ADDvantage Technologies Revenue Full-Year Increases 56% to $97.0 million, Improves Bottom line by $7.0 million

Rhea-AI Summary

ADDvantage Technologies Group reported significant financial growth for the year ended December 31, 2022, with total sales reaching $97.0 million, up 56% from the previous fiscal year. The Telco segment saw a 59% increase in revenue, while the Wireless segment grew by 49%. Despite a challenging fourth quarter, the company posted a net income of $0.5 million, a turnaround from a net loss of $6.5 million the prior year. Operating expenses were contained, and gross profit margin improved to 29%. Cash reserves increased to $3.7 million, and outstanding debt was reduced to $1.9 million.

Positive

• Total sales increased 56% to $97.0 million for fiscal 2022.
• Telco segment revenue grew 59% to $66.2 million.
• Wireless segment revenue increased 49% to $30.8 million.
• Net income for the year was $0.5 million, a significant improvement from a $6.5 million loss.
• Gross profit margin improved from 26% to 29%.
• Cash and cash equivalents rose to $3.7 million, up from $2.4 million.
• Paid off line of credit, reducing outstanding debt to $1.9 million.

Negative

• Net loss of $0.5 million in the fourth quarter, although improved from $2.0 million loss year-over-year.
• Operating expenses increased by $0.5 million to $9.8 million.

Telco Sales Increase 59%, Wireless Revenues Up 49%, for Year-Ended December 31, 2022

CARROLLTON, Texas, March 21, 2023 (GLOBE NEWSWIRE) -- ADDvantage Technologies Group, Inc. (NASDAQ: AEY) (“ADDvantage Technologies” or the “Company”) today reported financial results for the three and 12 months ended December 31, 2022, the fourth quarter of 2022. The Company has changed its fiscal year end from September 30 to December 31 and the current fiscal year runs from January 1, 2022 through December 31, 2022 (fiscal 2022).

“This was a milestone year for ADDvantage Technologies, as we grew both our segments and delivered full-year positive net income, even with a challenging fourth quarter impacted by weather and economic headwinds,” commented Joe Hart, Chief Executive Officer. “Our Telco segment drove the majority of our growth, and this business benefits from customers seeking lower-cost technology such as our high-quality optical transport and refurbished end-user solutions. Our Wireless segment grew steadily throughout the year, delivering 49% year-over-year growth. We continue to gain market share in our target regions.”

“Recent upheaval in the wireless industry, and struggles of longstanding players, is creating new and exciting opportunities for us,” continued Mr. Hart. “Leading carriers are seeking new partners, partly due to the volume of work and partly due to issues involving legacy providers. We are well-positioned to secure new, long-term contracts due to our strong relationships with carriers and our capabilities.”

Financial Results for the Three Months ended December 31, 2022

Fourth quarter sales were $19.6 million, an increase of $0.9 million, or 5% compared to $18.7 million last year. The increase was primarily due to an increase of $0.8 million, or 11% in Wireless revenue due to 5G tower work, and an increase of $0.1 million, or 1%, in Telco revenue.

Gross profit was $5.3 million, or 27% gross margin, compared to gross profit of $4.6 million, or 25% gross margin, for the same period last year. Operating expenses decreased $0.3 million, or 10%, to $2.2 million reflecting the previously announced cost-reduction initiatives. Consolidated selling, general and administrative ("SG&A") expenses include overhead, which consist of personnel, insurance, professional services, communication, and other cost categories, decreased $0.6 million or 16%, to $3.1 million for the three months ended December 31, 2022 from $3.7 million for the same period last year.

Net loss for the quarter was $0.5 million, or $(0.04) per basic and diluted share, compared to a net loss of $2.0 million, or $(0.16) per basic and diluted share, for the fourth quarter last year. The December quarter is typically slow due to weather which impacts Wireless work, and holidays which impact Telco sales.

Financial Results for the 12 Months ended December 31, 2022 (the period from January 1 to December 31)

For fiscal 2022, sales were $97.0 million, an increase of 56% compared to $62.2 million for the fiscal year ended September 30, 2021. Wireless segment revenue increased 49% to $30.8 million and Telco segment revenue increased 59% to $66.2 million.

Gross profit was $27.8 million, or 29% gross margin, compared to gross profit of $16.1 million, or 26% gross margin, for the prior year. Operating expenses increased $0.5 million to $9.8 million. Full-year net income was $0.5 million, or $0.03 per basic and diluted share, compared to a net loss of $6.5 million, or $(0.52) per basic and diluted share last year.

Balance sheet

Cash and cash equivalents were $3.7 million as of December 31, 2022, compared with $2.4 million at December 31, 2021. As of December 31, 2022, the Company had net inventories of $9.6 million.

During the year ended December 31, 2022, the Company paid off its line of credit. Outstanding debt as of December 31, 2022 was $1.9 million, consisting of vehicle financing leases.

Earnings Conference Call

The Company will host a conference call on Tuesday, March 21, 2023 at 5 p.m. Eastern.
Date:	Tuesday, March 21, 2023
Time:	5 p.m. Eastern
Toll-free Dial-in Number:	1-877-407-9039
International Dial-in Number:	1-201-689-8470
Conference ID:	13736536

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.

A replay of the conference call will be available through April 4, 2023.
Toll-free Replay Number:	1-844-512-2921
International Replay Number:	1-412-317-6671
Replay Passcode:	13736536

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.

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

-- Tables follow –

ADDvantage Technologies Group, Inc.
Consolidated Balance Sheets
(in thousands, except share amounts)

	December 31,
		2022				2021
Assets
Current assets:
Cash and cash equivalents	$	2,552			$	1,837
Restricted cash		1,101				581
Accounts receivable, net of allowances of $262 and $250, respectively		1,682				6,469
Unbilled revenue		5,005				2,219
Income tax receivable		102				—
Inventories, net of allowance of $3,871 and $3,567, respectively		9,563				5,653
Prepaid expenses and other current assets		1,399				1,371
Total current assets		21,404				18,130
Property and equipment, at cost:
Machinery and equipment		5,542				5,354
Leasehold improvements		899				821
Total property and equipment, at cost		6,441				6,175
Less: Accumulated depreciation		(3,057	)			(2,558	)
Net property and equipment		3,384				3,617
Right-of-use lease assets		1,540				2,466
Intangibles, net of accumulated amortization		709				1,027
Goodwill		58				58
Other assets		123				128
Total assets	$	27,218			$	25,426

Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	9,407			$	6,812
Accrued expenses		1,445				1,184
Deferred revenue		148				207
Bank line of credit		—				2,050
Right-of-use lease obligations, current		1,204				1,177
Finance lease obligations, current		636				652
Other current liabilities		442				706
Total current liabilities		13,282				12,788
Right-of-use lease obligations, long-term		635				1,839
Finance lease obligations, long-term		1,254				1,484
Total liabilities		15,171				16,111
Shareholders’ equity:
Common stock, $.01 par value; 30,000,000 shares authorized; 14,132,033 and 13,041,127 shares issued and outstanding, respectively		141				130
Paid in capital		2,585				335
Retained earnings		9,321				8,850
Total shareholders’ equity	$	12,047			$	9,315
Total liabilities and shareholders’ equity	$	27,218			$	25,426

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

	Three months ended								Year Ended
	December 31,								December 31,				September 30,
		2022				2021				2022				2021
Sales	$	19,554			$	18,690			$	97,028			$	62,160
Cost of sales		14,213				14,059				69,239				46,033
Gross profit		5,341				4,631				27,789				16,127
Operating expenses		2,245				2,500				9,845				9,329
Selling, general and administrative expense		3,112				3,688				15,571				14,890
Depreciation and amortization expense		309				345				1,234				1,228
Gain on disposal of assets		29				—				338				23
Income (loss) from operations		(296	)			(1,902	)			1,477				(9,297	)
Other income (expense):
Gain on extinguishment of debt		—				—				—				2,955
Interest income		—				—				—				135
Interest expense		(42	)			(55	)			(176	)			(238	)
Other expense		(147	)			(72	)			(822	)			(110	)
Other income (expense), net		(189	)			(127	)			(998	)			2,742
Income (loss) before income taxes		(485	)			(2,029	)			479				(6,555	)
Income tax provision (benefit)		8				—				8				(53	)
Net income (loss)	$	(493	)		$	(2,029	)		$	471			$	(6,502	)
Income (loss) per share:
Basic and diluted	$	(0.04	)		$	(0.16	)		$	0.03			$	(0.52	)
Shares used in per share calculation:
Basic and diluted		14,023,911				12,683,312				13,484,271				12,401,043

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 stock compensation expense, gain on extinguishment of debt, impairment of intangibles and right of use assets, 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.

A reconciliation by segment of loss from operations to Adjusted EBITDA follows, in thousands:

	Three Months Ended December 31, 2022												Three Months Ended December 31, 2021
	Wireless				Telco				Total				Wireless				Telco				Total
Income (loss) from operations	$	(933	)		$	637			$	(296	)		$	(2,326	)		$	424			$	(1,902	)
Depreciation and amortization expense		188				121				309				220				125				345
Stock compensation expense		40				30				70				144				137				281
Adjusted EBITDA	$	(705	)		$	788			$	83			$	(1,962	)		$	686			$	(1,276	)

	For the year ended December 31, 2022												For the year ended September 30, 2021
	Wireless				Telco				Total				Wireless				Telco				Total
Income (loss) from operations	$	(4,792	)		$	6,269			$	1,477			$	(6,864	)		$	(2,433	)		$	(9,297	)
Depreciation and amortization expense		749				485				1,234				715				513				1,228
Stock compensation expense		274				296				570				516				493				1,009
Adjusted EBITDA	$	(3,769	)		$	7,050			$	3,281			$	(5,633	)		$	(1,427	)		$	(7,060	)

FAQ

What were the financial results for ADDvantage Technologies (AEY) in 2022?

For 2022, ADDvantage Technologies reported sales of $97.0 million, a 56% increase, with net income of $0.5 million.

How did the Wireless and Telco segments perform for AEY in 2022?

The Wireless segment revenue increased by 49% to $30.8 million, while the Telco segment revenue rose 59% to $66.2 million.

What is the gross profit margin for ADDvantage Technologies (AEY) for the fiscal year 2022?

The gross profit margin improved to 29% for fiscal 2022, compared to 26% the previous year.

How did the fourth quarter of 2022 affect ADDvantage Technologies' (AEY) performance?

In Q4 2022, ADDvantage Technologies reported a net loss of $0.5 million, which improved from a $2.0 million loss in Q4 2021.

What is the current cash position of ADDvantage Technologies (AEY)?

As of December 31, 2022, ADDvantage Technologies had cash and cash equivalents of $3.7 million.