |
|
Income tax (benefit) expense |
|
(5 |
) |
|
|
8 |
|
|
|
(434 |
) |
|
|
8 |
|
Depreciation and amortization |
|
731 |
|
|
|
639 |
|
|
|
1,460 |
|
|
|
1,282 |
|
Stock based compensation |
|
524 |
|
|
|
513 |
|
|
|
970 |
|
|
|
933 |
|
Adjusted EBITDA |
$ |
(5,739 |
) |
|
$ |
(2,258 |
) |
|
$ |
(11,794 |
) |
|
$ |
(4,683 |
) |
|
|
|
|
|
|
|
|
Genasys (NASDAQ:GNSS)
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Genasys (NASDAQ:GNSS)
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