ADDvantage Technologies Group's (AEY) CEO David Humphrey on Q1 2016 Results - Earnings Call Transcript

| About: ADDvantage Technologies (AEY)

ADDvantage Technologies Group, Inc. (NASDAQ:AEY)

Q1 2016 Earnings Conference Call

February 9, 2016 12:00 p.m. ET

Executives

Garth Russell - KCSA Strategic Communications

David Humphrey - President and CEO

Dave Chymiak - Chief Technology Officer

Scott Francis - Chief Financial Officer

Analysts

Doug Ruth - Lenox Financial Services

George Gasper - Private Investor

Steve Rudd - Blackwell Investments

Operator

Good day, and welcome to the ADDvantage Technologies First Quarter 2016 Earnings Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Garth Russell of KCSA Strategic Communications. Please go ahead.

Garth Russell

Thank you. Before we begin today’s call, I would like to remind you that this conference call may contain certain forward-looking statements, which are subject to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among other things, statements regarding the future events, such as the availability or ability of ADDvantage Technologies and its subsidiaries to maintain strategic relationships and agreements with certain original equipment manufacturers and multiple system operators as well as the future financial performance of ADDvantage Technologies.

These statements involve a number of risks and uncertainties. Participants are cautioned that these forward-looking statements are only predictions and may materially differ from actual future events or future results due to a variety of factors, such as those contained in ADDvantage Technologies’ most recent report on Form 10-K on file with the SEC.

Financial information presented on this conference call should be considered in conjunction with the consolidated financial statements and notes hereto included in the ADDvantage Technologies’ most recent report on Form 10-Q filed earlier today.

The guidance regarding anticipated future results on this call is based on limited information currently available on ADDvantage Technologies, which are subject to change. Although any such guidance and factors influencing it may change, ADDvantage Technologies will not necessarily update the information as the company will only provide guidance at certain points during the year. Such information speaks only as of the date of this call.

During this call, we will also present certain non-GAAP financial measures, presented in our press release earlier today, which is located on our website at addvantagetechnologies.com. You will find a reconciliation of these non-GAAP financial measures with the closest GAAP financial measures and a discussion about why we think these non-GAAP financial measures are relevant. These financial measures are included for the benefit of investors and should be considered in addition to and not instead of GAAP measures.

With nothing further, I would now like to turn the call over to David Humphrey, President and Chief Executive Officer of ADDvantage Technologies. David, the floor is yours.

David Humphrey

Thank you, Garth. Welcome everyone to ADDvantage Technologies’ first quarter fiscal 2016 conference call. With me today is Dave Chymiak, our Chief Technology Officer and Scott Francis, our Chief Financial Officer.

Before I turn the call over to Scott, who will provide the detailed financial results, I want to briefly comment on our recent performance and the current industry dynamics that we are seeing play out. As we entered fiscal 2016 our business continued to face challenges associated with general industry weakness related to equipment sales which impacted our performance.

In our last quarterly call, we discussed how a general slowdown in the telco industry had led to a decline in orders being placed with our sales team for this segment of our business. Unfortunately as expected, this trend continued into the first quarter of the fiscal year. In talking with our customers, we believe that this slowdown was due primarily to delays from our customer ordering the equipment at the end of their calendar year due to budgetary and economic constraints. We are in constant discussion with our customers and we anticipate equipment sales for the telco segment will begin to normalize over the next several months based on these discussions. We are already starting to see some signs of improvement for the current quarter from equipment sales.

Cable TV segment has experienced declining equipment sales over the past several years for the products we eventually [ph] carry due to the continued consolidation of the cable television operators and further upgrade and fewer upgrades with the cable television networks and planned expansions.

For the three months ended December 31 2015, our equipment sales decreased to their lowest level during this turndown. However we believe some of the decrease in sales this quarter was due to uncertainties caused by pending merger activities. We’re not content with this downturn and we’re working diligently to explore out opportunity to expand sales for the Cable TV segment both in products and services offered to our customers.

As we look to address changing market dynamics, we are looking to build market share by focusing on our core strength of providing equipment repair services and sales through a network of regional locations. The ability to have a broad set of services easily accessible to our customers aligns with their businesses and allows us more timely insight into their networks and network upgrades.

During the first quarter 2016 we acquired an existing business based in Tennessee which provides cable television equipment repairs as well as sales of equipment. This new location will allow us to provide faster, more convenient service to customers in the Ohio Valley and Central Atlantic regions of the U.S. Similar to our other service centers, the Tennessee facility provides pickup and delivery service for cable equipment repairs for the region and repair headed equipment, fiber optic equipment and transport equipment for most manufacturers. This location will also provide equipment sales through our customer relationships.

We continued to keep our expenses down in both the Cable TV and Telco segment. This helped us to record positive net income for the quarter in spite of our lower sales volume. This is a testament to the flexibility of our LEED [ph] business model and our capacity to vary our cost structure in line with fluctuating revenues.

While we are not pleased with this quarter’s results, we are confident that our dedicated sales team and strong balance sheet enable us to adapt to changing market dynamics, so we can benefit from opportunities in the market. We also continue to work with an investment bank to identify strategic acquisition targets that could further establish our presence in the broader telecommunications industry.

With that, I will now turn the call over to Scott Francis, our Chief Financial Officer who will take you through the financial results in more detail.

Scott Francis

Thank you, David. For the first fiscal quarter of 2016, our total sales decreased $2.6 million or 24% to $8.2 million from $10.8 million for the same period of last year.

Sales for the Cable TV segment decreased $1.8 million to $5 million for the three months ended December 31, ‘15 from $6.8 million for the same period of last year. Sales for the Telco segment decreased $700,000 to $3.3 million for the three months ended December 31, ‘15 from $4 million for the same period of last year.

Our consolidated gross profit decreased $1 million or 28% to $2.8 million for the three months ended December 31, ‘15 from $3.8 million for the same period of last year. The decrease in gross profit was due to a $400,000 and a $600,000 decrease of gross profit from the Cable TV and Telco segments, respectively.

The decreased gross profit in the Cable TV segment was primarily due to decreased equipment sales while the decrease in gross profit from the Telco segment was primarily a result of lower overall equipment sales as well as the impact of lower margins from our recycling operations, which is due mostly to lower commodity prices and lower volume during this period.

Our gross margin for the Cable TV segment increased to 32% for the quarter ended December 31, ‘15 from 30% for the same period of last year, due primarily to the improved margins from our new equipment sales. Our gross margin for the Telco segment decreased to 36% for the three months ended December 31, ‘15 from 45% for the same period of last year. And this decrease was primarily resulted from our lower commodity prices in our recycling operation.

Our operating, selling and general administrative expenses decreased $400,000 to $2.7 million for the three months ended December 31, ‘15 from $3.1 million for the same period of last year. This decrease was primarily due to lower expenses related to the Nave acquisition earn-out liability.

Our net income for the three months period ended December 31, ‘15 was $24,000 which was $0.00 per diluted share compared with $400,000 or $0.04 per diluted share for the same period of last year. Our consolidated EBITDA decreased $700,000 to $400,000 for the three months ended December 31, ‘15 from $1.1 million for the same period of last year.

The Cable TV segment EBITDA decreased $500,000 to $200,000 for the three months ended period of December 31, ‘15 from $700,000 for the same period of last year. While the Telco segment EBITDA decreased $200,000 to be $200,000 for the three months ended December 31, ‘15 from $400,000 for the same period of last year.

Our cash and cash equivalents on hand were $6.7 million as of December 31, ‘15, which was equivalent to $6.1 million as of September 30, ‘14. As of December 31, 2015, the company had inventory of $23 million compared with $23.6 million as of September 30, ‘14. The increase in inventory position was due primarily to decreased inventory in our Cable TV segment.

This concludes the financial overview for the three months ended December 31, 2015. And now I will turn the call over to the operator for any questions.

Question-and-Answer Session

Operator

[Operator Instructions] We’ll take our first question from Doug Ruth with Lenox Financial Services.

Doug Ruth

Hi and good morning to all of you. Could you give us a little more color about the business that was acquired in Tennessee, how significant could this business be for you?

Scott Francis

Yes, I will address that and I will also turn it over to David in just a minute. I would estimate the revenue stream from the company between $0.5 million to $1 million potentially. But of course, they’ve got to go out and demonstrate that, but that’s been the history prior to our acquisition. Outside of that, I think it will be a good operation and a good opportunity for us to expand our business in that market area.

Doug Ruth

Will it be accretive to earnings?

Scott Francis

I certainly anticipate that it will. Dave, any other insights?

David Humphrey

I think you’ve covered it pretty well. It’s not a significant acquisition as far as extremely large or anything, it’s just another step that we are looking at filling out our service and sales there across the country.

Doug Ruth

That sounds like an excellent opportunity for the company and thank you for doing what you did there. Is there any update at all from the investment banker, what does the state of the industry look like as far as the opportunity to make some acquisitions?

David Humphrey

We don’t address it on the call, Doug. Other than to say we are continuing to work with him. We have some potential candidates that we are in discussions with. And that’s about all I can say on it but yes, we are still focused on that aspect of our business of growing through acquisitions.

Doug Ruth

You had talked before that you were optimistic with the transition to the – into the electrical distribution market. Is that where you’re seeing the opportunities coming to you?

David Humphrey

I don’t – I am not clear on what your comment was. I don’t recall making any discussions about the electrical distribution business.

Doug Ruth

No, telecommunication distribution market, that was mentioned in the last – transcript of the last conference call, the fourth quarter results that you thought that there was opportunity that you are transitioning into more the telecommunication equipment distribution market?

David Humphrey

I am still unclear, Doug, because we are already in the telecommunications distribution business.

Doug Ruth

Now you are further expanding into that market segment.

David Humphrey

But I mean we are attempting to do that through acquisition. So outside of that I really can’t address exactly – I am not real clear on – if we made the previous comment I am not sure what we were saying. Scott?

Scott Francis

Doug, this is Scott. I think, all I think I could think of is with the previous acquisition, with Nave, and the framework might have been more in terms of – we’re continuing to try to grow that, we’re continuing to work with some of the bigger players. And we do believe that there is a play – continue to grow within that customer base. Obviously the telco business is huge. I mean not just to mention AT&T and Verizon but there’s a lot of players there. So Nave is focused on trying to get further penetration into further customers, and that’s probably where that reference was going to is trying to get into that penetration.

David Humphrey

In addition, I do recall, Doug, that we did talk about they received their R2 certification, I can’t recall that call or the previous one but that certainly gives them expanded opportunity to recycle business but also could lead to additional inventory purchases that could either be sold through R2 or ultimately scrap. So it does help with both aspects of their business. In addition, Nave is continually looking at adding to their sales team to try to expand their sale base as well. So certainly organically Nave is attempting to grow and they are certainly incentivized to do that through the earn-out structure that we’ve got in place. And we are certainly trying to add to the cable business as well, the Tennessee is a demonstration of that and ultimately add to the entire base through the investment banker with acquisitions. Does that address your question, Doug?

Operator

It looks like he has signed off. We’ll go to our next question George Gasper, a private investor.

George Gasper

Good morning. Further on that acquisition that was announced in your release this morning. I don’t recall if you mentioned any cost – can you share the cost of that acquisition and what might be it in terms of incentives going forward that company might have to pay?

Scott Francis

Hi George, this is Scott. I am sure you haven’t gotten a chance to see it in our 10-Q, we’ve actually fit in there what the cost of the structure was. It was – basically we paid little under 200K for the net assets of the structure. And there is an incentive for the current owner there. We didn’t disclose that but I can tell you it’s definitely not to the level of the Nave acquisition and so forth. So it is a much smaller deal in all respects which is – but it was $200,000 -- $178,000 is what we paid. And we do anticipate there will be some – we hope there will be some incentives there, because I mean they are doing well and we are doing well.

David Humphrey

It was a stock acquisition. I am sorry – it was not a stock acquisition. It was a pure asset acquisition and all of the employees have joined the LLC that we set up to put the assets in. So all the employees joined our company including the guy who was the previous sole owner. So we’re very excited about what his potential is going to be able to do on behalf of our company as well.

George Gasper

How many people were involved in the acquisition as far as employees, and where is the reach now that you’re expecting to accomplish from Tennessee if you could just repeat that please?

Scott Francis

Right now the employee base there with the tax and admin – it ranges from between 10 and 15 depending on they had some part time folks between 10 and 15 people there. The region – it’s in Tennessee, it’s on the eastern part of Tennessee. So it’s going to reach into that region on the central and Central Atlantic and Ohio Valley areas, what we are planning on through that area.

David Humphrey

He’s got a fairly good customer base in – he is located in Tennessee and the border of Virginia, he’s got Tennessee, Kentucky, Virginia, West Virginia customer base on equipment sales as well as repair business and has some other contacts beyond that from an equipment sales standpoint.

George Gasper

Next question on inventory breakdown. Can you break the inventory down in terms of your cable inventory versus telco, that 23 million that was referred to as your inventory?

Scott Francis

The easiest way to do that, is to do the math, it’s about right over $6.5 million is your telco, everything else will be cable.

George Gasper

And then do you have any perspective on recent trends in just last three months since your last call? On the cable business in general, do you see anything coming out of the cable operators that on the pluses and minuses side?

Dave Chymiak

Hey George, this is Dave Chymiak. George, it’s basically flat. We don’t – I mean I am seeing pluses and minuses, it’s nothing significant. We keep doing our same things everyday and we’re staying busy.

George Gasper

And then previously you had done some expansion if I recall and setting up an operation was it in Arizona?

Dave Chymiak

That is correct, George.

George Gasper

How is that going? How is that progressing?

Scott Francis

The Arizona operation continues to ramp up revenue. It’s not cash positive at this point in time. Again we generally don’t speak specifically about any one location but you did specifically ask about that. We are still hopeful that we will continue to ramp up revenue in our Arizona operation and get to be profitable as well as cash positive.

George Gasper

So based on where the stock is selling for in here relative to your book value, looks like you are selling at about 40%, 45% of book, is that about right?

Scott Francis

I have done that calculation but that’s probably reasonably about where it is.

George Gasper

Yes, it looks like your book might be in the 3.85, 3.90 range, yes. Okay, thank you.

Operator

We’ll take our next question from Steve Rudd with Blackwell.

Steve Rudd

Hi. I want to go to this acquisition of Advantage Solutions LLC in Kingsport, Tennessee. In the10-Q you described that you acquired the net operating assets of Advantage Solutions. Any detail of these assets at $178,000? Then Scott said, we paid $170,000 or less than $200,000 for the structure. Then the follow up question said, well, how many employees are there, and it’s between 10 and 15 employees and the revenue stream is $500,000. But you hope -- you expect it to be accretive. Now I have to say I am scratching my head on multiple levels here. The first is in your Q you really shouldn’t say you bought just the assets, you should say N employees are coming with this. Because that to me sounded like you bought $170,000 in assets, no big deal. Picking up 10 to 15 employees, that’s a big deal. Picking them up with the $500,000 revenue stream unless they are paid some paltry sums which I can even do the math on, I don’t see how you possibly have an accretive acquisition here with $500,000 revenue stream. So on the disclosure point of view and communicating with shareholders, this is not done well. That’s the first part.

Secondly on an acquisition, so let’s put that aside because we’ve had clarification now from the phone call but that’s fine, be that as it may. The second part is on an acquisition, once really going honed here, I mean we picked up 10 to 15 employees and some assets, and revenue stream is $500,000, I don’t see how that’s accretive. Can you explain to us how that’s possibly so?

David Humphrey

Yes. I am not sure if you are doing – trying to do a metric on $500,000 with 10 to 15 employees or not. But this is a repair center and their employees are – we have a higher ratio of employees to revenue on all of our repair centers, that we still are able to generate a fairly decent margin in our repair business. So if you’re trying to do a metric off of employee versus revenue, that would work as a very good metric. What I did say was this could be a $500,000 to $1 billion revenue business and ultimately the key is are they going to ultimately generate additional profits to ADDvantage Technologies, and the answer is we believe so, we would not have made the acquisition, we did not buy it for the assets. But it was an asset purchase, it was not a stock purchase. So that’s why specified the way it is and I apologize for any confusion it may have caused but you see – because we did buy the business there but in buying the business we could say we bought the stock of the company and as buying the assets all the employees did not have joined us, but they ultimately all did.

Steve Rudd

I mean I am fine with how stuff is structured, I’ve just sounded extremely confusing and perhaps a bit – let’s delete the word with confusion. But the other part I don’t get is $500,000 in revenue there is a facility that they’re going to cost money, or even take 750,000, you can make money, $75000 revenue per person, is that a fair statement [ph]?

David Humphrey

Yes, it can and we do.

Steve Rudd

That’s pretty tight. Okay. Second issue is telco is improving – currently as we speak. Telco is improving, cable is not, this feels like a recurring movie or Groundhog Day, I mean are we just continually going to see this way and somehow this 20 some odd million dollars that we have tied up and cable remains – there’s really not been any – this is an observation – there really hasn’t been any sobre analysis of this cable business. I mean the prior caller is quite correct in the book value, those of us who are value investors scratch our head and say this is the bargain of bargains but it’s not a bargain if we have a business that is continually lot of weight, that we continually pour money into and we sit with this dead inventory. So last time I was suggesting that, Dave Chymiak – and I was suggesting that we’ve undervalued our human assets – human assets being Scott and the other Dave, David Humphrey to turn and say how can we streamline this cable business to make it profitable, who has been around here too long, who is not producing, I suspect that, that just hasn’t taken place, because I didn’t see in the release. As part of our cost cutting, we’ve let seven people go, old Joe who has been here since 1958, has decided to retire. Where are we really headed on this? And Dave Chymiak, I think you are the one to answer this and realize I am saying this that I’d like to be in the same boat with you. But I see it as a boat that you are more seeing as a hobby than as a business, and you’re just reassuring us that this is not a hobby, it is a business. To me isn’t the same as saying yes, we streamlined our operations, we cut staff by 15%, senior people who have been with me 35 years there now, two of them, that’s how it would really work, so Dave, if you would, realizing where we are coming from, that we do want to be in the same boat with you obviously and we’re in there right now. Tell us what substance of what you are doing to get this cable business right or when you’re going to pull the plug which to me seems would be something that requires real consideration?

Dave Chymiak

I don’t know quite how to answer that. The cable industry, our part of it has been banking a profit now, always has made a profit for almost 30 years. We’ve got a downturn, we used to have about $35 million worth – pouring in the cable side, we now have $16.5 million because 6.5 that’s going towards the telco side. And we continue making a profit and I don’t have the exact answer to – other than that we don’t have people sitting around not working, we have decreased the employees over the period of time, not really going in a mob but they are all busy, there’s not anybody we could just turn around and let go today, we are busy.

Steve Rudd

We are not really making money. I mean you may say we are making profit but we were making breakeven last quarter at a loss. And we are down 30% revenue on the cable side. And this is the same story we’ve had the prior quarter and the prior quarter the matter wasn’t that cable was so terrifically profitable. I mean it’s nice to say but these numbers just don’t back it up. I wish it were so. So maybe my question is, since year end what’s our employee count put aside the 10 or 15 folks we just picked up, has it decreased and by how much?

Scott Francis

Steve, the number of employees has not decreased since year end and part of the reason is because we already run a really lean cost structure already. We have already – as Dave already alluded to, when people have left over the last several years we’ve tried very hard to not replace them and reassign. And so – and plus on top of that we are not convinced that this is the – the demise if you will, like you are trying to paint the picture of the cable industry is we’re not going to react in a layoff situation and then all of a sudden be caught on the other side of, all of a sudden we can’t book the orders because we laid everyone off. So we’re not going to react in a two to three months period there on that front, when we are already on a lean cost structure to begin with. So I don’t know how to answer your question other than that, I appreciate your comments and your concern. But that’s kind of where we are at right at the moment and trying to evaluate and trying to get it to flat and grow and not necessarily just watching it go down like you are suggesting, that’s not what we are doing.

David Humphrey

Steve, to try to address your question, I will go one step further in saying 2015, during the year we reduced our staff by about six people. The way we do that is to look at every single location, look at the profitability, look at the operations, look at what the detail for the employees and in this particular location we determined that we didn’t need as many employees, we specifically reduced staff in that one location. But as Scott said, for one we have a lean organization to begin with. Our operation has already maintained a lean organization, it continues to do so. And unless there are specific employee positions where we could reduce, would impair the ability of our – our ability to generate revenue and profits for the company. So that’s the key we work on. So as time continues on and we see continuing decline we won’t make adjustments in the organization to maintain our profitable level. And that’s why we are reducing the number of employees within the organization.

Steve Rudd

Share buyback, you talked about it at length in the last call, haven’t heard a word about it and one of the signs of a business being undervalued is that management itself believes it’s undervalued, and they actually act on that. And so we just said no, not really, we’re not going to do this. As you haven’t said a word about it, it’s not in the release, and unless I missed something in the press release and between –

David Humphrey

No, it’s not mentioned. I will tell you that the board always considers such things and takes it up, we do know with the current stock price, we have had discussions around that although I will also tell you that the board and management believe the primary use for our capital today is acquisitions. And while the acquisition of the operation in Tennessee is not an example of that. For less than $200,000 we are still committed with our best banker to go out find that next acquisition similar to the Nave deal. So –

Steve Rudd

So you can find acquisitions at better than 50% discount because that’s where we are at now. In other words, we can buy Advantage at 50% discount to both and you can go out and make a better acquisition than at 50% discount? Is that the challenge you have with your investment banker?

David Humphrey

If I understand your question, were you talking about a 50% discount, you’re not selling relative to the business, you’re talking about relative to the assets. And yes, we buy companies probably for a lot higher than its asset value because we are buying going concern such as Nave had $3 million of assets, we bought it, we paid – it’s a range but to use the calculation I believe Scott said, it was about a $15 million purchase. So we bought some for $15 million, with $3 million worth of assets, so I guess on that calculation, we bought at a significant discount to its asset value but we bought it – the company is doing close to $3 million of EBITDA. So you can do the math on the multiples there, if you want and it’s not significantly discounted to its performance, it’s significantly discounted to its assets.

Steve Rudd

I am okay with the Nave acquisition. ADDvantage Technologies today is trading at 50% of its book and almost one-third, so less than half of revenue per share. Now that to me is incredible bargain and I suspect the assets from the fixed assets as opposed to the inventory is under-stated because of the length of time that you guys have been in business, they have been depreciated down. So what has me just stunned from a matter of financial management and this has got nothing – it’s not reflecting on Scott because he is not the decision maker here. But from a financial management point of view you know the operations of ADDvantage, you know the staff, you know the inventory, you know the revenue, you know the customer base, and basically by failing to buy back the stock at these prices, you’re determining that in fact, this is no bargain at all, that’s what the message is to every shareholder based on your actions, it’s not that there is a better deal out there, because all this tells me is that this valuation of the company is probably rich right now. In other words, $1.72, whatever we are at, is rich because the guys who know the business best won’t buy back one share at this price.

Garth Russell

Guys, I think Steve, you made your point. This is Garth. If you have another question, that’s great, or we can move on to the next caller.

David Humphrey

I will add to one last question, Garth, but I appreciate that we need to move on. And that is that the commitment of not buying additional shares does not indicate that we don’t believe it’s the value. We do. The board and the management team believes that our stock is significantly under-valued to the capability of the performance of our company. Unfortunately the market dynamics indicate that we are performing well at this and the last quarter and I think that’s a reflection of our stock price and we indicated that in the previous quarter and that drove our stock price during that quarterly call. So I think we have better uses for our capital, it’s what’s believed by the board and our strategies utilize our cash flow for acquisition to get its dual growth model. That’s what we did with the Nave acquisition and that’s what we are planning on doing to find the next acquisition and utilize our cash for Nave acquisition. It’s no way indicative of the fact that we’re sending a message to the marketplace that we believe that our stock is not undervalued. We truly believe it’s undervalued. So that’s the answer I’d give you, Steve. So I guess operator, we’ll turn it back over to you for any other questions we’ve got.

Operator

We’ll go to Doug Ruth, Lenox Financial Services.

Doug Ruth

I wanted – I don’t know what happened when I was on the line previously but I wanted to ask about the stock buyback and you answered that question so.

Operator

And we’ll go to George Gasper, Private Investor.

George Gasper

Just a follow up, I know there is a lot of intelligence among the people who are asking questions and then we can get on this situation of the value of ADDvantage Technologies on the buyback. But I think management has to stay the course and put the effort in to acquisitions to broaden this revenue scale well above $50 million and $50 million would be a nice target for this year, if that is possible, I don’t know. At this point it may be a little too much to ask for. But I think you’ve got a good strategy, you’ve just got to keep looking around for the right acquisitions, use your intelligence that you have in the company to take it to the next level with – through asset purchase.

I’d also like to just say – is there any sharing you could impart to us on the current quarter from a revenue stream, is it – can we look for the revenue stream being higher than this past quarter, and the current quarter with maybe the entrance of some pickup in the revenue stream from telco and cable coming about and exclusive of the acquisition that you just made?

Scott Francis

To answer your question, George, of course we don’t make forward looking statements, we try to stay from but as I believe we would say based on what we have already reported, we anticipate overall our company will increase its revenue. That will be provided next quarter.

Operator

And we currently have no questions at this time. We have received a question from Bob Paulin with BP [ph].

Unidentified Company Representative

Good morning gentlemen. Nice work Dave.

David Humphrey

Thank you, Bob.

Unidentified Company Representative

In a down revenue quarter. We are all experiencing the same thing in the CATV sector, you guys have such an agile cost structure that you always seem to do well. Congratulations, regardless and keeping your powder dry until you find the right thing, I think is a wise move.

David Humphrey

Bob, thank you very much. Appreciate that comment.

Operator

And we will take our next question from George Gasper, Private Investor.

George Gasper

Yes, one last directed potentially to Dave Chymiak. Regarding the potential changes in the amplifier market, is there anything new from your perspective unfolding in the market for amplifiers for enhancing the bandwidth that’s coming about?

Dave Chymiak

It’s a little disheartening – it just keeps me on postpone but we are seeing more and more interest, more and more questions, more and more quotes, it’s been postponed, it looks like towards the end of this year and 2017 budgets.

End of Q&A

Operator

And that will conclude today’s question and answer session. I will turn it back now to management for any additional or closing remarks.

David Humphrey

Thank you, operator. And thank you to everyone for joining us on the call today. I’d like to conclude by reiterating that although we are experiencing challenges in the industry we believe the slowdown in the telco segment is a temporary problem caused by short term events in the general market. It’s not possible to predict exactly when the market will turn around. We are encouraged by some of the early signs we are seeing in the telco segment. We remain confident that we are well positioned to meet the customers’ needs with the demand does increase. Cable TV segment has been facing significant challenges over the past several years, but during this time the segment has always been profitable and had positive cash flows.

We are continuing to look for ways to aid revenue growth to this segment as evidenced by the recent addition in Tennessee location while at the same time trying to control costs. In addition, we are still seeking strategic acquisitions in order to further expand the scope of our business within the broader telecommunications industry. I’d like to thank our shareholders for their loyalty and patience as we focus on identifying new revenue sources for our existing businesses and growing ADDvantage Technologies. Thank you and good bye.

Operator

And that does conclude today's conference. Thank you for your participation.

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