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.