CIMdata PLM Industry Summary Online Archive
15 May 2008
Financial News
Avatech Solutions Reports Third Consecutive Quarter of Profitability and Net Income of $1.0 Million
Avatech Solutions, Inc. announced financial results for its fiscal third quarter and nine months ended March 31, 2008.
For the third quarter of fiscal 2008, the Company reported revenues of $12.8 million, compared to $14.6 million in the prior-year quarter. Revenue included $770,000 in commission from the Company’s largest single software sale to date. Selling, general & administrative (SG&A) expenses were approximately $4.7 million, or 37% of sales, compared to $6.4 million, or 44% of sales, in the prior year quarter. As a percentage of sales, SG&A expense remained in line with the previous two quarters of fiscal 2008. Operating income was $1.3 million, compared to a loss of $111,000 for the prior year quarter. For the three months ended March 31, 2008, the Company reported net income of $1.0 million, or $0.05 per fully diluted share, compared to a net loss of $200,000, or $(0.02) per fully diluted share, in the same period in the prior year.
For the nine months ended March 31, 2008, the Company reported revenues of $38.1 million, compared to $39.0 million in the prior-year period. During the period, Avatech increased Service revenue by 11% to $8.6 million as a result of the Company’s focus on growing this important business group. SG&A expense was $14.1 million, or 37% of sales, compared to $17.0 million, or 44% of sales, in the prior year period. For the nine months ended March 31, 2008, operating income was $3.1 million, compared to $668,000 for the prior year period and net income for the period was $2.3 million, or $0.12 per fully diluted share, compared to $0.3 million, or $0.00 per fully diluted share, for the same period in the prior fiscal year.
George Davis, President and Chief Executive Officer of Avatech Solutions, said, “We are pleased with our net income and services revenue for the quarter and continue to concentrate on growing these areas. At the beginning of the year we stated that this would be a year of restructuring and focus, with an emphasis on profitability, and we are delivering to that end. Although we are disappointed with our top-line revenue results, and particularly our software product sales, we recognize that a combination of regional economic factors, workforce attrition and transition and vendor programs all contributed to the product sale shortfall. We have remained steadfast in containing expenses and improving margins, which are reflected in our performance during the quarter.”
“For the year-to-date, we grew our Service revenue by 11% in 2008 over last year. This growth reflects our emphasis on improved utilization of our experienced engineers and their enhanced productivity. This is a core focus for growing our business, as it strengthens our relationships with customers by weaving our offerings deeper into their business and allows for greater interaction.”
“Looking ahead, we anticipate continued profitability in the fourth quarter, and are focusing on returning to revenue growth, while delivering consistent net income in fiscal 2009. As of March 31, 2008, our balance sheet remains strong with $4.1 million in cash, no long-term debt and an untapped credit facility of $5 million. We believe this strategically positions us with the ability to complete accretive transactions that will strengthen our services businesses and enter new geographic markets. Currently, we are exploring potential targets that are profitable, possess total annual revenue between $5 and $15 million and have established capabilities,” concluded Davis.
Conference Call Information
Avatech Solutions will hold a conference call to discuss its fiscal third quarter results at 11:00 a.m. ET on May 14, 2008. A replay of the call will also be available through May 21, 2008 and can be accessed by dialing (888) 286-8010 (Domestic) or (617) 801-6888 (International), and enter the passcode (50782613).
A live webcast of the call will be broadcast in the Investor Relations section of the Company’s website, http://www.avatech.com. For those who cannot listen to the live broadcast, an audio replay of the call will also be available on the site for a limited time.
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