ADDvantage Technologies Group, Inc. (NASDAQ:AEY),
today announced its financial results for the three and nine month
periods ended June 30, 2016.
“Our results for the third fiscal quarter
reflect a 5% decline in revenues compared to the sequential
quarter. However, there are several pockets of opportunity within
certain regions as well as demand for services and product lines
that we are looking at entering in order to bolster our growth
strategy,” commented David Humphrey, President and CEO of
ADDvantage Technologies.
“Revenues from the Cable TV segment for the
quarter are within our expectations, considering they naturally
fluctuate in line with market conditions, albeit within a broadly
declining trend. It is our ability to manage costs that has
allowed us to maintain profitability despite the lower revenues. We
are in the process of expanding our reach in the market through
strategic hires and new product lines. The downward trend we
have experienced in the Cable TV segment was the reason we
initiated and continue the strategy of growing our business by
seeking acquisition opportunities within the broader
telecommunications industry.”
“The financial performance for the Telco segment
is disappointing this quarter, as it did not meet our internal
expectations. There are certain challenges facing this segment that
we have been addressing in order to grow market share and boost
revenues. This includes the implementation of several
strategic initiatives, including improving the quality and
diversity of our used products, expanding our recycling operation,
and increasing our sales of new product lines. We will continue to
focus on the successful execution of these initiatives to maximize
sales opportunities and drive revenue growth in fiscal year
2017.”
“Our YKTG Solutions joint venture to provide decommission work on
cell towers continued in the fiscal third quarter. In
addition, YKTG Solutions completed another project with a different
telecommunications provider in the fiscal third quarter.
These projects provided $163,000 in pre-tax income for the
period. These projects allow us to leverage our balance sheet
and are expected to generate in excess of $1 million in pretax
income by the end of the third quarter of fiscal 2017. We are
pleased by the success of this joint venture and continue to seek
out additional projects,” concluded Mr. Humphrey.
Results for the three months ended June
30, 2016
Consolidated sales decreased 15% to $10.1
million for the three months ended June 30, 2016 compared with
$11.9 million for the same period ended June 30, 2015. The decrease
in sales resulted from a $1.1 million and $0.8 million decrease in
sales in the Telco segment and Cable TV segment, respectively,
compared to the same period last year. Sales for the Telco
segment in the third quarter of fiscal 2015 benefited from large
equipment sales of $0.8 million to an end-user customer.
Consolidated operating, selling, general and
administrative expenses decreased $0.1 million, or 4%, to $3.1
million for the three months ended June 30, 2016 from $3.2 million
for the same period last year. This decrease was primarily
due to $0.2 million in Telco segment expenses, while the Cable TV
segment increased $0.1 million.
Net income for the three months ended June 30,
2016, was $316 thousand, or $0.03 per diluted share, compared with
$0.6 million, or $0.06 per diluted share, for the same period of
2015.
Consolidated EBITDA for the three months ended June 30, 2016 was
$0.7 million compared with $1.2 million for the same period ended
June 30, 2015.
Results for the nine months ended June
30, 2016
Consolidated sales decreased 15% to $28.9
million for the nine months ended June 30, 2016 compared with $34.1
million for the same period ended June 30, 2015. The decrease in
sales resulted from a decrease in both the Cable TV and Telco
segments of $2.4 million and $3.0 million, respectively. The
Telco segment decrease in sales was primarily due to the absence of
$2.3 million in equipment sales to an end-user customer in the
second and third quarters of 2015.
Consolidated operating, selling, general and
administrative expenses decreased $1.1 million, or 11%, to $9.0
million for the nine months ended June 30, 2016 from $10.1 million
for the same period last year. This decrease was primarily
due to $1.4 million in Telco segment expenses, which was partially
offset by a $0.3 million increase in expenses for the Cable TV
segment. The decrease in expenses for the Telco segment
included a $0.9 million decrease in expenses for the annual
earn-out payment related to the acquisition of Nave Communications
and a $0.3 million decrease in personnel costs.
Net income for the nine months ended June 30,
2016 was $0.5 million, or $0.05 per diluted share, compared with
$1.3 million or $0.13 per diluted share, for the same period of
2015.
Consolidated EBITDA for the nine months ended
June 30, 2016 was $1.8 million compared with $3.1 million for the
same period ended June 30, 2015.
Cash and cash equivalents were $5.1 million as
of June 30, 2016, compared with $6.1 million as of September 30,
2015. The Company generated $2.7 million of cash from
operations for the nine months ended June 30, 2016. This was
offset by $1.6 million of advances to the strategic joint venture,
YKTG Solutions, LLC, in connection with the cell tower decommission
project for a U.S. wireless provider, $1.0 million of deferred
consideration payments related to the Nave Communications
acquisition and $0.6 million of principal payments on the Company’s
notes payable. As of June 30, 2016, the Company had inventory
of $21.7 million compared with $23.6 million as of September 30,
2015.
Earnings Conference Call
The Company will host a conference call today,
Tuesday, August 9th, at 12:00 p.m. Eastern Time featuring remarks
by David Humphrey, President and Chief Executive Officer, Dave
Chymiak, Chief Technology Officer, and Scott Francis, Chief
Financial Officer.
The conference call will be available via
webcast and can be accessed through the Investor Relations section
of ADDvantage's website, www.addvantagetechnologies.com.
Please allow extra time prior to the call to visit the site and
download any necessary software to listen to the Internet
broadcast. The dial-in number for the conference call is
888-427-9411 (domestic) or 719-325-2463 (international). All
dial-in participants must use the following code to access the
call: 7252544. Please call at least five minutes before the
scheduled start time.
For interested individuals unable to join the
conference call, a replay of the call will be available through
August 23, 2016 at 877-870-5176 (domestic) or 858-384-5517
(international). Participants must use the following code to access
the replay of the call: 7252544. An online archive of the
webcast will be available on the Company's website for 30 days
following the call.
About ADDvantage Technologies Group,
Inc.
ADDvantage Technologies Group, Inc. (NASDAQ:AEY)
supplies the cable television (Cable TV) and telecommunications
industries with a comprehensive line of new and used
system-critical network equipment and hardware from a broad range
of leading manufacturers. The equipment and hardware ADDvantage
distributes is used to acquire, distribute, and protect the
communications signals carried on fiber optic, coaxial cable and
wireless distribution systems, including television programming,
high-speed data (Internet) and telephony. In addition, ADDvantage
operates a national network of technical repair centers focused
primarily on Cable TV equipment and recycles surplus and obsolete
Cable TV and telecommunications equipment.
ADDvantage operates through its subsidiaries,
Tulsat, Tulsat-Atlanta, Tulsat-Arizona, Tulsat-Nebraska,
Tulsat-Tennessee, Tulsat-Texas, NCS Industries, ComTech Services
and Nave Communications. For more information, please visit the
corporate web site at www.addvantagetechnologies.com.
The information in this announcement may include
forward-looking statements. All statements, other than
statements of historical facts, which address activities, events or
developments that the Company expects or anticipates will or may
occur in the future, are forward-looking statements. These
statements are subject to risks and uncertainties, which could
cause actual results and developments to differ materially from
these statements. A complete discussion of these risks and
uncertainties is contained in the Company’s reports and documents
filed from time to time with the Securities and Exchange
Commission.
Non-GAAP Financial
MeasuresEBITDA is a supplemental, non-GAAP financial
measure. EBITDA is defined as earnings before interest
expense, income taxes, depreciation and amortization.
In addition, EBITDA as presented excludes other income,
interest income and income from equity method investment.
Management believes providing EBITDA in this release is useful to
investors’ understanding and assessment of the Company’s ongoing
continuing operations and prospects for the future and it is a used
by the financial community to evaluate the market value of
companies considered to be in similar businesses. Since
EBITDA is not a measure of performance calculated in accordance
with GAAP, it should not be considered in isolation of, or as a
substitute for, net earnings as an indicator of operating
performance. EBITDA, as calculated in the table below, may
not be comparable to similarly titled measures employed by other
companies. In addition, EBITDA is not necessarily a measure
of our ability to fund our cash needs.
(Tables follow)
| |
| ADDVANTAGE TECHNOLOGIES GROUP, INC. |
| CONSOLIDATED CONDENSED STATEMENTS OF INCOME |
| (UNAUDITED) |
| |
| |
Three Months Ended June
30, |
|
Nine Months Ended June
30, |
| |
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
| Sales |
$ |
10,060,242 |
|
|
$ |
11,902,391 |
|
|
$ |
28,897,097 |
|
|
$ |
34,106,088 |
|
| Cost of sales |
|
6,594,091 |
|
|
|
7,757,784 |
|
|
|
19,080,954 |
|
|
|
21,886,166 |
|
| Gross profit |
|
3,466,151 |
|
|
|
4,144,607 |
|
|
|
9,816,143 |
|
|
|
12,219,922 |
|
| Operating, selling,
general and administrative expenses |
|
3,062,288 |
|
|
|
3,202,402 |
|
|
|
8,987,316 |
|
|
|
10,081,016 |
|
| Income from
operations |
|
403,863 |
|
|
|
942,205 |
|
|
|
828,827 |
|
|
|
2,138,906 |
|
| Other income
(expense): |
|
|
|
|
| Project fee
income |
|
70,517 |
|
|
|
– |
|
|
|
180,071 |
|
|
|
– |
|
| Interest
income |
|
28,950 |
|
|
|
– |
|
|
|
31,122 |
|
|
|
– |
|
| Income
(loss) from equity method investment |
|
63,977 |
|
|
|
– |
|
|
|
(77,021 |
) |
|
|
– |
|
| Interest expense |
|
(54,221 |
) |
|
|
(71,071 |
) |
|
|
(184,289 |
) |
|
|
(235,594 |
) |
| Total other income
(expense), net |
|
109,223 |
|
|
|
(71,071 |
) |
|
|
(50,117 |
) |
|
|
(235,594 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income before provision
for income taxes |
|
513,086 |
|
|
|
871,134 |
|
|
|
778,710 |
|
|
|
1,903,312 |
|
| Provision for income
taxes |
|
197,000 |
|
|
|
234,000 |
|
|
|
293,000 |
|
|
|
616,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income |
$ |
316,086 |
|
|
$ |
637,134 |
|
|
$ |
485,710 |
|
|
$ |
1,287,312 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Earnings per share: |
|
|
|
|
| Basic |
$ |
0.03 |
|
|
$ |
0.06 |
|
|
$ |
0.05 |
|
|
$ |
0.13 |
|
| Diluted |
$ |
0.03 |
|
|
$ |
0.06 |
|
|
$ |
0.05 |
|
|
$ |
0.13 |
|
| Shares used in per share
calculation: |
|
|
|
|
| Basic |
|
10,134,235 |
|
|
|
10,073,121 |
|
|
|
10,098,564 |
|
|
|
10,055,390 |
|
| Diluted |
|
10,135,607 |
|
|
|
10,073,121 |
|
|
|
10,103,054 |
|
|
|
10,055,390 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Three Months Ended
June 30, 2016 |
|
Three Months Ended
June 30, 2015 |
| |
Cable TV |
|
Telco |
|
Total |
|
Cable TV |
|
Telco |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (loss) from
operations |
$ |
528,651 |
|
|
$ |
(124,788 |
) |
|
$ |
403,863 |
|
|
$ |
846,372 |
|
|
$ |
95,833 |
|
|
$ |
942,205 |
|
| Depreciation |
|
84,152 |
|
|
|
24,902 |
|
|
|
109,054 |
|
|
|
72,909 |
|
|
|
27,795 |
|
|
|
100,704 |
|
| Amortization |
|
− |
|
|
|
206,451 |
|
|
|
206,451 |
|
|
|
− |
|
|
|
206,451 |
|
|
|
206,451 |
|
|
EBITDA |
$ |
612,803 |
|
|
$ |
106,565 |
|
|
$ |
719,368 |
|
|
$ |
919,281 |
|
|
$ |
330,079 |
|
|
$ |
1,249,360 |
|
| |
Nine Months Ended
June 30, 2016 |
|
Nine Months Ended
June 30, 2015 |
| |
Cable TV |
|
Telco |
|
Total |
|
Cable TV |
|
Telco |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (loss) from
operations |
$ |
981,770 |
|
|
$ |
(152,943 |
) |
|
$ |
828,827 |
|
|
$ |
1,813,022 |
|
|
$ |
325,884 |
|
|
$ |
2,138,906 |
|
| Depreciation |
|
237,418 |
|
|
|
74,985 |
|
|
|
312,403 |
|
|
|
214,622 |
|
|
|
84,969 |
|
|
|
299,591 |
|
| Amortization |
|
− |
|
|
|
619,353 |
|
|
|
619,353 |
|
|
|
− |
|
|
|
619,354 |
|
|
|
619,354 |
|
|
EBITDA |
$ |
1,219,188 |
|
|
$ |
541,395 |
|
|
$ |
1,760,583 |
|
|
$ |
2,027,644 |
|
|
$ |
1,030,207 |
|
|
$ |
3,057,851 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| ADDVANTAGE TECHNOLOGIES GROUP, INC. |
| CONSOLIDATED CONDENSED BALANCE SHEETS |
| (UNAUDITED) |
| |
|
|
June 30,2016 |
|
September
30,2015 |
|
Assets |
|
|
|
|
|
| Current assets: |
|
|
| Cash and
cash equivalents |
$ |
5,143,774 |
|
|
$ |
6,110,986 |
|
| Accounts
receivable, net of allowance for doubtful accounts
of $250,000 |
|
5,839,088 |
|
|
|
4,286,377 |
|
| Inventories,
net of allowance for excess and obsolete inventory of $3,206,628
and $2,756,628, respectively |
|
21,667,539 |
|
|
|
23,600,996 |
|
| Prepaid
expenses |
|
241,498 |
|
|
|
153,454 |
|
| Deferred
income taxes |
|
1,824,000 |
|
|
|
1,776,000 |
|
| Total current assets |
|
34,715,899 |
|
|
|
35,927,813 |
|
| |
|
|
| Property and equipment, at
cost |
|
11,083,769 |
|
|
|
10,785,799 |
|
| Less: Accumulated
depreciation |
|
(4,883,554 |
) |
|
|
(4,584,796 |
) |
| Net property and
equipment |
|
6,200,215 |
|
|
|
6,201,003 |
|
| |
|
|
| Investment in and loans to
equity method investee |
|
1,515,721 |
|
|
|
– |
|
| Intangibles, net of
accumulated amortization |
|
5,180,120 |
|
|
|
5,799,473 |
|
| Goodwill |
|
3,910,089 |
|
|
|
3,910,089 |
|
| Other assets |
|
135,988 |
|
|
|
134,678 |
|
| |
|
|
|
|
|
| Total assets |
$ |
51,658,032 |
|
|
$ |
51,973,056 |
|
| |
|
|
|
|
|
| Liabilities and
Shareholders’ Equity |
|
|
| Current liabilities: |
|
|
| Accounts
payable |
$ |
2,483,707 |
|
|
$ |
1,784,482 |
|
| Accrued
expenses |
|
1,352,554 |
|
|
|
1,358,681 |
|
| Income tax
payable |
|
52,895 |
|
|
|
122,492 |
|
| Notes
payable – current portion |
|
896,330 |
|
|
|
873,752 |
|
| Other
current liabilities |
|
952,331 |
|
|
|
982,094 |
|
| Total current
liabilities |
|
5,737,817 |
|
|
|
5,121,501 |
|
| |
|
|
| Notes
payable, less current portion |
|
3,690,640 |
|
|
|
4,366,130 |
|
| Deferred
income taxes |
|
314,000 |
|
|
|
286,000 |
|
| Other
liabilities |
|
120,256 |
|
|
|
1,064,717 |
|
| Total liabilities |
|
9,862,713 |
|
|
|
10,838,348 |
|
| |
|
|
| Shareholders’ equity: |
|
|
| Common
stock, $.01 par value; 30,000,000 shares authorized; 10,634,893 and
10,564,221 shares issued, respectively; 10,134,235 and 10,063,563
shares outstanding, respectively |
|
106,349 |
|
|
|
105,642 |
|
| Paid in
capital |
|
(4,938,075 |
) |
|
|
(5,112,269 |
) |
| Retained
earnings |
|
47,627,059 |
|
|
|
47,141,349 |
|
| Total
shareholders’ equity before treasury stock |
|
42,795,333 |
|
|
|
42,134,722 |
|
| |
|
|
| Less:
Treasury stock, 500,658 shares, at cost |
|
(1,000,014 |
) |
|
|
(1,000,014 |
) |
| Total shareholders’
equity |
|
41,795,319 |
|
|
|
41,134,708 |
|
| |
|
|
|
|
|
| Total liabilities and
shareholders’ equity |
$ |
51,658,032 |
|
|
$ |
51,973,056 |
|
| |
|
|
|
|
|
|
|
For further information
Company Contact:
Scott Francis (918) 251-9121
KCSA Strategic Communications
Garth Russell
(212) 896-1250
grussell@kcsa.com
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