Knobias Clip Report (09-29-2008) AVSO
Submitted By Knobias ClipReport
AVSO: Management Discusses Record EPS on Flat Revenues in Q4 and FY08
By Fain Hughes, fhughes@knobias.com
Shares of Avatech Solutions, Inc. (AVSO) were weaker during Monday’s session after the Company announced its financial results for its fiscal fourth quarter and year ended June 30, 2008.
For the fourth quarter of fiscal 2008, the Company reported revenues of $11.5 million, compared to $11.5 million in the prior-year quarter. Net income for the three months ended June 30, 2008 was $742,000, or $0.03 per fully diluted share, compared to a net loss of $(874,000), or $(0.07) per fully diluted share, in the same period in the prior year. Adjusted EBITDA increased to $808,000 in the fourth quarter of fiscal 2008, from negative adjusted EBITDA of $(626,000) in the prior period.
For the fiscal year ended June 30, 2008, the Company reported revenues of $49.6 million, compared to $50.5 million in the prior year. For the year ended June 30, 2008, the Company reported net income of $3.1 million, or $0.15 per fully diluted share, compared to a net loss of $(555,000), or $(0.07) per fully diluted share for fiscal year 2007. Adjusted EBITDA increased to $4.7 million in fiscal 2008, as compared to adjusted EBITDA of $1.2 million in fiscal 2007. Adjusted EBITDA increased to $4.7 million in fiscal 2008, as compared to adjusted EBITDA of $1.2 million in fiscal 2007.
Lawrence Rychlak, CFO of of Avatech Solutions, explained in a conference call today, “The lack of growth in revenues for the year can be attributed to the economic environment, particularly in the building sector, that resulted in a slowdown of purchasing decisions by the custmers in our market. In addition, competition has increased in our market and made it more difficult to garner a greater market share. Our anticipation of the overall market weakness, combined with our commitment to provide a greater focus and emphasis on achieving strong operating results, held us off on the internal hiring plan that we originally contemplated for the past fiscal year. In retrospect, it was the right decision. We are hoping to prudently invest in new hires in sales and engineering during this fiscal year.”
He added, “We continue to strengthen our liquidity making us financially stronger than ever. As of year-end, we had cash of $5.5 million. Our working capital balance of $4.5 million was a great improvement over $1.1 million reported in June 2007. Our invetory levels continue to decline and were 53% lower than this time last year. We also have no debt, no borrowings on our line of credit and our stockholders equity is 53% larger than the start of the fiscal year.”
Mr. Rychlak concluded, “Our focus in the coming quarters will be to continue to demonstrate profitable results and positive cash flows from operations, while getting back on track with top line revenue growth.”
George Davis, President and CEO of Avatech Solutions, commented, “We achieved record net income, EPS and adjusted EBITDA. It is important to recognize that revenue for the year, combined with the dramatic increase in adjusted EBITDA, demonstrate the cash flow generation ability of our business and is solid proof that our strategy to focus on improving the fundamentals of our business model was successful. This has positioned us to move forward with confidence in building and implementing a growth strategy that will maintain profitability and generate positive cash flow going forward.”
He added, “We believe that a strong competitive demand for the technology and solutions that we provide, combined with the eventual stabilization of the economy, will open up the market for solid growth. We are well positioned to become a ‘go to’ company in the markets that we serve.”
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September 30th, 2008 at 10:58 am
Larry Rychlak and George Davis have no idea how to run this business
September 30th, 2008 at 10:58 am
The CFO and CEO have no idea how to run this business.