ADDvantage Technologies Announces Results for Fiscal 2011 Third Quarter

Tue Aug 9, 2011 8:01am EDT

* Reuters is not responsible for the content in this press release.

  BROKEN ARROW, OK, Aug 09 (MARKET WIRE) -- 
ADDvantage Technologies Group, Inc. (NASDAQ: AEY), today announced its
results for the three and nine month periods ended June 30, 2011.

    Revenue for the three month period ended June 30, 2011 was $8.7 million
compared to $13.3 million in the same period a year ago. Equipment sales
were negatively impacted by several factors including the continued
economic downturn in the cable television industry as MSO customers
continue to conserve cash and limit capital expenditures and the negative
impact of the Cisco agreement. Sales of new equipment were $5.6 million
for the three months ended June 30, 2011 as compared to $9.4 million for
the three months ended June 30, 2010. Net refurbished equipment sales
were $1.9 million for the three months ended June 30, 2011 as compared to
$2.5 million for the same period last year. The decrease in refurbished
equipment sales was primarily due to a decrease in sales of digital
converter boxes of $0.2 million, as well as the factors discussed above.
Service revenue was $1.2 million for the three months ended June 30, 2011
as compared to $1.4 million for the same period last year. This decline
was primarily attributable to the closure of the Tulsat-West facility in
the fiscal first quarter of 2011.

    Net income attributable to common shareholders in the third quarter of
fiscal 2011 was $0.5 million, or $0.05 per diluted share, as compared to
$1.4 million, or $0.14 per diluted share, in the same period last year. 

    For the nine months ended June 30, 2011, revenue decreased to $26.8
million from $35.6 million, for the same period last year.

    Net income attributable to common stockholders for the nine month period
was $1.8 million, or $0.18 per diluted share, as compared to $3.3
million, or $0.33 per diluted share, for the first nine months of fiscal
2010.

    In May 2011, the Company acquired the net operating assets of Adams
Global Communications, LLC ("AGC"), a purchaser and seller of cable
television access and transport equipment, digital converter boxes and
modems in the U.S., Canada and Latin American markets. AGC has a
strategic reseller agreement for the U.S. with Arris Solutions, one of
the nations' largest OEMs of cable equipment. Upon closing the AGC
acquisition, ADDvantage also started marketing one of its existing
subsidiaries, Broadband Remarketing International, LLC ("BRI"), under
Adams Global Communications or AGC.

    Ken Chymiak, President and CEO, commented, "The third quarter of fiscal
2011 continued the trends we have seen over the past few quarters. We
maintained relatively strong gross margins of approximately 30% and
reported a positive net income of approximately $0.5 million. During the
quarter, we continued to experience a decline in our total revenue,
primarily due to several factors, including the prolonged economic
downturn in the cable television industry. As we have mentioned in the
past, our large and small MSO customers continue to limit capital
expenditures on plant expansion projects and bandwidth upgrades in an
effort to conserve cash, and we cannot predict when these MSOs will
return capital expenditures to pre-recession levels. In addition, the
reseller contract Tulsat signed with Cisco in December, 2010, continues
to impact our business by limiting our ability to sell to certain
customers.

    "During the quarter we executed upon a key element of our growth
strategy, with the acquisition of AGC. The addition of AGC provides
additional scale within our core business as well as significant growth
opportunities through new customers and its OEM reseller agreement with
Arris Solutions. 

    "Our cash position remains strong, at $12.0 million as of June 30, 2011,
compared to $8.7 million as of the beginning of our fiscal year 2011.
This is a reflection of the positive cash flow we are generating as a
result of our profitable operations and from the continued reduction in
the level of our inventory," concluded Mr. Chymiak.

    Earnings Conference Call

    As previously announced, the Company's earnings conference call is
scheduled for 12:00 p.m. Eastern Time on Tuesday, August 9, 2011. The
conference call will be available via webcast and can be accessed through
the Investor Relations section of ADDvantage's website,
www.addvantagetech.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)
352-6803 or (719) 325-2245 for international participants. All dial-in
participants must use the following code to access the call: 2419302.
Please call at least five minutes before the scheduled start time.

    For interested individuals unable to join the conference call, a replay
of the call will be available through August 23, 2011 at (877) 870-5176
(domestic) or (858) 384-5517 (international). Participants must use the
following code to access the replay of the call: 2419302. The 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. supplies the cable television (CATV) industry with a
comprehensive line of new and used system-critical network equipment and
hardware from leading manufacturers, including Cisco, Motorola and
Fujitsu Frontech North America, as well as operating a national network
of technical repair centers. The equipment and hardware ADDvantage
distributes is used to acquire, distribute, and protect the broad range
of communications signals carried on fiber optic, coaxial cable and
wireless distribution systems, including television programming,
high-speed data (Internet) and telephony. 

    ADDvantage operates through its subsidiaries, Tulsat, Tulsat-Atlanta,
Tulsat-Nebraska, Tulsat-Texas, NCS Industries, ComTech Services and Adams
Global Communications. For more information, please visit the corporate
web site at www.addvantagetech.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.

                    ADDVANTAGE TECHNOLOGIES GROUP, INC.
         CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                                (UNAUDITED)

                            Three Months Ended         Nine Months Ended
                                  June 30,                  June 30,
                             2011         2010         2011         2010
                         -----------  -----------  ------------ ----------- 
Sales:
  Net new sales income   $ 5,568,777  $ 9,386,857  $ 18,510,943 $23,749,544 
  Net refurbished sales
   income                  1,923,665    2,492,755     4,624,947   7,613,522 
  Net service income       1,202,763    1,417,837     3,685,466   4,209,125 
                         -----------  -----------  ------------ ----------- 
Total net sales            8,695,205   13,297,449    26,821,356  35,572,191 
Cost of sales              6,127,808    9,089,475    18,689,684  24,414,081 
                         -----------  -----------  ------------ ----------- 
Gross profit               2,567,397    4,207,974     8,131,672  11,158,110 
Operating, selling,
 general and
 administrative expenses   1,642,403    1,758,724     4,686,050   5,164,803 
                         -----------  -----------  ------------ ----------- 
Income from operations       924,994    2,449,250     3,445,622   5,993,307 
Interest expense             170,417      197,016       530,704     609,589 
                         -----------  -----------  ------------ ----------- 
Income before provision
 for income taxes            754,577    2,252,234     2,914,918   5,383,718 
Provision for income
 taxes                       287,000      856,000     1,108,000   2,046,000 
                         -----------  -----------  ------------ ----------- 
Net income attributable
 to common shareholders      467,577    1,396,234     1,806,918   3,337,718 

Other comprehensive
 income:
  Unrealized gain (loss)
   on interest rate
   swap, net of taxes        (29,838)    (113,419)      200,953     (67,757)
                         -----------  -----------  ------------ ----------- 

Comprehensive income     $   437,739  $ 1,282,815  $  2,007,871 $ 3,269,961 
                         ===========  ===========  ============ =========== 

Earnings per share:
  Basic                  $      0.05  $      0.14  $       0.18 $      0.33 
  Diluted                $      0.05  $      0.14  $       0.18 $      0.33 
Shares used in per share
 calculation:
  Basic                   10,195,135   10,143,970    10,164,487  10,128,887 
  Diluted                 10,197,372   10,148,303    10,168,613  10,132,548 

                    ADDVANTAGE TECHNOLOGIES GROUP, INC.
                        CONSOLIDATED BALANCE SHEETS

                                                  June 30,    September 30, 
                                                    2011           2010
                                                 (unaudited)    (audited)
                                                ------------  ------------- 
Assets
Current assets:
  Cash and cash equivalents                     $ 12,031,640  $   8,739,151 
  Accounts receivable, net of allowance of
   $300,000                                        3,283,493      4,905,733 
  Income tax refund receivable                       242,475        203,405 
  Inventories, net of allowance for excess and
   obsolete inventory of $2,300,000 and
   $2,545,000, respectively                       26,739,349     27,410,722 
  Prepaid expenses                                   231,571         92,567 
  Deferred income taxes                            1,314,000      1,423,000 
                                                ------------  ------------- 
Total current assets                              43,842,528     42,774,578 

Net property and equipment                         6,983,062      7,224,256 

Other assets:
  Deferred income taxes                              516,000        678,000 
  Goodwill                                         1,560,183      1,560,183 
  Other assets                                        11,237         23,236 
                                                ------------  ------------- 
Total other assets                                 2,087,420      2,261,419 
                                                ------------  ------------- 

Total assets                                    $ 52,913,010  $  52,260,253 
                                                ============  ============= 

Liabilities and Shareholders' Equity
Current liabilities:
  Accounts payable                              $  3,249,235  $   2,751,498 
  Accrued expenses                                   987,126      1,340,414 
  Notes payable - current portion                  1,814,008      1,814,008 
                                                ------------  ------------- 
Total current liabilities                          6,050,369      5,905,920 

Notes payable                                     10,697,622     12,058,128 
Other liabilities                                    928,730      1,252,683 

Shareholders' equity:
  Common stock, $.01 par value; 30,000,000
   shares authorized; 10,431,354 and 10,367,934
   shares issued, respectively; and 10,207,390
   and 10,143,970 shares outstanding,
   respectively                                      104,314        103,679 
  Paid in capital                                 (5,886,725)    (6,070,986)
  Retained earnings                               42,000,709     40,193,791 
  Accumulated other comprehensive income
   (loss):
    Unrealized loss on interest rate swap, net
     of tax                                         (575,730)      (776,683)
                                                ------------  ------------- 
  Total shareholders' equity before treasury
   stock                                          35,642,568     33,449,801 

  Less: Treasury stock, 223,964 shares, at cost     (406,279)      (406,279)
                                                ------------  ------------- 
Total shareholders' equity                        35,236,289     33,043,522 
                                                ------------  ------------- 

Total liabilities and shareholders' equity      $ 52,913,010  $  52,260,253 
                                                ============  ============= 

    


For further information
Company Contact:
Ken Chymiak 
(9l8) 25l-9121

Scott Francis 
(9l8) 25l-9121

KCSA Strategic Communications
Garth Russell / Zach Brown 
(212) 896-1250 / (212) 896-1217
grussell@kcsa.com / zbrown@kcsa.com 

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