ADDvantage Technologies Announces Financial Results for the Fiscal Second Quarter of 2012

Tue May 8, 2012 8:00am EDT

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

  BROKEN ARROW, OK, May 08 (Marketwire) -- 
ADDvantage Technologies Group, Inc. (NASDAQ: AEY), today announced its
results for the three and six month periods ended March 31, 2012.

    Revenue for the three months ended March 31, 2012 slightly increased to
$9.2 million compared to $8.9 million for the same period last year.
Sales of new equipment were $5.8 million for the three months ended March
31, 2012 as compared to $6.4 million for the three months ended March 31,
2011. New equipment sales continued to be negatively impacted by several
factors including the continued economic downturn in the cable television
industry as multiple system operator ("MSO") customers continue to
conserve cash and limit capital expenditures, partially offset by revenue
from Adams Global Communications, which was acquired in May 2011. Net
refurbished equipment sales were $2.4 million for the three months ended
March 31, 2012 as compared to $1.3 million for the same period last year.
The increase in net refurbished equipment sales was primarily driven by
our acquisition of Adams Global Communications. Service revenue was $1.1
million for the three month period ended March 31, 2012 as compared to
$1.2 million for the same period last year. 

    In March, the Company paid off the outstanding amount owed of $9.4
million under one of its term loans. In connection with paying off this
loan, the Company also terminated the associated interest rate swap
agreement for $0.8 million. The termination payment was recorded as a
one-time charge to interest expense. In paying off the debt, it is
anticipated that the Company will have reduced interest expense of
approximately $1.3 million over the remaining term of the debt. In
addition, the Company will have cash flow savings of approximately $0.5
million per quarter from lower debt service payments.

    Net loss for the three months ended March 31, 2012 was $0.1 million, or
$0.01 per diluted share, as compared to net income of $0.6 million, or
$0.06 per diluted share, for the same period last year. Removing the
impact of the termination payment in March 2012, adjusted net income for
the three months ended March 31, 2012 was $0.4 million, or $0.04 per
diluted share. 

    For the six months ended March 31, 2012, revenue increased to $18.2
million from $18.1 million, for the same period last year. Net income for
the six month period was $0.4 million, or $0.04 per diluted share, as
compared to $1.3 million, or $0.13 per diluted share, for the first six
months of fiscal 2011. Removing the impact of the termination payment in
March 2012, adjusted net income for the six months ended March 31, 2012
was $0.9 million, or $0.09 per diluted share.

    "Total sales for the quarter increased slightly compared to the same
period last year, which was mostly driven by strong sales of refurbished
equipment attributable to Adams Global Communications, which we acquired
in May 2011. We are continuing to look for strategic growth opportunities
within our core business or that will give us access to new markets,"
stated David Humphrey, newly appointed President and CEO of ADDvantage
Technologies. "I'm excited to join the ADDvantage team at such an
important time in its history. With its positive cash flow, strong
deleveraged balance sheet and access to our $7.0 million line of credit,
we have a lot of flexibility in developing a strategy that will put us
back on the path towards long-term growth."

    Earnings Conference Call
 As previously announced the Company will host a
conference call on Tuesday, May 8, 2012, at 12:00 p.m. Eastern Time. The
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
(877)-627-6544 (domestic) or (719)-325-4792 (international). All dial-in
participants must use the following code to access the call: 5846012.
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 May 22, 2012 at (877) 870-5176
(domestic) or (858) 384-5517 (international). Participants must use the
following code to access the replay of the call: 5846012. 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.addvantagetechnologies.com.

    Non-GAAP Financial Measures 
 Adjusted net income and adjusted net income
per diluted share are not generally accepted accounting principles
("GAAP") measures and are not intended to be used in lieu of a GAAP
presentation of net income/loss and income/loss per diluted share.
Adjusted net income and adjusted net income per diluted share were
calculated by excluding the one-time payment to terminate the interest
rate swap agreement and the related tax effect of that payment. Adjusted
net income and adjusted net income per diluted share were presented to
supplement our GAAP consolidated financial statements to allow a better
comparison of results in the current period as compared to the prior year
and to provide a more meaningful insight to the Company's on-going
operating performance after exclusion of these items. Reconciliations of
net income (loss) to adjusted net income and adjusted net income per
diluted share for the periods presented are included in the tables at the
end of this release.

    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.

    (Tables follow)

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

                             Three Months Ended        Six Months Ended
                                  March 31,                March 31,
                              2012         2011        2012         2011
                          -----------  ----------- ------------ ------------
Sales:
  Net new sales income    $ 5,778,308  $ 6,417,153 $ 10,973,273 $ 12,942,166
  Net refurbished sales
   income                   2,366,833    1,299,781    4,955,550    2,701,282
  Net service income        1,085,815    1,179,771    2,306,528    2,482,703
                          -----------  ----------- ------------ ------------
Total net sales             9,230,956    8,896,705   18,235,351   18,126,151
Cost of sales               6,703,637    6,211,995   12,969,011   12,561,876
                          -----------  ----------- ------------ ------------
Gross profit                2,527,319    2,684,710    5,266,340    5,564,275
Operating, selling,
 general and
 administrative expenses    1,712,862    1,545,141    3,559,477    3,043,647
                          -----------  ----------- ------------ ------------
Income from operations        814,457    1,139,569    1,706,863    2,520,628
Interest expense              940,736      174,863    1,099,362      360,287
                          -----------  ----------- ------------ ------------
Income (loss) before
 provision for income
 taxes                       (126,279)     964,706      607,501    2,160,341
Provision (benefit) for
 income taxes                 (50,000)     366,000      237,000      821,000
                          -----------  ----------- ------------ ------------
Net income (loss)             (76,279)     598,706      370,501    1,339,341

Other comprehensive
 income:
  Unrealized gain on
   interest rate swap,
   net of taxes               532,889       83,622      587,258      230,791
                          -----------  ----------- ------------ ------------

Comprehensive income      $   456,610  $   682,328 $    957,759 $  1,570,132
                          ===========  =========== ============ ============

Earnings (loss) per
 share:
  Basic                   $     (0.01) $      0.06 $       0.04 $       0.13
  Diluted                 $     (0.01) $      0.06 $       0.04 $       0.13
Shares used in per share
 calculation:
  Basic                    10,199,564   10,154,355   10,203,477   10,149,163
  Diluted                  10,200,508   10,164,046   10,204,780   10,160,414

                     ADDVANTAGE TECHNOLOGIES GROUP, INC.
              RECONCILIATION OF CERTAIN NON-GAAP ITEMS TO GAAP
                                 (UNAUDITED)

                              Three Months Ended        Six Months Ended
                                   March 31,                March 31,
                               2012         2011        2012         2011
                           -----------  ----------- -----------  -----------
Calculation of adjusted
 net income:
  Net income               $   (76,279) $   598,706 $   370,501  $ 1,339,341
  Add: Termination payment     815,415            -     815,415            -
  Less: Tax impact of
   termination payment        (318,012)           -    (318,012)           -
                           -----------  ----------- -----------  -----------
  Adjusted net income      $   421,124  $   598,706 $   867,904  $ 1,339,341
                           ===========  =========== ===========  ===========

GAAP earnings (loss) per
 share - Basic             $     (0.01) $      0.06 $      0.04  $      0.13
Total adjustments to GAAP
 net income (loss)                0.05            -        0.05            -
                           -----------  ----------- -----------  -----------
Non-GAAP earnings per
 share - Basic             $      0.04  $      0.06 $      0.09  $      0.13
                           ===========  =========== ===========  ===========

GAAP earnings (loss) per
 share - Diluted           $     (0.01) $      0.06 $      0.04  $      0.13
Total adjustments to GAAP
 net income (loss)                0.05            -        0.05            -
                           -----------  ----------- -----------  -----------
Non-GAAP earnings per
 share - Diluted           $      0.04  $      0.06 $      0.09  $      0.13
                           ===========  =========== ===========  ===========

Shares used in non-GAAP
 per share calculation:
  Basic                     10,199,564   10,154,355  10,203,477   10,149,163
  Diluted                   10,200,508   10,164,046  10,204,780   10,160,414

                     ADDVANTAGE TECHNOLOGIES GROUP, INC.
                         CONSOLIDATED BALANCE SHEETS

                                                 March 31,    September 30, 
                                                    2012           2011
                                                (unaudited)     (audited)
                                               -------------  ------------- 
Assets
Current assets:
  Cash and cash equivalents                    $   2,113,172  $  10,943,654 
  Accounts receivable, net of allowance of
   $300,000                                        3,348,001      4,244,049 
  Income tax refund receivable                       221,351        349,745 
  Inventories, net of allowance for excess and
   obsolete inventory of $1,758,000 and
   $1,556,000, respectively                       24,719,350     25,777,747 
  Prepaid expenses                                   196,089        177,486 
  Deferred income taxes                            1,049,000      1,059,000 
                                               -------------  ------------- 
Total current assets                              31,646,963     42,551,681 

Property and equipment, at cost:
  Land and buildings                               8,797,402      8,683,679 
  Machinery and equipment                          2,919,764      2,856,615 
  Leasehold improvements                             205,797        205,797 
                                               -------------  ------------- 
Total property and equipment, at cost             11,922,963     11,746,091 
Less accumulated depreciation and amortization    (3,569,175)    (3,392,329)
                                               -------------  ------------- 
Net property and equipment                         8,353,788      8,353,762 

Other assets:
  Deferred income taxes                               18,000        403,000 
  Goodwill                                         1,560,183      1,560,183 
  Other assets                                        13,778         19,245 
                                               -------------  ------------- 
Total other assets                                 1,591,961      1,982,428 
                                               -------------  ------------- 

Total assets                                   $  41,592,712  $  52,887,871 
                                               =============  ============= 

Liabilities and Shareholders' Equity
Current liabilities:
  Accounts payable                             $   2,050,443  $   2,675,907 
  Accrued expenses                                   889,952      1,240,224 
  Notes payable - current portion                    184,008      1,814,008 
                                               -------------  ------------- 
Total current liabilities                          3,124,403      5,730,139 

Notes payable, less current portion                1,594,616     10,244,120 
Other liabilities                                          -        957,258 

Shareholders' equity:
  Common stock, $.01 par value; 30,000,000
   shares authorized; 10,465,323 and
   10,431,354 shares issued, respectively; and
   10,189,120 and 10,207,390 shares
   outstanding, respectively                         104,653        104,314 
  Paid in capital                                 (5,811,459)    (5,884,521)
  Retained earnings                               43,100,599     42,730,098 
  Accumulated other comprehensive loss:
    Unrealized loss on interest rate swap, net
     of tax                                                -       (587,258)
                                               -------------  ------------- 
  Total shareholders' equity before treasury
   stock                                          36,886,126     36,362,633 

  Less: Treasury stock, 276,203 and 223,964
   shares, respectively, at cost                    (520,100)      (406,279)
                                               -------------  ------------- 
Total shareholders' equity                        36,873,693     35,956,354 
                                               -------------  ------------- 

Total liabilities and shareholders' equity     $  41,592,712  $  52,887,871 
                                               =============  ============= 


    


For further information
Company Contact:
Scott Francis 
(918) 251-9121

KCSA Strategic Communications
Garth Russell / Jason Maymudes 
(212) 896-1250 / (212) 896-1211
grussell@kcsa.com / jmaymudes@kcsa.com 

ADDvantage Technologies Group, Inc.
1221 E. Houston
Broken Arrow, Oklahoma 74012 

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