ADDvantage Technologies Reports 63% Revenue Increase to a Record of $27.8 million, Net Income of $875,000 for the Third Quarter of Fiscal 2022

·9 min read
ADDvantage Technologies Group, Inc.
ADDvantage Technologies Group, Inc.

Company Reaches GAAP Profitability, Generates $5.0 Million in Cash from Operations, as Both Wireless and Telco Segments Generate Profitable Growth

CARROLLTON, Texas, Aug. 11, 2022 (GLOBE NEWSWIRE) -- ADDvantage Technologies Group, Inc. (NASDAQ: AEY) (“ADDvantage Technologies” or the “Company”) today reported record financial results for the three and nine months ended June 30, 2022, the third fiscal quarter of 2022.

“Both our Wireless and Telco Segments delivered double-digit growth driving record revenues of $27.8 million and overall profitability for the Company of $875,000 of net income,” commented Joe Hart, Chief Executive Officer. “The recent progress in both segments is encouraging, and we see continued cost optimization opportunities, particularly in our Wireless segment, driving further margin expansion as 5G demand continues to accelerate. ”

“The multi-year 5G build-out opportunity, combined with being strategically positioned as a trusted partner for our carrier customers, is leading to demand for both sides of our business,” continued Joe Hart. “For Wireless, as we grow to meet this demand, we will stay focused in our execution and bidding. By increasing our scale and maintaining our cost optimization initiative we expect to improve our wireless margins. Simultaneously, our Telco segment continues expand our offerings to both wireless and optical network carriers to support both wireless and broadband connectivity for optical and IP transport.”

Financial Results for the Three Months ended June 30, 2022

Fiscal third quarter sales were a record $27.8 million, an increase of $10.8 million, or 63% compared to $17.0 million last year. The increase was primarily due to an increase of $3.1 million, or 75% in Wireless revenue related to 5G tower work, and an increase of $7.7 million, or 60% in Telco revenue due to increased demand for refurbished telecommunications equipment sold by the Telco segment.

Gross profit was $8.1 million, or 29% gross margin, compared to gross profit of $4.3 million, or 25% gross margin, for the same period last year. Operating expenses increased $36,000, or 1%, to $2.5 million, with the small operating expense increase against a 63% revenue increase reflecting the previously announced cost-reduction initiatives. Consolidated selling, general and administrative ("SG&A") expenses include overhead, which consist of personnel, insurance, professional services, communication, and other cost categories, increased $0.5 million, or 16%, to $4.1 million for the three months ended June 30, 2022 from $3.6 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 income for the quarter was $875,000, or $0.07 per basic and diluted share, compared to a net loss of $2.1 million, or $0.17 per diluted share, for the third fiscal quarter last year.

Financial Results for the Nine Months ended June 30, 2022

Year-to-date sales were a record $70.2 million, an increase of 66% compared to $42.4 million last year. Wireless segment revenue increased 61% to $22.1 million and Telco segment revenue increased 68% to $48.1 million.

Gross profit was $18.5 million, or 26% gross margin, compared to gross profit of $11.1 million, or 26% gross margin, for the same period last year. Operating expenses increased $1.1 million to $7.8 million from $6.7 million the same period last year. Year-to-date net loss narrowed by $4.6 million to $2.5 million, or $0.20 per diluted share, compared with a net loss of $7.1 million, or $0.58 per diluted share last year.

Balance sheet

Cash and cash equivalents were $4.2 million as of June 30, 2022, compared with $2.6 million at September 30, 2021. As of June 30, 2022, the Company had net inventories of $7.6 million.

Outstanding debt as of June 30, 2022 was $2.0 million, exclusively related to vehicle financing leases.

Earnings Conference Call

The Company will host a conference call on Thursday, August 11, 2022 at 5 p.m. Eastern.

Date:

Thursday, August 11, 2022

Time:

5 p.m. Eastern

Toll-free Dial-in Number:

1-800-289-0720

International Dial-in Number:

1-323-701-0160

Conference ID:

2999226


The conference call will be available via webcast and can be accessed through the Investor Relations section of ADDvantage's website, 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.

A replay of the conference call will be available through August 25, 2022.

Toll-free Replay Number:

1-844-512-2921

International Replay Number:

1-412-317-6671

Replay Passcode:

2999226

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.

For further information:
Hayden IR
Brett Maas
(646) 536-7331
aey@haydenir.com

-- Tables follow –

ADDvantage Technologies Group, Inc.
Consolidated Balance Sheets
(in thousands, except share amounts)
(Unaudited)

 

June 30,
2022

 

September 30,
2021

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

4,157

 

 

$

2,608

 

Restricted cash

 

1,782

 

 

 

334

 

Accounts receivable, net of allowances of $250, respectively

 

2,384

 

 

 

7,013

 

Unbilled revenue

 

2,786

 

 

 

2,488

 

Inventories, net of allowances of $3,714 and $3,476, respectively

 

7,609

 

 

 

5,922

 

Prepaid expenses and other assets

 

1,584

 

 

 

1,431

 

Total current assets

 

20,302

 

 

 

19,796

 

 

 

 

 

Property and equipment, at cost:

 

 

 

Machinery and equipment

 

5,512

 

 

 

4,973

 

Leasehold improvements

 

899

 

 

 

813

 

Total property and equipment, at cost

 

6,411

 

 

 

5,786

 

Less: Accumulated depreciation

 

(2,899

)

 

 

(2,293

)

Net property and equipment

 

3,512

 

 

 

3,493

 

Right-of-use lease assets

 

2,009

 

 

 

2,730

 

Intangibles, net of accumulated amortization

 

868

 

 

 

1,107

 

Goodwill

 

58

 

 

 

58

 

Other assets

 

117

 

 

 

128

 

Total assets

$

26,866

 

 

$

27,312

 


Liabilities and Shareholders’ Equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

$

10,559

 

 

$

7,044

 

Accrued expenses

 

1,509

 

 

 

1,581

 

Deferred revenue

 

87

 

 

 

168

 

Bank line of credit

 

 

 

 

2,050

 

Right-of-use lease obligations, current

 

1,215

 

 

 

1,198

 

Finance lease obligations, current

 

665

 

 

 

582

 

Other current liabilities

 

922

 

 

 

692

 

Total current liabilities

 

14,957

 

 

 

13,315

 

Right-of-use lease obligations, long-term

 

1,221

 

 

 

2,141

 

Finance lease obligations, long-term

 

1,335

 

 

 

1,429

 

Total liabilities

 

17,513

 

 

 

16,885

 

Shareholders’ equity:

 

 

 

 

Common stock, $0.01 par value; 30,000,000 shares authorized; 13,168,191 and 12,610,229 shares issued and outstanding, respectively

 

132

 

 

 

126

 

Paid in capital

 

890

 

 

 

(578

)

Retained earnings

 

8,331

 

 

 

10,879

 

Total shareholders’ equity

 

9,353

 

 

 

10,427

 

Total liabilities and shareholders’ equity

$

26,866

 

 

$

27,312

 

ADDvantage Technologies Group, Inc.
Consolidated Statement of Operations
(in thousands, except share and per share amounts)
(Unaudited)

 

Three Months Ended June 30,

 

Nine Months Ended June 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Sales

$

27,789

 

 

$

17,017

 

 

$

70,238

 

 

$

42,433

 

Cost of sales

 

19,642

 

 

 

12,748

 

 

 

51,702

 

 

 

31,354

 

Gross profit

 

8,147

 

 

 

4,269

 

 

 

18,536

 

 

 

11,079

 

Operating expenses

 

2,544

 

 

 

2,508

 

 

 

7,796

 

 

 

6,733

 

Selling, general and administrative expenses

 

4,145

 

 

 

3,561

 

 

 

11,684

 

 

 

10,532

 

Depreciation and amortization expense

 

313

 

 

 

314

 

 

 

975

 

 

 

899

 

Loss (gain) on disposal of assets

 

 

 

 

(13

)

 

 

2

 

 

 

(23

)

Income (loss) from operations

 

1,145

 

 

 

(2,101

)

 

 

(1,921

)

 

 

(7,062

)

Other income (expense):

 

 

 

 

 

 

 

Interest income

 

 

 

 

34

 

 

 

 

 

 

115

 

Other expense, net

 

(233

)

 

 

(34

)

 

 

(473

)

 

 

(61

)

Interest expense

 

(37

)

 

 

(46

)

 

 

(154

)

 

 

(156

)

Other income (expense), net

 

(270

)

 

 

(46

)

 

 

(627

)

 

 

(102

)

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

875

 

 

 

(2,147

)

 

 

(2,548

)

 

 

(7,164

)

Benefit for income taxes

 

 

 

 

(23

)

 

 

 

 

 

(23

)

 

 

 

 

 

 

 

 

Net income (loss)

$

875

 

 

$

(2,124

)

 

$

(2,548

)

 

$

(7,141

)

 

 

 

 

 

 

 

 

Income (loss) per share:

 

 

 

 

 

 

 

Basic and diluted

$

0.07

 

 

$

(0.17

)

 

$

(0.20

)

 

$

(0.58

)

Shares used in per share calculation:

 

 

 

 

 

 

 

Basic and diluted

 

13,191,792

 

 

 

12,495,438

 

 

 

12,980,634

 

 

 

12,352,960

 

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 impairment charges for operating lease right-of-use assets and intangible assets including goodwill, 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, as calculated below, 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 loss from operations to Adjusted EBITDA for the three and nine month periods ended June 30, 2022 and 2021, in thousands:

 

Three Months Ended June 30, 2022

 

Three Months Ended June 30, 2021

 

Wireless

 

Telco

 

Total

 

Wireless

 

Telco

 

Total

Income (loss) from operations

$

(1,461

)

 

$

2,606

 

$

1,145

 

 

$

(2,117

)

 

$

16

 

 

$

(2,101

)

Depreciation and amortization expense

 

192

 

 

 

121

 

 

313

 

 

 

185

 

 

 

129

 

 

 

314

 

Stock compensation expense

 

44

 

 

 

59

 

 

103

 

 

 

136

 

 

 

143

 

 

 

279

 

Adjusted EBITDA

$

(1,225

)

 

$

2,786

 

$

1,561

 

 

$

(1,796

)

 

$

288

 

 

$

(1,508

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended June 30, 2022

 

Nine Months Ended June 30, 2021

 

Wireless

 

Telco

 

Total

 

Wireless

 

Telco

 

Total

Income (loss) from operations

$

(5,985

)

 

$

4,064

 

$

(1,921

)

 

$

(4,759

)

 

$

(2,303

)

 

$

(7,062

)

Depreciation and amortization expense

 

608

 

 

 

367

 

 

975

 

 

 

513

 

 

 

387

 

 

 

899

 

Stock compensation expense

 

289

 

 

 

342

 

 

631

 

 

 

383

 

 

 

457

 

 

 

840

 

Adjusted EBITDA

$

(5,088

)

 

$

4,773

 

$

(315

)

 

$

(3,863

)

 

$

(1,459

)

 

$

(5,323

)