Avatech Solutions, Inc. (OTCBB: AVSO.OB), the nationwide technology experts for design, engineering, and facilities management solutions, today announced financial results for its fourth quarter and fiscal year ended June 30, 2006.
Fiscal 2006 Highlights
For the year ended June 30, 2006, revenue totaled $39.6 million compared to $34.1 million for fiscal year 2005. Excluding the one-time $1.9 million sale of developed software to a major supplier in 2005, revenue increased 23%. Net income for fiscal year 2006 totaled $2.2 million, or $0.18 per share, compared to net income of $1.9 million, or $0.18 per share, for fiscal year 2005. Excluding the one-time software sale, net income for fiscal year 2005 would have been $111,000, or $0.01 per share. Results for fiscal year 2006 reflect the effect of expensing stock options which totaled $315,000, or $0.03 per share.
For the fourth quarter ended June 30, 2006, revenue totaled $9.9 million compared to $8.8 million for the fourth quarter of fiscal year 2005. The company reported a net loss of $84,000, or $0.01 per share, for the fourth quarter of 2006, compared to net income of $714,000, or $0.06 per share, for the same period last year.
Chief Executive Officer Scotty Walsh commented, “Avatech performed well for the year overall, meeting our revenue goal and outperforming our internal expectations for the bottom line. These accomplishments were driven largely by the company’s success in vertical markets where customers are increasingly converting to 3D design. As planned, another key accomplishment for fiscal year 2006 was the strengthening of our balance sheet.
“The company’s fourth quarter was somewhat less robust than we would have liked, particularly in comparison to our very strong third quarter, which benefited from increased sales activity related to the retirement of certain products by our main supplier, Autodesk. During the fourth quarter, we made significant investment in sales and technical staff in addition to adding personnel through the Sterling acquisition. We expect these new personnel, who were not yet fully productive in the fourth quarter, to begin contributing to revenue growth in fiscal year 2007. In addition to the higher selling expenses, our financial results for the quarter were also impacted by a non-recurring interest expense of $65,000 associated with the short-term loan we secured to finance the Sterling acquisition.
“Overall, our growth strategy -- aimed at transitioning Avatech to a diversified services and solutions provider -- has been very successful, and in fiscal 2007 we plan to build on the progress we have achieved to date. Management expects that this strategy will include the exploration of acquisition opportunities as they arise and acting on those that management believes involve profitable, well-managed companies expected to diversify our revenue stream, expand our customer base, and increase the profitability of the services we offer. Because the ability to close on any acquisition opportunity depends on our financial condition at the time and other unpredictable factors beyond our control, there can be no guarantee that we will pursue or realize on any opportunity that may arise. During the coming year, we also expect to reap the benefits of an expanded and fully productive sales and technical force.
“Our goal for fiscal year 2007 is to generate
revenue in the range of $55 million to $60 million, excluding the
effects of any additional acquisitions, and to achieve measurable
improvement in our operating margins. The realization of this goal,
however, is highly dependent on the successful expansion and
diversification of our range of products, the growth of our geographic
footprint, and an increase in our sales and customer-facing experts, all
of which are subject to several risks and uncertainties related to our
business and other factors beyond our control. Accordingly, there can be
no guarantee that we will achieve this goal. ”