Message #27 From:
NewsBot Date: September 28, 2006 05:30:00 AM
AVSO News Avatech Solutions Announces Fourth Quarter and Year-end Results
BALTIMORE--(BUSINESS WIRE)--Avatech Solutions, Inc. (OTCBB:AVSO.OB), the nationwide technology
experts for design, engineering, and facilities management solutions,
today announced financial results for its fourth quarter and fiscal year
ended June 30, 2006.
Fiscal 2006 Highlights
Revenue for the fiscal year increased 16% to $39.6 million. Excluding
the one-time sale of developed software to a major supplier in fiscal
year 2005, revenue increased 23%. The company realized double-digit
sales growth in all three of its revenue categories.
Net income for the fiscal year increased to $2.2 million, a 14%
increase over the prior year’s net income.
Excluding the one-time software sale in fiscal year 2005, net income
increased by $2.1 million.
The company closed its acquisition of Sterling Systems and Consulting,
Inc., on May 30, 2006. This acquisition contributed $1.1 million of
revenue in fiscal year 2006 and provided the company with four new
locations in the upper Midwest.
The company significantly expanded its professional staff, adding a
total of 24 sales representatives, including 11 from the Sterling
acquisition, and 20 technical engineers, including 12 from the
Sterling acquisition.
The company was able to significantly strengthen its balance sheet
through its profitable operations, two equity offerings, and the
repayment of long-term debt, and increased its stockholders’
equity to $4.7 million at June 30, 2006 from a deficit of $2.7 million
at June 30, 2005.
For the year ended June 30, 2006, revenue totaled $39.6 million compared
to $34.1 million for fiscal year 2005. Excluding the one-time $1.9
million sale of developed software to a major supplier in 2005, revenue
increased 23%. Net income for fiscal year 2006 totaled $2.2 million, or
$0.18 per share, compared to net income of $1.9 million, or $0.18 per
share, for fiscal year 2005. Excluding the one-time software sale, net
income for fiscal year 2005 would have been $111,000, or $0.01 per
share. Results for fiscal year 2006 reflect the effect of expensing
stock options which totaled $315,000, or $0.03 per share.
For the fourth quarter ended June 30, 2006, revenue totaled $9.9 million
compared to $8.8 million for the fourth quarter of fiscal year 2005. The
company reported a net loss of $84,000, or $0.01 per share, for the
fourth quarter of 2006, compared to net income of $714,000, or $0.06 per
share, for the same period last year.
Chief Executive Officer Scotty Walsh commented, “Avatech
performed well for the year overall, meeting our revenue goal and
outperforming our internal expectations for the bottom line. These
accomplishments were driven largely by the company’s
success in vertical markets where customers are increasingly converting
to 3D design. As planned, another key accomplishment for fiscal year
2006 was the strengthening of our balance sheet.
“The company’s
fourth quarter was somewhat less robust than we would have liked,
particularly in comparison to our very strong third quarter, which
benefited from increased sales activity related to the retirement of
certain products by our main supplier, Autodesk. During the fourth
quarter, we made significant investment in sales and technical staff in
addition to adding personnel through the Sterling acquisition. We expect
these new personnel, who were not yet fully productive in the fourth
quarter, to begin contributing to revenue growth in fiscal year 2007. In
addition to the higher selling expenses, our financial results for the
quarter were also impacted by a non-recurring interest expense of
$65,000 associated with the short-term loan we secured to finance the
Sterling acquisition.
“Overall, our growth strategy -- aimed at
transitioning Avatech to a diversified services and solutions provider
-- has been very successful, and in fiscal 2007 we plan to build on the
progress we have achieved to date. Management expects that this strategy
will include the exploration of acquisition opportunities as they arise
and acting on those that management believes involve profitable,
well-managed companies expected to diversify our revenue stream, expand
our customer base, and increase the profitability of the services we
offer. Because the ability to close on any acquisition opportunity
depends on our financial condition at the time and other unpredictable
factors beyond our control, there can be no guarantee that we will
pursue or realize on any opportunity that may arise. During the coming
year, we also expect to reap the benefits of an expanded and fully
productive sales and technical force.
“Our goal for fiscal year 2007 is to generate
revenue in the range of $55 million to $60 million, excluding the
effects of any additional acquisitions, and to achieve measurable
improvement in our operating margins. The realization of this goal,
however, is highly dependent on the successful expansion and
diversification of our range of products, the growth of our geographic
footprint, and an increase in our sales and customer-facing experts, all
of which are subject to several risks and uncertainties related to our
business and other factors beyond our control. Accordingly, there can be
no guarantee that we will achieve this goal.”
8K Filing - Audited Financial Statements of Sterling Systems
The company also noted that it had recently filed an amendment to its
Form 8-K filed with the Securities and Exchange Commission on June 1,
2006, relating to the Sterling acquisition, which amendment contains the
audited financial statements of Sterling and the pro forma financial
information required by Form 8-K.
Conference Call Information
The Company will hold a conference call to discuss its results on
Thursday, September 28th at 11:00 Eastern Time.
The phone number to join the call is 1-888-677-5721, the passcode is
AVATEL and the leader of the call will be the Company’s
CEO, Scotty Walsh. A recording of the conference call will also be
available in the investor relations section of the website after
approximately 2:00 PM Eastern Time on September 28th.
About Avatech Solutions
Avatech Solutions, Inc. (OTCBB:AVSO.OB) is the recognized leader in
design and engineering technology with unparalleled expertise in design
automation, data management and process optimization for the
manufacturing, engineering, building design and facilities management
markets. Headquartered in Owings Mills, Maryland, the company
specializes in consulting, software systems integration and
implementation, standards development and deployment, education, and
technical support. Avatech is one of the largest integrators of Autodesk
software worldwide and a leading provider of PLM solutions. The
company's clients include industry leaders from Fortune 500 and
Engineering News Record's Top 100 companies. Visit http://www.avatech.com
for more information.
Forward-Looking Statements
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.
All brand names, product names, or trademarks belong to their respective
holders.
