BALTIMORE, MD -- (MARKET WIRE) -- Sep 28, 2010 -- Avatech Solutions, Inc. (OTCBB: AVSO), a Rand Worldwide company and the leading professional services provider of design, engineering, and facilities management technology solutions, announced financial results for its fourth quarter and fiscal year ended June 30, 2010.
The Company reported revenues of $31.3 million compared to $35.4 million in the prior-year period. Selling, general and administrative expenses decreased to $13.9 million when compared to $16.2 million in the same period of the prior fiscal year. As a result, Avatech reported net income of $1.3 million, or $0.05 per fully diluted share, as compared to a net loss of $313,000, or $(0.05) per fully diluted share for the fiscal year 2009. Adjusted EBITDA (as defined) was $2,996,000 in fiscal 2010, a significant increase from the $483,000 reported in the prior year period.
For the fourth quarter, the Company earned revenues of $7.5 million compared to $7.2 million in the prior-year quarter. On the expense side, selling, general and administrative expenses decreased to $3.5 million in the three months ended June 30, 2010 compared to $3.8 million for the same period of the prior fiscal year. For its fourth fiscal quarter, the Company realized net income of $66,000, or $0.00 per fully diluted share, as compared with a net loss of $97,000, or $(0.01) per fully diluted share in the same period in the prior year. Adjusted EBITDA (as defined) was $356,000, a large increase from the negative adjusted EBITDA of $4,000 in the prior year period. It is important to note, fourth quarter and full fiscal year results were reduced by approximately $300,000 of costs relating to our August merger with Rand Worldwide, Inc.
With four sequential quarters of profitability, the Company reported that it continued to strengthen its financial position, evidenced by its cash balance of $2.5 million, the presence of only $33,000 in long-term liabilities, and the redemption of the final $2 million of its outstanding Series F Preferred Stock. In addition, the Company noted that, while it continues to maintain its $5 million line of credit, it had no borrowings on its line for the entire fiscal year.
"The results that we reported demonstrate the Company's ability and commitment to effectively manage through difficult economic periods. The last two quarters we have seen revenue growth when compared with the same quarter of last fiscal year," commented Lawrence Rychlak, President and Chief Financial Officer of Avatech.
"We continue to be well positioned to take advantage of the recovering economy. The merger with Rand is an exciting development for our customers, employees and shareholders because we are now a larger company with greater resource offerings to our customers. In addition, an expanded group of sales and technical professionals are now available to address more of our customers' needs in more locations throughout the world. Once we have concluded our integration efforts, we will be a financially stronger company and expect to continue with our growth and diversification strategies," continued Mr. Rychlak.
Company CEO, Marc Dulude added, "I am very pleased to have completed the merger between Rand Worldwide and Avatech. These solid results demonstrate how effectively the company's operations have been managed and we look forward to bringing solutions to an even wider base of customers than the two companies were addressing individually."
Conference Call Information
Avatech Solutions will hold a conference call to discuss its fourth quarter and year end results at 11:00 am ET on September 28, 2010. The dial-in numbers for the conference call are 1 (866) 203-2528 (domestic) or 1 (617) 213-8847 (International), and enter the passcode (52674716). A live, listen-only Webcast of the conference call will be available to all investors in the Investor Relations section of the Company's Web site ( www.avatech.com).
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 and Rand Worldwide
Rand Worldwide and Avatech Solutions have combined to form one of the world's leading professional services and technology companies for the engineering community, targeting organizations in the building, infrastructure, and manufacturing industries. The combined company 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 the company to gain a competitive advantage through technology consulting, implementation, training, and support services. One of the world's largest integrators of Autodesk software, the company designs systems that accelerate innovation while improving quality and profitability. For more information see ( www.avatech.com) and ( www.rand.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,
------------------------ ------------------------
2010 2009 2010 2009
----------- ----------- ----------- -----------
Revenues-
Product sales $ 3,868,000 $ 3,289,000 $15,340,000 $17,516,000
Service revenue 1,939,000 1,798,000 8,061,000 9,446,000
Commission revenue 1,656,000 1,611,000 7,925,000 7,973,000
Sale of developed
software 0 500,000 0 500,000
----------- ----------- ----------- -----------
Total revenues 7,463,000 7,198,000 31,326,000 35,435,000
----------- ----------- ----------- -----------
Cost of revenues-
Cost of product
sales 2,619,000 2,124,000 9,646,000 11,596,000
Cost of service
revenue 1,201,000 1,510,000 4,987,000 7,384,000
----------- ----------- ----------- -----------
Total cost of
revenues 3,820,000 3,634,000 14,633,000 18,980,000
----------- ----------- ----------- -----------
Gross margin 3,643,000 3,564,000 16,693,000 16,455,000
Operating income
(loss) 153,000 (247,000) 2,240,000 (513,000)
Net income (loss) 66,000 (97,000) 1,267,000 (313,000)
Earnings (loss)
per share:
Basic $ 0.00 $ (0.03) $ 0.06 $ (0.05)
=========== =========== =========== ===========
Diluted $ 0.00 $ (0.03) $ 0.05 $ (0.05)
=========== =========== =========== ===========
Weighted average
common shares
outstanding:
Basic 17,147,418 16,937,591 17,114,366 16,815,722
=========== =========== =========== ===========
Diluted 21,003,107 16,937,591 20,845,058 16,815,722
=========== =========== =========== ===========
June 30, June 30,
2010 2009
----------- -----------
Current assets $ 9,191,000 $ 8,835,000
Property and equipment 495,000 796,000
Other long-term assets 7,302,000 7,628,000
----------- -----------
Total assets $16,988,000 $17,259,000
=========== ===========
Current liabilities $ 6,973,000 $ 6,338,000
Other long-term
liabilities $ 33,000 $ 160,000
Series F convertible
preferred stock 0 1,864,000
Stockholders' equity 9,982,000 8,897,000
----------- -----------
Total liabilities and
stockholders' equity $16,988,000 $17,259,000
=========== ===========
Avatech Solutions, Inc.
Reconciliation of non-GAAP financial measure
Three Months Ended Twelve Months Ended
6/30/2010 6/30/2009 6/30/2010 6/30/2009
GAAP net
income $ 66,000 $ (97,000) $ 1,267,000 $ (313,000)
Provision for
income taxes 97,000 (157,000) 954,000 (182,000)
------------- ------------- ------------- -------------
Income before
income taxes 163,000 (254,000) 2,221,000 (495,000)
Stock-based
compensation 55,000 77,000 161,000 257,000
Net interest
(income)
expense 7,000 7,000 32,000 (2,000)
Depreciation
and
amortization 131,000 166,000 582,000 723,000
------------- ------------- ------------- -------------
Adjusted
EBITDA $ 356,000.00 $ (4,000.00) $2,996,000.00 $ 483,000.00
============= ============= ============= =============
Management uses adjusted EBITDA, a non-GAAP measure, to evaluate the
Company's operating 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.
Company Contact: Chantale Marchand Rand Worldwide Phone: (508) 663-1411 Email: Email Contact