SOURCE: Avatech Solutions, Inc.

September 28, 2010 08:15 ET

Avatech Solutions Reports $1.3 Million in Earnings for Fiscal 2010

Fourth Consecutive Profitable Quarter; $3.0 Million of Adjusted EBITDA for Fiscal Year

BALTIMORE, MD--(Marketwire - September 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 (

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 ( and (

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
                       -----------  -----------   -----------  -----------

  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
    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)

 compensation         55,000         77,000         161,000        257,000
Net interest
 expense               7,000          7,000          32,000         (2,000)
 amortization        131,000        166,000         582,000        723,000
               -------------  -------------   -------------  -------------

   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.

Contact Information

  • Company Contact:

    Chantale Marchand
    Rand Worldwide
    Phone: (508) 663-1411