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Avatech Third Quarter Financials Report Strong Growth in Revenues and Bottom Line

^{Published on 2010-05-17 05:35:33 - Market Wire}
 

BALTIMORE--([ BUSINESS WIRE ])--Avatech Solutions, Inc. (OTCBB: AVSO), the nationwide technology experts for design, engineering, and facilities management, announced financial results for its third fiscal quarter and for the nine months ended March 31, 2010.

"The resulting cash flows enabled us to complete the redemption of the remaining outstanding Series F Preferred stock while still increasing our available cash to $3.6 million giving Avatech an even stronger financial position."

Avatech reported that its total revenues increased 5%, to $8.4 million, when compared to the third quarter of the prior fiscal yeara"the first year-over-year increase since June 2008. Leading this increase were product sales and commission revenues, which saw increases of 10.5% and 24.9% respectively over the levels reported in the third quarter of last fiscal year. Due to a favorable revenue mix and the achievement of sales rebates from its principal supplier, the Company earned an overall gross margin of 58.4% compared with 50.0% for the quarter ended March 31, 2009. Operating expenses as a percentage of revenues were down when compared to those of the prior quarter and when compared to the same quarter in the prior fiscal year. As a result, for the third quarter of fiscal 2010, the Company reported net income of $592,000, or $0.03 per fully diluted share, as compared with a net loss of $(146,000), or $(0.01) per fully diluted share, for the quarter ended March 31, 2009. Adjusted EBITDA (as defined) was $1,154,000, compared with $106,000 in the prior year period.

For the nine months ended March 31, 2010, total revenues were $23.9 million, compared to $28.2 million in the prior-year period. The Companya™s overall gross margin percentage increased to 54.7% from 45.7% for the same nine months in the prior fiscal year. Operating income increased 90% to $2.1 million and Adjusted EBITDA (as defined) for the nine month period ended March 31, 2010 was $2,640,000, compared with $401,000 in the prior year period.

aWe are very pleased that these outstanding results reflect not only the continued progress of the recovery of the overall economy, but also the steps that we have taken in response to changes in our business levels. This is the third consecutive quarter of profitability and each quartera™s results have been better than the prior quarter, with this period 23% higher than our December quarter,a commented Lawrence Rychlak, President and Chief Financial Officer of Avatech Solutions. aThe resulting cash flows enabled us to complete the redemption of the remaining outstanding Series F Preferred stock while still increasing our available cash to $3.6 million giving Avatech an even stronger financial position.a

aWe enter our fourth quarter with continued optimism about our markets and our ability to provide solutions to our customers that enable them to grow and prosper, while at the same time providing an appropriate level of return for our shareholders,a concluded Rychlak.

George Davis, Chief Executive Officer added, aThese strong results validate the path that we have chosen and the tactics and strategies that we have implemented and will help us maintain our leadership position in the markets in which we operate. Our recent history of net income and good cash flows, along with our healthy balance sheet, provides us a solid foundation for pursuing our future strategies and may open up new opportunities for us. We remain focused and committed to fully serving the needs of our customers, ensuring a vibrant and rewarding experience for all of Avatecha™s employees, and pursuing strategies that enhance shareholder value.a

Conference Call Information

Avatech Solutions will hold a conference call to discuss its fiscal 2010 third quarter results at 10 a.m. ET on May 17, 2010. The dial-in numbers for the conference call are (866) 700-0133 (domestic) or (617) 213-8831 (international), and the passcode is 91961274. A replay of the call will also be available through May 24, 2010, and can be accessed by dialing (888) 286-8010 (domestic) or (617) 801-6888 (international), and then entering the passcode 93175819.

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 Companya™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. 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 Americaa™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 worlda™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 agoal,a aexpect,a aanticipate,a aestimate,a ashould,a abelieve,a aintend,a 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.