ADDvantage Technologies Group, Inc. (NASDAQ:AEY),
today announced its financial results for the fourth quarter and
fiscal year ended September 30, 2016.
“The financial results for the fiscal fourth
quarter reflects the third consecutive quarter of steady
performance from our Cable TV segment, both in top-line revenue and
bottom line results, attributable to solid demand across its
customer base. While revenue from our Telco segment was below
expectations for the fourth quarter, the opportunities for
long-term growth within this segment remain significant. As such,
we are continuing to make certain changes within our Telco segment,
including expanding its sales force and the end-user customer base,
which are expected to drive growth in future quarters,” commented
David Humphrey, President and CEO of ADDvantage Technologies.
“In October 2016, we completed the acquisition
of Triton Datacom, a leading provider of new and refurbished
enterprise networking products, including desktop phones,
enterprise switches and wireless routers. We believe there are many
areas where our businesses are complementary in nature in the
telecom sector. Also, the steady demand in the desktop phone
segment is an exciting new niche market for us to tap into and
expand Triton’s market share,” continued Mr. Humphrey.
“We see an exciting path forward for the Company
as we execute upon our strategy to further diversify our operations
across new segments of the communications equipment and services
market. The investments we have made through strategic
acquisitions and partnerships have placed us in a much stronger
position for long-term success as we look to drive shareholder
value,” concluded Mr. Humphrey.
Results for the three months ended
September 30, 2016
Consolidated sales increased slightly to $9.8
million for the three months ended September 30, 2016 compared with
$9.6 million for the same period ended September 30,
2015.
Consolidated operating, selling, general and
administrative expenses increased $0.5 million, or 18%, to $3.1
million for the three months ended September 30, 2016 from $2.6
million for the same period last year. This increase was
primarily due to $0.3 million in Telco segment expenses, while the
Cable TV segment increased $0.2 million.
Net loss for the three months ended September
30, 2016, was $0.2 million, or $0.02 per diluted share, compared
with a net income of $0.2 million, or $0.02 per diluted share, for
the same period of 2015. The net loss for the fourth quarter of
2016 includes $0.6 million of charges for the obsolete and excess
inventory reserve and lower of cost or market adjustments from the
Telco segment.
Consolidated EBITDA for the three months ended September 30, 2016
was a loss of $0.2 million compared with income of $0.8 million for
the same period ended September 30, 2015.
Results for the fiscal year ended September 30,
2016
Consolidated sales decreased 12% to $38.7
million for the fiscal year ended September 30, 2016 compared with
$43.7 million for the fiscal year ended September 30, 2015. The
decrease in sales resulted from a decrease in the Cable TV and
Telco segments of $2.4 million and $3.0 million,
respectively. The decrease in sales for the Cable TV segment
was due primarily to a decrease in sales in the first quarter
resulting from an overall weakness in the market in that
quarter. The decrease in sales for the Telco segment was due
in part to the absence of $2.3 million in used equipment sales to
an end-user customer in fiscal year 2015. In addition, the
Company believes the decrease in the Telco segment sales volume in
2016 was due to delays in capital expenditures from major customers
due to weak economic conditions and budgetary constraints in the
first quarter of fiscal year 2016.
Consolidated operating, selling, general and
administrative expenses decreased $0.6 million, or 5%, to $12.1
million for the fiscal year ended September 30, 2016 from $12.7
million for the fiscal year 2015. This decrease was primarily
due to a decrease in expenses for the Telco segment of $1.1
million, partially offset by an increase in Cable TV segment
expenses of $0.5 million.
Net income for the fiscal year ended September
30, 2016 was $0.3 million, or $0.03 per diluted share, compared
with $1.5 million or $0.15 per diluted share, for the fiscal year
ended September 30, 2015. The net income for fiscal year 2016
includes $0.6 million of charges for the obsolete and excess
inventory reserve and lower of cost or market adjustments from the
Telco segment.
Consolidated EBITDA for fiscal year ended
September 30, 2016 was $1.6 million compared with $3.8 million for
the fiscal year ended September 30, 2015.
Cash and cash equivalents were $4.5 million as
of September 30, 2016, compared with $6.1 million as of September
30, 2015. The Company generated $3.5 million of cash from
operations for the fiscal year ended September 30, 2016. This
was offset by $3.0 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 $0.9 million of principal payments on the Company’s
notes payable. As of September 30, 2016, the Company had
inventory of $21.5 million compared with $23.6 million as of
September 30, 2015.
Earnings Conference Call
The Company will host a conference call today,
Tuesday, December 13th, 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
888-690-2876 (domestic) or 913-312-0696 (international). All
dial-in participants must use the following code to access the
call: 5925708. 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
December 27, 2016 at 844-512-2921 (domestic) or 412-317-6671
(international). Participants must use the following code to access
the replay of the call: 5925708. 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,
Nave Communications and Triton Datacom. 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 OPERATIONS(UNAUDITED) |
|
|
Three Months Ended September 30, |
Twelve Months Ended September 30, |
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
Sales |
|
9,766,167 |
|
|
9,627,532 |
|
|
38,663,264 |
|
|
43,733,620 |
|
Cost of sales |
|
7,141,427 |
|
|
6,548,565 |
|
|
26,222,381 |
|
|
28,434,731 |
|
Gross profit |
|
2,624,740 |
|
|
3,078,967 |
|
|
12,440,883 |
|
|
15,298,889 |
|
Operating, selling,
general and administrative expenses |
|
3,109,706 |
|
|
2,641,663 |
|
|
12,097,022 |
|
|
12,722,679 |
|
Income (loss) from
operations |
|
(484,966 |
) |
|
437,304 |
|
|
343,861 |
|
|
2,576,210 |
|
Other income
(expense): |
|
|
|
|
Other income |
|
279,565 |
|
|
− |
|
|
459,636 |
|
|
− |
|
Interest income |
|
59,564 |
|
|
− |
|
|
90,686 |
|
|
− |
|
Loss from equity method investee |
|
(107,975 |
) |
|
− |
|
|
(184,996 |
) |
|
− |
|
Interest expense |
|
(51,735 |
) |
|
(69,716 |
) |
|
(236,024 |
) |
|
(305,310 |
) |
Total other income
(expense), net |
|
179,419 |
|
|
(69,716 |
) |
|
129,302 |
|
|
(305,310 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes |
|
(305,547 |
) |
|
367,588 |
|
|
473,163 |
|
|
2,270,900 |
|
Provision (benefit) for
income taxes |
|
(114,000 |
) |
|
157,000 |
|
|
179,000 |
|
|
773,000 |
|
|
|
|
|
|
Net income (loss) |
$ |
(191,547 |
) |
$ |
210,588 |
|
$ |
294,163 |
|
$ |
1,497,900 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
(0.02 |
) |
$ |
0.02 |
|
$ |
0.03 |
|
$ |
0.15 |
|
Diluted |
$ |
(0.02 |
) |
$ |
0.02 |
|
$ |
0.03 |
|
$ |
0.15 |
|
Shares used in per
share calculation: |
|
|
|
|
Basic |
|
10,134,235 |
|
|
10,063,563 |
|
|
10,107,483 |
|
|
10,055,552 |
|
Diluted |
|
10,136,986 |
|
|
10,063,563 |
|
|
10,111,545 |
|
|
10,055,552 |
|
|
Three Months Ended September 30, 2016 |
Three Months Ended September 30, 2015 |
|
Cable TV |
Telco |
Total |
Cable TV |
Telco |
Total |
|
|
|
|
|
|
|
Operating income
(loss) |
$ |
496,905 |
$ |
(981,871 |
) |
$ |
(484,966 |
) |
$ |
397,392 |
$ |
39,912 |
$ |
437,304 |
Depreciation |
|
84,659 |
|
24,889 |
|
|
109,548 |
|
|
82,254 |
|
26,858 |
|
109,112 |
Amortization |
|
− |
|
206,451 |
|
|
206,451 |
|
|
− |
|
206,451 |
|
206,451 |
EBITDA |
$ |
581,564 |
$ |
(750,531 |
) |
$ |
(168,967 |
) |
$ |
479,646 |
$ |
273,221 |
$ |
752,867 |
|
Year Ended September 30, 2016 |
Year Ended September 30, 2015 |
|
Cable TV |
Telco |
Total |
Cable TV |
Telco |
Total |
|
|
|
|
|
|
|
Operating income
(loss) |
$ |
1,478,676 |
$ |
(1,134,815 |
) |
$ |
343,861 |
$ |
2,210,414 |
$ |
365,796 |
$ |
2,576,210 |
Depreciation |
|
322,076 |
|
99,874 |
|
|
421,950 |
|
296,876 |
|
111,827 |
|
408,703 |
Amortization |
|
− |
|
825,804 |
|
|
825,804 |
|
− |
|
825,805 |
|
825,805 |
EBITDA
(a) |
$ |
1,800,752 |
$ |
(209,137 |
) |
$ |
1,591,615 |
$ |
2,507,290 |
$ |
1,303,428 |
$ |
3,810,718 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) The Telco segment includes earn-out expenses of $0.2 and
$0.7 million for the year ended September 30, 2016 and 2015,
respectively, related to the acquisition of Nave
Communications.
|
ADDVANTAGE TECHNOLOGIES GROUP, INC.CONSOLIDATED
CONDENSED BALANCE SHEETS(UNAUDITED) |
|
|
September 30, |
|
|
2016 |
|
|
2015 |
|
Assets |
|
|
Current assets: |
|
|
Cash and
cash equivalents |
$ |
4,508,126 |
|
$ |
6,110,986 |
|
Accounts
receivable, net of allowance of $250,000 |
|
4,278,855 |
|
|
4,286,377 |
|
Income
tax receivable |
|
480,837 |
|
|
− |
|
Inventories, net of allowance for excess and obsolete |
|
|
|
|
|
|
inventory
of $2,570,868 and $2,756,628, respectively |
|
21,524,919 |
|
|
23,600,996 |
|
Prepaid
expenses |
|
323,289 |
|
|
153,454 |
|
Total current
assets |
|
31,116,026 |
|
|
34,151,813 |
|
|
|
|
|
|
|
|
Property and equipment,
at cost: |
|
|
|
|
|
|
Land and
buildings |
|
7,218,678 |
|
|
7,218,678 |
|
Machinery
and equipment |
|
3,833,230 |
|
|
3,415,164 |
|
Leasehold
improvements |
|
151,957 |
|
|
151,957 |
|
Total property and
equipment, at cost |
|
11,203,865 |
|
|
10,785,799 |
|
Less: Accumulated
depreciation |
|
(4,993,102 |
) |
|
(4,584,796 |
) |
Net property and
equipment |
|
6,210,763 |
|
|
6,201,003 |
|
|
|
|
|
|
|
|
Investment in and loans
to equity method investee |
|
2,588,624 |
|
|
– |
|
Intangibles, net of
accumulated amortization |
|
4,973,669 |
|
|
5,799,473 |
|
Goodwill |
|
3,910,089 |
|
|
3,910,089 |
|
Deferred income
taxes |
|
1,333,000 |
|
|
1,490,000 |
|
Other assets |
|
135,988 |
|
|
134,678 |
|
|
|
|
|
|
|
|
Total assets |
$ |
50,268,159 |
|
$ |
51,687,056 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Shareholders’ Equity |
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
Accounts
payable |
$ |
1,857,953 |
|
$ |
1,784,482 |
|
Accrued
expenses |
|
1,324,652 |
|
|
1,358,681 |
|
Income
tax payable |
|
– |
|
|
122,492 |
|
Notes
payable – current portion |
|
899,603 |
|
|
873,752 |
|
Other
current liabilities |
|
963,127 |
|
|
982,094 |
|
Total current
liabilities |
|
5,045,335 |
|
|
5,121,501 |
|
|
|
|
|
|
|
|
Notes
payable, less current portion |
|
3,466,358 |
|
|
4,366,130 |
|
Other
liabilities |
|
131,410 |
|
|
1,064,717 |
|
Total liabilities |
|
8,643,103 |
|
|
10,552,348 |
|
|
|
|
|
|
|
|
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 |
|
(4,916,791 |
) |
|
(5,112,269 |
) |
Retained
earnings |
|
47,435,512 |
|
|
47,141,349 |
|
Total
shareholders’ equity before treasury stock |
|
42,625,070 |
|
|
42,134,722 |
|
|
|
|
|
|
|
|
Less:
Treasury stock, 500,658 shares, at cost |
|
(1,000,014 |
) |
|
(1,000,014 |
) |
Total shareholders’
equity |
|
41,625,056 |
|
|
41,134,708 |
|
|
|
|
|
|
|
|
Total liabilities and
shareholders’ equity |
$ |
50,268,159 |
|
$ |
51,687,056 |
|
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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