ADDvantage Technologies Group Inc (AEY) 2019 Q4 法說會逐字稿

Good day, and welcome to the ADDvantage Technologies Fourth Quarter 2019 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Brett Maas of Hayden IR. Please go ahead.

Thank you, operator. We are joined today by Joe Hart, President and CEO; as well as Kevin Brown, Chief Financial Officer; Scott Francis, Chief Accounting Officer; Don Kinison, President of Telecom segment; and Colby Empey, the President of Wireless segment.

Before we begin today's call, I'd like to remind you that this conference call may contain 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 future events, such as the ability of ADDvantage Technologies and 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 results -- future results or results due to various -- varying factors such as those contained in ADDvantage Technologies most recent on form -- 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 those included in the company's press release issued earlier today and included in ADDvantage Technologies' most recent report on Form 10-K. The guidance regarding anticipated future results on this call is based on limited information currently available on ADDvantage Technologies, which is subject to change. Although any such guidance and factors influencing it may change, ADDvantage Technologies will not necessarily update that 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 may also 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 addvantagetechnologies.com, you will find a reconciliation of these non-GAAP financial measures with the closest GAAP financials and a discussion of 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 would now like to turn the call over to Joe Hart, President and Chief Executive Officer, of ADDvantage Technologies. Joe, please go ahead.

Thank you, Brett, and thank you to everyone joining us today. We conclude an important fiscal year, a year of strategic transition, and the results we report today demonstrate that the transition is delivering the desired results. We enter fiscal 2020 poised for continued operational and financial improvements. The interim progress over the last year is reflected in our improved valuation. We believe there is incremental upside as we continue to deliver improved results.

It was a busy fiscal year for us. We divested our Cable segment and acquired a new venture that we believe will lead our growth for the next several years. Simultaneously, we invested in our operations with the goal of eliminating drags on our growth and profitability and empowering our teams to deliver improved results. We believe our company is strategically positioned at the forefront of the next wave of wireless technology. Central to this transition are 3 clear actions that we successfully completed, putting us in a strong position heading into fiscal 2020.

In July, we completed the sale of our Cable TV business segment for $10.3 million. By diversifying away from our original core cable business, we are now better positioned to focus our time and resources on an expansion strategy that encompasses a range of solutions in the telecom equipment and wireless services market. The addition of capital generated from this transaction provides the means for us to pay off debt, invest in new markets for long-term growth and improve returns on investment. As part of our strategy to divest the Cable TV business, we also sold 2 properties located in Missouri and Pennsylvania. Sale of these properties further advanced our strategy and provided additional working capital to support the launch of our wireless services business and execution of our growth strategies in our Telco segment.

Early in fiscal 2019, we announced our plans to launch a service business focused on providing wireless infrastructure services to the telecommunications market in order to expand our range of solutions and to pursue the rapidly evolving and growing wireless market for the first time. Launch of this business leverages our expertise, contacts and relationships in the wireless industry to provide a greater range of solutions to the broader telecom market. With the planned 5G rollout in the wireless space by all major U.S. carriers, our expansion significantly reduces our total addressable market, diversifies our revenue stream and clearly defines some meaningful growth opportunities. Simply stated, we are at the beginning of a multiyear secular trend, a catalyst which is expected to drive our growth for several years.

Accordingly, and promptly following the announced launch, we agreed to acquire substantially all of the assets of Fulton Technologies and most of the communications for a final purchase price of $1.3 million. We closed the purchase in January 2019 and quickly gained a comprehensive wireless infrastructure services offering with established and experienced operational teams and pre-existing revenue streams from major customers in the industry.

Fulton has a strong reputation in the wireless services industry and maintains solid multiyear contractual service relationships with 4 major U.S. wireless carriers, the national integrators and the only ones that support those wireless carriers.

The scope of our offering includes the installation and upgrade of technology on cell sites, the construction of new small cells, engineering, site acquisition, and commissioning and integration services for cell sites for current and future wireless carriers across the Southwest, Midwest and northern plains regions. We now have the core infrastructure, talent and range of offerings to participate in new growth opportunities, including, most importantly, the planned 5G rollout over the next 10 years.

In conjunction with these 2 strategic transactions, we seized the opportunity to realign operations in our Telco segment to improve efficiency and remove roadblocks to profitability. For example, at Nave, our focus is on optimizing inventory management. When we took over management in 2018, the storage and management of inventory was poorly managed and disorganized. It was difficult for technicians to find parts, increasing the time it took to perform their [duties], fulfill orders and improve our margins. We have revamped this process entirely, including moving Nave's entire inventories and order fulfillment operations from our facility in Jessup, Maryland to Palco Telecom, a third-party reverse logistics provider in Huntsville, Alabama.

Today, our inventory is tightly managed, significantly streamlining operations. This improvement enabled Nave to narrow its focus to growing the business in other areas such as testing, repair and recycle. Simultaneously, we lowered operating expenses by reducing the warehouse headcount, resulting in nearly $800,000 in annualized savings. Our sales team is focused on growing our business and not on inventory management. This also allowed us to expand our recycling division, generating incremental operating income. The results are clear. Nave revenue was up nearly 18% in fiscal 2019, and Nave became a significant positive contributor to adjusted EBITDA before the impact of inventory adjustments that were expensed in 2019. With a well-managed business now in place and people empowered to focus on their core responsibility without the distraction of a sloppy inventory system, we are well positioned for top and bottom line growth at Nave.

In 2020, we will be focusing on building our repair services business and even more growth within our recycle operations. At Triton, our issue was congestion at a facility that was too small. Space constraints limited our operations and challenged our workflows. We have inventory off-site at 6 disparate storage locations and it took significant time to manage. As a result, operational costs were poorly managed and documented processes and workflows were lacking. We changed all of this. We've consolidated 6 storage locations into a single new warehouse and operations center located in our brand-new facility in Pembroke Pines, Florida. As part of this, we also transitioned our legacy management personnel and replaced them with an experienced and highly trained operations team well equipped to manage operations and increase productivity. We rebuilt and fully documented all processes and workflows under the leadership of a new operations director and augmented the team with an office and accounting managers.

Finally, we engaged our third-party logistics partner, Palco Telecom, to help design our workflows. This has freed us up to ramp up online sales on platforms such as Amazon Prime, Google Shopping and Alibaba. Looking into fiscal 2020, we are adding additional manufacturers to our product lines to increase the number of product offerings at Triton. We are also redesigning our website, with a focus on search engine optimization.

We continue to work to improve production efficiencies and maximize the number of daily phones produced per headcount. Finally, we are in the process of conducting a deep dive into all costs of goods in the warehouse, materials, accessories, paper goods, packing materials and shipping costs. Revenue at Triton was up 16% for fiscal 2019. The timing of the move to the new facility, which was delayed approximately 6 months and concluded just at the end of our fiscal year, was a drag on full year EBITDA for 2019. Yet we are confident that the benefits of this move will be demonstrated in improved results in fiscal 2020.

Turning to Fulton, which was acquired on January 4, 2019 and following the acquisition, we moved quickly to adequately fund it (technical difficulty) look to resolve material, vendor and subcontractor availability issues, which has hampered growth. With this remedy, we quickly reestablished our customer base and began adding new customers like Nokia and JVP. Our access to subcontractors has been improved and we have also improved our self-performed capabilities. Key to this has been our efforts to supplement our staff with seasoned veterans in the wireless space. For example, we added a new leader of tower operations, a new leader of site acquisition and multiple key project managers in each market. This is helping us to pursue additional business and capture a larger share of the market.

In addition, we added financial controls and accounting personnel to help us maximize margins and manage accounts receivables by driving faster cash conversion and helping us better manage the timing of subcontractor payments. We have also been expanding our geographical footprint throughout the central region. Previously, we were focused on Texas and Oklahoma in the south and Illinois and Wisconsin in the north. We have since expanded and are now performing work in additional 7 states, including Arkansas, Kansas, Missouri, Mississippi, Louisiana and Alabama.

In the northern states, we have expanded our reach to include Iowa, Nebraska, Minnesota, the Dakotas, Michigan and Indiana. This expansion involves multiple carriers and integrators and is intended to strengthen our position and reach throughout the entire central region from north to south. Of primary importance, we are expanding the type of work we are doing. Our focus going forward will expand our base of small cell pole and macro cell new site build work, which is the scope of work that most aligns with the rollout of 5G.

The transition and integration of Fulton has gone well. Our gross margin and revenue improved significantly year-over-year, and we meaningfully narrowed the adjusted EBITDA loss compared to a significant adjusted EBITDA loss pre-acquisition.

That said, the progress we have made is clear when we look at this business from a sequential perspective. Revenue has grown from $4 million in the second quarter of fiscal 2019 to $10 million in the final quarter of the year. And we have eliminated most of the adjusted EBITDA loss, positioning this business unit to be a positive contributor in fiscal 2020. We are forecasting a strong double-digit top line increase to Fulton, and we expect positive adjusted EBITDA for fiscal 2020.

I would like to caution that our Fulton business more than others is impacted by seasonality. This is represented in 2 factors: weather; and the carrier's fiscal challenges. We have taken steps to make it possible for our crews to work with relative comfort and optimal safety even in cold conditions, but ice storms and other winter events can certainly disrupt and delay projects from time to time. It is possible that we may see a lull early in our fiscal year as they begin to transition to 5G prep work in their networks.

We are, however, experiencing strong demand across the Midwest in these winter months as the carriers expand across all remaining 4G frequencies. Year-over-year results will show the benefits of our improved operating efficiencies and better practices. And although the New Year may start slowly, we believe fiscal year 2020 will be a year of solid top and bottom line improvements. We are encouraged by the rapid progress we have made in fiscal year 2019 and the nimbleness of our organization to flex and adapt to the changes in our business. We are poised to have an even better year in 2020.

With that, I'll now turn the call over to our CFO, Kevin Brown, for a more detailed review of our financial results. Kevin, please go ahead.

Thank you, Joe.

For the fourth quarter of fiscal 2019, our group sales increased 182% to $17.9 million, up from $6.3 million for the fourth quarter of fiscal 2018. The increase in sales was due to an increase in the sales in the wireless segment of $10 million and an increase in sales of the Telco segment of $1.6 million. The wireless segment sales increase was due to the acquisition of Fulton Technologies in January of 2019. Therefore, revenue for the wireless segment was $10 million in the fourth quarter of fiscal 2019. We did not report any revenue for this segment in the fourth quarter of fiscal 2018.

Sales for the Telco segment increased $1.6 million to $7.9 million for the 3 months ended September 30, 2019, which is up from $6.3 million for the same period last year. The increase in sales for the Telco segment was due to year-over-year increases in equipment sales of $0.6 million and in recycling revenue of $1 million. The increase in Telco equipment sales was due to increased sales of Triton Datacom of $0.4 million and increased sales at Nave Communications of $0.2 million. The increase in recycling revenue was primarily due to an increased volume of recycling shipments at Nave.

Our gross profit increased $0.4 million (sic) [$0.3 million] to $1.8 million for the 3 months ended September 30, 2019, up from $1.4 million for the same period last year. The decrease in gross profit margin as a percentage of revenue was due to the inclusion of our wireless services segment. In addition, the Telco segment incurred inventory charges of $1.3 million in 2019 versus $0.4 million in 2018, creating a temporary decrease in gross margin percentage.

Operating and general and administrative expenses were $3.4 million in the fiscal fourth quarter of 2019 compared with $2.6 million in the prior fiscal year quarter. The increase in expenses was due to the addition of the wireless segment of $1.2 million partially offset by a decrease in the Telco segment of $0.4 million.

The fourth quarter of fiscal year 2018 included a restructuring expense of $0.9 million for the Telco segment as a result of management's decision to move Nave's inventory management and order fulfillment operations from its facility in Jessup, Maryland to Palco Telecom, a third-party logistics provider in Huntsville, Alabama. There were no restructuring expenses in the fourth quarter of fiscal 2019.

Other income for the 3 months ended September 30, 2019, was $55,000 compared to other expense of $39,000 for the 3 months ended September 30, 2018. The fourth quarter of 2019 includes interest income of $96,000 related to the promissory note from the sale of our Cable segment and earnings on an equity investment of $61,000 comprised primarily of payments received from YKTG Solutions' former partners, which was partially offset by interest and other expense of $102,000 related to discounts on the sale of our receivables and interest expenses on our line of credit. This compares to interest expense of $39,000 for the fourth quarter of fiscal 2018.

Our benefit for income taxes was 0 for the 3 months ended September 30, 2019, compared with a provision of $1.7 million for the 3 months ended September 30, 2018. Loss from continuing operations was $1.6 million (sic) [$1.5 million] or $0.15 per diluted share for the 3 months ended September 30, 2019, compared with a loss from continuing operations of $3.8 million or $0.37 per diluted share for the same period of 2018.

Adjusted EBITDA for the 3 months ended September 30, 2019, was a loss of $1.2 million compared with a loss of $0.7 million for the year -- for the period a year ago. Again, I reference to inventory charges we incurred during the quarter of $1.3 million in 2019 versus $0.4 million in 2018.

Turning to our full year results. Effective June 30, 2019, we sold our Cable TV segment to Leveling 8 Inc., which is a company controlled by David Chymiak, who is a Board Director and substantial shareholder of ADDvantage and was formerly the Chief Technical Officer and President of ADDvantage. As a result of this sale, we have reclassified the Cable TV segment as discontinued operations in our full year financial statements.

Sales for fiscal 2019 were $55.1 million, an increase of $27.6 million or 101%, up from $27.5 million for fiscal 2018. The increase in sales was due to an increase in sales in the wireless segment of $22.9 million and an increase in sales in the Telco segment of $4.7 million. As with the 2019 fourth quarter, wireless segment sales were due solely to the acquisition of Fulton Technologies. Therefore, revenue for the wireless segment was $22.9 million for the fiscal 2019. We did not report any revenue for this segment in 2018.

Sales for the Telco segment were $32.2 million for fiscal 2019, an increase of $4.7 million or 17%, up from $27.5 million in fiscal year 2018. The increase in sales for the Telco segment was due to year-over-year increases in equipment sales of $3.8 million and in recycling revenue of $0.9 million. The increase in Telco equipment sales was due primarily to the increased sales at Nave Communications and Triton Datacom of $1.9 million each. The increase in recycling revenue was primarily due to increased volume of recycling shipments.

Our gross profit increased $1.7 million to $9.1 million or 16.5% of sales for fiscal 2019, which is up from $7.4 million or 27% of sales for fiscal 2018. The decrease in gross profit margin was due to the inclusion of our wireless segment at 9% gross margin, while the Telco segment decreased from 27% to 22%. The decrease in Telco segment gross profit margin is the result of inventory obsolescence and valuation charges totaling $1.3 million in fiscal 2019 compared to $0.4 million in fiscal 2018.

Operating and general and administrative expenses was $13.1 million for fiscal 2019 compared with $10.3 million in fiscal 2018, an increase of 27% due to the addition of a wireless segment with expenses of $3.5 million, which was partially offset by a decrease in operating expenses in the Telco segment of $0.7 million. Fiscal year 2018 included restructuring expenses of $0.9 million for the Telco segment as a result of management's decision to move Nave's inventory management and order fulfillment operations as I mentioned in the discussion of the fourth quarter results. There were no restructuring expenses in fiscal year 2019.

Other expense for the 12 months ended September 30, 2019, was $72,000 compared with $469,000 for the 12 months ended September 30, 2018. Fiscal year 2019 includes income on an equity investment of $136,000, comprised primarily of payments received from YKTG Solutions' former partners compared with a loss on the same investment of $259,000 for the fiscal year 2018, which consisted primarily of a legal settlement with a subcontractor on the YKTG Solutions wireless cell tower decommissioning project and the associated legal expenses.

Other expense in fiscal 2019 also includes $224,000 of expense related to the wireless segment accounts receivable programs and $80,000 of interest expense. The benefit for income taxes was $13,000 for the fiscal year ended September 30, 2019, compared with the provision for income taxes of $1.5 million for the fiscal year ended September 30, 2018.

Loss from continuing operations was $4 million or $0.39 per diluted share for the fiscal 2019 compared with a loss of $5.8 million or $0.56 per diluted share for fiscal 2018.

Loss from discontinued operations included the operations of the Cable TV segment prior to its sale on June 30, 2019. For the 12 months ended September 30, 2019, loss from discontinued operations was $1.3 million. This compares to a loss of $1.5 million for the same period last year. We recognized a loss on the sale of the Cable TV segment of $1.5 million for the 12 months ended September 30, 2019. The Cable TV segment also recognized a goodwill impairment charge of $1.2 million for the 12 months ended September 30, 2018.

Net loss for fiscal 2019 included discontinued operations was $1.3 million or $0.51 per diluted share compared with a net loss of $7.3 million or $0.71 per diluted share in fiscal 2018. Adjusted EBITDA for the 12 months ended September 30, 2019, was a loss of $2.3 million compared with a loss of $1.3 million for a year ago period. Cash and cash equivalents were $1.2 million as of September 30, 2019, compared with $3.1 million as of September 30, 2018. As of September 30, 2019, the company had inventory of $7.6 million compared with $7.5 million as of September 30, 2018. The company had 0 drawn on its revolving line of credit on September 30, 2019.

This concludes the financial overview segment of our remarks. I will now turn the call over to the operator to field questions.

(Operator Instructions) We'll take our first question from Maj Soueidan from Geoinvesting.com.

I have 2 questions right now regarding the wireless segment. So I mean, looking at your -- among the Tier 1 wireless operators that are out there, can you discuss which ones you have the strongest relations with and where you see opportunities to strengthen certain relationships that you'd like to be better?

Maj, this is Joe Hart. I'd say our longest-standing relationship is with AT&T especially throughout the central region. Colby Empey and I both have spent probably 10 years in the last decade servicing the wireless networks and building sites and upgrading technology in 4G, really from north to south and central.

I'd say from the largest growth opportunity, it's to move from -- about half our business with AT&T is as a Tier 1 direct provider and that's mostly our specialty work, the temporary poles, for special events, (inaudible), all the things we do from them principally in the Midwest. The other half of our business with AT&T is as a Tier 2 provider. And we do that through turf vendors or OEMs like Ericsson, SAC Wireless, MasTec, et cetera.

I would say our midterm goal is probably to become a Tier 1 turf vendor so that we can do those network upgrades directly for AT&T. But at the same time, we want to do a great job providing services to the current Tier 1 vendors. So it's a little bit of chicken and egg on that regard.

With the Sprint/T-Mobile merger being sort of frozen at the moment in hearings, I would say the next big growth opportunity is once that breaks free, doing work direct 4G integrators for T-Mobile and then potentially directly for DISH because you probably are well aware, there's a nationwide RFP out on the Street to build DISH's network over the next 7 years.

Excellent. So can you also maybe take us through a typical engagement with a customer? I think you were kind of getting into it slowly through your answer. Specifically, like how you get business, how you source inventory and how you service the customer. (inaudible) the process.

So in the wireless segment -- so typically, it's a two-pronged attack: One, going directly to the market leaders in each of the geographies. In many cases, we know them and have worked with them in the past. But in some cases, they're new people. But typically, there's somebody there in that market that we've worked with and that's going after the business from a hunting perspective. You also have to go through each of the carriers' supply chain organizations because that's where most of the new initiatives are generated from, whether it's the RFP for DISH to build out their 5G network or AT&T trying to consolidate and expand their small-cell initiative. That will go through supply chain. So it's usually a two-pronged attack: one to the supply chain folks at their headquarters; and the other one directly with the markets in the geographies that you're interested in. Is that helpful?

Yes. And I guess a question I have here in terms of maybe margins here, how much of the inventory you actually -- or how much of the material equipment are you actually buying and how much of this equipment is maybe the customer providing you with?

Okay. So for our existing business, about 95% of the product inventory is provided in combination by the carriers. So the radios and the antennas and the large radio transmission products come from the carriers directly. And the major installation materials are provided by the OEMs or the integrators. We typically -- the only inventory obligation we've got is maybe a little bit of steel and some of the consumable products.

From a technology risk, we really don't feel there is any because this is pretty progressive. And really, the installation techniques and construction techniques are fairly common from 3G to 4G to 5G. And the risk -- I mean, typically, the OEMs are installing the -- they're doing the software changes for the radios, but we're installing the radio units at the top of the tower, which is fairly standard stuff.

So your major costs here, I guess, is skill, I mean, you're hitting the ground with the installations and being on the ground there...

Yes.

Some of the (inaudible) in that regard, is I guess, 4G keeps being exploited and then 5G is moving on here. There is going to be a lot of competition for labor out there. How do you navigate that type of competitive market for skill -- for the labor?

Well, it's -- so from a self-perform perspective, it really helps a lot to have a strong reputation as a company that's been in business, Fulton, for more than 30 years. It's got a very strong technical reputation, excellent training and, sort of, mentoring capabilities but it's also a good benefits program, a good pay structure, vehicles, equipment, clothing, like the winter -- the winter gear we just provided cold weather gear for all our crews up north. On the subcontractor side, it's pay-on-time and pay-every-Friday. Cash is king in that subcontractor business. So you can make or break your reputation by your ability to pay your subcontractors.

(Operator Instructions) We're taking our next question from [George Gusler].

Could you comment on the transfer to Dallas with your operations base? What type of employment do you have there now? And how many crews are there in total in the company, both inside the company and then that you're using outside? But if you could give us a view of your operations base, and is that including all management now?

We -- George, we still have a few folks like our HR leader and our accounting leader, Scott Francis, they are still in Tulsa. There is still a bit of a transition as we hire some new folks in the Telco segment accounting team and put them in Dallas. So there's still a handful of folks in the Broken Arrow office. But the intention is to have everybody either fully transitioned to the Dallas office or there will be a few people who would probably work in virtual offices and they tend to have to go wherever they're needed anyway, so a permanent location is probably a moot point.

The -- I think crew count, that can vary from week-to-week, month-to-month, time of year, climate, et cetera. We probably run, I'll say, plus or minus about 40 to 50 crews at any given time. And our balance is -- will probably -- I'd like it to be about 1/3 self-perform and about 2/3 subcontract just so that we provide a buffer and any risk of workload, ups and downs is absorbed by adding or subtracting subcontractor crews, and we don't strand any kind of fixed resources. So probably, the balance is 40/60. 40, self-performed; 60, subcontract but that can vary by time of year and geography.

Okay. That inside crew number is how many?

I didn't really give one. Yes, I mean, there's a little bit of secret sauce here. I mean, yes, competitors would always like to know how many internal crews you've got because everybody's trying to poach from the other guy, right? But you heard me say 40 to 50 crews total at any given time, and I'd like to keep the balance about 40/60.

Okay. All right. And then in -- and going forward, and now you're in your new fiscal year, in fact, you're through your first quarter of the new fiscal year, if you could -- and it looks like -- if I could just look at Fulton, for example, you did $10 million in the fourth quarter in revenue stream. So I -- if we were trying to project something going forward for the year, I would think that the base for Fulton would be at least $40 million for the year and up from there. Is that a fair thought?

Well, I'm happy to hear your enthusiasm, George. And that's typically the kind of guidance we try to stay away from. We had a very strong Q3 and Q4. The business is a bit seasonal and weather-sensitive. So as we approach and enter the winter months and then we go into January to March, January to March is often our slowest period due to weather and the holidays, right? Thanksgiving, Christmas, New Year's, et cetera. And the April through September is our strongest period of year. If you look at last year's performance, Fulton did probably $18 million in the summer months, the sort of warm weather quarters.

The first quarter probably was a bit of an aberration when -- I'm sorry, it was our Q2 when we purchased Fulton, and it was, I think, $4.2 million. But really we took over a pretty badly broken and bleeding operation. And it took us that full second quarter to really get it on its feet and in fighting shape again. So you could correlate Q3 and Q4, but I think that's a little risky. But our business is growing. Our customer base is growing. Crew count is quite a bit up from last year. So all signs and indications are good for Fulton. And we -- just like almost every year, we've got to get through the winter and keep our head down and be ready to just really take off once the sun comes out again in April.

Okay. And then if I could ask this question on the financial side, or comparison side. When you look at the enormity of the transfers that have taken place in the company, getting rid of Cable and so on and bringing Fulton in and building up the wireless area, I would assume that the vast majority of the unusual cost structures associated with this past fiscal year are gone at this time and they should be rather miniscule, right, into the first quarter here, I would assume.

And could you just relate also the start-up transition costs for Triton at the new facility in Florida? I assume that there was cost structure associated with getting into the new facility that still was affected in the September quarter. And so if I evaluate all this going forward, you should be pretty clean going forward as far as unusual nonrecurring costs. Am I right on that?

We feel pretty good about the changes and the restructuring that's taken place at Nave. Don Kinison did a really good job in getting -- I mean, it's pretty amazing that we picked up 90,000 units of product, put them in semi trailers and moved them across the country to Alabama. And within the same week, we were up and operational. So a lot of good things there.

And by moving the inventory to Palco, we had professional logistics folks visually inspecting every item and bubble wrapping it and putting it in inventory. And we learned a lot about what we had or what we didn't have when we moved to Palco. So it was a sincerely major positive move. So you're seeing some of that reconciliation that we just have booked here in this -- the end of the fiscal year.

From the situation with Triton, Triton is -- it was a relatively friendly neighborhood move probably within about 10 miles up the road or a couple of miles up the road. But brand-new facility and really, the employee base is thrilled with it. We moved ourselves so it's a relatively low-cost move. And Don had them up and running really in a couple-of-day period. And production is up, quality is up. I mean, people are -- the employee team is really energized by that move. So I think we're on good solid ground to really refresh and grow our refurbishment business, which is where the best of our margins really exist. We don't make a lot of money on new equipment at Triton, but our refurb line is, I think, ready to nicely get back to where it was. And then Don's got growth targets, of course, for every one of the product lines at both Nave and Triton.

And then we recently moved the recycle from Nave over to Palco as well. So we expect nice, solid, predictable improvement in performance at both Nave and Triton. Nave already had a good year and a good recovery operationally from 2019 over 2018. Triton took a step back because the move was delayed by 6 months because of landlord changes that were made to the new building. So we're in a really good place now with Triton and that team is very excited.

And then Fulton -- really Fulton operationally, -- operationally, it didn't go through a lot of changes, right? It was -- the management and crews in Chicago and in Dallas that were there when we brought them. And we've added crews, and we've added some smart key managers to the group. And most of the improvements on Fulton were in the back office. We put a new ERP in -- with past 4 months and got away from their old accounting system. And Kevin's done -- and Scott has done a really nice job in getting them in great shape for the ability to pay contractors and pay material vendors and credit card companies and just really make it a strong company behind the scene. So I would say we feel good about 2020.

And just one extension on that 2020 look. It appears as though there's a lot going on in Wisconsin already on this 5G, and I would assume that your activity level in Wisconsin and maybe the Milwaukee area is growing.

We are doing work for AT&T in Wisconsin, but Fulton had always been doing work in Illinois and Wisconsin. So we haven't done anything with U.S. Cellular yet. But quite honestly, we're kind of at max capacity in trying to add crews in that Midwest because the Midwest is surprisingly booming this year as we go into 2020. Even in spite of the winter weather, things are really moving and shaking up there. So -- and Chicago is the, I think, it's the third largest metropolitan statistical area in the cellular world so -- that's obviously Greater Chicago. It doesn't reach to Milwaukee, but it certainly crosses the Wisconsin border.

Good. And just to sum up from here on the outside. It's amazing what this company has accomplished in this past fiscal year. And obviously, Wall Street wants to see the bottom line develop, but it looks like the investors are getting more comfortable with the outlook and, hopefully, that you can keep imparting that and maybe get on the road and talk about ADDvantage Technologies to investment groups in the going forward year. I hope you're going to do that.

Yes. We look forward to do that -- to doing that. And we've taken on a new partner in Hayden, IR. Brett Maas is on the call with us. We went through a vetting process and we chose Hayden to be our investor relations firm, and they're very well placed and experienced in the micro-cap space. So Kevin and I look forward to being on the road next year, sorry it is 2020.

This concludes today's question-and-answers session. At this time, I'll turn the conference back to the moderators for closing remarks.

Okay. Brett, I think it might be you if you're still there.

All right. Well, thank you, everybody, for joining the call, and we look forward to speaking with you next quarter.

This concludes today's call. Thank you for your participation, and you may now disconnect.