ADDvantage Technologies Group, Inc.

Consolidated sales were $10.3 million in the third quarter, down $15.6 million or 60% from $25.9 million a year ago. Gross profit was $2.8 million, with gross margin of 27%, versus $8.5 million and 33% in the prior-year quarter. Operating expenses decreased $600,000 or 27% to $1.7 million, and SG&A decreased $1.4 million or 31% to $3.1 million. The company reported a net loss of $2.7 million, or $0.19 per basic and diluted share, compared with net income of $1.5 million, or $0.11 per share, last year. Cash and cash equivalents were $1.6 million at September 30, down from $2.6 million at December 31, 2022; net inventories were $7.8 million, down from $8.1 million at June 30 and $9.6 million at December 31, 2022; outstanding debt was $3.6 million. Management did not give formal next-quarter or full-year financial guidance, but said it expects broadband opportunities to be a significant growth opportunity in 2024 and that profitability should improve as revenues normalize and cost reductions flow through.

Joe Hart said the wireless and telco environments remain challenging, with wireless carriers pausing CapEx and telco demand hurt by supply chain normalization and customers working through inventory. He framed the company’s response as proactive: cutting expenses, reducing inventory, expanding into broadband and fixed wireless, and pursuing government-funded infrastructure opportunities such as BEAD and RDOF. His tone was frustrated by current results but increasingly optimistic about 2024, saying the company believes the worst is behind it.

Michael Rutledge focused on the quarter’s sharp revenue decline and margin pressure, noting sales fell to $10.3 million from $25.9 million and gross margin declined to 27% from 33%. He highlighted cost actions, including a $600,000 reduction in operating expenses to $1.7 million and a $1.4 million reduction in SG&A to $3.1 million. On the balance sheet, he cited $1.6 million of cash, $7.8 million of net inventories, and $3.6 million of debt, emphasizing that inventory reduction in telco remains a priority.

There was no live analyst Q&A in the transcript, so management mostly addressed investor concerns in prepared remarks. The main issues discussed were the sudden slowdown in wireless construction, lower telco demand after supply chains normalized, and the impact of customers working down inventory. Management’s answer to those headwinds was to cut costs, reduce inventory, and push into broadband and fixed wireless work, which it said is already building momentum.