ADDvantage Technologies Group, Inc.
1221 E. Houston
Broken Arrow, Oklahoma 74012
| For further information | KCSA Strategic Communications |
| Company Contact: | Garth Russell |
| Scott Francis (918) 251-9121 | (212) 896-1250 |
| grussell@kcsa.com |
ADDvantage Technologies Announces Results
for the Fiscal First Quarter of 2016
- - -
BROKEN ARROW, Oklahoma, February 9, 2016 – ADDvantage Technologies Group, Inc. (NASDAQ: AEY), today announced its financial results for the three month period ended December 31, 2015.
“We continued to experience a general weakness related to equipment sales in the Cable TV and Telco segments, which negatively impacted our revenues during the fiscal first quarter of 2016. Despite the lower sales in the quarter, we continued to manage all of our expenses in order to maintain a positive net income for the quarter,” said David Humphrey, President and CEO of ADDvantage Technologies. “We are encouraged by recent signs of improvement in the Telco industry and remain optimistic that sales opportunities will materialize in the near term. Furthermore, we are working diligently to explore all opportunities to expand in the Cable TV segment, both in products and services offered to our customers. In addition, we recently acquired a business based in Tennessee that provides cable television equipment repairs as well as sales of equipment. This new location will allow us to further support our Cable Television customers in the Ohio Valley and Central Atlantic regions of the U.S.”
“While we are not pleased with this quarter’s results, we are confident that our dedicated sales team and strong balance sheet position enables us to adapt to changing market dynamics, so we can benefit from opportunities in the market. We also continue to work with an investment bank to identify strategic acquisition targets that could further establish our presence in the broader telecommunications industry,” concluded Mr. Humphrey.
Consolidated sales decreased 24% to $8.2 million for the three months ended December 31, 2015, compared with $10.8 million for the same period ended December 31, 2014. The decrease in sales resulted from a $1.8 million and $0.7 million decrease in sales in the Cable TV segment and Telco segment, respectively, compared to the prior year.
Consolidated operating, selling, general and administrative expenses decreased $0.4 million, or 13%, to $2.7 million for the three months ended December 31, 2015, from $3.1 million for the same period last year. This decrease was due to $0.5 million in Telco segment expenses, partially offset by an increase of $0.1 million in Cable TV segment expenses.
Net income for the three months ended December 31, 2015, was $24 thousand, or $0.00 per diluted share, compared with $0.4 million, or $0.04 per diluted share, for the same period of 2014.
Consolidated EBITDA for the three months ended December 31, 2015, was $0.4 million compared with $1.1 million for the same period ended December 31, 2014.
Cash and cash equivalents were $6.7 million as of December 31, 2015, compared with $6.1 million as of September 30, 2015. As of December 31, 2015, inventory was $23.0 million, compared with $23.6 million as of September 30, 2015.
Earnings Conference Call
The Company will host a conference call today, February 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 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 888-438-5535 (domestic) or 719-325-2329 (international). All dial-in participants must use the following code to access the call: 5749081. 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 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: 5749081. 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 (CATV) 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 CATV equipment and recycles surplus and obsolete CATV and telecommunications equipment.
ADDvantage operates through its subsidiaries, Tulsat, Tulsat-Arizona, Tulsat-Atlanta, 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 Measures
EBITDA is a supplemental, non-GAAP financial measure. EBITDA is defined as earnings before interest expense, income taxes, depreciation and amortization. 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 metric 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 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 additions, 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 December 31, | |
| | | 2015 | | | 2014 | |
| Sales | | $ | 8,249,668 | | | $ | 10,837,158 | |
| Cost of sales | | | 5,484,288 | | | | 7,005,355 | |
| Gross profit | | | 2,765,380 | | | | 3,831,803 | |
| Operating, selling, general and administrative expenses | | | 2,668,625 | | | | 3,075,459 | |
| Income from operations | | | 96,755 | | | | 756,344 | |
| Interest expense | | | 67,761 | | | | 85,421 | |
| Income before provision for income taxes | | | 28,994 | | | | 670,923 | |
| Provision for income taxes | | | 5,000 | | | | 255,000 | |
| | | | | | | | | |
| Net income | | $ | 23,994 | | | $ | 415,923 | |
| | | | | | | | | |
| Earnings per share: | | | | | | | | |
Basic | | $ | 0.00 | | | $ | 0.04 | |
Diluted | | $ | 0.00 | | | $ | 0.04 | |
| Shares used in per share calculation: | | | | | | | | |
Basic | | | 10,069,139 | | | | 10,041,206 | |
Diluted | | | 10,069,139 | | | | 10,044,619 | |
| | | Three Months Ended December 31, 2015 | | | Three Months Ended December 31, 2014 | |
| | | Cable TV | | | Telco | | | Total | | | Cable TV | | | Telco | | | Total | |
Income (loss) from operations | | $ | 116,841 | | | $ | (20,086 | ) | | $ | 96,755 | | | $ | 618,811 | | | $ | 137,533 | | | $ | 756,344 | |
| Depreciation | | | 72,464 | | | | 22,716 | | | | 95,180 | | | | 71,564 | | | | 27,244 | | | | 98,808 | |
| Amortization | | | − | | | | 206,451 | | | | 206,451 | | | | − | | | | 206,452 | | | | 206,452 | |
| EBITDA | | $ | 189,305 | | | $ | 209,081 | | | $ | 398,386 | | | $ | 690,375 | | | $ | 371,229 | | | $ | 1,061,604 | |
ADDVANTAGE TECHNOLOGIES GROUP, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
| | | December 31, 2015 | | | September 30, 2015 | |
| Assets | | | | | | |
| Current assets: | | | | | | |
Cash and cash equivalents | | $ | 6,711,341 | | | $ | 6,110,986 | |
Accounts receivable, net of allowance for doubtful accounts of $250,000 | | | 3,968,551 | | | | 4,286,377 | |
Income tax receivable | | | 13,998 | | | | − | |
Inventories, net of allowance for excess and obsolete | | | | | | | | |
inventory of $2,906,628 and $2,756,628, respectively | | | 22,991,872 | | | | 23,600,996 | |
Prepaid expenses | | | 115,652 | | | | 153,454 | |
Deferred income taxes | | | 1,774,000 | | | | 1,776,000 | |
| Total current assets | | | 35,575,414 | | | | 35,927,813 | |
| | | | | | | | | |
| Property and equipment, at cost | | | 10,922,174 | | | | 10,785,799 | |
| Less: Accumulated depreciation | | | (4,679,976 | ) | | | (4,584,796 | ) |
| Net property and equipment | | | 6,242,198 | | | | 6,201,003 | |
| | | | | | | | | |
| Intangibles, net of accumulated amortization | | | 5,593,022 | | | | 5,799,473 | |
| Goodwill | | | 3,910,089 | | | | 3,910,089 | |
| Other assets | | | 134,678 | | | | 134,678 | |
| | | | | | | | | |
| Total assets | | $ | 51,455,401 | | | $ | 51,973,056 | |
| | | | | | | | | |
| Liabilities and Shareholders’ Equity | | | | | | | | |
| Current liabilities: | | | | | | | | |
Accounts payable | | $ | 1,870,759 | | | $ | 1,784,482 | |
Accrued expenses | | | 1,003,544 | | | | 1,358,681 | |
Income tax payable | | | − | | | | 122,492 | |
Notes payable – current portion | | | 880,999 | | | | 873,752 | |
Other current liabilities | | | 992,838 | | | | 982,094 | |
| Total current liabilities | | | 4,748,140 | | | | 5,121,501 | |
| | | | | | | | | |
Notes payable, less current portion | | | 4,142,894 | | | | 4,366,130 | |
Deferred income taxes | | | 286,000 | | | | 286,000 | |
Other liabilities | | | 1,085,930 | | | | 1,064,717 | |
| Total liabilities | | | 10,262,964 | | | | 10,838,348 | |
| | | | | | | | | |
| Shareholders’ equity: | | | | | | | | |
Common stock, $.01 par value; 30,000,000 shares authorized; 10,572,019 and 10,564,221 shares issued, respectively; 10,071,361 and 10,063,563 shares outstanding, respectively | | | 105,720 | | | | 105,642 | |
Paid in capital | | | (5,078,612 | ) | | | (5,112,269 | ) |
Retained earnings | | | 47,165,343 | | | | 47,141,349 | |
Total shareholders’ equity before treasury stock | | | 42,192,451 | | | | 42,134,722 | |
| | | | | | | | | |
Less: Treasury stock, 500,658 shares, at cost | | | (1,000,014 | ) | | | (1,000,014 | ) |
| Total shareholders’ equity | | | 41,192,437 | | | | 41,134,708 | |
| | | | | | | | | |
| Total liabilities and shareholders’ equity | | $ | 51,455,401 | | | $ | 51,973,056 | |
