ADDvantage Technologies Group, Inc. (NASDAQ: AEY) (“ADDvantage
Technologies” or the “Company”) today reported financial results
for the three and nine months ended September 30, 2023, the third
quarter of 2023.
“We have taken proactive steps to reduce our
fixed costs by $2 million this year in response to industry-wide
headwinds in both segments,” commented Joe Hart, Chief Executive
Officer. “Simultaneously, we are aggressively expanding our Fulton
Technologies business into adjacent Broadband and Fixed Wireless
construction and infrastructure markets where we can take advantage
of established relationships, existing contracts and proven
capabilities. This expansion shows significant promise,
representing a more durable revenue stream that is more resistant
to economic pressures. We are encouraged with the initial response
to our Broadband initiatives and our backlog for fiber network
construction has increased substantially over just a few short
months.”
“In the interim, we are carefully managing costs
to navigate the ongoing downturn in 5G-related build activity by
the national wireless carriers,” continued Mr. Hart. “Construction
is expected to pick back up in 2024 as wireless data consumption
and network demand continues to climb at a positive rate.
“Our Telco Segment is also experiencing a start
to increased monthly sales due to an increase in orders for Optical
Transport equipment. Simultaneously, we have methodically reduced
our Telco inventory levels by $1.8 million over the first nine
months of the year in light of lower demand.”
Financial Results for the Three Months
ended September 30, 2023
Third quarter sales were $10.3 million, a
decrease of $15.6 million, or 60% compared to $25.9 million last
year. The decrease was primarily due to a decrease of $11.4 million
in Telco revenue, and a decrease of $4.2 million in Wireless
revenue.
Gross profit was $2.8 million, or 27% gross
margin, compared to gross profit of $8.5 million, or 33.0% gross
margin, for the same period last year. Operating expenses decreased
$0.6 million, or 27%, to $1.7 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 $1.4 million or
31%, to $3.1 million for the three months ended September 30, 2023
from $4.5 million for the same period last year.
Net loss for the quarter was $2.7 million, or $0.19
per basic and diluted share, compared to net income of $1.5
million, or $0.11 per basic and diluted share, for the same quarter
last year.
Balance sheet
Cash and cash equivalents were $1.6 million as
of September 30, 2023, compared to $2.6 million at December 31,
2022. Outstanding debt as of September 30, 2023 was $3.6
million.
As a result of continuing negative operating
results, the Company is exploring obtaining other funding
arrangements to supplement working capital and a replacement of its
current accounts receivable factoring facility which matures
December 17, 2023. Our unaudited financial statements include an
explanatory paragraph related to the Company’s ability to continue
as a going concern. See further discussion in Note 2 to the
Company’s financial statements included in the Company’s Quarterly
Report on Form 10-Q for the three and nine months ended September
30, 2023. This announcement does not represent any change or
amendment to the Company’s financial statements or to its Quarterly
Report on Form 10-Q for the three and nine months ended September
30, 2023.
Earnings Conference Call
The Company will host a conference call on
Tuesday, November 14, 2023 at 5 p.m. Eastern.
Date: |
|
Tuesday,
November 14, 2023 |
Time: |
|
5 p.m. Eastern |
Toll-free Dial-in Number: |
|
1-844-826-3035 |
International Dial-in Number: |
|
1-412-317-5195 |
Conference ID: |
|
10184146 |
|
|
|
Participants can also click this link to have an
operator connect interested parties to the call using passcode:
6996978.
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 November 28, 2023.
Toll-free Replay Number: |
|
1-844-512-2921 |
International Replay Number: |
|
1-412-317-6671 |
Replay Passcode: |
|
10184146 |
|
|
|
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) |
|
|
September 30,2023 |
|
December 31, 2022 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
1,632 |
|
|
$ |
2,552 |
|
Restricted cash |
|
722 |
|
|
|
1,101 |
|
Accounts receivable, net of allowances of $304 and $262,
respectively |
|
1,491 |
|
|
|
1,682 |
|
Unbilled revenue |
|
1,232 |
|
|
|
5,005 |
|
Income tax receivable |
|
102 |
|
|
|
102 |
|
Inventories, net of allowances of $4,118 and $3,871,
respectively |
|
7,788 |
|
|
|
9,563 |
|
Prepaid expenses and other current assets |
|
1,313 |
|
|
|
1,399 |
|
Total current assets |
|
14,280 |
|
|
|
21,404 |
|
|
|
|
|
Property and equipment, at cost: |
|
|
|
Machinery and equipment |
|
5,568 |
|
|
|
5,542 |
|
Leasehold improvements |
|
899 |
|
|
|
899 |
|
Total property and equipment, at cost |
|
6,467 |
|
|
|
6,441 |
|
Less: Accumulated depreciation |
|
(3,761 |
) |
|
|
(3,057 |
) |
Net property and equipment |
|
2,706 |
|
|
|
3,384 |
|
Right-of-use lease assets |
|
814 |
|
|
|
1,540 |
|
Intangibles, net of accumulated amortization |
|
470 |
|
|
|
709 |
|
Goodwill |
|
58 |
|
|
|
58 |
|
Other assets |
|
207 |
|
|
|
123 |
|
Total assets |
$ |
18,535 |
|
|
$ |
27,218 |
|
Liabilities and Shareholders’ Equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
6,777 |
|
|
$ |
9,407 |
|
Accrued expenses |
|
1,531 |
|
|
|
1,445 |
|
Deferred revenue |
|
332 |
|
|
|
148 |
|
Notes payable |
|
2,220 |
|
|
|
— |
|
Right-of-use lease obligations, current |
|
757 |
|
|
|
1,204 |
|
Finance lease obligations, current |
|
627 |
|
|
|
636 |
|
Other current liabilities |
|
565 |
|
|
|
442 |
|
Total current liabilities |
|
12,809 |
|
|
|
13,282 |
|
Right-of-use lease obligations, long-term |
|
149 |
|
|
|
635 |
|
Finance lease obligations, long-term |
|
790 |
|
|
|
1,254 |
|
Total liabilities |
|
13,748 |
|
|
|
15,171 |
|
Shareholders’ equity: |
|
|
|
Common stock, $0.01 par value; 30,000,000 shares authorized;
14,850,858 and 14,132,033 shares issued and outstanding,
respectively |
|
149 |
|
|
|
141 |
|
Paid in capital |
|
3,625 |
|
|
|
2,585 |
|
Retained earnings |
|
1,013 |
|
|
|
9,321 |
|
Total shareholders’ equity |
|
4,787 |
|
|
|
12,047 |
|
Total liabilities and shareholders’ equity |
$ |
18,535 |
|
|
$ |
27,218 |
|
|
ADDvantage Technologies Group,
Inc.Consolidated Statements of
Operations(in thousands, except share and per
share amounts)(Unaudited) |
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Sales |
$ |
10,341 |
|
|
$ |
25,926 |
|
|
$ |
37,148 |
|
|
$ |
77,474 |
|
Cost of sales |
|
7,502 |
|
|
|
17,383 |
|
|
|
27,620 |
|
|
|
55,026 |
|
Gross profit |
|
2,839 |
|
|
|
8,543 |
|
|
|
9,528 |
|
|
|
22,448 |
|
Operating expenses |
|
1,689 |
|
|
|
2,303 |
|
|
|
5,703 |
|
|
|
7,600 |
|
Selling, general and administrative expenses |
|
3,071 |
|
|
|
4,464 |
|
|
|
9,965 |
|
|
|
12,459 |
|
Depreciation and amortization expense |
|
308 |
|
|
|
295 |
|
|
|
942 |
|
|
|
925 |
|
Gain on disposal of assets |
|
— |
|
|
|
311 |
|
|
|
— |
|
|
|
309 |
|
Income (loss) from operations |
|
(2,229 |
) |
|
|
1,792 |
|
|
|
(7,082 |
) |
|
|
1,773 |
|
Other expense: |
|
|
|
|
|
|
|
Other expense |
|
(158 |
) |
|
|
(273 |
) |
|
|
(491 |
) |
|
|
(675 |
) |
Interest expense |
|
(338 |
) |
|
|
(36 |
) |
|
|
(717 |
) |
|
|
(134 |
) |
Other expense, net |
|
(496 |
) |
|
|
(309 |
) |
|
|
(1,208 |
) |
|
|
(809 |
) |
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
(2,725 |
) |
|
|
1,483 |
|
|
|
(8,290 |
) |
|
|
964 |
|
Income tax provision |
|
2 |
|
|
|
— |
|
|
|
18 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
(2,727 |
) |
|
$ |
1,483 |
|
|
$ |
(8,308 |
) |
|
$ |
964 |
|
|
|
|
|
|
|
|
|
Income (loss) per share: |
|
|
|
|
|
|
|
Basic and diluted |
$ |
(0.19 |
) |
|
$ |
0.11 |
|
|
$ |
(0.60 |
) |
|
$ |
0.07 |
|
Shares used in per share calculation: |
|
|
|
|
|
|
|
Basic and diluted |
|
14,256,869 |
|
|
|
13,638,162 |
|
|
|
13,882,628 |
|
|
|
13,302,410 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 September 30, 2023 and 2022, in
thousands:
|
Three Months Ended September 30, 2023 |
|
Three Months Ended September 30, 2022 |
|
Wireless |
|
Telco |
|
Total |
|
Wireless |
|
Telco |
|
Total |
Income (loss) from operations |
$ |
(1,853 |
) |
|
$ |
(376 |
) |
|
$ |
(2,229 |
) |
|
$ |
(202 |
) |
|
$ |
1,994 |
|
$ |
1,792 |
Depreciation and amortization expense |
|
188 |
|
|
|
120 |
|
|
|
308 |
|
|
|
174 |
|
|
|
121 |
|
|
295 |
Stock compensation expense |
|
(7 |
) |
|
|
72 |
|
|
|
65 |
|
|
|
78 |
|
|
|
72 |
|
|
150 |
Adjusted EBITDA |
$ |
(1,672 |
) |
|
$ |
(184 |
) |
|
$ |
(1,856 |
) |
|
$ |
50 |
|
|
$ |
2,187 |
|
$ |
2,237 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2023 |
|
Nine Months Ended September 30, 2022 |
|
Wireless |
|
Telco |
|
Total |
|
Wireless |
|
Telco |
|
Total |
Income (loss) from operations |
$ |
(5,617 |
) |
|
$ |
(1,465 |
) |
|
$ |
(7,082 |
) |
|
$ |
(3,859 |
) |
|
$ |
5,632 |
|
$ |
1,773 |
Depreciation and amortization expense |
|
582 |
|
|
|
360 |
|
|
|
942 |
|
|
|
561 |
|
|
|
364 |
|
|
925 |
Stock compensation expense |
|
283 |
|
|
|
380 |
|
|
|
663 |
|
|
|
234 |
|
|
|
266 |
|
|
500 |
Adjusted EBITDA |
$ |
(4,752 |
) |
|
$ |
(725 |
) |
|
$ |
(5,477 |
) |
|
$ |
(3,064 |
) |
|
$ |
6,262 |
|
$ |
3,198 |
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