AEY - Earnings call transcript Q1 2018 | ADDvantage Technologies Group, Inc.

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Operator

Good day ladies and gentlemen and welcome to today's ADDvantage Technologies First Quarter 2018 Earnings Call.

As a reminder, today’s conference is being recorded; and at this time, I would like to turn the floor over to Elizabeth Barker of KCSA Strategic Communications. Please go ahead.

Elizabeth Barker

Thank you, Greg.

Before we begin today’s call, I would like to remind you that this conference call may contain certain forward-looking statements, which are subject to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. and among the statements and system ability to strategic include, events, the its operators, statements original ADDvantage maintain as certain Technologies. the such of relationships performance as forward-looking well other and future regarding things, future subsidiaries equipment as These manufacturers with financial multiple of agreements ADDvantage Technologies These statements involve a number of risks and uncertainties. of from due cautioned only contained ADDvantage predictions with materially XX-K Commission. variety differ Exchange are to those these results and on and or statements actual such forward-looking that events in Participants Technologies’ are report future as most file factors, a on Securities may the the recent Form included today report on should ADDvantage information considered financial with recent in in on and Technologies’ press most filed conjunction XX-Q notes consolidated the issued release included conference Financial Company’s presented in earlier call today. earlier be the Form and this statements results limited subject on call regarding this is anticipated guidance change. on to Technologies, future ADDvantage based The available on which currently information is

any Company this as may necessarily information as the only guidance Such information, ADDvantage date guidance the the update Technologies will the not year. Although, factors only certain change, points and speaks at call. during provide of of will influencing such

press financial of is present today, find you’ll these and further, During is certain be Technologies. earlier included -GAAP measures the Humphrey, our our now of and net measures in like not these David reconciliation ratios with yours. issued ADDvantage turn investors certain this income, on measures the a the tables and are which that call may why of of to With we of release non-GAAP the to closest call, think discussion the addition such with in website, we Executive benefit also a measures GAAP nothing In David, measures. Officer to non-GAAP and financial financial non-GAAP as non measures. financial GAAP located for and measures floor considered over are financial addvantagetechnologies.com, instead President and I’d relevant. Chief financial These are these should used

David Humphrey

the Thank With you, and quarter me Chief Sales. our Technology Financial Vice everyone Chief Officer; fiscal Elizabeth. Chymiak, first Francis, Welcome Scott XXXX ADDvantage President Don Dave conference Officer; Technologies today to our our is Kinison call. of

prior Before turn detailed update to over brief will the of in of offset for TV fiscal results, of in on period a the the outlook call rest the the I our most the the same compared year. our first year, over lower performance quarter result the sales. quarter Telco to fiscal provide segment with segment Scott Revenues relatively sales improved provide recent which comment financial on XXXX flat for and I Cable the

is that year segment moving increased Telco driven overall on pleased it side, sales over with improved our in by the are the direction also a the basis. which year On as segment Telco margins to the improved lines. year sales The led gross Triton, all year generated over across we product

impacted Telco have As results several which call, quarters. segment experienced our discussed earnings the Communications last has over Nave on challenges past

we organization sales have strategy sales fiscal XXXX. restructuring improved implemented to late the by pleased started are driven We improved see that Nave from and report in results to

reseller some headway a target made We and end with customer broader have our to customer with base base. strategy further and penetrate our current user

Nave results Nave’s be few take continues we confidence and improved there see we model done, to quarters work as over will growth in that line business believe from have top bottom to our next the more Although, strategy still is line and effect. we

TV one repair the segment equipment first from down of sales well of as a will from to in efficient the to sales support TV fiscal we customer were segment, Cable TV as the equipment first lower have the evidenced are believe With Scott, to as XXXX, loss over does I’d please usual in running Cable continues financial our Since the business. business the to Scott quarter quarter's at the to on discuss customer. fiscal now of a call facilities sales in volume Moving margin to for Cable margins resulting significantly lower the market business this loss results, making impact the not high operational significant due gross of quarter this however, margins, challenges enhancements the results segment than term. proceed. rose that, repair by face this of consolidated the Customers longer repair quarter. our turn over single that further we a and some

Scott Francis

David. you, Thank

revenue decrease sales the For $X customer equipment due the our primarily $XXX,XXX. the which the revenue to $XXX,XXX $X.X Nave increase same in million $XXX,XXX in primarily in segment $X.X the respectively. segment The million sales $XXX,XXX due compared offset due million due for equipment overall to last increased from the million sales total increase decrease same each, of Triton The the $X.X $XX.X for compared of offset service and past ended to months the and of year. increased the the was period to the revenue Telco The TV and Telco $XX.X $XXX,XXX of Communication. this demand primarily year. equipment of for sales increase was an for in Sales of the in million Datacom, first in refurbished million lower sales for continued segment last recycling loss same the XX, fiscal Telco increase sales in for service decreased decrease equipment period to year. equipment quarter. The in revenue was sales of significant an period an to to to in equipment three to to X% quarter repair compared XXXX, prior sales in due Cable the as December decrease last million is repair primarily from our new Sales $X.X new repair was year. of of refurbished by period for The partially XXXX, same decrease

increase the $XXX,XXX TV XX, XXXX XX% decrease $XXX,XXX. $X.X mostly in the months Gross to significant three million lower by to million decrease for sales the The profit profit December profit for or Our equipment TV three segment by for same attributable in consolidated The volume same new for the XX% decrease to for segment year. in of $X.X XX% the ended from margin. profit year. the significant gross -- of Cable gross customer gross excuse December increase last XXXX to XX, an from decreased $X of partially is months the due Cable period last the primarily with of on period decreased for segment was margin ended Telco million, in me, offset

last profit the the from for of same end XXXX equipment gross our higher period in XX, was XX% margins increased and user The Our the gross segment to Telco customers gross recycling XX% margin December to to margin due sales for ended increase the for months year. from three primarily program.

of XX, taxes for and including XXXX. due offset at increase to December months on related Our $XXX,XXX months general Jobs ended expenses three the of decrease is enacted and acquisition, ended Tax million same earn to both This Triton XXXX XX, the for TV period for taxes Telco $XXX,XXX The the $XXX,XXX December was 'XX. XXXX compared increase in an $X.X Cuts provision three selling for operating, segment, XX, from for provision Miami remained income segment expenses was tax by due to XXXX. out Act in flat provision of administrative the to income expenses. December the $XXX,XXX of The primarily and the Cable

provisions XXXX. One of rate of was this corporate to tax reduce the income January effective legislation X, the

the income result our tax the re-measured corporate tax of this remaining $XXX,XXX. rate, estimate legislation. assets As a tax as effective year income of our be deferred rate reduced which income approximately we tax a as resulted tax We XXXX result quarters expense that of in the corporate fiscal of rate, will XX% for income reduced

XXXX for income or of the share Our per a of December ended per $XXX,XXX net share the $X.XX with net same three $XXX,XXX or year. loss months compared $X.XX last XX, period was for

to month an month from increased Our from last ended for same XX, period $X of a year, period EBITDA adjusted of December same segment The $XXX,XXX $XXX,XXX $XXX,XXX XX, three EBITDA of decreased a the the loss $XXX,XXX XXXX for in for segment last TV December the a of consolidated period the XX, period last for XXXX December year. month ended million year. $XXX,XXX period Telco Cable of of the in period while $X.X three decreased $XXX,XXX EBITDA to adjusted XXXX same million for loss X.X from EBITDA to three adjusted adjusted the million the

September $XXX,XXX a as million were cash XXXX cash to of December Our XXXX. $X as compared equivalent and of XX, XX,

to we plan financial become overall outstanding December with covenants lender of of 'XX million. term loans extinguished our one in $X.X of balance our complaint our the by our paying of part primary As financial

result, As XXXX. were the financial a December in XX, compliance covenant of we of

the also of the Miami, of first to payment guarantee Inc. quarter. annual paid Triton In related addition, acquisition past we $XXX,XXX in the

XXXX. million As compared over the of XX, fiscal of quarter turn for for to -- the to I'll This September now inventory now questions. first the had the quarter Company million XX.X XXXX. concludes fiscal of December XX, overview as of financial of XXXX, XX.X the call operator

Operator

first right, All George Gaspar, we'll from Instructions] go ahead. please [Operator hear

Unidentified Analyst

cable the why you led can the a particular side, side on that the reason give on us any cable thought backed First customer that? repair question on away little to

David Humphrey

were ultimately work that we bid. the we a big work we we loved George, out They the was put lost supplier it did. national large level, they decision that at process is do theirs. bid, of the we But corporate a local the for -- was a

Unidentified Analyst

I underbid bid see, what somebody your where else was a over it bidding was. so, process

David Humphrey

tell what was. their I can't bid

ours, of the very ours a that and But by ever wasn't think our that. bid I competitive like the quality service of customer of we quality work the was much they certainly questioned provided. very

Unidentified Analyst

And and on pulling repair from the where if was going to Where consolidation your area then you of how you geographically in where? speaking. are to referred consolidating is that services to release, that's out

David Humphrey

looking two our teams We our facilities, Nebraska for the and things Tennessee. And have staff and shut we’re reduced to size in Arizona things and at operation, we've in operation support time. down Texas

Unidentified Analyst

see. I

So, filter that’s that into, back going is Tulsa, it? to then, Oklahoma just

David Humphrey

lost, on but will the will maintain Some operations. can’t it's some business we be profitable, of that that

Unidentified Analyst

Is there try services you provide? on as area is this cable to anything that around as that far the worked can turn being

Dave Chymiak

Dave. is this George,

got We’re on We’ve doing. sales that everything from continuing south. we're the

opportunities. We’re all looking at

We’re just working on it.

Unidentified Analyst

comments Okay, broaden doing? all business, all what new any development on you're the on overall, product the other side right. of focus And to

Dave Chymiak

operations. lines to know I but… the products, don't going new product We're within essentially broaden those that

Unidentified Analyst

Okay.

Dave Chymiak

to to of going customer Telco base broaden the and that the just we broaden lines on products continue It’s offer side. the

David Humphrey

services complimentary for well as products business lines. looking relate always we're that as George, two those to

Unidentified Analyst

Okay.

David Humphrey

we'll that. And evaluate

Unidentified Analyst

have got Do that? debt payment And not side. to that a a also repayment, payment new you requirement was financial debt question you on as have agreement? to I’ve a the The done of new the debt setup execute

Scott Francis

George, this is Scott. do that. No, to didn't have we

underneath debt are agreement. All loans of all our term -- master of credit our our

So all term was, we one our of we off effectively paid loan. did

was of there extinguished the so, loans. distinct executed. term a one just not And new agreement We

two. We to is that have down have our primary three, now, credit we agreement master underneath we with now all the -- bank. we're now That

Unidentified Analyst

quarter it it then be And going line through I that bottom to forward. sounds able back going Is current go there Nave, the to on proceeding situation okay. if may into like, the potentially could it’s ahead? get positive we question Right, and are just

David Humphrey

I the black. anticipate improve but Nave George, as, want continuing your getting quarter, we question and yes, talk to the answer to into I’ll to current

Unidentified Analyst

was for Okay. forward, that quarterly the $XXX,XXX the just is And a payment how uptick, on going then be going to long? that Telco,

David Humphrey

Yes, George. this is annual an payment,

Unidentified Analyst

annual, excuse On me.

Okay.

David Humphrey

annual. on was That Yes.

So, it's the on the anniversary acquisition. date of

of So, there three total. them is in

Unidentified Analyst

okay. Three,

So, there you accomplished then more beyond go to is what there. two

David Humphrey

is That correct.

Operator

Gaspar move George we'll And questions. some follow-up for Instructions] like looks [Operator it back to

Unidentified Analyst

Any comments that got am below it considerably just that. is the to if Company there you of the your to over shares I make noticed quarter that. on or filing not question. that, I so know in is interest in considerable that count on a you like it? execution like XXX,XXX can additional was make now. decline was report There's Ken about sure percentage something originally sell Yes Chymiak, a or share comment any can looks on a annual you in appreciate and where by I but

David Humphrey

well, What to but anymore. he's We do mean I liberty he's since knows as I brother, this can't. you he chairman is, longer is that but stock know at his and question. talk about no really business certainly executive Dave with to chooses probably appreciate never it’s our his his some your

Unidentified Analyst

that the the alright I ownership. basically stock totally than of other Okay, he's well, assume out Company

David Humphrey

and to his the of fair say. correct. brother's but executive think management of his the insider an staff, because I he's for ownership part ownership, still not He's team that's

Operator

conclude additional or And floor it portion to call. back looks like Mr. David the I'd of to for that any does like turn the closing question-and-answer Humphrey remarks. the

David Humphrey

has Well, who your Technologies. thank you for joined everyone continued support ADDvantage and us to today of

faced While we'll Telco from the be Triton our quarter, this deliver perform market the and segment improving continues challenges Cable encouraged results believe to TV has growth able on our overall strategy. by segment well. to we're

seeing signs Nave. of early We at are cautiously improvement optimistic. They're

our and leverage will we and as growth to their operations ahead, shareholders. concludes the Cable continue That for shareholders implement our to we across we opportunities and gain for the plan thank our Thank segment, value build to seek optimize you. market to and Looking like performance share. I'd both our additional strategic that, to support TV review continue our market Telco With as patience call.

Operator

and ladies Thanks today. our again, concludes program joining. that Once for gentlemen for

You may now disconnect.

ADDvantage Technologies (AEYGQ) 13 Feb 182018 Q1 Earnings call transcript