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ADDvantageTechnologies Group
ADDvantageTechnologies Group
NASDAQ: AEY
Investor Presentation September 2007
Safe Harbor
This presentation may contain forward-looking statements. All statements other than statements of historical facts, which address activities, events or developments that the Company expects or anticipates will or may occur in the future, are forward-looking statements. These statements are subject to risks and uncertainties, which could cause actual results and developments to differ materially from these statements.
A complete discussion of these risks and uncertainties is contained in the Company’s reports and documents filed from time to time with the Securities and Exchange Commission.
ADDvantage at a glance…
Ticker AEY
Listing NASDAQ
Stock Price (9/07/07) $7.52
Market Capitalization (9/07/07) $74.16 million
Avg. Volume (3 Mos.) 100,925
Sales (Nine months 6/30/07) $48.4 million
EBITDA (Nine months 6/30/07) $9.7 million
Net Income (Nine months 6/30/07) $5.0 million
EPS – Fully Diluted (Nine months 6/30/07) $0.49
Number of Employees (6/30/07) 167
Who we are…
We supply the cable television (CATV) industry with a comprehensive line of system-critical network equipment and hardware, and nationwide repair services.
ADDvantage products are used to acquire, distribute, and protect the broad range of communications signals carried on fiber optic, coaxial cable and wireless distribution systems.
Our history…
19851985TULSATacquiredby David andKen Chymiak
May 2001 May 2001 ADDvantage Technologies acquired Fero-Midwest (dba ComTech Services
December 1999December 1999ADDvantageMedia changedname toADDvantage TechnologiesGroup
September 1999September 1999Shareholders of
TULSAT assumed control of
ADDvantage Media through a reverse
merger
November 1999November 1999Lee CATV, a wholly owned subsidiary of ADDvantage Media, merged withDiamond W Investments
March 2001March 2001ADDvantage Technologies acquired NCS Industries
Nov 2003Nov 2003 ADDvantage Technologies began trading on AMEX.Ticker symbol AEY.
August 2005 August 2005 ADDvantage
Technologies acquired
Jones Broadband
International
June 2006June 2006
ADDvantage Technologies acquires the assets of Broadband Remarketing International
October 2006October 2006ADDvantage Technologies acquired assets of Broadband Digital Repairs
September 2007September 2007ADDvantage Technologies begins trading on the NASDAQ
June 2007June 2007Jones Broadband Intl. announced authorized service partner of JDSU
ADDvantage subsidiaries
Tulsat Tulsat - Atlanta Tulsat - Nebraska Tulsat - Texas NCS Industries Comtech Services Jones Broadband Broadband Remarketing International
A National Presence
Tulsat
Jones Broadband International
ComTech Services
Tulsat-Atlanta
Tulsat Nebraska
Tulsat-Texas
NCS Industries
Tulsat / ADDvantage Headquarters
Broadband Remarketing International
Our advantage…
Largest inventory of CATV equipment, allowing for “OnHand, On Demand” service
Largest seller and service provider of new and refurbished CATV electronics equipment in the U.S. market
Industry’s leading VAR - strong alliances with OEMs, including Scientific-Atlanta, Motorola, Blonder Tongue, Terayon
Expanding network of world-class repair centers, providing warranty and non-warranty services
Growing efficiencies within our operating model
Reliable Products
Expansive inventory of new and refurbished legacy CATV equipment, as well as digital and fiber optic broadband telecommunications equipment from major vendors.
Remarketing of converters both domestically and internationally.
One-stop shopping for all CATV equipment needs
Inventory of hard-to-find products Wide variety of products in stock
and readily available
Professional Services Technical Expertise
– Consult with customers on products and configurations– Provide customers with technical expertise from our experienced
sales and support organization
Service Capabilities
Maintain world-class service centers at all locations
Provide warranty and repairs for all products sold– Analog– Digital– Fiber optic – Test equipment
Provide out-of-warranty repairs Authorized service partner of JDSU for the Western U.S.
Our core markets Domestic Market
– Target customers - ~ 6,000 U.S. CATV systems • More than 1,400 active accounts • ~ 32% of 2006 revenues came from top 5 customers
– Technology convergence of video, voice and data delivery systems
• Changes in the market are expanding the potential client base to include RBOCs, independent telecoms and utilities
International Market– Distribution agreement in Latin America and South America
with Scientific Atlanta – Customer base in Latin America through Jones Broadband
International
Current Market Trends In the US and abroad, customers are in the infant stages
of VOIP and HSD, while IPTV and Wireless are set to follow
HDTV continues to thrive
Cable telephony and Converged IP Services over cable are growing at a rapid pace
Growing demand for bandwidth and speed, owing in part to the popularity of media-rich sites such as YouTube
Expected growth in cable TV infrastructure equipment sales from approximately $925 million in 2006 to over $2.1 billion in 2010, a CAGR of approximately 23% (according to In-Stat)
Strategy for Long Term Growth
Expand domestic and international sales forces
Enhance relationships with leading OEMs and increase special distribution agreements
Grow technical repair service via additional regional service centers
Explore VAR opportunities with key suppliers and branded manufacturers
Broaden ‘new industry’ sales efforts: RBOCs, independent Telecoms and utilities
Complement organic growth with strategic acquisitions
Build upon product portfolio to supply the most up-to-date offerings
Acquisition Criteria
Entry into new markets
Strong platforms that complement core business
Market leader in under-served markets
Strong market presence
Reliable service after the sale
Circle the Customer, Circle the Globe
Our valued customers
Private Cable Companies– Business Networks– Hotels– Hospitals– Apartments– School Campuses– Telephone
Competitive Service Providers– Disney– Universal Studios– Municipals
Large MSOs– Time Warner– Cox– Comcast– Charter– Cablevision
Mid-Market MSOs– Cebridge– Cable One– Independent CATV
Key OEM Relationships
Master Stocking Distributor for most new and legacy products and other broadband equipment
Exclusive relationship in the U.S. and Latin America for certain legacy products
Authorized third-party repair center for legacy and end-of-life products
One of two preferred VARs for broadband and transmission equipment
VAR Partners
Year-Over-Year Growth Operating Income EBITDA
Gross Profit Net Revenue
FY 2005 FY 2006 2007 YTD Numbers through Q3 –Annualized
2006 Revenue Mix 2006 Gross Profit Mix
RefurbishedProducts
26%
Service10%
New Products64%
Revenue and Gross Profit Mix
New Products73%
Service10%
Refurbished Products
17%
Financial PerformanceStatement of Operations
Three Months Ended
($ in thousands) June 30, 2007
June 30, 2006
Net Revenue $17,563 $13,199
Gross Profit $6,077 $4,048
Net Income Attributable to Common Stockholders
$2,000 $1,133
Earnings Per Share
Basic $0.20 $0.11
Diluted $0.19 $0.11
Shares Used in EPS Calculation
Basic 10,237 10,172
Diluted 10,265 10,206
Selected Financial Data
June 30
($ in thousands) 2007 2006
Current Assets $34,280 $34,757
Total Assets $47,341 $39,911
Current Liabilities $8,554 $7,836
Total Debt
Stockholders’ Equity $32,585 $27,098
Other Financial Data
Working Capital $25,726 $26,921
Depreciation & Amortization $78 $60
Balance Sheet Data
Capital Structure
Common Stock: (as of 6/30/07)– Outstanding – 10.2 million shares– Authorized – 30 million shares
Ownership: (as of 6/30/07)– Public Float – 5.7 million shares– Insider Holdings – 4.5 million shares
• Dave Chymiak, Chairman• 2.3 million shares – 24%
• Ken Chymiak, President and CEO• 2.2 million shares – 22%
Preferred Stock: (as 6/30/07)– Series B, 7% cumulative - $12 million
Senior Management
Dave Chymiak – Chairman of the Board–20+ years in the CATV industry
Ken Chymiak – President and CEO–20+ years in the CATV industry
Dan O’Keefe – Chief Financial Officer / Vice President and Secretary
Industry Veterans Heading our Subsidiaries
George McIlvain – General Manager, TULSAT-Atlanta – 21 years in with Scientific-Atlanta, Joined ATG in 2002
Johnny Lopez – General Manager, TULSAT-Texas– 28 years in the CATV industry
Nick Ferolito – President and General Manager, ComTech Services– 21 years in cable television industry – Co-founded ComTech in 1984; sold to ATG in 2001
John Noojin – Sales Manager, TULSAT-Nebraska– 27 years sales experience
John Denner – Service Manager, TULSAT-Nebraska– 37 years in the CATV industry
Mark Schumacher – Sales Manager, TULSAT– 26 years in the CATV industry
Fred Baker – Vice President/General Manager, NCS Industries– 28 years in the CATV industry
Investment Considerations
Accretive to earnings Unique one-stop-shopping through large inventory Established position in $10.13* billion cable equipment
and services industry Expanding repair services geographically Favorable market trends Strong financial position Broad product and service offerings Growing demand for bandwidth and speed Established relationships with leading OEMs Proven and experienced management team
* Source: Kagan Research, LLC. - Estimated cable industry infrastructure expenditures in 2004
ADDvantage Technologies Group1221 East Houston St.
Broken Arrow, OK 74012
Tulsat Tulsat-Atlanta Tulsat-Nebraska Tulsat-Texas NCS Com-Tech Services
Jones Broadband Broadband Remarketing International
ADDvantageTechnologies Group
ADDvantageTechnologies Group