ADDvantage Technologies Group, Inc. (NASDAQ: AEY) (“ADDvantage
Technologies” or the “Company”) today reported financial results
for the three months ended March 31, 2023, the first quarter of
2023. The Company has changed its fiscal year end from September 30
to December 31, and this report reflects that adjustment.
“In our wireless segment, weather-related delays
impacted results but we continue to win new business and we have
barely scratched the surface of the total near-term opportunity,”
commented Joe Hart, Chief Executive Officer. “Subsequent to the end
of the quarter, Brian Davidson, a strategic sales and marketing
executive and thought-leader with nearly 30 years of experience in
the telecom and utility industries, joined us as our new Chief
Revenue Officer, and we are confident this addition will further
accelerate our growth and expand our addressable market.”
“Meanwhile, the rapid normalization of the
supply chain had a significant and abrupt impact on our Telco
segment, with revenue down $7.9 million year-over-year and $3.5
million sequentially,” added Mr. Hart. “Many large companies had
built inventory during the supply chain disruptions following the
pandemic, and now that the supply chain has normalized, customers
are pausing purchases to work off inventory. We had expected a
normalization in our Telco segment, but the relatively sudden drop
in demand happened both faster and to a greater magnitude than we
anticipated. We believe there will be an improvement in demand once
inventory levels are depleted, but it is difficult to predict the
timing or magnitude of this recovery. We are taking steps to reduce
costs in this business, while maintaining our focus on the growing
wireless opportunity.”
Financial Results for the Three Months ended March 31,
2023
First quarter sales were $14.7 million, a
decrease of $9.1 million, or 38% compared to $23.8 million last
year. The decrease was primarily due to a decrease of $7.9 million,
or 49% in Telco revenue, and a decrease of $1.2 million, or 15% in
Wireless revenue, as discussed above.
Gross profit was $3.4 million, or 23% gross
margin, compared to gross profit of $5.8 million, or 24%gross
margin, for the same period last year. Operating expenses decreased
$0.8 million, or 29%, to $2.0 million 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, decreased $0.2 million or
6%, to $3.6 million for the three months ended March 31, 2023 from
$3.9 million for the same period last year.
Net loss for the quarter was $2.7 million, or $0.21 per basic
and diluted share, compared to a net loss of $1.4 million, or $0.11
per basic and diluted share, for the same quarter last year.
Balance sheet
Cash and cash equivalents were $2.6 million as
of March 31, 2023, effectively unchanged when compared to December
31, 2022. Subsequent to the end of the quarter, the Company entered
into securities purchase agreements (the “Securities Purchase
Agreements”) with Mast Hill Fund, L.P. (the "Purchaser") for the
issuance of 13% senior secured promissory notes in the aggregate
principal amount of up to $3.0 million (collectively the “Notes”)
convertible into shares of common stock of the Company, as well as
the issuance of up to 72,000 shares of common stock as a commitment
fee and warrants for the purchase of up to 648,000 shares of common
stock of the Company, raising net proceeds of $2.9 million. As of
March 31, 2023, the Company had net inventories of $8.5
million.
Outstanding debt as of March 31, 2023 was $1.7
million, consisting of vehicle financing leases.
Earnings Conference Call
The Company will host a conference call on
Monday, May 15, 2023 at 5 p.m. Eastern.
Date: |
Monday, May
15, 2023 |
Time: |
5 p.m. Eastern |
Toll-free Dial-in Number: |
1-877-407-9039 |
International Dial-in Number: |
1-201-689-8470 |
Conference ID: |
13738576 |
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 May
29, 2023.
Toll-free
Replay Number: |
1-844-512-2921 |
International Replay Number: |
1-412-317-6671 |
Replay Passcode: |
13738576 |
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 IRBrett Maas(646)
536-7331aey@haydenir.com
-- Tables follow –
ADDvantage Technologies Group, Inc. |
Consolidated Balance Sheets |
(in thousands, except share amounts) |
(Unaudited) |
|
|
|
March 31,2023 |
|
December 31, 2022 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
2,555 |
|
|
$ |
2,552 |
|
Restricted cash |
|
1,473 |
|
|
|
1,101 |
|
Accounts receivable, net of allowances of $304 and $262,
respectively |
|
1,635 |
|
|
|
1,682 |
|
Unbilled revenue |
|
3,124 |
|
|
|
5,005 |
|
Income tax receivable |
|
102 |
|
|
|
102 |
|
Inventories, net of allowances of $4,118 and 3,871,
respectively |
|
8,469 |
|
|
|
9,563 |
|
Prepaid expenses and other current assets |
|
1,308 |
|
|
|
1,399 |
|
Total current assets |
|
18,666 |
|
|
|
21,404 |
|
|
|
|
|
Property and equipment, at
cost: |
|
|
|
Machinery and equipment |
|
5,543 |
|
|
|
5,542 |
|
Leasehold improvements |
|
899 |
|
|
|
899 |
|
Total property and equipment,
at cost |
|
6,442 |
|
|
|
6,441 |
|
Less: Accumulated
depreciation |
|
(3,295 |
) |
|
|
(3,057 |
) |
Net property and
equipment |
|
3,147 |
|
|
|
3,384 |
|
Right-of-use lease assets |
|
1,302 |
|
|
|
1,540 |
|
Intangibles, net of
accumulated amortization |
|
629 |
|
|
|
709 |
|
Goodwill |
|
58 |
|
|
|
58 |
|
Other assets |
|
207 |
|
|
|
123 |
|
Total assets |
$ |
24,009 |
|
|
$ |
27,218 |
|
Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Accounts payable |
$ |
8,755 |
|
|
$ |
9,407 |
|
Accrued expenses |
|
1,552 |
|
|
|
1,445 |
|
Deferred revenue |
|
207 |
|
|
|
148 |
|
Right-of-use lease obligations, current |
|
1,069 |
|
|
|
1,204 |
|
Finance lease obligations, current |
|
645 |
|
|
|
636 |
|
Other current liabilities |
|
532 |
|
|
|
442 |
|
Total current liabilities |
|
12,760 |
|
|
|
13,282 |
|
Right-of-use lease obligations, long-term |
|
463 |
|
|
|
635 |
|
Finance lease obligations, long-term |
|
1,088 |
|
|
|
1,254 |
|
Total liabilities |
|
14,311 |
|
|
|
15,171 |
|
Shareholders’ equity: |
|
|
|
Common stock, $0.01 par value; 30,000,000 shares authorized;
14,788,857 and 14,132,033 shares issued and outstanding,
respectively |
|
148 |
|
|
|
141 |
|
Paid in capital |
|
2,977 |
|
|
|
2,585 |
|
Retained earnings |
|
6,573 |
|
|
|
9,321 |
|
Total shareholders’
equity |
|
9,698 |
|
|
|
12,047 |
|
Total liabilities and
shareholders’ equity |
$ |
24,009 |
|
|
$ |
27,218 |
|
ADDvantage Technologies Group, Inc. |
Consolidated Statements of Operations |
(in thousands, except share and per share
amounts) |
(Unaudited) |
|
|
Three Months Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
Sales |
$ |
14,720 |
|
|
$ |
23,759 |
|
Cost of sales |
|
11,303 |
|
|
|
18,001 |
|
Gross profit |
|
3,417 |
|
|
|
5,758 |
|
Operating expenses |
|
2,047 |
|
|
|
2,753 |
|
Selling, general and
administrative expenses |
|
3,606 |
|
|
|
3,850 |
|
Depreciation and amortization
expense |
|
317 |
|
|
|
318 |
|
Loss on disposal of
assets |
|
— |
|
|
|
2 |
|
Loss from operations |
|
(2,553 |
) |
|
|
(1,165 |
) |
Other income (expense): |
|
|
|
Other income (expense) |
|
(149 |
) |
|
|
(168 |
) |
Interest expense |
|
(46 |
) |
|
|
(61 |
) |
Other income (expense), net |
|
(195 |
) |
|
|
(229 |
) |
|
|
|
|
Loss before income taxes |
|
(2,748 |
) |
|
|
(1,394 |
) |
Income tax benefit |
|
— |
|
|
|
— |
|
|
|
|
|
Net loss |
$ |
(2,748 |
) |
|
$ |
(1,394 |
) |
|
|
|
|
Loss per share: |
|
|
|
Basic and diluted |
$ |
(0.21 |
) |
|
$ |
(0.11 |
) |
Shares used in per share
calculation: |
|
|
|
Basic and diluted |
|
13,273,330 |
|
|
|
13,071,053 |
|
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
month periods ended March 31, 2023 and 2022, in thousands:
|
Three Months EndedMarch 31,
2023 |
|
Three Months EndedMarch 31,
2022 |
|
Wireless |
|
Telco |
|
Total |
|
Wireless |
|
Telco |
|
Total |
Income (loss) from operations |
$ |
(2,097 |
) |
|
$ |
(456 |
) |
|
$ |
(2,553 |
) |
|
$ |
(2,203 |
) |
|
$ |
1,038 |
|
$ |
(1,165 |
) |
Depreciation and amortization
expense |
|
120 |
|
|
|
197 |
|
|
|
317 |
|
|
|
197 |
|
|
|
121 |
|
|
318 |
|
Stock compensation
expense |
|
213 |
|
|
|
186 |
|
|
|
399 |
|
|
|
114 |
|
|
|
133 |
|
|
247 |
|
Adjusted
EBITDA |
$ |
(1,764 |
) |
|
$ |
(73 |
) |
|
$ |
(1,837 |
) |
|
$ |
(1,892 |
) |
|
$ |
1,292 |
|
$ |
(600 |
) |
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