ADDvantage Technologies Reports 47% Revenue Growth, 36% Increase in Wireless Revenue, for the First Quarter of Fiscal 2022

Rhea-AI Summary

ADDvantage Technologies (NASDAQ: AEY) reported strong financial results for Q1 2022, achieving revenues of $18.7 million, a 47% increase compared to $12.7 million in Q1 2021. The wireless segment saw over $7 million in revenue, driven by 5G-related tower work, while the Telco segment grew by 54% year-over-year due to robust demand for refurbished telecom equipment. However, gross margins decreased to 25% from 28% due to increased costs related to new customer onboarding. The company forecasts continued revenue growth and margin expansion in the second half of 2022.

Positive

• Q1 2022 revenue increased by 47% to $18.7 million.
• Wireless revenue associated with 5G tower work rose by $1.9 million.
• Telco segment revenue grew 54% year-over-year.
• Expectations for further revenue and margin growth in H2 2022.

Negative

• Gross margin decreased to 25% from 28% year-over-year.
• Net loss remained flat at $2.0 million, or $0.16 per share.

Initial Acceleration of 5G-Related Revenue in Wireless Segment, Combined with 54% Increase in Telco Revenue, Drives Robust Top-Line Growth; Investments in Anticipation of Additional Wireless Revenue Underway

CARROLLTON, Texas, Feb. 14, 2022 (GLOBE NEWSWIRE) -- ADDvantage Technologies Group, Inc. (NASDAQ: AEY) (“ADDvantage Technologies” or the “Company”) today reported financial results for the three months ended December 31, 2021, the first fiscal quarter of 2022.

“We have moved quickly to ramp capabilities to meet the growing demand for 5G-related tower work, as our wireless segment delivered its second consecutive quarter of revenue greater than $7 million, even with weather and holiday-related interruptions, and we anticipate further growth as we move through calendar 2022,” commented Joe Hart, Chief Executive Officer. “The ramp up and entree into the new markets adversely effected margins for Q1 and into Q2 of this fiscal year. With our ramp up largely complete, we are now squarely focused on effectively aligning resources for demand, and improving operational efficiency and reducing general and administrative expenses, to drive margin expansion. We expect further growth in both revenue and margin expansion in the last half of the year.”

“ADDvantage Technologies is strategically and regionally well-positioned to benefit from this secular, multi-year spending cycle, with capabilities in place in key markets and long-term relationships with wireless carriers,” continued Mr. Hart. “Simultaneously, our Telco segment led by Nave Communications continues to deliver improved results due to strong demand for refurbished telecom equipment. Revenue in our Telco segment increased 54% year-over-year. While current demand remains high in our Telco segment we continue to expect an eventual leveling of demand, though at higher levels than we saw most of 2021.”

Financial Results for the Three Months ended December 31, 2021

Fiscal first quarter sales were $18.7 million, an increase of $6.0 million, or 47% compared to $12.7 million last year. The increase was primarily due to a $1.9 million increase in Wireless revenue related to 5G tower work, and an increase of $4.1 million in Telco revenue due to increased demand for refurbished telecommunications equipment sold by the Telco segment.

Gross profit was $4.6 million, or 25% gross margin, compared to gross profit of $3.6 million, or 28% gross margin, for the same period last year. The net changes in gross profit were due to higher overall sales in both the Wireless and Telco segments, and the decrease in gross margin as a percent of sales was due to investments made with a new wireless customer and the impact of the Company onboarding new crews in anticipation of near-term wireless revenue increases.

Operating expenses increased $0.5 million to $2.5 million from $2.0 million the same period last year as the Wireless group ramps up to meet the increased demand and deploy teams to additional new markets.

Consolidated selling, general and administrative ("SG&A") expenses include overhead, which consist of personnel, insurance, professional services, communication, and other cost categories. SG&A expense increased $0.5 million, or 15%, to $3.7 million for the three months ended December 31, 2021 from $3.2 million for the same period last year. The increase in SG&A relates primarily to increased selling and commissions expenses to support higher revenues.

Net loss for the quarter was $2.0 million or 0.16 per share, compared with a net loss of $2.0 million, or a loss of 0.16 per share for the same quarter last year.

Balance sheet

Cash and cash equivalents were $1.8 million as of December 31, 2021, compared with $2.6 million as of September 30, 2021. As of December 31, 2021, the Company had net inventories of $5.7 million.

Outstanding debt as of December 31, 2021 was $4.2 million, which is comprised of $2.1 million on a revolving line of credit, and $2.1 million in financing leases.

Earnings Conference Call

The Company will host a conference call on Tuesday, February 15, 2022 at 10 a.m. Eastern.

Date: Time: Toll-free Dial-in Number: International Dial-in Number: Conference ID:		Tuesday, February 15, 2022 10 a.m. Eastern 1-800-239-9838 1-323-794-2551 9288889

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) is a communications infrastructure services and equipment provider operating a diversified group of companies through its Wireless Infrastructure Services and Telecommunications segments. Through its Wireless segment, Fulton Technologies provides turn-key wireless infrastructure services including the installation, modification and upgrading of equipment on communication towers and small cell sites for wireless carriers, national integrators, tower owners and major equipment manufacturers. Through its Telecommunications segment, Nave Communications and Triton Datacom sell equipment and hardware used to acquire, distribute, and protect the communications signals carried on fiber optic, coaxial cable and wireless distribution systems. The Telecommunications segment also offers repair services focused on telecommunication equipment and recycling surplus and related obsolete telecommunications equipment.

ADDvantage operates through its subsidiaries, Fulton Technologies, Nave Communications, and Triton Datacom. For more information, please visit the corporate web site at www.addvantagetechnologies.com.

Cautions Regarding Forward-Looking Statements

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 Balance Sheets
(in thousands, except share amounts)
(Unaudited)

	December 31, 2021				September 30, 2021
Assets
Current assets:
Cash and cash equivalents	$	1,837				2,608
Restricted cash		581				334
Accounts receivable, net of allowances of $250		6,469				7,013
Unbilled revenue		2,219				2,488
Inventories, net of allowances of 3,567 and 3,476, respectively		5,653				5,922
Prepaid expenses and other current assets		1,371				1,431
Total current assets		18,130				19,796
Property and equipment, at cost:
Machinery and equipment		5,354				4,973
Leasehold improvements		821				813
Total property and equipment, at cost		6,175				5,786
Less: Accumulated depreciation		(2,558	)			(2,293	)
Net property and equipment		3,617				3,493
Right-of-use lease assets		2,466				2,730
Intangibles, net of accumulated amortization		1,027				1,107
Goodwill		58				58
Other assets		128				128
Total assets	$	25,426			$	27,312

Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	6,812			$	7,044
Accrued expenses		1,184				1,581
Deferred revenue		207				168
Bank line of credit		2,050				2,050
Right-of-use lease obligations, current		1,177				1,198
Finance lease obligations, current		652				582
Other current liabilities		706				692
Total current liabilities		12,788				13,315
Right-of-use lease obligations, long-term		1,839				2,141
Finance lease obligations, long-term		1,484				1,429
Total liabilities		16,111				16,885
Shareholders’ equity:
Common stock, $0.01 par value; 30,000,000 shares authorized; 13,041,127 shares issued and outstanding, and 12,610,229 shares issued and outstanding, respectively		130				126
Paid in capital		335				(578	)
Retained earnings		8,850				10,879
Total shareholders’ equity		9,315				10,427
Total liabilities and shareholders’ equity	$	25,426			$	27,312

ADDvantage Technologies Group, Inc.
Consolidated Statements of Operations
(in thousands, except share amounts)
(Unaudited)

	Three Months Ended December 31,
		2021				2020
Sales	$	18,690			$	12,749
Cost of sales		14,059				9,120
Gross profit		4,631				3,629
Operating expenses		2,500				2,047
Selling, general and administrative expenses		3,688				3,215
Depreciation and amortization expense		345				281
Loss from operations		(1,902	)			(1,914	)
Other income (expense):
Interest income		—				48
Other income (expense)		(72	)			(19	)
Interest expense		(55	)			(68	)
Other income (expense), net		(127	)			(39	)
Loss before income taxes		(2,029	)			(1,953	)
Income tax benefit		—				—
Net loss	$	(2,029	)		$	(1,953	)
Loss per share:
Basic and diluted	$	(0.16	)		$	(0.16	)
Shares used in per share calculation:
Basic and diluted		12,683,312				12,149,778

Non-GAAP Financial Measure

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 also excludes restructuring charge, stock compensation expense, other income, other expense, interest income and income from equity method investment.  Adjusted EBITDA is presented below because this metric is used by the financial community as a method of measuring our financial performance and of evaluating 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 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.

The following table provides a reconciliation by segment of income (loss) from operations to Adjusted EBITDA, in thousands:

	Three Months Ended December 31, 2021												Three Months Ended December 31, 2020
	Wireless				Telco				Total				Wireless				Telco				Total
Income (loss) from operations	$	(2,326	)		$	424			$	(1,902	)		$	(1,105	)		$	(809	)		$	(1,914	)
Depreciation and amortization expense		220				125				345				152				129				281
Stock compensation expense		144				137				281				140				175				315
Adjusted EBITDA	$	(1,962	)		$	686			$	(1,276	)		$	(813	)		$	(505	)		$	(1,318	)

For further information:
Hayden IR
Brett Maas
(646) 536-7331
aey@haydenir.com

FAQ

What financial results did ADDvantage Technologies announce for Q1 2022?

ADDvantage Technologies reported Q1 2022 revenues of $18.7 million, a 47% increase from $12.7 million in Q1 2021.

How did the wireless segment perform in the latest report?

The wireless segment generated over $7 million in revenue, driven by 5G-related tower work.

What is the outlook for ADDvantage Technologies in 2022?

The company expects continued revenue growth and margin expansion in the second half of 2022.

What was the gross margin reported for Q1 2022?

The gross margin for Q1 2022 was reported at 25%, down from 28% in Q1 2021.

What were the net losses reported by ADDvantage Technologies for Q1 2022?

The net loss for Q1 2022 remained at $2.0 million, or $0.16 per share.