Net income for the quarter ended March 31, 2006 was $1,277,000 ($0.11 per share), compared with $2,025,000 ($0.18 per share) for the same period in 2005. Excluding the one-time software sale in 2005, net income for the same period last year would have been $184,000, or $0.02 per share, and for the nine months ended March 31, 2005, the company would have incurred a loss of $620,000 or ($0.06) per share. Year-to-date net income was $2,287,000 ($0.19 per share) as compared with $1,221,000 ($0.11 per share) in 2005.
"Our record revenues and improved profitability reflects the success of our strategy," said Avatech CEO Scotty Walsh. "Product sales, the core of our business, grew over 28% from the third quarter in 2005 to 2006, our services business revenues increased by 19% and our commission revenues were 40% higher than last year," continued Walsh. "Our bottom line for the quarter was exceptional due to our revenue growth and the higher profit margins from increased sales incentives from our leading supplier, Autodesk."
The Company earns sales incentives based on reaching regional sales targets provided by Autodesk and those incentives increase significantly when sales exceed 115% of target. Due to strong sales for this period, the Company earned incentives approximately $700,000 higher for the quarter ended March 31, 2006 than in the first two quarters of the current fiscal year.
"We are planning to complete our previously announced acquisition of Michigan-based Sterling Systems and Consulting during our fourth quarter of this fiscal year and expect that this transaction will significantly add to our growing revenues and profits," said Walsh. "In addition, the capital expected to be provided by our private equity partner will be sufficient to fund the Sterling acquisition and the acquisition of other similar companies to fuel our growth and expansion plans."
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.
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. A description of risks and uncertainties attendant to Avatech and its industry, and other factors that could affect the Company's financial results, are included in its Securities and Exchange Commission filings, including, but not limited to, the annual report on Form 10-K for the fiscal year ending June 30, 2005 and other Securities and Exchange Commission filings. Investors and shareholders may obtain a free copy of the documents filed by Avatech Solutions, Inc. with the Commission at the Commission's web site at www.sec.gov.
All brand names, product names, or trademarks belong to their respective holders.
Avatech Solutions, Inc.
Summary Consolidated Financial Data
Three Months Ended Nine Months Ended
December 31, March 31,
----------------------------------------------------------------------
2006 2005 2006 2005
----------------------------------------------------------------------
Revenues-
Product sales $ 6,926,000 $ 5,396,000 $18,871,000 $15,028,000
Service revenue 1,836,000 1,537,000 5,563,000 4,275,000
Commission
revenue 2,251,000 1,605,000 5,258,000 4,174,000
Sale of developed
software - 1,900,000 - 1,900,000
------------ ------------ ------------ ------------
Total revenues 11,013,000 10,438,000 29,692,000 25,377,000
------------ ------------ ------------ ------------
Cost of revenues-
Cost of product
sales 3,827,000 3,173,000 11,029,000 9,778,000
Cost of service
revenue 1,308,000 1,157,000 3,706,000 3,288,000
Cost of developed
software - 59,000 - 59,000
------------ ------------ ------------ ------------
Total cost of
revenues 5,135,000 4,389,000 14,735,000 13,125,000
------------ ------------ ------------ ------------
Gross margin 5,878,000 6,049,000 14,957,000 12,252,000
Operating income 1,149,000 2,163,000 2,447,000 1,650,000
Net income 1,277,000 2,025,000 2,287,000 1,221,000
Earnings per share:
Basic $ 0.11 $ 0.18 $ 0.19 $ 0.11
============ ============ ============ ============
Diluted $ 0.07 $ 0.14 $ 0.14 $ 0.09
============ ============ ============ ============
Weighted average
common shares
outstanding:
Basic 11,585,455 10,865,042 11,231,776 10,188,717
============ ============ ============ ============
Diluted 17,338,249 14,092,635 16,610,646 13,531,523
============ ============ ============ ============
Contact:
Avatech Solutions, Inc., Owings Mills Media Contact: Jean Schaeffer, 410-581-8080 Fax: 410-753-1591 Email Contact or Investor Relations Contact: Christopher Olander, 410-581-8080 Fax: 410-753-1591 Email Contact
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