ADDvantage Technologies Group, Inc. (NASDAQ:AEY),
today announced its financial results for the three month period
ended December 31, 2017.
“Revenues for the first fiscal quarter of 2018
were relatively flat compared with the same period in the prior
year as declines in the Cable TV segment offset improved Telco
segment sales,” commented David Humphrey, President and CEO of
ADDvantage Technologies. “On the Telco side, we are pleased with
Triton’s performance, which generated improved revenues and gross
margins year-over-year. We are also starting to see improved
results from Nave Communications in recent weeks, driven by the
improved sales strategy and sales organization restructuring
implemented in late fiscal 2017. Looking ahead, we expect the sales
and operational improvements we are making at Nave will generate
higher sales and improved bottom-line results as its growth
strategy continues to take effect. Although there is still more
work to be done, we have confidence in Nave’s business model.
“Sales and gross profit from the Cable TV
segment were down in the first fiscal quarter of 2018, resulting
from lower equipment sales as well as the loss of one significant
customer in our repair business. In addition, our gross profit
eroded this quarter due to a high volume of equipment sales at
lower than usual margins to a single customer. Therefore, we
have consolidated some of our repair facilities and are making
further operational enhancements that we believe will support the
efficient running of the business over the longer term.”
Mr. Humphrey concluded, “While the Cable TV
segment continues to face market challenges, we are encouraged by
the strengthening results from our Telco segment and believe we
will be able to deliver on our overall growth strategy.”
Results for the three months ended
December 31, 2017
Consolidated sales increased 2% to $12.3 million
for the three months ended December 31, 2017 compared with $12.1
million for the three months ended December 31, 2016. The
increase in sales was in the Telco segment of $1.0 million,
partially offset by a decrease in the Cable TV segment of $0.8
million.
Consolidated operating, selling, general and
administrative expenses remained flat at $3.6 million for the three
months ended December 31, 2017, compared with the same period in
the prior year. This was due to higher Telco segment expenses of
$0.1 million and was offset by lower expenses in the Cable TV
segment.
The provision for income taxes was $0.3 million
for the three months ended December 31, 2017 compared to a
provision for income taxes of $0.1 million for the same period of
2016. The increase in the tax provision was due primarily to
the Tax Cuts and Jobs Act enacted on December 22, 2017. One
of the provisions of this legislation was to reduce the corporate
income tax rates effective beginning January 1, 2018. As a
result of the reduced corporate income tax rate, the Company
remeasured its deferred tax balances at the reduced corporate
income tax rate, which resulted in income tax expense of $0.4
million. The Company estimates that its effective income tax
rate for the remaining quarters of fiscal year 2018 will be
approximately 27% as a result of the legislation.
Net loss for the three months ended December 31,
2017, was $0.7 million, or $0.07 per diluted share, compared with
net income of $0.2 million, or $0.02 per diluted share, for the
same period of 2016.
Consolidated EBITDA for the three months ended December 31, 2017
was $0.1 million compared with $0.8 million for the same period
ended December 31, 2016.
Cash and cash equivalents were $0.4 million as
of December 31, 2017, compared with $4.0 million as of September
30, 2017. The decrease in cash was due primarily to the
extinguishment of one of the Company’s term loans in December 2017
by paying the outstanding balance of $2.7 million and the first
annual guaranteed payment of $0.7 million related to the
acquisition of Triton Miami, Inc. As of December 31, 2017,
the Company had inventory of $22.4 million compared with $22.3
million as of September 30, 2017.
Earnings Conference Call
The Company will host a conference call today,
Tuesday, February 13th, at 12:00 p.m. Eastern Time featuring
remarks by David Humphrey, President and Chief Executive Officer,
Dave Chymiak, Chief Technology Officer, Scott Francis, Chief
Financial Officer, and Don Kinison, Vice President of
Sales.
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
1-888-389-5986 (domestic) or 1-323-701-0225 (international). All
dial-in participants must use the following code to access the
call: 7829203. 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
February 27, 2018 at 1-844-512-2921 (domestic) or 1-412-317-6671
(international). Participants must use the following code to access
the replay of the call: 7829203. 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-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
MeasuresAdjusted 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 excludes other
income, interest income and income from equity method
investment. Management believes providing Adjusted 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 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, as
calculated in the table below, 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.
(Tables follow)
ADDVANTAGE TECHNOLOGIES GROUP, INC.CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS(UNAUDITED)
|
|
|
Three Months Ended December 31, |
|
|
2017 |
|
|
2016 |
Sales |
$ |
12,284,765 |
|
$ |
12,095,826 |
Cost of sales |
|
8,903,610 |
|
|
8,072,197 |
Gross profit |
|
3,381,155 |
|
|
4,023,629 |
Operating, selling,
general and administrative expenses |
|
3,646,823 |
|
|
3,596,824 |
Income (loss) from
operations |
|
(265,668 |
) |
|
426,805 |
Interest expense |
|
96,094 |
|
|
96,644 |
Income (loss) before
provision for income taxes |
|
(361,762 |
) |
|
330,161 |
Provision for income
taxes |
|
345,000 |
|
|
113,000 |
|
|
|
|
|
Net income (loss) |
$ |
(706,762 |
) |
$ |
217,161 |
|
|
|
|
|
Earnings (loss) per
share: |
|
|
Basic |
$ |
(0.07 |
) |
$ |
0.02 |
Diluted |
$ |
(0.07 |
) |
$ |
0.02 |
Shares used in per
share calculation: |
|
|
Basic |
|
10,225,995 |
|
|
10,134,235 |
Diluted |
|
10,225,995 |
|
|
10,134,559 |
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, 2017 |
|
|
Three Months Ended December 31, 2016 |
|
Cable TV |
|
|
Telco |
|
|
Total |
|
|
Cable TV |
|
Telco |
|
|
Total |
Income (loss)
from operations |
$ |
(188,500 |
) |
|
$ |
(77,168 |
) |
|
$ |
(265,668 |
) |
|
$ |
908,982 |
|
$ |
(482,177 |
) |
|
$ |
426,805 |
Depreciation |
|
66,948 |
|
|
|
31,195 |
|
|
|
98,143 |
|
|
|
73,245 |
|
|
30,542 |
|
|
|
103,787 |
Amortization |
|
− |
|
|
|
313,311 |
|
|
|
313,311 |
|
|
|
− |
|
|
311,986 |
|
|
|
311,986 |
Adjusted
EBITDA (a) |
$ |
(121,552 |
) |
|
$ |
267,338 |
|
|
$ |
145,786 |
|
|
$ |
982,227 |
|
$ |
(139,649 |
) |
|
$ |
842,578 |
|
|
|
|
(a) |
|
|
The Telco segment includes
earn-out expenses of $0.1 million for the three months ended
December 31, 2017, and includes acquisition-related costs of $0.2
million for the three months ended December 31, 2016 related to the
acquisition of Triton Miami, Inc. |
|
|
|
|
ADDVANTAGE TECHNOLOGIES GROUP, INC.CONSOLIDATED
CONDENSED BALANCE SHEETS(UNAUDITED)
|
|
|
|
|
|
December 31,2017 |
|
September 30,2017 |
|
Assets |
|
|
Current assets: |
|
|
Cash and
cash equivalents |
$ |
414,891 |
|
|
$ |
3,972,723 |
|
Accounts
receivable, net of allowance for doubtful accounts of
$150,000 |
|
5,299,536 |
|
|
|
5,567,005 |
|
Income
tax receivable |
|
244,510 |
|
|
|
247,186 |
|
Inventories, net of allowance for excess and obsolete |
|
|
inventory of $3,100,389 and $2,939,289, respectively |
|
22,406,750 |
|
|
|
22,333,820 |
|
Prepaid
expenses |
|
233,627 |
|
|
|
298,152 |
|
Total current
assets |
|
28,599,314 |
|
|
|
32,418,886 |
|
|
|
|
Property and equipment,
at cost |
|
11,373,571 |
|
|
|
11,416,363 |
|
Less: Accumulated
depreciation |
|
(5,467,393 |
) |
|
|
(5,395,791 |
) |
Net property and
equipment |
|
5,906,178 |
|
|
|
6,020,572 |
|
|
|
|
Investment in and loans
to equity method investee |
|
140,045 |
|
|
|
98,704 |
|
Intangibles, net of
accumulated amortization |
|
8,234,176 |
|
|
|
8,547,487 |
|
Goodwill |
|
5,970,244 |
|
|
|
5,970,244 |
|
Deferred income
taxes |
|
1,308,000 |
|
|
|
1,653,000 |
|
Other assets |
|
135,462 |
|
|
|
138,712 |
|
|
|
|
|
|
Total assets |
$ |
50,293,419 |
|
|
$ |
54,847,605 |
|
|
|
|
|
|
Liabilities and
Shareholders’ Equity |
|
|
Current
liabilities: |
|
|
Accounts
payable |
$ |
3,478,894 |
|
|
$ |
3,392,725 |
|
Accrued
expenses |
|
1,163,451 |
|
|
|
1,406,722 |
|
Notes
payable – current portion |
|
1,519,492 |
|
|
|
4,189,605 |
|
Other
current liabilities |
|
643,746 |
|
|
|
664,325 |
|
Total current
liabilities |
|
6,805,583 |
|
|
|
9,653,377 |
|
|
|
|
Notes
payable, less current portion |
|
1,708,622 |
|
|
|
2,094,246 |
|
Other
liabilities |
|
775,465 |
|
|
|
1,401,799 |
|
Total liabilities |
|
9,289,670 |
|
|
|
13,149,422 |
|
|
|
|
Shareholders’
equity: |
|
|
Common
stock, $.01 par value; 30,000,000 shares authorized;
10,726,653 shares issued; and 10,225,995 shares
outstanding |
|
107,267 |
|
|
|
107,267 |
|
Paid in
capital |
|
(4,734,138 |
) |
|
|
(4,746,466 |
) |
Retained
earnings |
|
46,630,634 |
|
|
|
47,337,396 |
|
Total
shareholders’ equity before treasury stock |
|
42,003,763 |
|
|
|
42,698,197 |
|
|
|
|
Less:
Treasury stock, 500,658 shares, at cost |
|
(1,000,014 |
) |
|
|
(1,000,014 |
) |
Total shareholders’
equity |
|
41,003,749 |
|
|
|
41,698,183 |
|
|
|
|
|
|
Total liabilities and
shareholders’ equity |
$ |
50,293,419 |
|
|
$ |
54,847,605 |
|
|
|
For further information |
KCSA Strategic Communications |
Company Contact: |
Elizabeth Barker |
Scott Francis (918) 251-9121 |
(212) 896-1203 |
ebarker@kcsa.com |
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