ADDvantage Technologies (AEYGQ) 15 May 232023 Q1 Earnings call transcript

Greetings, ladies and gentlemen .And welcome to the ADDvantage Technologies Group’s Fiscal 2023 First Quarter Financial Results. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded.

pleasure your my with Brett now IR. Hayden is to host, introduce Maas It sir. ahead go Please

Thank operator. you,

We today Chief well as are CEO; Michael and joined Rutledge, by Joe the company's Financial President Officer. Hart, as

conference the today's Reform call, Act Securities statements, to that certain Before we provisions call subject of I'd contain to begin may are Litigation Harbor remind of like you XXXX. this Safe which Private forward-looking the

ADDvantage manufacturers as Technologies among include things regarding the other performance maintain ability Technologies. such relationships well certain of system of its These agreements forward-looking statements financial as strategic and future statements the to and subsidiaries with events, future operators, ADDvantage as and original multiple equipment

statements the involve materially Commission. of Form These a contained are XX-K on factors future Participants actual recent Exchange risks predictions with number Technologies' are Securities those as on and of or in a differ variety uncertainties. ADDvantage and to may most the results these such due from statements and only events forward-looking cautioned file that report

Financial should in consolidated and call the in today with notes issued most be statements Technologies' report on release on recent XX-K. information ADDvantage and press conjunction in financial this included included considered earlier Form the presented company's conference

guidance change. currently based results available The regarding is on information to future is on on which limited anticipated this call subject ADDvantage Technologies

it change, the the of Technologies speaks ADDvantage during call. may influencing only information will update factors certain and only will the company as as guidance provide the Such date necessarily such information any guidance this Although year. of points not at

at ratios in the today, press table non-GAAP such non-GAAP certain with release and website located these present earlier addvantagetechnologies.com. net measures also measures our may we used call, income issued are our certain and are this at as that which financial in During financial

for are a relevant. about of reconciliation non-GAAP financial GAAP considered measures. a addition be instead measures measures non-GAAP GAAP and investors we are financial these benefit closest These discussion of believe the why find should financials the included measures in of financial not with and these to You'll

call President Joe go Hart, I'd like CEO ahead. to ADDvantage turn the Joe, now of over please Technologies. to and

Thank everyone slowest Telco The is the challenge segment that a quarter quarter. to always was compounding you on it for winter our segment. And sudden precipitous you, and in Midwest, joining This due our today. quarter. But March our call weather a challenging demand to Brett. is largely in for the was the thank typically decline wireless us

benefiting trends, Telco remote the years, two such growth several pandemic been shortage, supply the and robust chain, For last as related our the delivering from chip workforce. disrupted the segment has global

spares high needed made and phones equipment. and Simply put, they more led to to equipment, operators this over new constraints, to workforce for chip or large year, for components. to in better was shortage, more in the network to cases a buy it optical supply wouldn't support Telco Last chain distributed from to and concerned was difficult than office result their a But get critical ever. enterprises switches refurbished curve network borrow buying from network. some that able The that cost be parts XXXX demand used impossible

a up on improved have OEMs the equipment, of operators business. delivery built our impact they for burning the that the intervals had which significant have inventory spares, Now the new focused excess had on that off has

to in historic point slight with perform levels weather. burn the back half levels and inventory winter to normal some that segment expect months January more In second business equipment at buildup next at to in off will We of wireless during few decline a this our our year. the will that normalize meantime, due the continues

we've will surface only revenue As confident We think of that wireless highly the accelerate this are scratched weather improves, wireless the our we year. the opportunity. significantly

to and opportunities improving continue competitive our talent to position. add our We broadening team, our experienced

upheaval. industry Moreover, unprecedented wireless facing is the

service Some large many integrators served of the struggling. who carriers the had largest in country areas are of

growth halfway the tower new failed. less one a continuing additions complete capture will a their reliable as opportunity The opportunity believe partners, established work greenfield is for significant has are with bring XG had to relationships created and This of represents spend. XG have than and near our we has carriers issues team opportunities Some massive overall experience. and meaningful initial The multiyear for the service deployments. opportunity the CapEx and we share term

to subscriber in deliver Although, population. as some the ever of continue dollars plans, wireless and the of required their demanding in the carriers are they brief their coverage slowdown capacity pause billions expansion or networks must invest announcing a by they

division the this year. profitability as revenues half bright normalize our second the again expenses put in last from reduction in We we and segment the we solid of are cost in initiatives year. SG&A the we On benefited place side, the poised wireless and lowered for increase Telco in

revenues the $X.X consolidated decreased a ago, from While quarter million. operating decreased flat gross essentially same remained expenses our margins XX% year by and

now call to our of more Michael our over Rutledge, I'll review CFO, turn financial Michael, results. that, detailed With a please go the to provide ahead.

revenue million, XX% million, of or to profit Telco same of quarter gross decrease decrease a and million, you, compared the gross a three or gross XX, due Gross XX% XX% XX%, in March million, was the $X.X in $X.X ended XX% margin, sales Consolidated wireless of last with The profit the margin, primarily a $X.X from XXXX. to $X.X Joe. year. to a $X.X $XX.X decrease was million $XX.X Thank million months decreased or or first for revenue. period million, for for

$XXX,XXX same last basic diluted of $X.XX $X.X and cost communication compared X% for selling, announced share, administrative overhead, categories, period for months XX% year. quarter initiatives. net the approximately a approximately SG&A $XXX,XXX same to $X.XX other per which the $X.X or the to XXXX, million Operating from reduction for or previously million, Net to million, Consolidated for and general include or $X.X last personnel, expenses and loss or services, was reflecting XX, the professional quarter year. decreased expenses loss ended insurance, and or decreased per March $X.X basic cost of three the diluted million million, share, $X.X consist

Turning million essentially into were purchase stock securities net cash the principal promissory at March the to balance Company, XX, equivalents of and a entered million. $X.X amount into proceeds of our shares from the issuing $X.X secured In XX% XX, aggregate million we of common of sheet, raising December convertible unchanged notes in cash XXXX. April, $X.X agreement

$X.X March had million. leases. $X.X XXXX, consisting XX, company inventories Outstanding XX of vehicle financing million of March was net of the As as debt of

of This turn segment the facilitate concludes financial to will remarks. overview now operator to the I over our the questions. any call

[Operator Instructions]

a private question comes first Kasmar, from The who's investor. George

me? the like call. Okay. your well, towers can in to hear you expand more that this on much on work? going of operations base But needless All potential you you made say, what disappointing to your know, basis. the quarter last update in this more so I'd Can wireless a changes to right, have addressed in to you Are than market are area, are there And coming what able development on of the anything a you you on that going the that's towers, going getting now, wireless and past of that envision to terms to you to in besides you're there implied general? tower is towers expand going operating terms there's regular in be of on give lot even XG things to area on into be that the

the to new you Yes, aspects that George. there's Thanks, the services for future lot a your This for will of is improve on towers think perform us. Joe. question. that we Thank we

commercial sites street allows lights, – is That opportunity and residential side towers than directly poles, cell, billboards, One less areas that gives put which foot us the an in rather wireless homes small those XXX which cell obtrusive of smaller over where street is network. access the architecture wireless, and fixed poles, businesses fixed exist. get big cellular into to are basically going light XXX cell is right you and can internet that

for Both of coming opportunity those are growth us. a

their access fixed The wireless advocate are Some Cellular wireless. big of one a programs. in the to is of fixed geography your carriers starting US announce

bright XG lot a more tremendous the of the So people and a future amount doing in Also, requires that. speed you from need the we video XG bandwidth. sites as cell And XG, increase it a bandwidth. to bandwidth to streaming, see streaming as data and

that So the holes to from XXX height coming down the does slowly in ft and XXX the what those XXX antennas creates of to of average foot is then shrinks diameter the cell it Well, probably level. about more ft network. the -XXX down of an

have there? announcing program new what companies of to So the number increase sites You big happens Verizon they like out there. a that see

of number doing be construction new we'll the of a a lot carriers. for site So

are then relaunching And spectrum whole as the bought last band soon rejuvenating year. and that AT&T FCC new available, in the be the announced recently dual band auctions they'll C as their they that program for radios

So plain we of and the antennas. opportunity tower developing climb beyond a the see radios old just bit quite and upgrade the

But further lot the hope road, expanding that's network bit and question. there, fashion. that little into down at further a opportunity services there's we're I of your a some looking out maybe So us. road the then for in the down fiber potentially cable answers optic

looking a where here? you're Okay, to, few talk coverage involved ago and concentrating, that the go a that what would to just like you state really you're I expand bit Where state? at you going relative to are forward, about Can little question? could geographical and months say, now you from

region south. we central serve basically So from to the north

but out of straight way Mississippi, down the in Wisconsin, Michigan, southern branched Alabama. sometimes, Oklahoma, to So And a into year serve last Texas. all Illinois, a we comes Kansas, little of border through Louisiana, it we down and bit Minnesota Arkansas, Indiana, bit the little Missouri,

the Georgia, provides the go won't that all to over plain there for for us way and storefront expect the without not our of wait into We're up potentially states, up business Minnesota the geography Iowa, business. the be But opportunity northern going might giving also and customer us takes to awarding then just Florida, that states, the deployment. a southeastern and Nebraska, Carolinas. growth We and including set really we a that go Gulf, is

by, where Joe, have middle year? opposed the going to the end And can as the say, And you of identify working past think year? you the that of of now this year Okay. you're crews then, you do number

I afternoon, But a we Well, north crews the we're rainstorm about be off big towards at south George, XX had of know to currently this might so end here I by the couple. year. a

the holidays Chicago to will summer this in few probably we and hit the and were Lakes weeks of XX the for that XX a we down around hit probably area, that think crews. area a Christmas XX, winter But weather With Great there. XX level

the in second of here We the up and revenues half expect our count. crew drive year, to pick that'll

far getting finding Okay. are And the for All capability, then as crews? your service right. or it as crew you accessible crews it hard is

subcontractor lot geography, programs No, in But that. of as change are picking a good a the is crews whatever internal hit their either there there available just pause internal sure really a adding have of or cause about the part of just a not trickier bodies. carrier completion and you're cruise, some crews a lot or points the crews up programs might available warm are that more, in making you're that

accomplished recent going I If that that, number give in specifically financing in just you the to time? ask the question. count And just share you you've terms us identify additional Can general more could most point at Can the out are little a where's that this other idea? a conversion Okay. of of go? shares of in the one

Rutledge so that to going answer just Michael to that I I'm misspeak. Yes, don't ask

that of the disclose George we Joe. outstanding shares as on is XX.X X. Yes. we Thanks, XX-Q, million have May

shares shares potential determine far any would Mast conversion It pricing in not as that will our convert. Hill it's financing how at that that decided the we be that those would convert, they the intent many get. that time it would As conversion, the April, necessarily did tied if to of to of

and convert, current share that anticipating necessarily to would the I'm intend Given do convert. they for we nor them to not price, want

a this don't at that shares determining of we number that number. So have point,

You beyond number don't the it? that have million, XX.X is the

the loan we That's to correct. Like don't pay so I have an the convert. intend said, to have down, shares intent we

back reached question-and-answer of Hart we for seem the have session. closing and end gentlemen, call I'll Joe remarks. the turn Ladies the now over to to

used this. thank product late the Thank through to now those want you, invested operator. for patch as market just to a get I We in and Technologies. remember right have had continuously But we'll sort new we're itself telephone equipment to couple last really And hitting gets of that great normal. of folks year. rough a a ADDvantage quarters readjusts

We have growth looks. The wireless good of us. year a ahead

interrupt Apologies, do have moment? a you sir. in queue. We the apologize. I another Can I for there do question

Okay.

private Richard The question from comes next McGlynn, investor. who's a

Hello? in million that, Yes, George to about convertible it and This as here. the promissory note some basically have on of share I there touched that the it stated AEY. current below convertibles. $X price, just situations going price these of tied If is are price price concerns additional And $X market is vote share, not? would not, it, an the shareholders the is agreement, that on that the first floor if opportunity the off, it. happen? why to Is which for get to

Yes, question, thank you for the Richard.

an consecutive have days, of so shares. out, obligation the have company, request of We they shares the have once trading a to, be potential converted that below to now, five shareholders $X the for to have as should -- the pointed shares we for approve which be XX% sale over been an that obligation you

a we and that have obligation the in to So we'll legal doing do future. be that

When stock to in is delist can aspect danger the the it or consecutive price XX that Also, $X of expect days. share below the they're notifies Nasdaq national if from too, we you because the that is going is price market the gets for that?

does to the management notification can And of considered possibility? that note, as You guys have as a What the that. into principal. for the note, on set Hill plans get which a a concerning Mast for play could default will far that this items lot do what convert is

now $X – the We have comes. on grow goes to we get notified price we'll with below plans the focusing it and if the share there. And Nasdaq, in and see share the right business, works falls, that have as where by to from But price we'll deal we're stays

you the I over convertible that necessity AEY we're that just that opinion, XX is We at the you if been company in will not are what's terms say, get half my But And longer stock no compliance. And days sure. can to at this correctly, $X, the already, led I that like XX you looking it’s get, share remember curious, situation we for with Nasdaq. from years. of it's And saw it XXX coming little haven't up they back the with course, it's guess days notify by way XX this there now think underneath to more will what price over usually there, of beginning word, the for first direction quarter first seen right the $X days the is a see a I'm I what the price kind heading when makes the in you again. in doesn't I a note, such were sense. possibly the of in as remedy if have up I I stock And see generous earnings even

say, was, I'm situation and as the have with a able operating about liquid could the been the dilution could this cash shares. keep being like possibly company to current liquidity concerned, million possible issue, planned. has because X going very to George up shareholders the Mast loan to close same is end business concern that around to as at Hill I it my continue has rate to So enough But for

addition I with to more XX% if that the point. the and company outstanding don't know that that at of warrants or up And includes shares in end

So management --? is

Yes, is Richard, this Joe.

I'm possibly, about at the default, heard price the by unusual at considering this what just end Hill call, trigger kind shares could of available which make this I it's sighted. $X of and floor last curious floor of how it issue possible price earnings is I But the so rather of we correct? broad conversion the that guess, a Mast Is would share. mean

be the converted. but to shares intent It there's point to where would to stated not I is possible, as Georgia, a our get

Well, it never it is, but does.

greater want only to to don't weren't shares there's to the when we able be of regular going to an would I XX% they them if advantage payments or the we're Hill thought loan. Mast on take pay. to convert making think

The that It's could the equals go share potential now to such approve must has is be rule, to price that to for than but by declined, not because something the we calculation have event. sure, other greater the XX%, which thing it a shareholders meant that want we a happen, to. we

category, after going we XXX a day notified stock an price, XX We we we've $X XXX of I recent XX additional great cure As compared that of far that Nasdaq, will and don't really total We year ultimately much a on anything once to have for get having were quarters date improved cure. change making nothing, And sub potential the days we're you're plan the envision days then progress, to didn't this notification if corrective the submit a being then as the in we of we're action feel have a to from from a exceeded necessity. But to we that. when you, assure row. couple days that a to there's quarter.

months. equipment Once supply business the shortages, our the side. highly up because off a built hold for Nothing the online, sure. feel providers equipment was like accumulated fiber network spares they sometime profitable. that by know a And OEMs on they the burn ordering, Nicely cetera, us, no network that had of until way stockpile any as the stockpile from that and who to spares to like new mostly put issues, supply chip resolved our of of growing of providers finally back and It equipment the shutdown time then couldn't chain standby the additional they decided and order was et the off to fiber OEMs had changed that just companies We burned optical next total couple on in such of OEMs. equipment crazy. There's orders stockpile. profitable. just like And new

to helped last over the this talking people two that and equipment us business are the grow We this ordered same years.

I Those this, in need last of that. of saying, of that, months. I I six equipment this, XXof mean are that, XX need our tripled look, contacts business XX over customer XX I need same this, the revenue

take then The level. they to as order to to have when be allowed not no just level back an again. I'm I'll until inventory ordering control down gate the we going as hold only thing is comes is And that soon off, anything acceptable over open again. that

has going along and have revenue Our like months after we Georgia get while here been wireless division investor. earning month Margins been you summer quite Richard, an into steadily, been have here like our and as people month. good too a sounds

Our big on us for wireless side. are summer really months the months

months we going and going side next the So still to to side think this change things. on we equipment few strong have normalize year on the believe will the a is over wireless we're that

this you the in liquidity. or guys having with to the hit kind get some that Was Because Telco, to something do off drop revenues you were suddenly? from of note sudden financing this had of

That's exactly us bolster way put was the to business Telco rapid situation capital a from capital. where And working XX/XX. from working our declined this decline correct. The in a

amortization Okay, is till so October, this is not that note payment first correct? the what, on

out. six months Yes. Yes,

was guess filing. I that. finish with think you each I I up the on the last the five I was, supposed payments, left it Okay, then saw in and interest to whatever one then balance guess and had month,

Okay, so don't I know. liquidity

you the have -- don't going liquidity Tell is payments? with this. on to can those But struggle anticipate me. loan going us tell you're a You like feel currently how making

payments to early. No, those intend we start paying

get it a of we're agreement latter not point our part and payments a $XXX,XXX at making where to month. So intent the to is the

Right.

in mid-March filed saw and that say, for I huge in millennium after and it out, with And company this XX% Okay. we've that since was Well, I the and market. years. being me down from guess so, dilutive, since, teens then say, XX then it shortly, report as came note note earnings a I it XX% for or that's the thought, last the say, invest aren’t when people as was it included. this like like the maybe yes, when I because and filed seems company dowels the shareholders, was forever, $X.XX stock dilution in to drop this to convertible to I like was $X guess, went the that Like of back I the this possibility on had current been going what of a but looks

So as holding all I it, got for big and pretty in size of company this decent a us hopes do.

that I triggered XXX,XXX say an and just how mainly to that right. and price, was redeem or shares go creating by years. those warrants off Mast I those the paid the default with the the on So warrants, successfully just still be no the share are could still, know wanting issues, to the has things If the buy those issue those delisting five what, Hill matter for chance those

of them they'll half Approximately keep.

they half, return off successfully, pay The if other the to us. warrants we

Now, is does the matter? or of $X.XX bit it which A each? that? The Or little $X.XX? ones

that it's the that us. No, are returned to $X.XX ones

to Returned us.

spook just and too, to business, were Don't would and so too be something on then Okay, other it, I want felt to like and mainly. that it's only maybe right, called more market I in. you much All want wanted clarification like shareholders to that well, didn't well, firmer it's the my I -- those but getting back to concerns hopefully to ground. up to the one know get

the to Well, monitor on questions, what what's and do for we shareholders. the basis best continue evaluate to appreciate daily and a we do we'll

That's right. depend what Yes. All I on.

you, the end close remarks. the Hart the now Thank Joe over to and-answer reached I sir. back gentlemen, have Thanks you of sir. call very turn much, session. we and will Ladies question- now for

operator. Yes. Thanks,

bright cure ADDvantage rough but We the pass. earlier, your and As in cause investment of know moment, I and this for know future. we the we're too, We're your feeling it feel We shall you have thank that a patch in for the we a to say it. we started at interest Technologies. that

right over profitable year, these our we few hit hit biggest and time that going into so. full move here So headed here most stride the the as year And next then be of months. summer we'll feel in into go on trajectory. we'll next And we're June, to it's always direction different also It's July a months. and we the our growth

So thank And today. our the joining you for that call remarks. concludes

you, now And Thank sir. concludes for and disconnect Thank may that gentlemen, event. you today's line. Ladies your you attending.