avp crocs
tour
AVP REPORTS RECORD THIRD QUARTER REVENUE UP 41%;
RECORD THIRD QUARTER GAAP NET INCOME OF $2.57
MILLION, OR $0.09 PER FULLY DILUTED SHARE
Third Quarter Gross Profit Up 193% Year-Over-Year
LOS ANGELES, Calif., - November 14, 2006 - AVP, Inc. (OTC Bulletin Board: AVPI),
a lifestyle sports entertainment company focused on professional beach
volleyball, today announced record financial results for its 2006 third quarter
and nine-months ended September 30, 2006. AVP generated record revenue of $13.8
million for the third quarter of 2006, an increase of 41% year-over-year, and
record net income of $2.57 million, or $0.09 per fully diluted share, for the
third quarter.
"As we close a very successful 2006 season, we are excited to report our first
profitable quarter, reflecting record revenue, gross profit and net income,"
said Leonard Armato, Chief Executive Officer of AVP, Inc. "We accomplished a
number of key objectives this quarter. Year over year, we generated a 34%
increase in advertising and sponsorship revenue, as well as increased
attendance, tickets sales and media coverage. We continue to grow our fan base,
which has now increased 53% over the past two years, enhancing our ability to
attract new sponsorship and advertising agreements and renew and extend our
existing agreements with nationally recognized brands that include Crocs, Sony,
Hilton, Cuervo, Nautica, and Bud Light.
"In addition, we continue to successfully transition to a promoter based
operating model and engaged promoters for seven events in the third quarter,
compared to only one in the third quarter of last year. As a result, we reduced
third quarter average event cost by 10% compared to third quarter 2005. The
transition to a promoter model is both reducing our expenses and enabling us to
focus more on further building our relationships with current and prospective
advertisers and sponsors.
"Looking ahead, we remain focused on growing our advertising and sponsorship
base, as well as expanding our marketing programs to further grow attendance in
2007. At the same time, we are also focused on managing expenses and achieving
consistent profitability. We had a very successful 2006 tour, as is reflected in
our strong financial results and upwardly revised annual guidance, and we are
now laying the groundwork to achieve even greater success in 2007," Mr. Armato
concluded.
Notable Milestones In The Third Quarter Of 2006:
o Record revenue of $13.8 million in the third quarter, a 41% increase
from $9.8 million in the third quarter of 2005.
o Sponsorship/advertising revenues up 34% year-over year.
o Gross profit margin increased to 33% compared to 16% in the third
quarter of 2005.
o Record GAAP net income of $2.57 million, or $0.09 per fully diluted
share.
o Fan base increased 53% over the past two years, higher than any
other organized sport.
Third Quarter Financial Results
Total revenue for the third quarter reached a record $13.8 million, a 41%
increase over total revenue of $9.8 million for the third quarter of 2005.
During the course of the entire year, the majority of AVP's revenues are derived
from sponsorship and advertising contracts with national and local sponsors and
advertisers along with local event revenue and ancillary revenue. The Company's
beach volleyball tournament season customarily begins in early April and
continues through late September or early October and AVP recognizes sponsorship
and advertising revenue as well as event costs during the tour, as events occur.
As a result, the majority of AVP's revenues were recognized in the second and
third quarters of the calendar year.
The Company's net income available to common shareholders for the third quarter
was $2.57 million, or $0.09 per fully diluted share, compared to a net loss of
$(0.5) million, or $(0.05) per diluted share, for the third quarter of 2005.
Total event costs for the three months ended September 30, 2006 were $9.3
million for ten events, compared to $8.3 million in the same period last year,
which included 8 events. The average event cost during the three months ended
September 30, 2006 was $0.9 million, down 10% from $1.0 million in 2005. The
cost savings is primarily attributable to an increase in the number of events
produced with promoters who incurred certain operational costs of the events.
Total operating expenses, excluding stock based expenses, for the three months
ended September 30, 2006 were $2 million, or flat compared to the prior year
period. Operating stock based expenses for the third quarter were $21,263,
compared to $84,623 in the prior year period.
Nine Months Financial Results
For the nine months ended September 30, 2006, total revenue was $21.2 million, a
49% increase over total revenue of $14.2 million for the same period in 2005.
Net income available to common shareholders for the first nine months was $1.04
million, or $0.04 per fully diluted share, compared to a net loss of $(7.4)
million, or a loss of $(0.90) per diluted share, for the same period last year.
As noted earlier in this release, AVP recognizes the majority of its revenue and
associated operating expenses in the second and third quarters of the calendar
year.
Total operating expenses, excluding stock based expenses, for the nine months
ended September 30, 2006 were $5.4 million, compared to the $5.0 million
reported in the prior year period. Operating stock based expenses for the nine
months ended September 30, 2006 were $0.3 million, compared to $5.3 million in
the prior year period.
Business Outlook and Financial Guidance
AVP currently estimates that total revenue for 2006 will be between $21.2
million and $21.5 million. GAAP net loss is currently expected to be between
$(0.5) million and $(0.75) million for the year versus a $(9.0) million GAAP net
loss in 2005, and the company expects a non-GAAP net loss, excluding stock based
expenses and contra-revenue expense of between $0 and $(0.25) million, versus a
non-GAAP net loss of $(3.3) million in 2005.
Conference Call
AVP Inc., will host a conference call and webcast on Wednesday, November 15th at
8:30 a.m. Pacific Time (11:30 am Eastern Time) to discuss its 2006 third quarter
financial results. Those wishing to participate in the live call should dial
(800) 257-1836 and give the Company name "AVP." A phone replay of the call will
be available for one week beginning approximately one hour after the call's
conclusion by dialing (800) 405-2236 and entering 11075559 followed by the "#"
sign when prompted for a code. To access the live or archived webcast of the
call, go to the Investor Relations section of AVP's website at www.avp.com.
About AVP, Inc.
About AVP, Inc.
AVP, Inc. is a lifestyle sports entertainment company focused on the production,
marketing and distribution of professional beach volleyball events worldwide.
AVP operates the industry's most prominent volleyball tour in the United States,
the AVP Crocs Tour. Featuring more than 200 of the top American men and women
competitors in the sport, including Gold Medalists from every Olympics since
beach volleyball became an Olympic sport, AVP held 16 AVP Crocs Tour events
throughout the United States in 2006. For more information, please visit
www.avp.com.
All above-mentioned trademarks are the property of their respective owners.
Some of the information in this press release may contain projections or other
forward-looking statements regarding future events or the future financial
performance of the Company. We wish to caution you that these statements involve
risks and uncertainties and actual results might differ materially from those in
the forward-looking statements, if we receive less sponsorship and advertising
revenue than anticipated, or if attendance is adversely affected by unfavorable
weather. Event-related expenses, such as for the stadium, transportation and
accommodations, or security might be greater than expected; or marketing or
administrative costs might be increased by our hiring, not currently planned, of
a particularly qualified prospect. Additional factors have been detailed in the
Company's filings with the Securities and Exchange Commission, including our
recent filings on Forms 10-K and 10-Q.
Contacts:
AVP, Inc MKR Group, Inc.
Andrew Reif Investor Relations
COO and CFO Marie Dagresto or Todd Kehrli
(310) 426-8000 (323) 468-2300
areif@avp.com avpi@mkr-group.com
- Financial tables to follow -
AVP, INC
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
2006 2005
------------- -------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 3,758,704 $ 1,143,345
Accounts receivable, net of allowance for
doubtful accounts of $31,798 and $49,232 5,159,395 484,770
Prepaid expenses 297,929 158,054
Other current assets - current portion 429,565 145,768
------------- -------------
TOTAL CURRENT ASSETS 9,645,593 1,931,937
------------- -------------
PROPERTY AND EQUIPMENT, net 411,255 288,409
------------- -------------
OTHER ASSETS 358,376 455,192
------------- -------------
TOTAL ASSETS 10,415,224 2,675,538
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES
Notes payable $ 183,334 $ 600,071
Accounts payable 949,032 711,303
Accrued expenses 1,749,689 1,702,424
Deferred revenue 79,960 116,000
------------- -------------
TOTAL CURRENT LIABILITIES 2,962,015 3,129,798
------------- -------------
NON-CURRENT LIABILITIES 219,034 150,000
------------- -------------
TOTAL LIABILITIES 3,181,049 3,279,798
------------- -------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIENCY)
Preferred stock, 2,000,000 shares authorized:
Series A convertible preferred stock, $.001 par value,
1,000,000 shares authorized, no shares issued and outstanding -- --
Series B convertible preferred stock, $.001 par value, 250,000
shares authorized, 71,020 and 94,488 shares issued and outstanding 71 94
Common stock, $.001 par value, 80,000,000 shares authorized,
19,689,588 and 11,669,931 shares issued and outstanding 19,690 11,670
Additional paid-in capital 38,974,109 32,183,810
Accumulated deficit (31,759,695) (32,799,834)
------------- -------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY) 7,234,175 (604,260)
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) $ 10,415,224 $ 2,675,538
============= =============
AVP, INC
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2006 2005 2006 2005
--------------- -------------- -------------- --------------
REVENUE
Sponsorships/Advertising (1) $ 11,155,368 $ 8,308,522 $ 17,388,458 $ 11,732,917
Other 2,654,724 1,505,739 3,855,602 2,494,745
--------------- -------------- -------------- --------------
TOTAL REVENUE 13,810,092 9,814,261 21,244,060 14,227,662
EVENT COSTS 9,292,516 8,270,234 14,652,753 11,266,722
--------------- -------------- -------------- --------------
GROSS PROFIT 4,517,576 1,544,027 6,591,307 2,960,940
--------------- -------------- -------------- --------------
OPERATING EXPENSES
Sales and Marketing (2) 932,501 575,349 2,304,590 1,445,140
Administrative (3) 1,082,321 1,482,785 3,373,011 8,886,382
--------------- -------------- -------------- --------------
TOTAL OPERATING EXPENSES 2,014,822 2,058,134 5,677,601 10,331,522
--------------- -------------- -------------- --------------
OPERATING INCOME (LOSS) 2,502,754 (514,107) 913,706 (7,370,582)
--------------- -------------- -------------- --------------
OTHER INCOME (EXPENSE)
Interest expense (7,823) (24,292) (19,754) (122,863)
Interest income 72,173 41,745 127,118 94,755
Gain on warrant derivative -- -- 111,042 --
--------------- -------------- -------------- --------------
TOTAL OTHER INCOME (EXPENSE) 64,350 17,453 218,406 (28,108)
--------------- -------------- -------------- --------------
INCOME (LOSS) BEFORE INCOME TAXES 2,567,104 (496,654) 1,132,112 (7,398,690)
INCOME TAXES -- -- -- --
--------------- -------------- -------------- --------------
NET INCOME (LOSS) 2,567,104 (496,654) 1,132,112 $ (7,398,690)
=============== ============== ============== ==============
Deemed dividend to Series B
Preferred Stock Shareholders -- -- 91,973 --
--------------- -------------- -------------- --------------
Net Income (Loss) Available to
Common Shareholders $ 2,567,104 $ (496,654) $ 1,040,139 $ (7,398,690)
=============== ============== ============== ==============
Earnings (loss) per common share:
Basic $ 0.13 $ (0.05) $ 0.07 $ (0.90)
=============== ============== ============== ==============
Diluted $ 0.09 $ (0.05) $ 0.04 $ (0.90)
=============== ============== ============== ==============
Shares used in computing earnings (loss)
per share:
Basic 19,672,889 10,002,339 15,978,091 8,235,301
=============== ============== ============== ==============
Diluted 27,718,609 10,002,339 24,199,242 8,235,301
=============== ============== ============== ==============
(1) Sponsorship/Advertising includes $252,842 and $0 in stock based
contra-revenue for the nine months ended September 30, 2006 and 2005,
respectively and $158,496 and $0 for the three months ended September 30, 2006
and 2005, respectively.
(2) Sales and marketing expenses includes stock based expenses of $25,185 and $0
for the nine months ended September 30, 2006 and 2005, respectively and $9,393
and $0 for the three months ended September 30, 2006 and 2005, respectively.
(3) Administrative expenses includes stock based expenses of $225,837 and
$5,296,611 for the nine months ended September 30, 2006 and 2005, respectively
and $11,870 and $84,623 for the three months ended September 30, 2006 and 2005,
respectively.