Attached files
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| 8-K - QUARTER 3 2015 EARNINGS RELEASE 8-K - ADDVANTAGE TECHNOLOGIES GROUP INC | q3_08112015-8k.htm |
ADDvantage Technologies Group, Inc.
1221 E. Houston
Broken Arrow, Oklahoma 74012
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For further information
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KCSA Strategic Communications
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Company Contact:
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Garth Russell
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Scott Francis (918) 251-9121
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(212) 896-1250
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grussell@kcsa.com
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ADDvantage Technologies Announces 28% Revenue Growth
for the Fiscal Third Quarter of 2015
- - -
BROKEN ARROW, Oklahoma, August 11, 2015 – ADDvantage Technologies Group, Inc. (NASDAQ: AEY), today announced its financial results for the three and nine month periods ended June 30, 2015.
“We were pleased with the strong financial results from both the Cable TV and Telco segments, as we reported a 28% increase in total revenue and an 87% increase in EBITDA, compared to the same period last year,” commented David Humphrey, President and CEO of ADDvantage Technologies. “We believe that our Cable TV and Telco segments will continue to provide a strong foundation for cash generation and profitability as we look to expand our position in the market via organic growth and strategic acquisitions.”
Results for the three months ended June 30, 2015
Consolidated sales increased 28% to $11.9 million for the three months ended June 30, 2015 compared with $9.3 million for the same period ended June 30, 2014. The increase in sales resulted from a $2.4 million and $0.2 million increase in sales in the Telco segment and Cable TV segment, respectively, compared to the same period last year.
Consolidated operating, selling, general and administrative expenses increased $0.3 million, or 10%, to $3.2 million for the three months ended June 30, 2015 from $2.9 million for the same period last year. This increase was primarily due to $0.3 million in Telco segment expenses, while the Cable TV segment remained relatively flat.
Income from continuing operations for the three months ended June 30, 2015 was $0.6 million, or $0.06 per diluted share, compared with a gain from continuing operations of $0.2 million, or $0.02 per diluted share, for the same period of 2014.
Consolidated EBITDA for the three months ended June 30, 2015 was $1.2 million compared with $0.7 million for the same period ended June 30, 2014.
“The strategy to expand our Telco segment’s sales remains on track again this quarter. This segment sustainably increased sales by adding to its customer base and growing its existing customers. This increased business did result in lower overall margins, but still positively contributed to EBITDA. In addition, Nave Communications took steps to improve the processes at its facility with the addition of the Responsible Recycling (R2) certification. This certification means that Nave Communication’s customers can be assured that we will responsibly manage its materials all the way to final disposition,” commented David Humphrey.
“Sales for our Cable TV segment saw a slight increase in the third quarter, and we also saw a solid increase in the margins achieved from those sales. We believe that the decline in sales that we have experienced over the last several years may be starting to turn around as we continue to make strategic
changes in this segment. Of note this quarter, we recently announced the opening of a new subsidiary, Tulsat-Arizona, as part of our strategy to maximize sale opportunities in the segment.”
Results for the nine months ended June 30, 2015
Consolidated sales increased 44% to $34.1 million for the nine months ended June 30, 2015 compared with $23.8 million for the same period ended June 30, 2014. The increase in sales was primarily in the Telco segment resulting from the increase in sales and the acquisition of Nave Communications, which was partially offset by a $0.5 million decrease in sales from the Cable TV segment compared to the same period last year.
Consolidated operating, selling, general and administrative expenses increased $2.9 million, or 40%, to $10.1 million for the nine months ended June 30, 2015 from $7.2 million for the same period last year. This increase was primarily due to $3.3 million in Telco segment expenses as a result of the Nave Communications acquisition, which was partially offset by a $0.4 million decrease in expenses for the Cable TV segment.
Income from continuing operations for the nine months ended June 30, 2015 was $1.3 million, or $0.13 per diluted share, compared with $40,000, or $0.00 per diluted share, for the same period of 2014.
Consolidated EBITDA for the nine months ended June 30, 2015 was $3.1 million compared with $0.7 million for the same period ended June 30, 2014.
Cash and cash equivalents were $4.6 million as of June 30, 2015, compared with $5.3 million as of September 30, 2014. As of June 30, 2015, the Company had inventory of $24.5 million compared with $22.8 million as of September 30, 2014.
“We experienced positive growth in both segments of our business, and we are in a strong financial position to take advantage of available opportunities in our market. In addition, we are still in the process of working with our investment banker to identify a possible strategic acquisition in the broader telecommunications industry that have the potential to add value and growth to our existing businesses,” concluded David Humphrey.
Earnings Conference Call
The Company will host a conference call today, Tuesday, August 11th, 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. 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 888-505-4369 (domestic) or 719-325-2484 (international). All dial-in participants must use the following code to access the call: 3626116. Please call at least five minutes before the scheduled start time.
About ADDvantage Technologies Group, Inc.
ADDvantage Technologies Group, Inc. 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-Atlanta, Tulsat-Arizona, Tulsat-Nebraska, 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 used by the financial community to evaluate 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 OPERATIONS
(UNAUDITED)
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Three Months Ended June 30,
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Nine Months Ended June 30,
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2015
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2014
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2015
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2014
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Sales
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$ | 11,902,391 | $ | 9,323,158 | $ | 34,106,088 | $ | 23,756,707 | ||||||||
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Cost of sales
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7,757,784 | 6,103,103 | 21,886,166 | 16,442,257 | ||||||||||||
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Gross profit
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4,144,607 | 3,220,055 | 12,219,922 | 7,314,450 | ||||||||||||
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Operating, selling, general and administrative expenses
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3,202,402 | 2,898,216 | 10,081,016 | 7,187,512 | ||||||||||||
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Operating income
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942,205 | 321,839 | 2,138,906 | 126,938 | ||||||||||||
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Interest expense
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71,071 | 100,113 | 235,594 | 131,107 | ||||||||||||
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Income (loss) before provision for income taxes
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871,134 | 221,726 | 1,903,312 | (4,169 | ) | |||||||||||
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Provision (benefit) for income taxes
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234,000 | 44,000 | 616,000 | (44,000 | ) | |||||||||||
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Income from continuing operations
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637,134 | 177,726 | 1,287,312 | 39,831 | ||||||||||||
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Discontinued operations:
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Loss from discontinued operations, net of tax
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− | (2,135 | ) | − | (36,211 | ) | ||||||||||
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Loss on sale of discontinued operations, net of tax
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− | (73,393 | ) | − | (629,835 | ) | ||||||||||
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Discontinued operations, net of tax
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− | (75,528 | ) | − | (666,046 | ) | ||||||||||
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Net income (loss)
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$ | 637,134 | $ | 102,198 | $ | 1,287,312 | $ | (626,215 | ) | |||||||
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Earnings (loss) per share:
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Basic
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Continuing operations
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$ | 0.06 | $ | 0.02 | $ | 0.13 | $ | − | ||||||||
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Discontinued operations
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− | (0.01 | ) | − | (0.07 | ) | ||||||||||
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Net income (loss)
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$ | 0.06 | $ | 0.01 | $ | 0.13 | $ | (0.06 | ) | |||||||
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Diluted
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Continuing operations
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$ | 0.06 | $ | 0.02 | $ | 0.13 | $ | − | ||||||||
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Discontinued operations
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− | (0.01 | ) | − | (0.07 | ) | ||||||||||
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Net income (loss)
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$ | 0.06 | $ | 0.01 | $ | 0.13 | $ | (0.06 | ) | |||||||
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Shares used in per share calculation:
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Basic
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10,073,121 | 10,041,206 | 10,055,390 | 10,014,839 | ||||||||||||
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Diluted
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10,073,121 | 10,087,115 | 10,055,390 | 10,051,242 | ||||||||||||
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Three Months Ended June 30, 2015
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Three Months Ended June 30, 2014
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Cable TV
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Telco
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Total
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Cable TV
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Telco
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Total
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Operating income (loss)
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$ | 846,372 | $ | 95,833 | $ | 942,205 | $ | 385,309 | $ | (63,470 | ) | $ | 321,839 | |||||||||||
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Depreciation
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72,909 | 27,795 | 100,704 | 74,387 | 24,232 | 98,619 | ||||||||||||||||||
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Amortization
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− | 206,451 | 206,451 | − | 246,327 | 246,327 | ||||||||||||||||||
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EBITDA (a)
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$ | 919,281 | $ | 330,079 | $ | 1,249,360 | $ | 459,696 | $ | 207,089 | $ | 666,785 | ||||||||||||
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(a)
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The Telco segment includes earn-out expenses of $0.1 million and zero for the three months ended June 30, 2015 and 2014, respectively, related to the acquisition of Nave Communications.
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Nine Months Ended June 30, 2015
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Nine Months Ended June 30, 2014
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Cable TV
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Telco
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Total
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Cable TV
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Telco
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Total
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Operating income (loss)
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$ | 1,813,022 | $ | 325,884 | $ | 2,138,906 | $ | 867,762 | $ | (740,824 | ) | $ | 126,938 | |||||||||||
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Depreciation
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214,622 | 84,969 | 299,591 | 219,806 | 38,990 | 258,796 | ||||||||||||||||||
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Amortization
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− | 619,354 | 619,354 | − | 322,983 | 322,983 | ||||||||||||||||||
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EBITDA (a)
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$ | 2,027,644 | $ | 1,030,207 | $ | 3,057,851 | $ | 1,087,568 | $ | (378,851 | ) | $ | 708,717 | |||||||||||
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(a)
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The Telco segment includes earn-out expenses of $0.8 million and zero for the nine months ended June 30, 2015 and 2014, respectively, related to the acquisition of Nave Communications. In addition, the Telco segment includes acquisition-related costs of $0.6 million for the nine months ended June 30, 2014 related to the acquisition of Nave Communications.
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ADDVANTAGE TECHNOLOGIES GROUP, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
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June 30,
2015
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September 30,
2014
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Assets
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Current assets:
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Cash and cash equivalents
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$ | 4,638,741 | $ | 5,286,097 | ||||
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Accounts receivable, net of allowance for doubtful accounts of
$200,000
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5,799,626 | 6,393,580 | ||||||
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Income tax refund receivable
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7,180 | 220,104 | ||||||
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Inventories, net of allowance for excess and obsolete
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inventory of $2,606,628 and $2,156,628, respectively
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24,497,418 | 22,780,523 | ||||||
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Prepaid expenses
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153,823 | 174,873 | ||||||
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Deferred income taxes
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1,581,000 | 1,416,000 | ||||||
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Total current assets
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36,677,788 | 36,271,177 | ||||||
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Property and equipment, at cost:
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Land and buildings
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7,264,753 | 7,208,679 | ||||||
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Machinery and equipment
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3,394,996 | 3,244,153 | ||||||
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Leasehold improvements
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145,737 | 206,393 | ||||||
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Total property and equipment, at cost
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10,805,486 | 10,659,225 | ||||||
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Less accumulated depreciation
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(4,491,107 | ) | (4,191,516 | ) | ||||
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Net property and equipment
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6,314,379 | 6,467,709 | ||||||
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Intangibles, net of accumulated amortization
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6,005,924 | 6,625,278 | ||||||
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Goodwill
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3,910,089 | 3,910,089 | ||||||
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Other assets
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131,428 | 131,428 | ||||||
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Total assets
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$ | 53,039,608 | $ | 53,405,681 | ||||
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Liabilities and Shareholders’ Equity
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Current liabilities:
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Accounts payable
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$ | 2,755,394 | $ | 2,880,761 | ||||
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Accrued expenses
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1,660,203 | 1,809,878 | ||||||
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Notes payable – current portion
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866,507 | 845,845 | ||||||
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Other current liabilities
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971,350 | 983,269 | ||||||
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Total current liabilities
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6,253,454 | 6,519,753 | ||||||
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Notes payable, less current portion
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4,587,138 | 5,240,066 | ||||||
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Deferred income taxes
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252,000 | 267,000 | ||||||
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Other liabilities
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1,042,480 | 1,942,889 | ||||||
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Shareholders’ equity:
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Common stock, $.01 par value; 30,000,000 shares authorized;
10,573,779 and 10,541,864 shares issued, respectively; and
10,073,121 and 10,041,206 shares outstanding, respectively
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105,738 | 105,419 | ||||||
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Paid in capital
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(5,131,949 | ) | (5,312,881 | ) | ||||
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Retained earnings
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46,930,761 | 45,643,449 | ||||||
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Total shareholders’ equity before treasury stock
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41,904,550 | 40,435,987 | ||||||
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Less: Treasury stock, 500,658 shares, at cost
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(1,000,014 | ) | (1,000,014 | ) | ||||
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Total shareholders’ equity
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40,904,536 | 39,435,973 | ||||||
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Total liabilities and shareholders’ equity
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$ | 53,039,608 | $ | 53,405,681 | ||||