AEY - Earnings call transcript Q2 2022 | ADDvantage Technologies Group, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the ADDvantage Technologies Fiscal Year 2022 Second Quarter Financial Results Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Brett Maas. Please go ahead, sir.

Brett Maas

Thank you, operator.

by Rutledge, President Officer. the today well CEO; joined Michael as company's are Joe and Hart, as We Chief Financial

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

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

call, as non-GAAP net in present tables these we addvantagetechnologies.com. non-GAAP release used on During ratios our financial which with may located certain measures, earlier are this issued also financial in today, income and certain are that our website and measures at press such

You'll Joe benefit turn these in be financials of financial call these non-GAAP over not a discussion ahead. find reconciliation addition to and and non-GAAP are Joe, Chief Executive with of please relevant. measures measures of measures. closest of are Officer the and These should measures Hart, we investors instead why like for the go financial the believe financial included GAAP now to Technologies. GAAP President to considered I'd about and ADDvantage

Joe Hart

Thank This for a and you, quarter everyone thank joining today. record call Brett was the us you on to us.

in a time with some surge is our simultaneous we've happens XX% For clearly it expecting and telco work, up nearly XG a for result $XX as year-over-year. well. tower that segment Encouragingly, million of nearly revenue The has been occurred. boom

pipeline growing to address to expect reduction on our is as on site cost The not We implemented this. but continue have yet, evident revenue initiatives a line and work of encouraging based trend we this [ph]. significant awards progress bottom

demand. XG quickly we the meet move to As surged, the work

scale to approximately few infrastructure. is the that achieved these initial result support and we into we months, the customers the have that reductions in our and benefits Now over expenses demand schedule the million back on in strategically meet June. next personnel quarter, have backend third near-term more our an visibility resources see reduced expect have we the $X.X reallocated natural The note most I should of our in current attrition. ends were annual fiscal quarter, cuts through basis of which would

with associated the this there and So costs quarter. net current are beginning material should and in initiative. or expect operating losses margin a in our expansion Investors restructuring improvement no severance

improving bottom already to other by not line last XG clearly and of revenue date focused rollout We line just year year. aspects are year profitability increased related on the compared XX% tower to has top over growth. to year, work and Wireless

that it expect throughout this fiscal will to grow We continue year.

year, approximately this last $XX all year. the fact, In revenue $XX in we six generated wireless million in we've months just million almost generated and first

The Our work several we spread center customers carriers, the of the including longstanding regions the in growth players to both be new service, across touches States. broad-based involving the continues and all United market.

We are the leading in areas. metropolitan large several vendor

for trend, millions have are for public discussed. term. of tens widely not wireless awarded The data new centers, carriers work, of waiting pipeline and as providers, plans a that in and confidence the manufacturers the XG dollars been secular the just projects, technology growth permitting of gives us continue carriers tower, near handset are where represents but orders of opportunity CapEx Each expansion significant we Our multi-year purchase and the we carriers. meaning will the complete, of are investing for in is

from are supply that segment and chip for issues market this segment. to simultaneously expands, chain new As quickly are other our driving impact Global trends wireless the telco strong secular telco equipment. benefiting we results shortages in continue

telco for to creating from challenges resell. and their a workforce equipment because pandemic working either closing purchase related attractive expansion In office facilitate now workforce. prices market addition, the an us many refurbish a are to to often to or requiring to remote the at for people infrastructure home, Offices is of because are of remote,

viable the fourth million segment revenue $XX the of our equipment supports was of compelling million $XX performance and Triton, telco all-time in these This high. an and this. the quarter revenue nearly make record in fact, Nave over consecutive factors All sold and refurbished was year-to-date and by more a option

revenue The contributing six positive second our months And the quarter is exceeded margin first company. last and revenue telco our segment telco the to for of solid year. contribution alone

chip at in and future as the quarters a recent past. global elevated shortage some was delivered as the the We global at The CEO somewhat recently in we to into quoted issues supply may level point relative albeit continue anticipate revenue Overall, shortages last XXXX. quarter. leveling a demand predicting of growth Intel XX% subside, off to the of that chip

margins impacted were the overall of capabilities million in spending costs. a our costs to call coming business the With points, the At CFO same But as inflection bottom net quarter profitability Michael with offset $X.X of by annually where $XXX,XXX per ramp and Michael, by quarter, profit margin in quarters. volume review current a time, go I'll reducing will the wireless over as to crews advance year, to increased financial now we our the detailed the and reaches line are turn able in to the demand. necessary fixed to is committed ahead. fixed please up expansion through Our that improve as further we move more that. coming our or are results. our provide delivering we we Rutledge, the believe

Michael Rutledge

you, telco a million $XX.X due cells $XX.X quarter cells three Joe. second increases for million. of Thank XX% for and increased wireless of increased from in $X.X was XX, increase the to million or sales Consolidated our million in million months $XX.X million million wireless gross million XXXX. period $X.X $X.X March sales increased to due $X.X gross slight The ended segment for year. for and increase to the the The profit quarter Consolidated telco increase last $X.X was of to to from the same $X.X segment. compared in in profit increase million an

increased increase expenses general $XX,XXX million Operating we million growth. Joe or from our its for expenses in in year X% in same higher fiscal the to expansion, As selling second same regional period million cost the [ph]. $X.X administrative and increase half to period reductions. expenses to million investment year. the growth particularly the the increased to mentioned, expect for second XG segment increased last in and $X.X margin SG&A last for quarter to in $X.X strategy $XXX,XXX The reflects to related related primarily wireless year. the commissions expected our the relates support compared for quarter infrastructure company's of Selling, to The $X.X

was on with that a note increased loss loss than XX.X I Net of SG&A quarter $X.XX $X.XX the share more the million. year. a loss last quarter $X.X of less $XX per based million a think $XXX,XXX important than loss $X.X or for revenue while the it diluted is increased cents net share a to million per on based of compared diluted shares, million same million XX.X shares for or

sheet, XX, XXXX. balance cash as XX used cash our primarily was to operations. at to Cash Turning compared December million fund were $X.X $X.X to March of and million equivalence

XX, million. of inventories net the As March of company had XXXX, $X.X

will I to This overview support concludes We questions. backstops are near-term any capitalized to segment the continue sufficiently believe to now operator conditions over normalized business turn appropriate business with financial the return. our to of the call conditions remarks. until more facilitate we

Operator

instructions] question take Casper, from first Josh We'll [Operator our private a investor.

ahead. please. open, line Your is Go

Josh Casper

me? morning everyone. Can good Yes. hear you

Joe Hart

Yes. Good morning, George.

Josh Casper

morning. Good

Just improved to or have that? you this that's them wireless bit higher you're going and more start much you margin completing out expansion potential, process associated because might a through be here, through been costs pretty can little with on that backlog your us with would are much you over highlight

Joe Hart

the seven would Joe. work to business warrant in those in premise market months for didn't investment two to nine geographies. Sure. get couple volume launched those about was volume of a that a markets and in headcount sufficient is of through wireless ago to actually we geographic markets. carrier We that in with the oversee three This The each new come the

of So investment to that that's decided the crux backlog. it Overall, we our on back needed affected and hasn't pull that we really it.

of backlog second year Our on Fulton larger first side half half of for the the than the the business. of backlog the for is the year the

and set come more wave office to So we of support work for us equilibrium that suddenly. the steady, up back at that to profitable we're feel that had state, we allowed then a trim a large

fleet a the of headcount, like expenses. also expenses, things per trimmed we've fuel So diems, but that. It involves fair was bit

the same standing in at other our direct the good bringing customers additional it of consolidated, made cost the time, the three. we at and office it efficient. and support. by margin We we're sold both work back carrier more on with and So the improvements goods made centralized level, in We're big

So at I manageable, structure the stable feel profitable in moment. like we're more a

bit back much is think both a the had we're well focused operating in a condition. challenging work lots now simultaneously. on better to margin markets and and of got deploying margin That gross profitable always under we focus the I as that level. level We control, on we're as So at to

Josh Casper

Yes.

your I was what your weather and impressive was Southwest across that Midwest in past with some And in the that Okay. going as improvement and favor quarter nice accomplished this with would this were think pretty you tough of be this of quarter amount terms on that's on wireless, that volume direct you in revenue versus question you're in volume additional -- with work down from, break tower My land forward third associated work? now. can the

Joe Hart

all the on tower. It's

Josh Casper

on all tower. okay. the Oh, It's

comment So kind think of are I types how there opening there out that breaking you more long business with are develops? about a -- other in the associated comments of before earlier in and terms work was work wireless, developing of --

Joe Hart

in carriers It it tends what comes doing. -- come waves are the depending upon to

So fiber the as some haul site. be carriers cell and to sites into the for or that into on could cell work or new the to back new power ground going along either that's on electrical are back with sites the that, haul goes site them, bring there

haven't on and just a the installation an for on. say hand But we're strategy been right and a in we're really with kinds at already on site of that previously comes kind at. document now, something that Verizon will sticking it they or widely deployed the what out website. and AT&T of of we'll put that, that Future glove we a So we're good located be to put put what work

Josh Casper

see. I

about or one lot And expanding possibility a connection thought show. starting part? not Is shortages some your United is work though wireless activity. a last the the throughout that along a to the way, there's you could as business doing broader a concern It that on the moving there's that there on basis in end appears States electricity on Okay. their of up

Joe Hart

so, George. I don't believe

stand down be that -- level carriers that would chain. that, that something our think can I We build dealing food up need risk don't at something us management think at going because, a all impact and to we get site using power sites departments I would the their own strategy the in permanent actually be that's and don't generators. built. the to with like

least for, event in So I on months, not think the to barring macro business. have next some right, XX at our political an it's impact going unforeseen

Josh Casper

Right.

you that the operations? big is chip potentially telco shortage your could side, a on areas of for about base areas I you question opportunity there you in that Have an Okay. a a existing to there And could that? are telco the look activity know at of equipment. do Are this thought that been the add future? repair of in has -- expanding area

Joe Hart

Sure.

we've think communication office Presidents networks Mike with the of Birch different of different different of enterprise equipment Damon in equipment [ph] or representing product looking networks OEMs tends as and public switched deals Selector Datacom products, and made lines, as -- network well in I Triton communications different types both ways to those at and OEM deal with expanding with are new customers. both transport some and

to companies, those resources, able have $XX when of previous were a out we had One capacity. our basically the, we rapid with facility inhibiting Rutledge issues I'll say Michael vast million of bank for restricted worth with was convert that of of cash any growth banking we but both Oklahoma, was

now So a to now we're fellows different Triton Navy able really more and and with situation much are in running and approach aggressive a mindset. the he it

very while going we're bullish through ability this our XG. feel telco grow to we period growth the to with about segment continue wireless So

is good So I and focused now current I the right what that's spot and business we're to in for and a quarter Michael I this and Michael job standing really in now a on get on think forward moving profitable this are and

Michael Rutledge

this deliver got existing with and million stream in $X pretty a and share. shares momentum going going stream annual an basis to XX hopefully to that's $XXX forward got revenue what going a out able than in in toward I being observation, what just a revenue you're you more company million out. a the here at selling with build a on And And you've as a reaching the quarter of impressive past you've closing, be quarter the little

shareholders something this get you be time waiting line. should up, to a for there built able If line bottom enjoy -- you. been long should bottom the for, the at they've Thank

Joe Hart

George. you, Thank

Operator

[indiscernible]. [Operator instructions]

open. is go Please line Your ahead.

UnidentifiedAnalyst

where to this you won't Or I keep Hi the telco sales? of but going in it over, apologize. quarters this can get to down Do a selling ability of inventory segment, did the up here? late you inventory by a enable you you build guys. or I little have has have your you have have got kind case to up? the been I'm as that it, to are move you inventory go to

Joe Hart

two products not product, find inventory. ways available We market. some did and match sale. add to inventory. a We the were a buy a that for those sell from and client find the then and we'll the from Other we're need did on of and together go then broker we In ways, we'll the things make the bit source

hard And was We've team inventory to worked in as collectively past So ago get we're problem. to years. building that in say management a that focused really that control. on three years five problem not a been I'll has a

from inhibiting business telco see the very for growing don't a strong years. I the next anything in fashion couple us So

supply issues both Asia am I and global not or charge of Now, those chip or in like events of actually our the but chain help that, from business anything Triton. Nave for shortage

UnidentifiedAnalyst

Yeah, exactly.

inventory assume have broker. you, higher you'd than margin So a on your selling being the I lot

Joe Hart

would. we Yes,

UnidentifiedAnalyst

great. Thanks lot. a Okay,

Joe Hart

You're welcome.

Operator

question back like I further closing no any to appear are would It at or instructions] for turn remarks. to additional the [Operator call there this management time. the

Joe Hart

This of and situation cost it million a We're focused getting reduction The profitable quickly. is again. the company and doing on Thank enable overspending that. continue is and beginning this support you, at trim operator. the clearly the year this office will Joe in of but to growth on structure not both business, overcommitting $X.X the back time same shape or our be and to it;

finished basis, on progress, but focus a make in in March actions are feel metrics an Michael perspective already. QX had So our better place that I has in again. income Those total quarter-over-quarter investing in forward. and to moving an and myself, and consider it place get the in that place even are trends worth place a excellent in a work strong net is April. once the -- positive are a this to it and We this We

for to continued and strong you support thank support your feel return you. obligation Thank and interest your again. a So that we to you

Operator

Thank you. And participation. today's for concludes that call. your Thank you

You may now disconnect.

ADDvantage Technologies (AEYGQ) 12 May 222022 Q2 Earnings call transcript