ADDvantage Technologies Group, Inc.

Good day, ladies and gentlemen, and welcome to the Advantage Technologies Fiscal Year 2022 Second Quarter Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Brad Moss. Please go ahead, sir.

Thank you, Operator. We are joined today by Joe Hart, President and CEO, as well as Michael Rutledge, the Company's Chief Financial Officer. Before we begin today's call, I'd like to remind you that this conference may contain forward-looking statements which are subject to Safe Harbor provisions. of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among other things, statements regarding future events, such as the ability of Advantage Technologies and its subsidiaries to maintain strategic relationships and agreements with certain original equipment manufacturers and multiple system operators, as well as future financial performance of Advantage 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 the actual future results and results due to a variety of factors, such as those contained in Advantage Technologies' most recent report on Form 10-K, on file with the Securities and Exchange Commission. Financial information presented on this conference call should be considered in conjunction with the consolidated financial statements and notes included in the company's press release issued earlier today, or actually yesterday, and included in Advantage Technologies' most recent report on Form 10-Q. The guidance regarding anticipated future results on this call is based on limited information currently available on Advantage Technologies. We decided to change. Although any such guidance and factors influencing it may change, Advantage Technologies will not necessarily update the information, as the company will only provide guidance at certain points during the year. Such information speaks as only the date of this call. During this call, we also may present certain non-GAAP financial measures, such as non-GAAP net income and certain ratios that are used with these measures. In our press release and in the financial tables issued earlier today, which are located on our website at advantagetechnologies.com, You'll find a reconciliation of these non-GAAP financial measures with the closest GAAP financials and a discussion about why we believe 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. I'd now like to turn the call over to Joe Hart, President and Chief Executive Officer of Advantage Technologies. Joe, please go ahead.

Thank you, Brett, and thank you to everyone joining us on the call today. This was a record quarter for us. For some time, we've been expecting a surge in 5G tower work, and that has clearly occurred. Encouragingly, it happened simultaneous with a boom for our telco segment as well. The result is revenue of nearly $24 million, up nearly 90% year over year. We expect this encouraging revenue trend to continue based on site awards and a growing pipeline of work. The progress is not as evident on our bottom line yet, but we have implemented significant cost reduction initiatives to address this. As the 5G work surged, we moved quickly to meet the demand. Now that we have more visibility into the schedule our customers expect over the next few months, we have strategically reallocated resources to meet near-term demand and have scaled back our back-end support infrastructure. The result is approximately $2.4 million in reduced expenses on an annual basis. And we should see the initial benefits of these cuts in the current quarter, our third fiscal quarter, which ends in June. I would note that most of the personnel reductions were achieved through natural attrition. so there are no restructuring or severance costs associated with this initiative. Investors should expect margin expansion and a material improvement in our operating and net losses beginning in the current quarter. We are clearly focused on improving bottom-line profitability and not just top-line growth. Wireless revenue related to tower work and other aspects of the 5G rollout has already increased by 55% year-to-date compared to last year, year-over-year. We expect that it will continue to grow throughout this fiscal year. In fact, all last year we generated approximately $21 million in wireless revenue, and we've generated almost $15 million in just the first six months this year. Our growth continues to be broad-based, involving several carriers, including both long-standing customers and new players in the market. The work touches all the regions we service, spread across the center of the United States. We are the leading vendor in several large metropolitan areas. Our pipeline of new projects, meaning work we have been awarded where we are waiting for purchase orders as permitting is complete, gives us significant confidence that the growth will continue in the near term. The 5G opportunity represents a multi-year secular trend, not just for tower, but for data centers, technology providers, handset manufacturers, and wireless carriers. Each of the carriers are investing tens of millions of dollars in the expansion, and the CapEx plans of carriers are public and widely discussed. As this wireless segment quickly expands, we are simultaneously benefiting from other secular trends that are driving strong results in our telco segment. Global supply chain issues and chip shortages continue to impact the market for new telco equipment. In addition, many people are working from home, requiring an expansion of the telco infrastructure to facilitate a remote workforce. Offices are clothing. either because of challenges related to the pandemic or often because their workforce is now remote, creating a market for office equipment for us to purchase at attractive prices, to refurbish, and to resell. All of these factors make our refurbished equipment sold by Knave and Triton a more compelling and viable option, and the year-to-date performance supports this. This was the fourth consecutive quarter of revenue over $11 million. And in fact, the nearly $16 million in telco segment revenue was an all-time record high. The second quarter telco revenue alone exceeded the revenue for the first six months of last year. And our telco segment is contributing solid and positive contribution margin to our company. We continue to anticipate a leveling off of demand at some point in future quarters as the global supply issues and chip shortages subside, albeit at a somewhat elevated level relative to the recent past. The CEO of Intel was quoted recently as predicting that the global chip shortage may last into 2024. Overall, we delivered 88% revenue growth in the quarter. Our wireless margins and overall profitability were impacted by the increased spending to ramp up crews and capabilities in advance of the coming demand. But we believe that will improve in the current quarter with further margin expansion as we move through the year, as our business reaches the necessary inflection points where volume is able to offset fixed costs. At the same time, as we are reducing our fixed costs by $2.4 million annually, or $600,000 per quarter, we are committed to delivering a bottom-line net profit in the coming quarters. With that, I'll now turn the call over to Michael Rutledge, our CFO, to provide a more detailed review of our financial results. Michael, please go ahead.