ADDvantage Technologies Group

ADDvantage Technologies Announces Results for Fiscal 2011 First Quarter

Tuesday 08 February 2011

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First quarter 2011 total revenue of $9.2 million and net income of $0.07 per diluted share

BROKEN ARROW, Oklahoma, February 8, 2011 – ADDvantage Technologies Group, Inc. (NASDAQ: AEY), today announced its results for the three month period ended December 31, 2010.

Revenue for the three month period ended December 31, 2010 was $9.2 million compared to $10.2 million in the same period a year ago.  Sales of new equipment were $6.5 million for the three months ended December 30, 2010 as compared to $6.6 million for the three months ended December 31, 2009.  Net refurbished equipment sales were $1.4 million for the three months ended December 31, 2010 as compared to $2.3 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 $0.6 million.  Service revenue was $1.3 million for the three months ended December 31, 2010 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 first quarter of fiscal 2011 was $0.7 million, or $0.07 per diluted share, as compared to $0.9 million, or $0.8 per diluted share, in the same period last year.

Ken Chymiak, President and CEO, commented, “We continue to report strong gross margins and positive net income, and further strengthened our balance sheet with an increase in cash and cash equivalents.  Our sales remained relatively the same compared to last year except for the sale of refurbished digital converter boxes.  The decrease in sales for the digital converter boxes was due to lower demand for this product.  The overall market demand for cable television equipment continues to be flat as a result of the difficult economic environment and traditional United States cable companies are still under budgetary pressures as new housing starts and consumer spending are still down.”

“Also, as previously announced on December 27, 2010, our subsidiary, Tulsat, entered into a new system integrator/reseller agreement with Cisco, which will enable it to sell both IT and Service Provider Video Technology Group (“SPVTG”) related products in the United States.  This agreement replaces Tulsat’s prior distributor agreement with Cisco, which expired December 20, 2010.  Under the terms of the new agreement, Tulsat will purchase the majority of its new Cisco product inventory through a primary stocking distributor as opposed to purchasing directly from Cisco as it did under the prior agreement.  This is expected to result in slightly higher product costs, but it will lower the Company’s inventory, storage, shipping and handling costs,” 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, February 8, 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 (877) 852-6579 or (719) 325-4933 for international participants.  All dial-in participants must use the following code to access the call: 1034872. 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 February 22, 2011 at (877) 870-5176 (domestic) or (858) 384-5517 (international). Participants must use the following code to access the replay of the call: 1034872. 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 Broadband Remarketing International. 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.

 Contact:

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

For further information
Company Contact:
Ken Chymiak
(918) 251-9121

Scott Francis
(918) 251-9121

KCSA Strategic Communications
Garth Russell
(212) 896-1250
grussell@kcsa.com
                                                                                (Tables follow)

ADDVANTAGE TECHNOLOGIES GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(UNAUDITED)

 

Three Months Ended December 31,

 

         2010     

             2009     

Sales:

 

 

   Net new sales income

    $ 6,525,013

       $  6,569,913

   Net refurbished sales income

       1,401,501

           2,268,803

   Net service income

       1,302,932

           1,380,505

Total net sales

       9,229,446

         10,219,221

Cost of sales

       6,349,881

           6,888,881

Gross profit

       2,879,565

           3,330,340

Operating, selling, general and administrative expenses

       1,498,506

           1,730,767

Income from operations

       1,381,059

           1,599,573

Interest expense

          185,424

              211,934

Income before provision for income taxes

       1,195,635

           1,387,639

Provision for income taxes

          455,000

              528,000

Net income attributable to common shareholders

          740,635

              859,639

 

 

 

Other comprehensive income:

 

 

   Unrealized gain on interest rate swap, net of taxes

          147,169

               91,980

 

 

 

Comprehensive income

    $    887,804

       $     951,619

 

 

 

Earnings per share:

 

 

   Basic

    $         0.07

       $          0.08

   Diluted

    $         0.07

       $          0.08

Shares used in per share calculation:

 

 

   Basic

10,143,970

10,116,820

   Diluted

10,154,523

10,120,085

ADDVANTAGE TECHNOLOGIES GROUP, INC.

                                        CONSOLIDATED BALANCE SHEETS

 

    December 31,

         2010

    (unaudited)

     September 30,

            2010

         (audited)  

Assets

 

 

Current assets:

 

 

   Cash and cash equivalents

    $ 10,398,858

      $  8,739,151

   Accounts receivable, net of allowance of $300,000

        2,758,523

          4,905,733

   Income tax refund receivable

–

            203,405

   Inventories, net of allowance for excess and obsolete

 

 

      inventory of $2,643,000 and $2,545,000, respectively

       28,588,730

        27,410,722

   Prepaid expenses

             54,334

              92,567

   Deferred income taxes

         1,440,000

         1,423,000

Total current assets

       43,240,445

        42,774,578

 

 

 

Property and equipment, at cost:

 

 

   Land and buildings

        7,208,679

          7,208,679

   Machinery and equipment

        3,123,851

          3,203,701

   Leasehold improvements

           205,797

             205,797

 

      10,538,327

         10,618,177

Less accumulated depreciation and amortization

      (3,436,425)

         (3,393,921)

Net property and equipment

        7,101,902

           7,224,256

 

 

 

Other assets:

 

 

   Deferred income taxes

          578,000

            678,000

   Goodwill

       1,560,183

          1,560,183

   Other assets

            11,236

              23,236

Total other assets

       2,149,419

          2,261,419

 

 

 

Total assets

    $ 52,491,766

      $ 52,260,253

 

 

 

Liabilities and Shareholders’ Equity

Current liabilities:

 

 

   Accounts payable

    $ 3,289,984

      $  2,751,498

   Accrued expenses

         833,593

          1,340,414

   Notes payable – current portion

       1,814,008

          1,814,008

Total current liabilities

       5,937,585

          5,905,920

 

 

 

Notes payable

     11,604,626

        12,058,128

Other liabilities

       1,015,514

          1,252,683

 

 

 

Shareholders’ equity:

 

 

   Common stock, $.01 par value; 30,000,000 shares authorized;                    10,367,934 shares issued and 10,143,970 shares outstanding

 

         103,679

 

            103,679

   Paid in capital

     (6,068,271)

        (6,070,986)

   Retained earnings

     40,934,426

        40,193,791

   Accumulated other comprehensive income (loss):

 

 

      Unrealized loss on interest rate swap, net of tax

         (629,514)

           (776,683)

 

        34,340,320

         33,449,801

 

 

 

   Less: Treasury stock, 223,964 shares, at cost

         (406,279)

           (406,279)

Total shareholders’ equity

       33,934,041

        33,043,522

 

 

 

Total liabilities and shareholders’ equity

    $ 52,491,766

      $ 52,260,253