BROKEN ARROW, Oklahoma, Dec. 14, 2017 (GLOBE NEWSWIRE) -- ADDvantage Technologies Group, Inc. (NASDAQ:AEY), today announced its financial results for the fourth quarter and fiscal year ended September 30, 2017. The twelve month period includes the financial results for the Company's asset acquisition of Triton Miami, Inc. ("Triton Datacom") from October 14, 2016 to September 30, 2017.

"We reported strong top line revenue growth in both the fourth quarter and full fiscal year, driven by the acquisition of Triton Datacom's assets which expanded our Telco offering into the desktop phone segment and broadened our customer reach," commented David Humphrey, President and CEO of ADDvantage Technologies. "We see significant room for further growth in our Telco segment, specifically at Nave Communications, which reported a disappointing sales performance in fiscal 2017. We have identified the challenges faced by Nave and are directing resources into improving its sales infrastructure to allow it to expand both its end-user and reseller customer base in order to increase sales. This strategy is well underway, driven by our new VP of Sales. We remain confident that Nave has a fundamentally sound business model and look forward to seeing the impact of our strategy as it takes hold over the next few quarters.

"Sales from the Cable TV segment were down in the fourth quarter of fiscal 2017, reflecting fluctuations in demand that are typical for the industry. However, the Cable TV segment's overall performance throughout fiscal 2017 still generated consistent, positive earnings and remained flat relative to fiscal year 2016 results. While we are pleased with the consistent positive cash flows that the Cable TV segment generates, we are proactively working to continually improve operational efficiencies and to maximize the profitability of this business," continued Mr. Humphrey.

"Looking ahead, we have implemented a plan focused on improving results in the Telco segment and continue to implement our strategy to grow the value of our business. We anticipate that Nave's sales initiatives will serve to expand its customer base which, combined with Triton's diversified offering and strong sales capabilities, will enable us to achieve stronger revenue growth as we progress through fiscal 2018. In addition, although we believe that the Cable TV segment revenues will be down again next quarter, we are working on consolidating some of our facilities in order to efficiently manage costs and support margins," concluded Mr. Humphrey.

Results for the three months ended September 30, 2017

Consolidated sales increased 26% before the impact of intercompany sales to $12.3 million for the three months ended September 30, 2017 compared with $9.8 million for the three months ended September 30, 2016. The increase in sales was due to an increase in the Telco segment of $3.4 million, partially offset by a decrease in the Cable TV segment of $0.8 million. The decrease in Cable TV sales was due to a decrease in new equipment sales, repairs sales and refurbished equipment sales of $0.4 million, $0.2 million and $0.2 respectively. The increase in Telco used equipment sales was due to Triton Datacom, which offset the continued lower sales from the remaining portion of this segment. The Company is continuing to address the lower sales in the Telco segment by restructuring and expanding its sales force, targeting a broader end-user customer base, increasing sales to the reseller market and expanding the capacity of the recycling program. 

Consolidated operating, selling, general and administrative expenses increased $0.5 million, or 17%, to $3.6 million for the three months ended September 30, 2017 from $3.1 million for the same period last year. This increase in expenses was due to the Telco segment of $0.7 million, while the Cable TV segment decreased by $0.2 million. The increase for the Telco segment was due primarily to operating expenses of $0.8 million from Triton Datacom and Triton Datacom earn-out expenses of $50 thousand.

Net loss for the three months ended September 30, 2017, was $0.3 million, or $0.03 per diluted share, compared with a net loss of $0.2 million, or $0.02 per diluted share, for the same period of 2016.

Consolidated Adjusted EBITDA for the three months ended September 30, 2017 was $0.1 million compared with a loss of $0.2 million for the same period ended September 30, 2016.

Results for the fiscal year ended September 30, 2017

Consolidated sales increased 26% before the impact of intercompany sales to $48.7 million for the fiscal year ended September 30, 2017 from $38.7 million for the fiscal year ended September 30, 2016. The increase in sales was due to an increase in the Telco segment of $10.2 million, partially offset by a decrease in the Cable TV segment of $0.2 million. The increase in Telco equipment sales was primarily due to Triton Datacom on October 14, 2016, which offset the continued lower sales from the remaining portion of this segment. The decrease in sales for the Cable TV segment was due to a decrease in refurbished equipment revenue of $1.1 million, partially offset by an increase in new equipment sales and repair sales of $0.1 million and $0.8 million, respectively. 

Consolidated operating, selling, general and administrative expenses increased 21% to $14.7 million for the fiscal year ended September 30, 2017 from $12.1 million for the same period last year. This increase was primarily due to increased expenses of the Telco segment of $3.0 million, partially offset by a decrease in Cable TV segment expenses of $0.4 million.

Net loss for the fiscal year ended September 30, 2017 was $0.1 million, or $0.01 per diluted share, compared with a profit of $0.3 million, or $0.03 per diluted share, for the fiscal year ended September 30, 2016.

Consolidated Adjusted EBITDA for the fiscal year ended September 30, 2017 was $1.9 million compared with $1.6 million for the fiscal year ended September 30, 2016.

Cash and cash equivalents were $4.0 million as of September 30, 2017, compared with $4.5 million as of September 30, 2016. The Company generated $2.9 million of cash from operations for the fiscal year ended September 30, 2017. As of September 30, 2017, the Company had inventory of $22.3 million compared with $21.5 million as of September 30, 2016.

The Company was not in compliance with one of its financial covenants at September 30, 2017. The Company notified its primary financial lender of the covenant violation, and on December 1, 2017, the primary financial lender granted a waiver of the covenant violation. Subsequent to September 30, 2017, the Company elected to extinguish one of its term loans in December 2017 by paying the term loan's outstanding balance of $2.5 million as part of the Company's overall plan to become compliant with its financial covenants. As a result, the Company believes it will be in compliance with its financial covenants at December 31, 2017.

Earnings Conference Call

The Company will host a conference call on Thursday, December 14th, at 12:00 p.m. Eastern Time featuring remarks by David Humphrey, President and Chief Executive Officer, Dave Chymiak, Chief Technology Officer, Scott Francis, Chief Financial Officer, and Don Kinison, Vice President of Sales. 

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 800-281-7973 (domestic) or 323-794-2093 (international). All dial-in participants must use the following code to access the call: 5305971. 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 December 28, 2017 at 844-512-2921 (domestic) or 412-317-6671 (international). Participants must use the following code to access the replay of the call: 5305971. 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) supplies the cable television (Cable TV) 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 Cable TV equipment and recycles surplus and obsolete Cable TV and telecommunications equipment.

ADDvantage operates through its subsidiaries, Tulsat, Tulsat-Atlanta, Tulsat-Tennessee, Tulsat-Texas, NCS Industries, ComTech Services, Nave Communications and Triton Datacom. 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 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 excludes other income, interest income and income from equity method investment. Management believes providing Adjusted 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 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 in the table 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.

(Tables follow)
 
ADDVANTAGE TECHNOLOGIES GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
     
  Three Months Ended September 30, Twelve Months Ended September 30,
        2017          2016          2017          2016   
Sales   12,333,174     9,766,167     48,713,746     38,663,264  
Cost of sales       9,066,590         7,141,427         33,903,153         26,222,381  
Gross profit   3,266,584     2,624,740     14,810,593     12,440,883  
Operating, selling, general and    administrative expenses       3,633,711      3,109,706      14,664,987      12,097,022  
Income (loss) from operations   (367,127 )   (484,966 )   145,606     343,861  
Other income (expense):        
Other income   -     279,565     -     459,636  
Interest income   -     59,564     -     90,686  
Loss from equity method investee   -     (107,975 )   -     (184,996 )
Interest expense       (109,958 )       (51,735 )       (389,722 )       (236,024 )
Total other income (expense), net       (109,958 )       179,419         (389,722 )       129,302  
         
Income (loss) before income taxes   (477,085 )   (305,547 )   (244,116 )   473,163  
Provision (benefit) for income taxes       (218,000 )       (114,000 )       (146,000 )       179,000  
         
Net income (loss) $     (259,085 ) $     (191,547 ) $     (98,116 ) $     294,163  
         
Earnings (loss) per share:        
  Basic $     (0.03 ) $     (0.02 ) $     (0.01 ) $     0.03  
  Diluted $     (0.03 ) $     (0.02 ) $     (0.01 ) $     0.03  
Shares used in per share calculation:        
  Basic   10,225,995     10,134,235     10,201,825     10,107,483  
  Diluted   10,225,995     10,136,986     10,201,825     10,111,545  

  Three Months Ended September 30, 2017 Three Months Ended September 30, 2016
    Cable TV    Telco      Total  Cable TV   Telco      Total 
             
Operating income (loss) $   248,471 $ (615,598 ) $     (367,127 ) $   496,905 $ (981,871 ) $     (484,966 )
Depreciation     78,318     39,843       118,161       84,659     24,889       109,548  
Amortization   -     313,311         313,311     -     206,451         206,451  
Adjusted EBITDA $   326,789 $ (262,444 ) $     64,345   $   581,564 $ (750,531 ) $     (168,967 )

    Year Ended September 30, 2017    Year Ended September 30, 2016 
    Cable TV    Telco    Total  Cable TV   Telco    Total 
             
Operating income (loss) $ 1,834,484 $ (1,688,878 ) $   145,606 $ 1,478,676 $ (1,134,815 ) $   343,861
Depreciation     303,571       143,263         446,834     322,076     99,874         421,950
Amortization   -     1,267,182       1,267,182    -     825,804         825,804
Adjusted EBITDA (a) $ 2,138,055 $   (278,433 ) $   1,859,622 $ 1,800,752 $   (209,137 ) $   1,591,615
                             
  1. The Telco segment includes earn-out expenses of $0.2 million for each of the years ended September 30, 2017 and 2016, related to the acquisition of Triton Miami and Nave Communications.
 
ADDVANTAGE TECHNOLOGIES GROUP, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
   
    September 30,
        2017          2016   
Assets    
Current assets:    
  Cash and cash equivalents $   3,972,723   $   4,508,126  
Accounts receivable, net of allowance for doubtful accounts of    $150,000 and $250,000, respectively   5,567,005     4,278,855  
  Income tax receivable   247,186     464,837  
  Inventories, net of allowance for excess and obsolete    
     inventory of $2,939,289 and $2,570,868, respectively   22,333,820     21,524,919  
  Prepaid expenses       298,152         323,289  
Total current assets   32,418,886     31,100,026  
     
Property and equipment, at cost:    
  Land and buildings   7,218,678     7,218,678  
  Machinery and equipment   3,995,668     3,833,230  
  Leasehold improvements       202,017         151,957  
Total property and equipment, at cost   11,416,363     11,203,865  
Less: Accumulated depreciation       (5,395,791 )       (4,993,102 )
Net property and equipment   6,020,572     6,210,763  
     
Investment in and loans to equity method investee   98,704     2,588,624  
Intangibles, net of accumulated amortization   8,547,487     4,973,669  
Goodwill   5,970,244     3,910,089  
Deferred income taxes   1,653,000     1,349,000  
Other assets       138,712         135,988  
     
Total assets $   54,847,605   $   50,268,159  
     
     
Liabilities and Shareholders' Equity    
Current liabilities:    
  Accounts payable $   3,392,725   $   1,857,953  
  Accrued expenses   1,406,722     1,324,652  
  Notes payable - current portion   4,189,605     899,603  
  Other current liabilities       664,325         963,127  
Total current liabilities   9,653,377     5,045,335  
     
  Notes payable, less current portion   2,094,246     3,466,358  
  Other liabilities       1,401,799         131,410  
Total liabilities   13,149,422     8,643,103  
     
Shareholders' equity:    
  Common stock, $.01 par value; 30,000,000 shares authorized;       10,726,653 and 10,634,893 shares issued, respectively;     10,225,995 and 10,134,235 shares outstanding, respectively   107,267     106,349  
  Paid in capital   (4,746,466 )   (4,916,791 )
  Retained earnings     47,337,396       47,435,512  
  Total shareholders' equity before treasury stock   42,698,197     42,625,070  
     
  Less: Treasury stock, 500,658 shares, at cost       (1,000,014 )       (1,000,014 )
Total shareholders' equity     41,698,183       41,625,056  
     
Total liabilities and shareholders' equity $   54,847,605   $   50,268,159  

For further information KCSA Strategic Communications
Company Contact: Elizabeth Barker
Scott Francis  (918) 251-9121 (212) 896-1203
ebarker@kcsa.com