ADDvantage Technologies Group Inc (AEY) 2020 Q4 法說會逐字稿

Thank you for standing by. This is the conference operator. Welcome to ADDvantage Technologies' Fiscal 2020 Fourth Quarter Financial Results Conference Call.

(Operator Instructions) the conference is being recorded. (Operator Instructions)

I would now like to turn the conference over to Brett Maas with Hayden Investor Relations. Please go ahead, sir.

Thank you, operator. We are joined today by Joe Hart, President and CEO; and Jarrod Watson, Chief Financial Officer.

Before we begin today's call, I'd like to remind everyone that this conference call may contain forward-looking statements, which are made 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 ADDdvantage Technologies and its subsidiaries to maintain strategic relationships, 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 and participants are cautioned that these forward-looking statements are only predictions and may materially differ from the actual results or results due to varying factors such as those contained in ADDvantage Technology's most recent report on Form 10-K and Form 10-Q on file with the Securities and Exchange Commission.

Additional information presented on this call should be considered in conjunction with the consolidated financial statements and notes included in the company's press release issued earlier today included in ADDvantage Technologies most recent reports on Form 10-Q and 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 this 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 net income, non-GAAP net income, certain ratios that are used with these measures.

In our press release and in the financial tables issued actually yesterday, which are located on our website at addvantagetechnologies.com, you will find reconciliations of the non-GAAP financial measures with the closest GAAP financials and as discussed as to why we believe those 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 like to now 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 on the call today. We're having a brief conversation before the call started this morning. And I was thinking back to about this time last year, probably more in the February time frame, March.

News of the pandemic was really coming to the forefront, things we're getting very concerning. And as we went through the last 9 months, businesses around the world have been been quite a tumultuous situation. We've seen businesses that have gone belly up. We've seen businesses that have been cut back to 25%, 50% levels.

We've seen a lot of negative things that have happened. At ADDvantage, we were looking at things and saying, look, we've got to do something to build up our cash reserves. We don't know how long this pandemic is going to last. We don't know how deeply it may hurt us.

We've really got stock up on dry powder and find a way to weather the storm and really get ourselves in a good, protective, stable situation. At the same time, a lot of our business is based on wireless growth. And as we've looked at some of the growth opportunities related to 5G, there's a lot of confusion out there in the marketplace for investors.

All of the major carriers are advertising that they've got 5G. They've got 5G ultra capacity, 5G ultra-wideband, 5G E, 5G Plus, et cetera, et cetera, et cetera.

By and large, those are all variations and enhancements to 4G. There are some, I'll call them pilot programs, where they've installed millimeter wavelength, 5G in downtown New York City or downtown Philly or L.A. or some other major area. But by and large, those are still relatively experimental. No carrier has actually gone on a full bore construction program to convert their entire network of cell sites, both existing and new ones that they'll need, and convert those to 5G radios. It just hasn't really truly taken place yet.

So we haven't missed the window. We're not laggards in respect to what's happening in the industry. We believe that where we have come out of this, both the the COVID-19 environment as well as the 5G ramp plan. We feel that we've ended the year in a good place as we go into 2021.

Results for 2020 weren't sterling. We've done a lot to clean up our balance sheet. We have improved our cash position and working capital situation. We feel we're in a good place to actually take advantage of when 5G is really going to kick in here.

In calendar 2021. So -- and at the end of the day, I would say, we've been very both blessed and fortunate that none of our employees have been personally affected or put on the sideline due to COVID-19. All of the families are intact.

So at the end of the day, we've really come out in a decent place, considering all the trouble that's going on in the world.

So with that, I'll get to my formal remarks, and thanks for bearing with me. We successfully navigated a challenging global business environment during 2020. And I'm encouraged that we exited the year better positioned for sustainable success than where we were when the year began. ADDvantage Technologies Group was identified as an essential service by Homeland security as we provide critical infrastructure in building and supporting communication services.

This designation allowed us to continue working during the pandemic related shutdowns. We have been resilient in our cost and cash management, and this discipline helped us weather challenges in both our telco and wireless businesses during fiscal year 2020.

The shift to remote work as offices shut down, had a significant impact on our telco business and closure of special outdoor summer events impacted our wireless business in the Midwest.

The pandemic continues, and we have no more clarity than you on when things will return to normal or what normal will ultimately look like. But we view these challenges as temporary.

As we navigated this business environment, we wanted to accomplish 3 strategic imperatives and strengthening our balance sheet for sustainable growth.

First, we wanted to increase our overall cash position. We achieved this by increasing our cash holdings to over $8 million while maintaining working capital at over $11 million.

Second, we wanted to use this environment to reshape our telco and wireless businesses for expanded growth, plus drive a more nimble and leaner business model by reducing overhead and direct expenses. In our telco business, we took approximately $11 million in write-downs of goodwill, intangibles and inventory earlier this year.

This action made our telco business nimble and more competitive in both a COVID and a post-COVID business environment. For growth, we invested in our wireless business by increasing our revenue coverage model by adding resources in sales and back office in supporting the increased and coming 5G build opportunities.

For telco growth, we completed our investment for a new facility for our Triton business in Fort Lauderdale, which improves both our efficiencies and our employee work environment while allowing for expansion.

Third, we wanted to continue to attract and retain great people to support our long-term growth. In fiscal year 2020, we rewarded key functional team members with restricted stock awards, which are tied to the financial goals of the company and shareholder returns.

We added new talent within our executive leadership team. And these executives bring the experience and know-how to scale through growth while working within a lean operation.

Overall, our people drive our business and continue to excel during these challenging times. As a result of these strategic imperatives, we continue to transform our business model, by streamlining our expenses, improving our operational efficiency and positioning the company for growth and profitability as the 5G transformation accelerate.

I'm encouraged that we successfully improved gross margins by more than 1,500 basis points, even with lower revenue.

In addition, we eliminated approximately $0.5 million in quarterly operating expenses, resulting in a significant narrowing of our loss from operations. We are seeing clear signs that the 5G transformation will finally begin in earnest in 2021.

We are well-positioned to capture a meaningful share of the tower work related to this important project in the geographic areas we currently serve. I'm sure many of you saw that Apple recently released the new 5G-capable handset, providing the clearest indication yet of the impending 5G opportunity.

All of the carriers are now advertising 5G services, signaling that the trend will accelerate due to consumer demand. Industry analysts project that the actual long-term upgrade of the networks is just about to begin in 2021.

These 3G, 4G and now 5G cycles, typically last 7 to 10 years and require major CapEx spend by every carrier, principally in the first 5 years of each of these cycles.

Turning to our telco business. We delivered the strongest quarter of the fiscal year in Q4 as customer spending started to return to normal after pandemic cutbacks. This momentum gives us optimism as we head into our new fiscal year.

We anticipate double-digit revenue growth for our business in fiscal 2021. The and we anticipate reaching positive net income on a quarterly basis by the end of the year.

Overall, we enter 2021 with several tailwinds. First, we have a lean and efficient organization positioned for improved profitability as we grow. Second, we are strategically positioned throughout the middle of the country with strong relationships with the leading wireless carriers and telco clients.

Third, we have significantly improved our liquidity to execute our growth strategy. Fourth, we are at the beginning of a multiyear secular spending cycle, and we are already starting to see wireless activity picking up in our Southwest region another positive indicator. Finally, we have the right team in place to help us scale efficiently.

With that, I'll now turn the call over to our Chief Financial Officer, Jarrod Watson; for a more detailed review of our financial results. Jarrod, please go ahead.

Thank you, Joe. Sales for the fourth quarter 2020 decreased to $12.2 million from $17.9 million in the prior year. $5.3 million of this decrease came from our wireless segment. As the group felt the impact of COVID-19 on its business and 5G delays in infrastructure spending from the major U.S. carriers.

Traditionally, our wireless group earns between $4 million and $5 million in revenue, from the construction and deployment of temporary cell sites during the summer months at large public gatherings, such as County fairs, air shows, the Democratic National Convention, The World Series and other similar events.

Most of which were either rescheduled, canceled or lacked spectators in 2020. We also experienced a decline in sales in our Telco segment of $0.4 million as equipment sales at Triton dropped. Triton cell's office telephone and IP equipment for enterprise networks, and most large offices were closed during the quarter, also as a result of the COVID-19 pandemic.

However, even with a $5.7 million sales decrease, gross profit increased by $0.7 million to $4.4 million compared with a gross profit of $3.7 million for the same quarter last year. The increase was primarily due to the Telco segment profit margin improving by $1.2 million, partially offset by the wireless segment profit margin decreasing $0.5 million as a result of lower revenue. Gross profit margin improved to 36%, up from 21% for the prior year fourth quarter as wireless margins improved 2,000 basis points and telco margins improved 1,700 basis points.

As Joe mentioned, operating expenses decreased $0.5 million to $1.9 million for the quarter ended September 30, 2020. And compared with $2.4 million for the same quarter last year, which was the result of cost reductions in our wireless segment.

Selling, general and administrative expenses for the quarter increased $0.6 million to $3.2 million compared with $2.6 million for the same quarter last year. This increase was due to an investment in building out the sales team for our wireless group. Net loss for the quarter was $1 million or a loss of $0.09 per diluted share an improvement of $0.6 million compared with a net loss of $1.6 million or a loss of $0.15 per diluted share for the same quarter last year.

Adjusted EBITDA loss narrowed $0.8 million for the quarter to $0.1 million compared with an adjusted EBITDA loss of $0.9 million for the same quarter last year. Taking a look at full year results. Overall, sales decreased 9% to $50.2 million compared with $55.1 million last year.

The decrease in sales was driven principally by the global '19 pandemic and investment delays in 5G network build-outs. Sales for the wireless segment decreased $1.60 to $21.4 million for the year compared with $23 million in the prior year. Wireless was significantly impact during the summer months by crowd safety restrictions due to COVID-19.

As I previously mentioned, bolt-on traditionally has earned significant revenues for the construction and deployment of large complex temporary cell sites for summer in all festivals, County fairs, air shows and large events like the Democratic National Convention in Milwaukee, the Indy 500, The World Series and others, which were canceled or rescheduled this year. Sales for our Telco segment decreased 10% or $3.40 to $28.8 million for the year compared with $32.2 million last year. The decrease in sales resulted primarily from telecom and IP office equipment as customers delayed build-outs of new office space and upgrades of office-based communications equipment as employees were sent home to work during 2020.

Annual gross profit decreased $1.80 to $11.7 million compared with $13.5 million for the prior year, primarily related to the Telco segment, for which gross profit decreased $2 million as a result of an increase in our reserve for inventory obsolescence in fiscal quarter Q2. Partially offset by an increase in gross profit of $0.2 million from our wireless group.

Operating expenses for the year increased $1.80 to $8.2 million compared with $6.4 million last year. The increase is attributable to having a 4 full quarters of wireless expense in 2020 versus 3 quarters in 2019 as the Fulton acquisition concluded in the second quarter of 2019.

Additionally, the company incurred onetime facility costs as a result of moving into a new facility at Triton in the first quarter of 2020 and additional operating personnel costs.

Selling, general and administrative expenses increased $1.30 to $11.2 million for the year compared with $10 million last year. Of this increase, $0.9 million is attributable to having 4 full quarters of wireless expense in 2020 versus 3 quarters in 2019, again due to the Fulton acquisition, which concluded in the second quarter of 2019.

This increase is partially offset by a decrease of $0.4 million in general and administrative personnel costs in the Telco segment. Impairment of intangibles, including goodwill, was $8.7 million in the Telco segment in the second fiscal quarter. The company determined that changes in the economy related to the COVID-19 pandemic and the continued losses experienced in the Telco segment had caused the intangible asset carrying amounts on the books to exceed their fair values.

Therefore, after performing the appropriate valuations the company recorded a $3.9 million impairment charge for intangible assets and a $4.8 million charge for goodwill in the Telco segment.

Net loss for the year was $17.3 million or a loss of $1.55 per diluted share compared with a net loss of $5.3 million or $0.51 per diluted share for the prior year. However, it should be noted that net loss included the previously mentioned $8.7 million write-off of intangible assets. It also included $0.7 million impairment charge related to a facility that we no longer use and inventory obsolescence adjustments of $1.8 million for the year compared to $0.7 million for the prior year, all of which were in the Telco segment.

The company recognized a $1.2 million tax benefit for the year ended in 2020 compared to almost no tax in the prior year.

Additionally, the prior year included approximately $1.3 million in losses from discontinued operations. Adjusted EBITDA for the year was a loss of $7 million compared with a loss of $2.3 million for the same period of 2019.

Moving on to the balance sheet. As Joe mentioned, cash and cash equivalents were $8.4 million as of September 30, 2020, compared with $1.6 million as of September 30, 2019, or an increase of $6.8 million of cash.

As of September 30, 2020, the company had inventories of $5.8 million, down from $7.6 million at September 30, 2019. The outstanding debt was $8 million at fiscal year-end, comprised of $2.8 million of a revolving line of credit, $4.1 million of notes payable and $1.1 million of financing lease obligations compared to no debt as of September 30, 2019.

At September 30, 2019, notes payable were comprised of $1.2 million from our primary banker which correlates to payments that we received from a $3.8 million promissory note and $2.9 million of a PPP loan for which we have applied for forgiveness.

Subsequent to year-end, we have renewed our revolving line of credit for 1 year to a maturity of December 17, 2021, and we have paid off $1.2 million note payable to our primary banker. We continue to believe we are sufficiently capitalized with appropriate backstops to support near-term business conditions until more normalized business conditions returned.

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

(Operator Instructions) Our first question is from George Gasper, a shareholder.

Okay. The first question is relative to the changes overall that you made at telco in your new facility. Can you describe the expansion in repair services and the expansion in distribution of product line that you can experience on a more positive basis going forward?

All right. Hi George, It looks like Joe may have gotten disconnected. Reggie, are you on the line? Can you take that question? Or do you like me to take it?

Yes, absolutely. Yes, I can take it. So relating to our expansion at our Fort Lauderdale Triton facility, we were fortunate to locate a real estate space where we could design a facility with a workflow process would be able to allow us to refurbish the equipment we refurbish and sell in the market.

We are working on expanding our product line there as well. And in at our other farther telco company made, we're continuously upgrading our repair capabilities there as well to better serve our customers in the market. So hopefully, that answers your questions, George, any had additional questions, let me know.

Just one. The scope of the telco base are scoping your capacity to expand nation -- nationally from that base. I mean, how do you view that?

Well, I think with the distributions that we have and the Fedex, UPS, other carriers as well, the web presence that we have in person presence that we have with multiple large carriers.

We're positioned to grow and to deliver across the country, and we do do a little bit of business internationally, as indicated in our 10-K. So I think we're positioned to handle any growth across the country, George.

Okay. Okay. All right. And is there any -- how are you your cost structure you're acquiring product line in telco. How have you -- can you give us some thought about the cost structure on a per unit basis, how it's going now versus, say, a year ago to acquire product?

Yes. Very good question, George. So with the COVID environment, we've had some opportunities because business is slow to acquire product at prices that were more favorable than a year ago.

We're continuously searching the market and looking for different avenues to acquire equipment so that we can be more competitive and increase our margins.

So there's great opportunity, and we're always looking for different avenues to acquire equipment. And it's been pretty good this year versus last, despite the headwinds we facing on COVID.

Okay. The...

George? Sorry. It's Joe. It's Joe. Yes. I would balance that with -- Reggie has been working very hard to make sure that we're not growing the inventory to a level that we can't support with sales. And historically, that has always been a challenge. And as you have seen over the years, we'll have a good year with our equipment business, a pretty good to good year, and then it will be offset with some inventory write-down because of either sale, aged or inventory and disrepair that was purchased in some kind of bulk fashion.

So Reggie has got a very sort of delicate balancing act between buying product that's at good prices and yet keeping inventory at a very manageable level. So he's been doing a really nice job since he's taken over.

Wonderful, wonderful. Okay. And I want to extend this questioning to the 5G expansion probabilities and opportunities. The -- you explained basically in early comments here, the impact of COVID and the slowdown and but you're also suggesting that 5G breakout going forward could be considerable. And I'm sure, very opportunistic for your company. How are you prepared now? Can you give us some commentary on your crew count and how it's compared from, say, a year ago? And I know that it's probably tough to keep crews together when your business is down. But if you're going into a better period going forward, obviously, you need the cruise to accomplish the effort. And can you talk more geographical also about how you view your activities going forward through the calendar year '21?

Sure. So if we look at the carriers, Verizon has historically been kind of a steady eddy, they build-out, spend their CapEx on a pretty regular fashion year after year. And they expand their revere and upgrade to new technology on a steady ongoing annual basis.

AT&T tends to be a little more bulky, a lot of 4, 5 years upfront, big spend, and then it starts to sort of average out at a little lower level. The -- there's a couple of things going on here. They've all had pilot programs with millimeter wavelength, high band, Robert cetera. But the FCC has got a big option going on right now for C-band, which puts 300 megahertz of new spectrum out there for all the carriers.

So I think the bidding is up into about $7 billion, $8 billion at the moment on that spectrum. So it's very active. The other thing is DISH must start building its new network and they've ordered radios from Fujitsu, CPI out of Taiwan.

We expect DISH will start construction about the middle of 2021. So probably about that June, July time frame, we'll see DISH starting to build. And they've only got about 3 years to cover half of the U.S. population.

So that's going to be a fairly rapid buildup as they start their construction. From our perspective, you've heard me say on the prior couple of quarters, our business almost dried up here during the summer in the Southwest.

Well, we're very active, very busy. We're a little under 20 crews working in the -- back in the Southwest. So we're encouraged that our building our businesses really rebuilding itself in the Southwest region. We are essentially an up the middle country -- company.

So Southwest from Texas all the way up to the Canadian border, Illinois, Wisconsin, the Great Lake Area as well as the plain states of Island of Nebraska, Minnesota, et cetera. So our bread and butter is up the middle of the country. And that's where we want to stay focused and not be chasing business all corners of the country without a good plan, the ability to supervise it.

So hopefully, I've answered your question. I think it's building. But I always throw that caution that if you watch the news, the Northeast is getting hit by tremendous blizzards and Ice and snow. That can happen at any time in the Midwest, as we know, and we're entering winter.

So I just -- I feel good about 2021 overall. It is finally happening. I know some investors have kind of cast a wary eye, this keeps promise in 5G, but it hasn't happened yet, right?

So we're almost there, George.

Right. And could you comment on the revenue stream on the wireless, if you were to divide it up as to the type of business, say, the tower work, tower install, not tower install itself, but maybe the accomplishing the equipment on towers. And relative to, let's say, be going -- that the work that's necessary away from the towers. If you were to can you identify it in terms of percentages of how much is done on towers directly versus away from towers? And can you comment on how much is necessary to accomplish for effective 5G away from the towers?

Well, that's a lot to identify. But I would say this, that of all the Capex. The CapEx is predicted. The CapEx spend for the next 4, 5 years is predicted to be about $30 billion to $35 billion a year. We expect that by 2025, about 350 mobile subs -- 350 million mobile subscriptions will be on 5G compared to about 1 million today. So in that $30-plus billion a year CapEx spend, probably half of that is spent on fiber optics technology to get signals ton from cell sites within the public switch network across town, across state across country. Half of it's on wireless.

And of that wireless spend, about 30% is probably on the equipment itself. Probably another 50-plus percent is on the services needed to actually upgrade the technology on an existing set. So there's about 400,000 existing cell sites out there. They all have to be upgraded to 5G. So the opportunity is pretty immense. I would say services for 5G, probably about 20% will be on adding new sites, 20% to 25% could be on small cell. And then the remaining will be on upgrading to 5G on the existing cell site.

Okay. Okay. And well, that's pretty -- when you describe some of these numbers, it looks like there's the room for considerable expansion. Once maybe you get along here in a couple of quarters.

Finally, I'd like to just ask that you're nearly through your first quarter now being that this is the 17th of December. Is there any comments that you could make for us on how this quarter has gone?

Well, that's a bit of a tricky one because we usually don't comment on forward business. Well, as I said, I think the wireless activity is picking up. That telco activity, Reggie's got a good operation, got a good team.

So telco is producing at sort of budgeted level we're not out of the COVID situation. There's great hope and expectations around the back soon. It's not widely available yet. We still have, I'll say, the momentary week or 2-week quarantine situations with employees and our people are out working in the network and with the public every day.

So we do hit a moment in time where accrue or a few CRLs get shut down for a bit as they somebody they're exposed to somebody who's positive tested. So it's not perfect, and we're heading into the holiday. So this is never our best quarter of the year, George. So but I think it's going to be a strong year.

(Operator Instructions) Our next question is from Bob Jensen, a shareholder.

Yes. You guys, their presentation this last summer, where your goal was to grow revenues from $50 million to $250 million. Can you comment on where you stand as far as is that still doable? And basically, how will you get there? Would it be through acquisition or organic growth?

Bill, it's some -- Bob, it's some percentage of organic growth. I mean, we're still bullish on the ability to grow our existing operations, which are basically Dallas and Chicago centric to grow that business. It's -- I've seen this in through the 3G and the 4G cycles before with other companies where we've been able to grow the business from $50 million, $60 million a year to $600 million, $700 million in over a 6-, 7-year period.

So it's quite possible to do it organically, but it's also slower. And as I mentioned, the bulk of the CapEx in the 5G cycle will be spent in the first 5 years of that 10-year cycle. So we believe that on top of the organic growth, we need to be fairly aggressive about an M&A program.

So we're positioning ourselves to begin working with potential investors and go on a capital raise program that allows us to look at really good target companies that have both a cultural fit as well as the technical capability and reputation to allow us to expand our geographic footprint, while we're growing the business pretty dramatically.

I feel the $50 million a year to the $250 million a year. Is actually quite doable. And in sometime I've personally done a number of times in my career, we just got to have good targets. And you got to have good customers, and we have both of those. So I'm feeling very confident and bullish about our ability to grow the business.

Do you currently have any acquisitions in site?

Sure. I mean there's always targets on the radar. There are a few out there that we like a lot. And so we're working our way towards trying to make some progress in that regard.

Okay. Would any -- would those acquisitions be financed 2 sales of stock? And you guys did a registration for a shelf offering, I believe.

Right, right. The shelf offering has been out there for a number of months it was capped at just a little bit under $14 million in the registration documents. We've sold about $2.5 million worth of shares over the last, since June, not a big amount. There are some daily limits.

So you're never going to see a big swath of shares that comes through the S-3. And so we're looking at our options, whether it might be capital raised through in S-1.

It might be through attracting large investors or private equity money to them in. There's a lot of options about how to raise the money, whether it's debt or whether it's equity.

So I would say, we're just in the sort of fact-finding exploratory phase of that right now.

Yes. Okay. Well, hopefully, you won't raise money when the stock price is low.

Next question is a follow-up from George Gasper, a shareholder.

Okay. Joe, the follow-up here is when you complete work on a tower. And the how far away from the tower? Can your work go from a specific tower? I think maybe back a couple, 3, 4 quarters ago, we were we were talking a little bit about this opportunity away from tellers getting individual highways or streets or whatever. Exactly what is the opportunity away from the tower in terms of distance to complete, let's say, a single project in a specific area for you. Can you can you describe that?

Well, typically, for something like a 5G expansion or upgrade in technology do not only have the work that's at the base of the tower. The tower and the top. But you often have to bring additional fiber optic cable to that tower. And you're all driven around both your neighborhoods as well as 2 in some other cities.

So in the city, towers are close to the main Street. So maybe it's 50 feet to 100 feet, 200 feet to get to the Street, and you're going to take a fiber cable out to that street, and it will be connected by the phone company or the Wideband carrier who will slicing into the network. If you're out in more rural areas, those access words to the sites could 0.25 mile, 0.5 mile, something like that from the main road.

So it's it's a fairly controlled environment. And it's not like you're building out in the middle of National forest or in the mountain range or something like that.

I see. Okay. All right. And there is so much discussion about the opportunity on a daily basis hearing investment commentaries about the opportunity to find companies that are associated with 5G and in terms of what they're doing, but most of it at this point has been concentrated on the equipment side from the commentaries in Wall Street. And it looks like there's a pretty interesting potential coming from the install side equipment install side, and that's where you come into the picture, it would it's going to be interesting to see how this unfolds the commentary that you've made here shows a pretty dramatic opportunity going forward. And if you are able to accomplish a decent amount of the potential out there, it should give you opportunity to look for some types of acquisitions of to run your revenue stream on an annual basis, upside by, hopefully, what will be a very significant margin. Any comment on that?

Well, I think we agree. I mean, there are very few companies in the publicly traded space. That are in this business. There are a few multibillion-dollar companies, MasTech, DICOM, Quantum to name the top 3.

But there are barely any in the sort of small- to medium-sized companies.

In other words, in the sort of $30 million to $500 million you don't find many. Most of them stay private or they're one owner companies that work their way up the ladder.

And eventually, they sell off. But -- so we feel that we're in a good place we have both the experienced team, the credentials. We've got a core support group that has done this before. And that's kind of critical, right?

From an overhead perspective, we have a back-office spine of core services provided by folks who have done this and have scaled this business up before. And that's critical to us being able to rapidly grow our business.

So from that $50 million to the $250 million, right? You got to have people who know how to do it. We've done it before. And we've got those functional leaders in project controls, contracts, subcontracts, back office, all the different services as well as construction. And we feel we're in a good place.

As long as we pick good targets and remain disciplined, we're going to do well in this growth curve.

Okay. In a closing comment, I would have observation. Also, your large substance of being in the Southwest. Looks very attractive from the standpoint that more companies are moving out of California and the West Coast generally, and they're moving into Texas and Arizona, and I don't know about New Mexico potentially there, too. But there's some pretty sizable transfers being taken or taking place from San Francisco South and through California to this Texas area, which would seemingly put you in a pretty dynamic position to take advantage of what is going to be a better market in the southwest?

We feel we're in a good place. We agree to it.

There are no further questions registered at this time. I would like to turn the conference back over to management for any closing remarks.

Well, I just want to thank everybody again for joining us on the call today. We all wish that results were better than they had been in 2020.

But given what's taking place around the world and both in the technology space as well as with COVID-19, we feel fortunate to be where we are. High percentage of businesses that haven't made it through this pandemic, and I don't want to overplay that, but we feel that we've made a lot of prudent moves, trimming the fat, getting ourselves with the best people in the right positions and being able to really leapfrog from where we've been to where we want to get to in 2023.

So thank you for your continued interest and investment in Advantage technology.

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.