ADDvantage Technologies Group, Inc. (NASDAQ: AEY) (“ADDvantage
Technologies” or the “Company”) today reported record revenues for
the three and 12 months ended September 30, 2021.
“As planned, 5G services activity is surging translating to
revenue, as our Wireless segment grew 69% sequentially and 47%
year-over-year in the fourth quarter, reaching $7.0 million,”
commented Joe Hart, Chief Executive Officer. “This growth is
broad-based, representing contracts from several large carriers in
various regions, reinforcing our confidence that the 5G buildout is
now underway in earnest and ADDvantage Technologies is
strategically well-positioned to benefit from this secular,
multi-year spending cycle. This momentum for Wireless continued
into the first fiscal quarter at the same pace as the fourth fiscal
quarter and we anticipate further growth in the second half of the
fiscal year well beyond the recent and current two quarters subject
to our success in onboarding additional in-house and subcontract
crews in this challenging labor market. We expect that fiscal 2022
will be a record year for our Wireless segment, enabling strong
top- and bottom-line growth.”
“Our Telco segment, and specifically Nave Communications,
continued to benefit from the global supply chain constraints,
which make refurbished telecom equipment more feasible as it is
readily available and locally supplied,” continued Mr. Hart.
“Accordingly, revenue in our Telco segment increased 44%
year-over-year and for the year, this segment generated record
revenue. While current demand remains high in our Telco segment we
continue to expect an eventual leveling of demand, though at higher
levels than we saw most of 2020.”
Financial Results for the Three Months ended September
30, 2021
Fiscal fourth quarter sales were $19.7 million, an increase of
$7.5 million, or 61% compared to $12.2 million last year. The
increase was primarily due to a $2.2 million increase in Wireless
revenue related to 5G tower work, and an increase of $5.3 million
in Telco revenue due to increased demand for refurbished
telecommunications equipment sold by the Telco segment.
Gross profit was $5.0 million, or 26% gross margin, compared to
gross profit of $4.4 million, or 36% gross margin, for the same
period last year. The net changes in gross profit were due to
higher overall sales in both the Wireless and Telco segments, and
the decrease in gross margin as a percent of sales was due to
investments being made with a new wireless customer and for the
startup of new geographic locations. The 36% gross margin in the
fourth quarter of fiscal 2020 was inflated by true up of margin
from wireless change orders from the second quarter of fiscal
2020.
Operating expenses increased $0.7 million to
$2.6 million from $1.9 million the same period last year as the
Wireless group ramps up to meet the increased demand and deploy
teams to additional new markets.
Consolidated selling, general and administrative ("SG&A")
expenses include overhead, which consist of personnel, insurance,
professional services, communication, and other cost categories.
SG&A expense increased $1.2 million, or 38%, to $4.4 million
for the three months ended September 30, 2021 from $3.2 million for
the same period last year. The increase in SG&A primarily
relates to increased personnel costs and selling costs.
During 2021, the Company applied for and was granted forgiveness
by the Small Business Administration ("SBA") of $2.9 million in
eligible expenditures for payroll, other expenses, and accrued
interest described in the CARES Act, resulting in a gain on
extinguishment of debt of $3.0 million in the fourth quarter of
fiscal 2021.
Inclusive of this $3.0 million non-recurring gain, net income
for the quarter was $0.6 million, or $0.05 per diluted share,
compared with a net loss of $1.0 million, or a loss of $(0.09) per
diluted share for the same quarter last year.
Financial Results for the Year Ended
September 30, 2021
Sales increased $12.0 million, or 24%, to $62.2 million for the
year months ended September 30, 2021 from $50.2 million for the
year ended September 30, 2020. The increase in sales was related to
an increase of $12.7 million in the Telco segment, mainly
attributable to increased demand for refurbished network equipment
resulting from the global chip shortage. Sales for the Wireless
segment decreased $0.7 million for the year.
Consolidated gross profit increased $4.4 million, or 38%, to
$16.1 million, or 26% gross margin, for 2021 from $11.7 million, or
23% gross margin, for 2020. Telco gross profit increased $4.7
million, partially offset by a decrease in gross profit in the
Wireless segment of $0.3 million.
Operating expenses increased $1.1 million to $9.3 million for
the year ended September 30, 2021 compared with $8.2 million for
the same period last year. The increase in operating expenses was
due primarily to investments in the Company’s regional growth
strategy to meet the demand of our customers in the Wireless
segment. Consolidated selling, general and administrative
("SG&A") expenses include overhead costs, which primarily
consist of personnel costs, insurance, professional services, and
communication, among other less significant cost categories.
SG&A increased $3.7 million or 32% to $14.9 million in 2021
compared to $11.2 million in 2020. Increased selling expenses
resulted from higher sales compensation and commissions to support
growth in the Telco segment. Increased general and administrative
expenses during 2021 were related to expanded operational support
and infrastructure in anticipation of future 5G expansion.
In 2020 the Company recorded impairment charges of $8.7 million
on intangibles including goodwill and $0.7 million on its
right-of-use asset Telco Segment.
Net loss for the year was $6.5 million, or $(0.52) per share,
compared to a net loss of $17.3 million, or $(1.55) per share, for
the year ended September 30, 2020. The net loss for the year
benefited from the non-recurring benefit for the forgiveness of the
Company’s PPP loan.
Balance Sheet
Cash and cash equivalents were $2.6 million as of September 30,
2021, compared with $8.3 million as of September 30, 2020. Along
with available cash, we had availability on our line of credit at
September 30, 2021 of $1.9 million. Additionally, we have access to
$10.8 million of capital that can be raised pursuant to a shelf
registration statement on Form S-3 and the related prospectus filed
with the Securities and Exchange Commission on March 3, 2020. As of
September 30, 2021, the Company had net inventories of $5.9
million.
Outstanding debt decreased during the year ended September 30,
2021 by $3.9 million to $4.1 million, which is comprised of $2.1
million on a revolving line of credit, and $2.0 million in
financing leases. At September 30, 2020, outstanding debt was $8.0
million. We paid down $1.2 million of our line of credit during the
year, and we were granted forgiveness of $3.0 million (inclusive of
interest) of loan associated with the Payroll Protection Act.
Nasdaq Listing
In an effort to align the Company with the market platform that
best fits its current structure, management has transferred from
the NASDAQ Global Market to the NASDAQ Capital Market, effective
December 27, 2021. This adjustment is not expected to impact the
ability of investors to trade our shares.
Earnings Conference Call
The Company will host a conference call on
Tuesday, December 28, 2021 at 10 a.m. Eastern.
Date: |
Tuesday,
December 28, 2021 |
Time: |
10 a.m. Eastern |
Toll-free Dial-in Number: |
1-866-548-4713 |
International Dial-in Number: |
1-323-794-2093 |
Conference ID: |
2339953 |
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) is a
communications infrastructure services and equipment provider
operating a diversified group of companies through its Wireless
Infrastructure Services and Telecommunications segments. Through
its Wireless segment, Fulton Technologies provides turn-key
wireless infrastructure services including the installation,
modification and upgrading of equipment on communication towers and
small cell sites for wireless carriers, national integrators, tower
owners and major equipment manufacturers. Through its
Telecommunications segment, Nave Communications and Triton Datacom
sell equipment and hardware used to acquire, distribute, and
protect the communications signals carried on fiber optic, coaxial
cable and wireless distribution systems. The Telecommunications
segment also offers repair services focused on telecommunication
equipment and recycling surplus and related obsolete
telecommunications equipment.
ADDvantage operates through its subsidiaries, Fulton
Technologies, Nave Communications, and Triton Datacom. For more
information, please visit the corporate web site at
www.addvantagetechnologies.com.
Cautions Regarding Forward-Looking
Statements
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.
-- Tables follow –
ADDvantage Technologies Group,
Inc.Consolidated Balance
Sheets(unaudited)
|
September 30, |
(in thousands, except
share amounts) |
2021 |
|
2020 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
2,608 |
|
|
|
$ |
8,265 |
|
|
Restricted cash |
334 |
|
|
|
108 |
|
|
Accounts receivable, net of allowances of $250 |
7,013 |
|
|
|
3,968 |
|
|
Unbilled revenue |
2,488 |
|
|
|
590 |
|
|
Promissory note, current |
— |
|
|
|
1,400 |
|
|
Income tax receivable |
— |
|
|
|
1,283 |
|
|
Inventories, net of allowance of $3,476 and $3,054,
respectively |
5,922 |
|
|
|
5,576 |
|
|
Prepaid expenses and other current assets |
1,431 |
|
|
|
884 |
|
|
Total current assets |
19,796 |
|
|
|
22,074 |
|
|
|
|
|
|
Property and equipment, at
cost: |
|
|
|
Machinery and equipment |
4,973 |
|
|
|
3,500 |
|
|
Leasehold improvements |
813 |
|
|
|
720 |
|
|
Total property and equipment,
at cost |
5,786 |
|
|
|
4,220 |
|
|
Less: Accumulated
depreciation |
(2,293 |
) |
|
|
(1,586 |
) |
|
Net property and
equipment |
3,493 |
|
|
|
2,634 |
|
|
Right-of-use lease assets |
2,730 |
|
|
|
3,758 |
|
|
Promissory note,
long-term |
— |
|
|
|
2,375 |
|
|
Intangibles, net of
accumulated amortization |
1,107 |
|
|
|
1,425 |
|
|
Goodwill |
58 |
|
|
|
58 |
|
|
Other assets |
128 |
|
|
|
179 |
|
|
Total assets |
$ |
27,312 |
|
|
|
$ |
32,503 |
|
|
Liabilities and
Shareholders’ Equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
7,044 |
|
|
|
$ |
3,472 |
|
|
Accrued expenses |
1,581 |
|
|
|
1,277 |
|
|
Deferred revenue |
168 |
|
|
|
113 |
|
|
Bank line of credit |
2,050 |
|
|
|
2,800 |
|
|
Notes payable, current |
— |
|
|
|
1,709 |
|
|
Right-of-use obligations, current |
1,198 |
|
|
|
1,275 |
|
|
Finance lease obligations, current |
582 |
|
|
|
285 |
|
|
Other current liabilities |
692 |
|
|
|
83 |
|
|
Total current liabilities |
13,315 |
|
|
|
11,014 |
|
|
Note payable |
— |
|
|
|
2,440 |
|
|
Right-of-use lease obligations, long-term |
2,141 |
|
|
|
3,310 |
|
|
Finance lease obligations, long-term |
1,429 |
|
|
|
791 |
|
|
Other liabilities |
— |
|
|
|
15 |
|
|
Total liabilities |
16,885 |
|
|
|
17,570 |
|
|
Shareholders’ equity: |
|
|
|
Common stock, $.01 par value; 30,000,000 shares authorized;
12,610,229 and 11,822,009 shares issued and outstanding,
respectively |
126 |
|
|
|
118 |
|
|
Paid in capital |
(578 |
) |
|
|
(2,567 |
) |
|
Retained earnings |
10,879 |
|
|
|
17,382 |
|
|
Total shareholders’
equity |
$ |
10,427 |
|
|
|
$ |
14,933 |
|
|
|
|
|
|
Total liabilities and
shareholders’ equity |
$ |
27,312 |
|
|
|
$ |
32,503 |
|
|
ADDvantage Technologies Group,
Inc.Consolidated Statement of
Operations(Unaudited)
|
Three months ended September 30, |
|
Years ended September 30, |
(in thousands except share and
per share amounts) |
2021 |
|
2020 |
|
2021 |
|
2020 |
Sales |
$ |
19,727 |
|
|
|
$ |
12,239 |
|
|
|
$ |
62,160 |
|
|
|
$ |
50,182 |
|
|
Cost of sales |
14,679 |
|
|
|
7,883 |
|
|
|
46,033 |
|
|
|
38,502 |
|
|
Gross profit |
5,048 |
|
|
|
4,356 |
|
|
|
16,127 |
|
|
|
11,680 |
|
|
Operating expenses |
2,597 |
|
|
|
1,890 |
|
|
|
9,329 |
|
|
|
8,166 |
|
|
Selling, general and
administrative expense |
4,358 |
|
|
|
3,153 |
|
|
|
14,890 |
|
|
|
11,249 |
|
|
Impairment of right-of-use
asset |
— |
|
|
|
— |
|
|
|
— |
|
|
|
660 |
|
|
Impairment of intangibles
including goodwill |
— |
|
|
|
— |
|
|
|
— |
|
|
|
8,714 |
|
|
Depreciation and amortization
expense |
329 |
|
|
|
357 |
|
|
|
1,228 |
|
|
|
1,554 |
|
|
Gain on disposal of assets |
— |
|
|
|
133 |
|
|
|
23 |
|
|
|
133 |
|
|
Loss from operations |
(2,236 |
) |
|
|
(911 |
) |
|
|
(9,297 |
) |
|
|
(18,530 |
) |
|
Other income (expense): |
|
|
|
|
|
|
|
Gain on extinguishment of debt |
2,955 |
|
|
|
— |
|
|
|
2,955 |
|
|
|
— |
|
|
Interest income |
19 |
|
|
|
63 |
|
|
|
135 |
|
|
|
321 |
|
|
Interest expense |
(82 |
) |
|
|
(70 |
) |
|
|
(238 |
) |
|
|
(254 |
) |
|
Income from equity method investment |
— |
|
|
|
— |
|
|
|
— |
|
|
|
41 |
|
|
Other expense |
(48 |
) |
|
|
(73 |
) |
|
|
(110 |
) |
|
|
(160 |
) |
|
Other income (expense), net |
2,844 |
|
|
|
(80 |
) |
|
|
2,742 |
|
|
|
(52 |
) |
|
|
|
|
|
|
|
|
|
Income (loss) before income
taxes |
608 |
|
|
|
(991 |
) |
|
|
(6,555 |
) |
|
|
(18,582 |
) |
|
Income tax benefit |
(30 |
) |
|
|
(13 |
) |
|
|
(53 |
) |
|
|
(1,249 |
) |
|
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
638 |
|
|
|
$ |
(978 |
) |
|
|
$ |
(6,502 |
) |
|
|
$ |
(17,333 |
) |
|
|
|
|
|
|
|
|
|
Loss per share: |
|
|
|
|
|
|
|
Basic and diluted |
$ |
0.05 |
|
|
|
$ |
(0.09 |
) |
|
|
$ |
(0.52 |
) |
|
|
$ |
(1.55 |
) |
|
Shares used in per share
calculation: |
|
|
|
|
|
|
|
Basic and diluted |
12,445,727 |
|
|
|
11,163,660 |
|
|
|
12,401,043 |
|
|
|
11,163,660 |
|
|
Non-GAAP Financial Measure
Adjusted EBITDA is a supplemental, non-GAAP
financial measure. EBITDA is defined as earnings before
interest expense, income taxes, depreciation and
amortization. Adjusted EBITDA as presented also excludes
restructuring charge, stock compensation expense, other income,
other expense, interest income and income from equity method
investment. Adjusted EBITDA is presented below because this
metric is used by the financial community as a method of measuring
our financial performance and of evaluating the market value of
companies considered to be in similar businesses. Since
Adjusted 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. Adjusted EBITDA may not be comparable to
similarly titled measures employed by other companies. In
addition, Adjusted EBITDA is not necessarily a measure of our
ability to fund our cash needs.
A reconciliation by segment of loss from operations to Adjusted
EBITDA follows:
|
Three months ended September 30, 2021 |
|
Three months ended September 30, 2020 |
|
Wireless |
|
Telco |
|
Total |
|
Wireless |
|
Telco |
|
Total |
Loss from operations |
$ |
(2,105 |
) |
|
|
$ |
(131 |
) |
|
|
$ |
(2,236 |
) |
|
|
$ |
(241 |
) |
|
|
$ |
(670 |
) |
|
|
$ |
(911 |
) |
|
Depreciation and amortization
expense |
202 |
|
|
|
127 |
|
|
|
329 |
|
|
|
166 |
|
|
|
191 |
|
|
|
357 |
|
|
Intangible Impairment |
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Impairment of right of use
asset |
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Stock compensation
expense |
132 |
|
|
|
37 |
|
|
|
169 |
|
|
|
152 |
|
|
|
255 |
|
|
|
407 |
|
|
Adjusted EBITDA (a)(b) |
$ |
(1,771 |
) |
|
|
$ |
33 |
|
|
|
$ |
(1,738 |
) |
|
|
$ |
77 |
|
|
|
$ |
(224 |
) |
|
|
$ |
(147 |
) |
|
|
For the year ended September 30, 2021 |
|
For the year ended September 30, 2020 |
|
Wireless |
|
Telco |
|
Total |
|
Wireless |
|
Telco |
|
Total |
Loss from operations |
$ |
(6,864 |
) |
|
|
$ |
(2,433 |
) |
|
|
$ |
(9,297 |
) |
|
|
$ |
(4,377 |
) |
|
|
$ |
(14,153 |
) |
|
|
$ |
(18,530 |
) |
|
Depreciation and amortization
expense |
715 |
|
|
|
513 |
|
|
|
1,228 |
|
|
|
628 |
|
|
|
926 |
|
|
|
1,554 |
|
|
Intangible Impairment |
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
8,714 |
|
|
|
8,714 |
|
|
Impairment of right of use
asset |
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
660 |
|
|
|
660 |
|
|
Stock compensation
expense |
515 |
|
|
|
493 |
|
|
|
1,008 |
|
|
|
216 |
|
|
|
358 |
|
|
|
574 |
|
|
Adjusted EBITDA (a)(b) |
$ |
(5,634 |
) |
|
|
$ |
(1,427 |
) |
|
|
$ |
(7,061 |
) |
|
|
$ |
(3,533 |
) |
|
|
$ |
(3,495 |
) |
|
|
$ |
(7,028 |
) |
|
(a) The Telco segment includes an inventory
obsolescence charge of $0.4 million and $1.8 million for the years
ended September 30, 2021 and 2020, respectively. In addition,
the Telco segment includes a lower of cost or net realizable value
charge of $0.1 million for the years ended September 30, 2021 and
2020.
(b) The Company allocates its corporate general
and administrative expenses to the reportable segments.
For further information:Hayden IRBrett Maas(646)
536-7331aey@haydenir.com
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