Addvantage Technologies Group Inc (AEY) SEC Filing 10-Q Quarterly report for the period ending Saturday, March 31, 2018

ADDvantage Technologies Group, Inc.

1221 E. Houston

Broken Arrow, Oklahoma 74012

ADDvantage Technologies Announces Financial Results

for the Fiscal Second Quarter of 2018

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BROKEN ARROW, Oklahoma, May 15, 2018 – ADDvantage Technologies Group, Inc. (NASDAQ: AEY)

, today announced its financial results for the three and six month periods ended March 31, 2018.

“Revenues for the second fiscal quarter of 2018 increased 3% compared with the same period in the prior year, driven by improved Telco segment sales and partially offset by declines in the Cable TV segment,” commented David Humphrey, President and CEO of ADDvantage Technologies. “On the Telco side, we were pleased to see our new sales strategy and restructuring initiatives at Nave Communications positively impact revenue growth. At Triton Datacom, we continue to be pleased with its overall sales performance despite slightly lower equipment sales due to reduced demand in the market early in the quarter. Looking ahead, we believe that the impact of our sales initiatives at both Nave and Triton, along with improved market demand, will drive top line growth in the Telco segment.  Despite experiencing top-line growth this quarter, our operating loss further increased, primarily due to lower revenues from our recycling business this quarter, which was driven by timing of shipments, and lower margins generated from our equipment sales.”

“Sales in the Cable TV segment continued to be impacted by the market weakness reported in the first fiscal quarter and the loss of a large repair business customer. We have implemented several initiatives to adapt to the declining revenues in this segment, including continued operational process improvements and right-sizing the Company's cost structure. This led to an improvement in operating income of thirteen percentage points compared to last year in the Cable TV segment.

Mr. Humphrey concluded, “Our results for the quarter also included equity losses of $0.3 million for a legal settlement with a subcontractor related to the YKTG Solutions, LLC wireless cell tower decommissioning project and the associated legal expenses.  Looking ahead, we believe we now have the framework in place to drive stronger top-line results in our Telco segment, and we have implemented initiatives to improve the margins on our equipment sales, both of which are expected to improve bottom-line results.  In addition, we anticipate that our recycling revenue will return to normal levels next quarter, and we do not expect any further expenses related to the YKTG Solutions project. We remain confident in the opportunities to grow market share and build value for shareholders.”

Results for the three months ended March 31, 2018

Consolidated sales increased 3% to $11.6 million for the three months ended March 31, 2018 compared with $11.3 million for the three months ended March 31, 2017.  The increase in sales was in the Telco segment of $0.7 million, partially offset by a decrease in the Cable TV segment of $0.4 million.

Consolidated operating, selling, general and administrative expenses decreased $0.3 million, or 7%, to $3.4 million for the three months ended March 31, 2018, from $3.7 million in the same period in the prior year. This was due to lower expenses in the Cable TV segment, while the Telco segment was relatively flat.