“The building and manufacturing markets continue to be adversely affected by the recession, forcing our customers to reduce costs and postpone investments in new software and services. While at this time we cannot predict when our business will return to traditional levels, we can commit that we will continue to monitor the cost containment plans we have put in motion and will take any additional actions that we believe to be necessary. As an example of just how effective these measures can be, our previously established cost containment initiatives and on going business management controls resulted in a return to positive adjusted EBITDA and a small net loss for the third quarter,” commented George Davis, President and Chief Executive Officer of Avatech.
“As part of our effort to drive revenue in this tough market, we are working more closely than ever with our customers in an attempt to bring them improved solutions that add value through enhanced productivity, reduced costs and improved competitiveness. Our core focus right now is trying to balance providing premier service to our large customer base and capturing incremental new business, while ensuring that we manage our day to day operations in the spirit of protecting our cash and liquidity,” continued Mr. Davis.
“I am confident in the business we have built at Avatech and remain committed to maintaining its position of strength through this period so we will be well positioned when the market returns to traditional levels,” concluded Mr. Davis.
For the third quarter of fiscal 2009, the Company reported revenues of $8.0 million, compared to $12.8 million in the prior-year quarter. Selling, general & administrative expenses decreased to $3.9 million in the three months ended March 31, 2009, compared to $4.7 million in the same period of the prior fiscal year.
The Company incurred a net loss of $146,000, or $(0.01) per fully diluted share, for the three months ended March 31, 2009, compared to net income of $1.0 million, or $0.05 per fully diluted share, in the same period in the prior year. Adjusted EBITDA (as defined) was $106,000 in the third quarter of fiscal 2009, from adjusted EBITDA of $1.7 million in the prior year period.
For the nine months ended March 31, 2009, the Company reported revenues of $28.2 million, compared to $38.1 million in the prior-year period. Selling, general & administrative expenses decreased to $12.6 million in the first nine months of Fiscal 2009, when compared to $14.1 million in the same period of the prior fiscal year.
For the nine months ended March 31, 2009, Avatech reported a net loss of $216,000, or $(0.03) per fully diluted share, compared to net income of $2.3 million, or $0.12 per fully diluted share, for the same period in the prior year. Adjusted EBITDA (as defined) was $401,000 in the first nine of fiscal 2009 from adjusted EBITDA of $3.9 million in the prior year period.
Conference Call Information
Avatech Solutions will hold a conference call to discuss its third quarter results at 11 a.m. ET on May 15, 2009. The dial-in numbers for the conference call are (888) 713-4214 (domestic) or (617) 213-4866 (international), and enter the passcode (19034599). A replay of the call will also be available through May 22, 2009, and can be accessed by dialing (888) 286-8010 (domestic) or (617) 801-6888, and dialing the passcode (64478089).
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.
(Tables Below)
| Avatech Solutions, Inc. | ||||||||||||||
| Summary Consolidated Financial Data | ||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||
| March 31, | March 31, | |||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||
| Revenues- | ||||||||||||||
| Product sales | $ | 3,355,000 | $ | 6,341,000 | $ | 14,227,000 | $ | 20,960,000 | ||||||
| Service revenue | 2,508,000 | 3,132,000 | 7,648,000 | 8,635,000 | ||||||||||
| Commission revenue | 2,090,000 | 3,279,000 | 6,362,000 | 8,505,000 | ||||||||||
| Total revenues | 7,953,000 | 12,752,000 | 28,237,000 | 38,100,000 | ||||||||||
| Cost of revenues- | ||||||||||||||
| Cost of product sales | 2,120,000 | 4,413,000 | 9,472,000 | 14,272,000 | ||||||||||
| Cost of service revenue | 1,859,000 | 2,109,000 | 5,874,000 | 6,129,000 | ||||||||||
| Total cost of revenues | 3,979,000 | 6,522,000 | 15,346,000 | 20,401,000 | ||||||||||
| Gross margin | 3,974,000 | 6,230,000 | 12,891,000 | 17,699,000 | ||||||||||
| Operating (loss) income | (148,000 | ) | 1,318,000 | (266,000 | ) | 3,083,000 | ||||||||
| Net (loss) income | (146,000 | ) | 1,005,000 | (216,000 | ) | 2,349,000 | ||||||||
| Earnings per share: | ||||||||||||||
| Basic | $ | (0.01 | ) | $ | 0.06 | $ | (0.03 | ) | $ | 0.13 | ||||
| Diluted | $ | (0.01 | ) | $ | 0.05 | $ | (0.03 | ) | $ | 0.12 | ||||
| Weighted average common shares outstanding: | ||||||||||||||
| Basic | 16,895,651 | 16,304,013 | 16,777,422 | 16,096,985 | ||||||||||
| Diluted | 16,895,651 | 20,267,042 | 16,777,422 | 20,108,236 | ||||||||||
| March 31, | June 30, | |||||||||||||
| 2009 | 2008 | |||||||||||||
| Current assets | $ | 8,699,000 | $ | 13,955,000 |
|
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| Property and equipment | 908,000 | 781,000 | ||||||||||||
| Other long-term assets | 7,579,000 | 7,860,000 | ||||||||||||
| Total assets | $ | 17,186,000 | $ | 22,596,000 | ||||||||||
| Current liabilities | $ | 5,533,000 | $ | 9,425,000 | ||||||||||
| Obligations under capital leases | 193,000 | — | ||||||||||||
| Series F convertible preferred stock | 2,306,000 | 3,629,000 | ||||||||||||
| Stockholders' equity | 9,154,000 | 9,542,000 | ||||||||||||
| Total liabilities and stockholders' equity | $ | 17,186,000 | $ | 22,596,000 | ||||||||||
| Avatech Solutions, Inc. | |||||||||||||||
| Reconciliation of non-GAAP financial measure | |||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||
| 3/31/2009 | 3/31/2008 | 3/31/2009 | 3/31/2008 | ||||||||||||
| GAAP net income | $ | (146,000 | ) | $ | 1,005,000 | $ | (216,000 | ) | $ | 2,349,000 | |||||
| Provision for income taxes | (22,000 | ) | 332,000 | (25,000 | ) | 789,000 | |||||||||
| Income before income taxes | (168,000 | ) | 1,337,000 | (241,000 | ) | 3,138,000 | |||||||||
| Stock-based compensation | 72,000 | 180,000 | 94,000 | 294,000 | |||||||||||
| Net interest (income) expense | 9,000 | (15,000 | ) | (9,000 | ) | (26,000 | ) | ||||||||
| Depreciation and amortization | 193,000 | 168,000 | 557,000 | 523,000 | |||||||||||
| Adjusted EBITDA | $ | 106,000 | $ | 1,670,000 | $ | 401,000 | $ | 3,929,000 | |||||||
|
Note 1 - Management uses adjusted EBITDA, a non-GAAP measure, to evaluate the Company's operating |
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| performance and compare the Company's current results with those for prior periods, but cautions that | |||||||||||||||
|
they should not be considered as a substitute for disclosures made in accordance with GAAP |
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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,
+1-212-896-1215
Email Contact
or
Garth
Russell, +1-212-896-1250
Email Contact