CARROLLTON, Texas, Feb. 14, 2022 (GLOBE NEWSWIRE) -- ADDvantage Technologies Group, Inc. (NASDAQ: AEY) (“ADDvantage Technologies” or the “Company”) today reported financial results for the three months ended December 31, 2021, the first fiscal quarter of 2022.
“We have moved quickly to ramp capabilities to meet the growing demand for 5G-related tower work, as our wireless segment delivered its second consecutive quarter of revenue greater than $7 million, even with weather and holiday-related interruptions, and we anticipate further growth as we move through calendar 2022,” commented Joe Hart, Chief Executive Officer. “The ramp up and entree into the new markets adversely effected margins for Q1 and into Q2 of this fiscal year. With our ramp up largely complete, we are now squarely focused on effectively aligning resources for demand, and improving operational efficiency and reducing general and administrative expenses, to drive margin expansion. We expect further growth in both revenue and margin expansion in the last half of the year.”
“ADDvantage Technologies is strategically and regionally well-positioned to benefit from this secular, multi-year spending cycle, with capabilities in place in key markets and long-term relationships with wireless carriers,” continued Mr. Hart. “Simultaneously, our Telco segment led by Nave Communications continues to deliver improved results due to strong demand for refurbished telecom equipment. Revenue in our Telco segment increased 54% year-over-year. 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 2021.”
Financial Results for the Three Months ended December 31, 2021
Fiscal first quarter sales were $18.7 million, an increase of $6.0 million, or 47% compared to $12.7 million last year. The increase was primarily due to a $1.9 million increase in Wireless revenue related to 5G tower work, and an increase of $4.1 million in Telco revenue due to increased demand for refurbished telecommunications equipment sold by the Telco segment.
Gross profit was $4.6 million, or 25% gross margin, compared to gross profit of $3.6 million, or 28% 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 made with a new wireless customer and the impact of the Company onboarding new crews in anticipation of near-term wireless revenue increases.
Operating expenses increased $0.5 million to $2.5 million from $2.0 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 $0.5 million, or 15%, to $3.7 million for the three months ended December 31, 2021 from $3.2 million for the same period last year. The increase in SG&A relates primarily to increased selling and commissions expenses to support higher revenues.
Net loss for the quarter was $2.0 million or 0.16 per share, compared with a net loss of $2.0 million, or a loss of 0.16 per share for the same quarter last year.
Balance sheet
Cash and cash equivalents were $1.8 million as of December 31, 2021, compared with $2.6 million as of September 30, 2021. As of December 31, 2021, the Company had net inventories of $5.7 million.
Outstanding debt as of December 31, 2021 was $4.2 million, which is comprised of $2.1 million on a revolving line of credit, and $2.1 million in financing leases.
Earnings Conference Call
The Company will host a conference call on Tuesday, February 15, 2022 at 10 a.m. Eastern.
| Date: Time: Toll-free Dial-in Number: International Dial-in Number: Conference ID: | Tuesday, February 15, 2022 10 a.m. Eastern 1-800-239-9838 1-323-794-2551 9288889 | |
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
(in thousands, except share amounts)
(Unaudited)
| December 31, 2021 | September 30, 2021 | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 1,837 | 2,608 | ||||
| Restricted cash | 581 | 334 | |||||
| Accounts receivable, net of allowances of $250 | 6,469 | 7,013 | |||||
| Unbilled revenue | 2,219 | 2,488 | |||||
| Inventories, net of allowances of 3,567 and 3,476, respectively | 5,653 | 5,922 | |||||
| Prepaid expenses and other current assets | 1,371 | 1,431 | |||||
| Total current assets | 18,130 | 19,796 | |||||
| Property and equipment, at cost: | |||||||
| Machinery and equipment | 5,354 | 4,973 | |||||
| Leasehold improvements | 821 | 813 | |||||
| Total property and equipment, at cost | 6,175 | 5,786 | |||||
| Less: Accumulated depreciation | (2,558 | ) | (2,293 | ) | |||
| Net property and equipment | 3,617 | 3,493 | |||||
| Right-of-use lease assets | 2,466 | 2,730 | |||||
| Intangibles, net of accumulated amortization | 1,027 | 1,107 | |||||
| Goodwill | 58 | 58 | |||||
| Other assets | 128 | 128 | |||||
| Total assets | $ | 25,426 | $ | 27,312 | |||
| Liabilities and Shareholders’ Equity | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 6,812 | $ | 7,044 | |||
| Accrued expenses | 1,184 | 1,581 | |||||
| Deferred revenue | 207 | 168 | |||||
| Bank line of credit | 2,050 | 2,050 | |||||
| Right-of-use lease obligations, current | 1,177 | 1,198 | |||||
| Finance lease obligations, current | 652 | 582 | |||||
| Other current liabilities | 706 | 692 | |||||
| Total current liabilities | 12,788 | 13,315 | |||||
| Right-of-use lease obligations, long-term | 1,839 | 2,141 | |||||
| Finance lease obligations, long-term | 1,484 | 1,429 | |||||
| Total liabilities | 16,111 | 16,885 | |||||
| Shareholders’ equity: | |||||||
| Common stock, $0.01 par value; 30,000,000 shares authorized; 13,041,127 shares issued and outstanding, and 12,610,229 shares issued and outstanding, respectively | 130 | 126 | |||||
| Paid in capital | 335 | (578 | ) | ||||
| Retained earnings | 8,850 | 10,879 | |||||
| Total shareholders’ equity | 9,315 | 10,427 | |||||
| Total liabilities and shareholders’ equity | $ | 25,426 | $ | 27,312 | |||
ADDvantage Technologies Group, Inc.
Consolidated Statements of Operations
(in thousands, except share amounts)
(Unaudited)
| Three Months Ended December 31, | |||||||
| 2021 | 2020 | ||||||
| Sales | $ | 18,690 | $ | 12,749 | |||
| Cost of sales | 14,059 | 9,120 | |||||
| Gross profit | 4,631 | 3,629 | |||||
| Operating expenses | 2,500 | 2,047 | |||||
| Selling, general and administrative expenses | 3,688 | 3,215 | |||||
| Depreciation and amortization expense | 345 | 281 | |||||
| Loss from operations | (1,902 | ) | (1,914 | ) | |||
| Other income (expense): | |||||||
| Interest income | — | 48 | |||||
| Other income (expense) | (72 | ) | (19 | ) | |||
| Interest expense | (55 | ) | (68 | ) | |||
| Other income (expense), net | (127 | ) | (39 | ) | |||
| Loss before income taxes | (2,029 | ) | (1,953 | ) | |||
| Income tax benefit | — | — | |||||
| Net loss | $ | (2,029 | ) | $ | (1,953 | ) | |
| Loss per share: | |||||||
| Basic and diluted | $ | (0.16 | ) | $ | (0.16 | ) | |
| Shares used in per share calculation: | |||||||
| Basic and diluted | 12,683,312 | 12,149,778 | |||||
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.
The following table provides a reconciliation by segment of income (loss) from operations to Adjusted EBITDA, in thousands:
| Three Months Ended December 31, 2021 | Three Months Ended December 31, 2020 | ||||||||||||||||||||||
| Wireless | Telco | Total | Wireless | Telco | Total | ||||||||||||||||||
| Income (loss) from operations | $ | (2,326 | ) | $ | 424 | $ | (1,902 | ) | $ | (1,105 | ) | $ | (809 | ) | $ | (1,914 | ) | ||||||
| Depreciation and amortization expense | 220 | 125 | 345 | 152 | 129 | 281 | |||||||||||||||||
| Stock compensation expense | 144 | 137 | 281 | 140 | 175 | 315 | |||||||||||||||||
| Adjusted EBITDA | $ | (1,962 | ) | $ | 686 | $ | (1,276 | ) | $ | (813 | ) | $ | (505 | ) | $ | (1,318 | ) | ||||||
For further information:
Hayden IR
Brett Maas
(646) 536-7331
aey@haydenir.com
