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ADDvantage Technologies Announces Financial Results for the Fiscal Second Quarter of 2016

BROKEN ARROW, Okla., May 10, 2016 (GLOBE NEWSWIRE) -- ADDvantage Technologies Group, Inc. (NASDAQ:AEY), today announced its financial results for the three and six month periods ended March 31, 2016.

“The sales activity in the second fiscal quarter of 2016 rebounded from the fiscal first quarter of 2016, as we reported $10.6 million in revenue for the second quarter, a 28% increase sequentially, though revenue was down 7% compared to the second quarter of fiscal 2015. The sequential improvement was largely driven by a positive change in market dynamics as we witnessed greater demand across both the Telco and Cable TV segments compared with the first fiscal quarter of 2016,” commented David Humphrey, President and CEO of ADDvantage Technologies. “The results for the quarter were in line with our expectations that market forces would begin to stabilize this quarter, enabling our customers to gain greater visibility into their budgetary constraints and thereby allowing them to make purchase decisions.”

“Our ability to rapidly regain customers as market conditions improved reflects the proactivity of our sales team and its strong industry relationships. This ability to withstand market fluctuations, combined with our recently announced strategic joint venture with YKTG, positions us to grow the business in the second half of the year. Furthermore, our balance sheet remains strong, and we continue to seek out acquisition opportunities in the broader telecommunications sector with a view to expanding market share over the long term,” concluded Mr. Humphrey.

Consolidated sales for the three months ended March 31, 2016 decreased $0.8 million, or 7%, to $10.6 million compared with $11.4 million for the same period ended March 31, 2015. The decrease in consolidated sales is attributable to a decrease in sales of $1.2 million from the Telco segment, and was partially offset by an increase in sales of $0.2 million for the Cable TV segment sales.

Consolidated operating, selling, general and administrative expenses decreased $0.5 million, or 14%, to $3.3 million for the three months ended March 31, 2016 from $3.8 million for the same period last year. This decrease was primarily due to a $0.7 million decrease in Telco segment expenses, and was partially offset by an increase of $0.2 million in Cable TV segment expenses. The decrease in the Telco segment included a $0.4 million decrease in expenses for the annual earn-out payments related to the acquisition of Nave Communications.

Net income for the three months ended March 31, 2016, was $146 thousand, or $0.01 per diluted share, compared with $234 thousand, or $0.02 per diluted share, for the same period of 2015.

Consolidated EBITDA for the three months ended March 31, 2016 was $0.6 million compared with $0.7 million for the same period ended March 31, 2015.

Consolidated sales for the six months ended March 31, 2016 decreased $3.4 million, or 15%, to $18.8 million compared with $22.2 million for the same period ended March 31, 2015. Sales for the Cable TV segment decreased by $1.6 million to $11.0 million for the six months ended March 31, 2016 from $12.6 million for the same period last year, while sales for the Telco segment decreased $2.0 million to $7.9 million for the six months ended March 31, 2016 from $9.9 million for the same period last year.

Consolidated operating, selling, general and administrative expenses decreased $1.0 million to $5.9 million for the six months ended March 31, 2016 from $6.9 million for the same period last year. This decrease was primarily due to a $1.1 million decrease in Telco segment expenses and was partially offset by an increase of $0.1 million in expenses in the Cable TV segment. The decrease in the Telco segment included a $0.7 million decrease in expenses for the annual earn-out payments related to the acquisition of Nave Communications.

Net income for the six month period ended March 31, 2016 was $170 thousand, or $0.02 per diluted share, compared with $650 thousand, or $0.06 per diluted share, for the same period of 2015.

Consolidated EBITDA for the six months ended March 31, 2016 was $1.0 million compared with $1.8 million for the same period ended March 31, 2015.

Cash and cash equivalents were $5.0 million as of March 31, 2016, compared with $6.1 million as of September 30, 2015. As of March 31, 2016, the Company had inventory of $21.8 million compared with $23.6 million as of September 30, 2015.

Earnings Conference Call

The Company will host a conference call today, Tuesday, May 10th, at 12:00 p.m. Eastern Time featuring remarks by David Humphrey, President and Chief Executive Officer, Dave Chymiak, Chief Technology Officer, and Scott Francis, Chief Financial Officer. 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 888-438-5535 (domestic) or 719-325-2472 (international). All dial-in participants must use the following code to access the call: 4740927. Please call at least five minutes before the scheduled start time.

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-Arizona, Tulsat-Nebraska, Tulsat-Tennessee, Tulsat-Texas, NCS Industries, ComTech Services and Nave Communications. 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
EBITDA is a supplemental, non-GAAP financial measure. EBITDA is defined as earnings before interest expense, income taxes, depreciation and amortization. Management believes providing 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 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. EBITDA, as calculated in the table below, may not be comparable to similarly titled measures employed by other companies. In additions, EBITDA is not necessarily a measure of our ability to fund our cash needs.

(Tables follow)

ADDVANTAGE TECHNOLOGIES GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended March 31, Six Months Ended March 31,
2016 2015 2016 2015
Sales$10,587,187 $11,366,539 $18,836,855 $22,203,697
Cost of sales 7,002,575 7,123,027 12,486,863 14,128,382
Gross profit 3,584,612 4,243,512 6,349,992 8,075,315
Operating, selling, general and administrative expenses 3,256,403 3,803,155 5,925,028 6,878,614
Income from operations 328,209 440,357 424,964 1,196,701
Other income (expense):
Other income 109,554 109,554
Interest income 2,172 2,172
Loss from equity method investment (140,998) (140,998)
Interest expense (62,307) (79,102) (130,068) (164,523)
Total other income (expense), net (91,579) (79,102) (159,340) (164,523)
Income before provision for income taxes 236,630 361,255 265,624 1,032,178
Provision for income taxes 91,000 127,000 96,000 382,000
Net income$ 145,630 $ 234,255 $ 169,624 $ 650,178
Earnings per share:
Basic$0.01 $0.02 $0.02 $0.06
Diluted$0.01 $0.02 $0.02 $0.06
Shares used in per share calculation:
Basic 10,092,319 10,051,844 10,080,729 10,046,525
Diluted 10,092,319 10,051,844 10,080,729 10,046,525


Three Months Ended March 31, 2016 Three Months Ended March 31, 2015
Cable TV Telco Total Cable TV Telco Total
Income (loss) from operations$336,279 $(8,070)$328,209 $347,839 $92,518 $440,357
Depreciation 80,802 27,367 108,169 70,149 29,930 100,079
Amortization 206,451 206,451 206,451 206,451
EBITDA$ 417,081 $ 225,748 $ 642,829 $ 417,988 $ 328,899 $ 746,887


Six Months Ended March 31, 2016 Six Months Ended March 31, 2015
Cable TV Telco Total Cable TV Telco Total
Income (loss) from operations$453,119 $(28,155)$424,964 $966,650 $230,051 $1,196,701
Depreciation 153,266 50,083 203,349 141,713 57,174 198,887
Amortization 412,902 412,902 412,903 412,903
EBITDA$ 606,385 $ 434,830 $1,041,215 $1,108,363 $ 700,128 $1,808,491


ADDVANTAGE TECHNOLOGIES GROUP, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
March
31,
2016
September
30,
2015
Assets
Current assets:
Cash and cash equivalents$4,969,254 $6,110,986
Accounts receivable, net of allowance for doubtful accounts of $250,000 5,650,300 4,286,377
Income tax receivable 175,096
Inventories, net of allowance for excess and obsolete
inventory of $3,056,628 and $2,756,628, respectively 21,757,901 23,600,996
Prepaid expenses 354,962 153,454
Deferred income taxes 1,740,000 1,776,000
Total current assets 34,647,513 35,927,813
Property and equipment, at cost 11,066,923 10,785,799
Less: Accumulated depreciation (4,774,500) (4,584,796)
Net property and equipment 6,292,423 6,201,003
Investment in and loans to equity method investee 280,562
Intangibles, net of accumulated amortization 5,386,571 5,799,473
Goodwill 3,910,089 3,910,089
Other assets 135,988 134,678
Total assets$50,653,146 $51,973,056
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable$2,055,719 $1,784,482
Accrued expenses 979,778 1,358,681
Income tax payable 122,492
Notes payable – current portion 888,845 873,752
Other current liabilities 941,534 982,094
Total current liabilities 4,865,876 5,121,501
Notes payable, less current portion 3,917,289 4,366,130
Deferred income taxes 296,000 286,000
Other liabilities 114,679 1,064,717
Total liabilities 9,193,844 10,838,348
Shareholders’ equity:
Common stock, $.01 par value; 30,000,000 shares authorized; 10,634,893 and 10,564,221 shares issued, respectively; 10,134,235 and 10,063,563 shares outstanding, respectively 106,349 105,642
Paid in capital (4,958,006) (5,112,269)
Retained earnings 47,310,973 47,141,349
Total shareholders’ equity before treasury stock 42,459,316 42,134,722
Less: Treasury stock, 500,658 shares, at cost (1,000,014) (1,000,014)
Total shareholders’ equity 41,459,302 41,134,708
Total liabilities and shareholders’ equity$50,653,146 $51,973,056

For further information Company Contact: Scott Francis (918) 251-9121 KCSA Strategic Communications Garth Russell (212) 896-1250 grussell@kcsa.com

Source:ADDvantage Technologies Group, Inc.