Company limits losses in challenging operating environment; Maintains strong balance sheet
BALTIMORE — (BUSINESS WIRE) — September 28, 2009 — Avatech Solutions, Inc. (OTCBB: AVSO), the nationwide technology experts for design, engineering, and facilities management, announced financial results for its fourth quarter and year ended June 30, 2009.
For the fiscal year ended June 30, 2009, the Company reported revenues of $35.4 million, compared to $49.6 million in the prior-year period. Selling, general & administrative expenses decreased to $16.2 million in fiscal 2009, when compared to $18.5 million in the same period of the prior fiscal year. As a result, Avatech reported a net loss of $313,000, or $(0.05) per fully diluted share, compared to net income of $3 million, or $0.15 per fully diluted share, for the same period in the prior year. Adjusted EBITDA (as defined) was $467,000 in Fiscal 2009 down from adjusted EBITDA of $4.7 million in the prior year period.
For the fourth quarter of its fiscal year, the Company earned revenues of $7.2 million, compared to $11.5 million in the prior-year quarter. Included in the revenues for the quarter was a $500,000 sale of software that was developed by the Company’s software development group. On the expense side, selling, general & administrative expenses decreased to $3.6 million in the three months ended June 30, 2009, compared to $4.4 million in the same period of the prior fiscal year. For its fourth fiscal quarter, the Company incurred a net loss of $97,000, or $(0.01) per fully diluted share, as compared with net income of $742,000, or $0.03 per fully diluted share, in the same period in the prior year. Adjusted EBITDA (as defined) was a negative $4,000, down from adjusted EBITDA of $808,000 in the prior year period.
The Company indicated that its balance sheet continues to be strong evidenced by its cash balance of $2.7 million, the presence of only $160,000 in long-term liabilities and repayments of $2 million of its Series F Preferred Stock that occurred during the fiscal year. In addition, the Company noted that while it continues to maintain its $5 million line of credit, it has had no borrowings on its line for the entire fiscal year.
“The building and manufacturing markets were significantly impacted by the global recession throughout fiscal 2009, which resulted in an unprecedented reduction in spending on the types of software and services we provide. Through a proactive management approach, we quickly reduced our costs to adapt to the current business environment. This has allowed us to preserve our cash, minimize our net loss and report positive EBITDA for fiscal 2009, while maintaining our market share and the infrastructure necessary to quickly ramp up operations as customer spending returns,” commented George Davis, President and Chief Executive Officer of Avatech.
“During the past year we have been developing our consulting and services offerings into a stand alone business, MSD Consulting, which taps into our highly-trained staff of engineers. While it was still in its early stages of development in the past fiscal year, this new initiative helped supplement our revenues for the year, generating approximately $1 million in incremental revenue,” continued Mr. Davis.
“The economy is starting to show early signs of recovery and we are beginning to experience greater interest from customers in our software and services. However, while we are excited about these latest indicators, we are still taking a conservative business approach to fiscal 2010. We expect that the current plan we have in place will result in EBITDA growth in the current fiscal year as we take advantage of the improving market conditions,” concluded Mr. Davis.
Conference Call Information
Avatech Solutions will hold a conference call to discuss its third quarter results at 11 a.m. ET on September 28, 2009. The dial-in numbers for the conference call are (888) 713-4215 (domestic) or (617) 213-4867 (international), and enter the passcode (59540239). A replay of the call will also be available through October 5, 2009, and can be accessed by dialing (888) 286-8010 (domestic) or (617) 801-6888, and dialing the passcode (73265135).
A live webcast of the conference call will be available to all investors in the Investor Relations section of the Company's website, www.avatech.com. For those who cannot listen to the live broadcast, an audio replay of the call will also be available on the Company’s site for a limited time.
Note Regarding Use of Non-GAAP Financial Measure
This news release contains the non-GAAP measure Adjusted EBITDA. Adjusted EBITDA represents earnings (or losses) before interest, income taxes, depreciation and amortization, and stock-based compensation expense.
Adjusted EBITDA is used by management, analysts, investors and other interested parties in evaluating our operating performance compared to that of other companies in our industry, as the calculation of EBITDA as adjusted eliminates the effect of financing, income taxes, stock-based compensation costs, the accounting effects of capital spending and certain other merger related expenses, which items may vary from different companies for reasons unrelated to overall operating performance.
Avatech believes this non-GAAP measure provides useful information to both management and investors by excluding certain expenses that may not be indicative of its core operating results. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. The non-GAAP measure included in this press release has been reconciled to the GAAP results in the accompanying table.
About Avatech Solutions
Avatech Solutions, Inc. (OTCBB: AVSO) is America’s leading professional services company for design and engineering technologies. Avatech advances the way organizations design, develop, and manage building, infrastructure, and manufacturing projects. Fortune 500 and Engineering News Record's Top 100 companies work with Avatech to gain a competitive advantage through technology consulting, implementation, training, and support services. One of the world’s largest integrators of Autodesk software, Avatech designs systems that accelerate innovation while improving quality and profitability. For more information please visit www.avatech.com.
Forward-looking Statement
This press release contains forward-looking statements about the expectations, beliefs, plans, intentions, and strategies of Avatech Solutions, Inc. There are a number of important factors that could cause actual results to differ materially from those anticipated by any forward-looking information. Statements that are not historical in nature, including those that include the words “goal,” “expect,” “anticipate,” “estimate,” “should,” “believe,” “intend,” and similar expressions, are based on current expectations, estimates and projections about, among other things, the industry and the markets in which Avatech operates, and they are not guarantees of future performance. Whether actual results will conform to expectations and predictions is subject to known and unknown risks and uncertainties, including risks and uncertainties discussed in this report; general economic, market, or business conditions; changes in interest rates, and demand for our products and services; changes in our competitive position or competitive actions by other companies; the ability to manage growth; changes in laws or regulations or policies of federal and state regulators and agencies; and other circumstances beyond our control. Consequently, all of the forward-looking statements made in this document are qualified by these cautionary statements, and there can be no assurance that the actual results anticipated will be realized, or, if substantially realized, will have the expected consequences on our business or operations.
| Avatech Solutions, Inc. | |||||||||||
| Summary Consolidated Financial Data | |||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||
| June 30, | June 30, | ||||||||||
| 2009 | 2008 | 2009 | 2008 | ||||||||
| Revenues- | |||||||||||
| Product sales | $3,289,000 | $6,690,000 | $17,516,000 | $27,650,000 | |||||||
| Service revenue | 1,798,000 | 2,728,000 | 9,446,000 | 11,363,000 | |||||||
| Commission revenue | 1,611,000 | 2,126,000 | 7,973,000 | 10,631,000 | |||||||
| Sale of developed software | 500,000 | 0 | 500,000 | 0 | |||||||
| Total revenues | 7,198,000 | 11,544,000 | 35,435,000 | 49,644,000 | |||||||
| Cost of revenues- | |||||||||||
| Cost of product sales | 2,124,000 | 4,529,000 | 11,596,000 | 18,801,000 | |||||||
| Cost of service revenue | 1,510,000 | 2,016,000 | 7,384,000 | 8,145,000 | |||||||
| Total cost of revenues | 3,634,000 | 6,545,000 | 18,980,000 | 26,946,000 | |||||||
| Gross margin | 3,564,000 | 4,999,000 | 16,455,000 | 22,698,000 | |||||||
| Operating income (loss) | (247,000) | 415,000 | (513,000) | 3,498,000 | |||||||
| Net income (loss) | (97,000) | 741,000 | (313,000) | 3,091,000 | |||||||
| Earnings (loss) per share: | |||||||||||
| Basic | $ (0.03) | $ 0.03 | $ (0.05) | $ 0.16 | |||||||
| Diluted | $ (0.03) | $ 0.03 | $ (0.05) | $ 0.15 | |||||||
| Weighted average common shares outstanding: | |||||||||||
| Basic | 16,937,591 | 16,370,186 | 16,815,722 | 16,166,067 | |||||||
| Diluted | 16,937,591 | 16,643,517 | 16,815,722 | 20,121,896 | |||||||
| June 30, | June 30, | ||||||||||
| 2009 | 2008 | ||||||||||
| Current assets | $8,835,000 | $13,955,000 | |||||||||
| Property and equipment | 796,000 | 781,000 | |||||||||
| Other long-term assets | 7,628,000 | 7,860,000 | |||||||||
| Total assets | $17,259,000 | $22,596,000 | |||||||||
| Current liabilities | $6,338,000 | $9,425,000 | |||||||||
| Other long-term liabilities | $160,000 | $0 | |||||||||
| Series F convertible preferred stock | 1,864,000 | 3,629,000 | |||||||||
| Stockholders' equity | 8,897,000 | 9,542,000 | |||||||||
| Total liabilities and stockholders' equity | $17,259,000 | $22,596,000 | |||||||||
| Avatech Solutions, Inc. | |||||||||||||||||||
| Reconciliation of non-GAAP financial measure | |||||||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||||||
| 6/30/2009 | 6/30/2008 | 6/30/2009 | 6/30/2008 | ||||||||||||||||
| GAAP net income | $ | (97,000 | ) | $ | 742,000 | $ | (313,000 | ) | $ | 3,091,000 | |||||||||
| Provision for income taxes | (157,000 | ) | (296,000 | ) | (182,000 | ) | 493,000 | ||||||||||||
| Income before income taxes | (254,000 | ) | 446,000 | (495,000 | ) | 3,584,000 | |||||||||||||
| Stock-based compensation | 77,000 | 204,000 | 257,000 | 499,000 | |||||||||||||||
| Net interest (income) expense | 7,000 | (12,000 | ) | (2,000 | ) | (86,000 | ) | ||||||||||||
| Depreciation and amortization | 166,000 | 170,000 | 723,000 | 693,000 | |||||||||||||||
| Adjusted EBITDA | $ | (4,000 | ) | $ | 808,000 | $ | 483,000 | $ | 4,690,000 | ||||||||||
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Note 1 - |
Management uses adjusted EBITDA, a non-GAAP measure, to evaluate the Company's operating
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Contact:
Avatech Solutions, Inc.
Jean Schaeffer, +1 410-581-8080
Fax: +1 410-753-1591
Email Contact
or
Investor Relations
KCSA Strategic Communications
Todd Fromer / Garth Russell, +1 212-896-1215 / 1250
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