Adeptron Q1 2010 Results

    
    Stock Symbol: ATQ
    Listing: Toronto Stock Exchange (TSX)
    Web Site: www.adeptron.com
    

TORONTO, May 17 /CNW/ - Adeptron Technologies Corporation (ATQ: TSX) ("Adeptron" or the "Company"), a specialist at delivering integrated product solutions and support to the global technology and electronics industry, today reports unaudited first quarter financial results for the three-month period ended March 31, 2010.

Effective January 1, 2010, the functional currency of Adeptron was changed from Canadian to U.S. dollars. Concurrent with this change in functional currency, Adeptron adopted the U.S. dollar as its reporting currency. Accordingly, all balance sheet and income statement amounts stated in this press release are expressed in thousands of U.S. dollars.

Q1 2010 Financial Highlights:

    
    -   Sales increased slightly by $165 or 1.6% over the first quarter of
        2009 to $10,304,
    -   Gross margin dropped to 5.0% compared to 13.3% for the same period
        last year,
    -   Net loss of $811 compared to net income of $42 for the same period
        last year,
    -   EBITDA loss of $376 compared to an EBITDA of $600 for the same period
        last year,
    -   Loss of $0.01 per share compared to earnings of $0.00 per share last
        year
    

F. Michael Marti, President & CEO of Adeptron stated, "The first quarter of 2010 contained a mix of positive and negative developments. Our sales improved by approximately $1.7 million over the prior calendar year and were almost $200 thousand over the results from the same quarter last year. At the same time, we experienced what for Adeptron is an unusual situation. At the end of this first quarter we had a backlog of orders in the amount of approximately $1.4 million that were scheduled for delivery in the quarter but could not be completed due to developments in the global electronics sector which has seen an almost universal increase in the lead times required to obtain our materials. Because of these worldwide parts shortages and extended lead times throughout the quarter, we were not able to run our manufacturing operations (labour) in an efficient manner and our gross margins were lower than expected. This situation still exists in the second quarter, but large changes in our procurement and sourcing strategies and practices have made good progress in mitigating these effects in the future. In addition, we recorded in SG&A expenses a non-recurring charge of approximately $100 thousand stemming from our conversion to U.S. dollar functional and reporting currency."

Marti continued, "We expect sales to continue to improve in the second quarter. In particular, increased sales levels beginning in the latter half of the quarter in our San Jose location, which has seen revenue declines in the last few quarters. On the financial front we have recently been successful in accessing additional cash through our senior lender and are engaged in completing other initiatives which we anticipate will provide more cash resources to handle the working capital needs of increased business in this second quarter and beyond. Our efforts are currently focused on meeting demands of our customers in spite of the supply chain issues that I previously mentioned, attracting and absorbing new customers and their orders, and of course, increasing the efficiency of all aspects of our operations to ensure we improve our overall results."

Q1-2010 - Financial Summary

Selected comparative financial information for the three-month period ended March 31, 2010 and 2009 is shown below. (All numbers below expressed in thousands of U.S. dollars, except per share information and gross margin percentages):

    
    Income Statement                         3-Month Period   3-Month Period
                                            ---------------- ----------------
                                             March 31, 2010   March 31, 2009
                                            ---------------- ----------------
    Sales                                           $10,304          $10,139
    Gross Profit                                        520            1,350
    Gross Profit %                                     5.0%            13.3%
    Net Income (loss)                                  (811)              42
    EBITDA(1)                                          (376)             600
    Net Income (loss) per share-basic &
     diluted                                         ($0.01)           $0.00
    Weighted average number of shares
     outstanding - diluted                           96,708           96,708
    

EBITDA(1) reconciliations to GAAP Net Income/(Loss) for the three-month period ended March 31, 2010 and 2009 are shown below. (All numbers below expressed in thousands):

    
                                             3-Month Period   3-Month Period
                                            ---------------- ----------------
                                             March 31, 2010   March 31, 2009
                                            ---------------- ----------------
    Net income (loss) per GAAP                        ($811)             $42
    Add (deduct):
    Embedded foreign currency derivatives               (92)              71
    Interest expense                                    212              197
    Income tax expense (recovery)                       (18)             (46)
    Depreciation and amortization                       321              300
    Stock based compensation                             12               36
    EBITDA(1)                                         ($376)            $600

    EBITDA(1) Earnings before embedded foreign currency derivatives,
    interest, taxes, depreciation, amortization, and stock-based
    compensation.
    

The working capital deficiency, defined as current assets less current liabilities, as at March 31, 2010, was $773 compared to $258 at December 31, 2009, representing an increase in working capital deficiency of $515. This increase in working capital deficiency can be explained by the increase in accounts receivable and inventory, which relates to the Company meeting demands of its customers. In response the Company has extended its payables with its suppliers in order to deal with these working capital demands.

Adeptron's unaudited 2010 first quarter financial statements and MD&A will be available on Adeptron's web site on May 17, 2010 at www.adeptron.com and the System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.com.

About Adeptron:

Adeptron is a specialist at delivering integrated product solutions and support to the global technology and electronics industry. As a leading global provider of complete Electronics Manufacturing Services (EMS), Adeptron offers world class manufacturing facilities and global partners throughout Canada, the United States, Israel and China, allowing the Company to provide its customers the flexibility and scalability to competitively achieve total solutions to their present and future electronics outsourcing needs. Adeptron is a public company whose common shares are listed for trading on the Toronto Stock Exchange (TSX) under the symbol: "ATQ". Visit Adeptron at: www.adeptron.com.

Adeptron is a public company whose common shares are listed for trading on The Toronto Stock Exchange under the symbol: "ATQ". Visit Adeptron at: www.adeptron.com or www.investorfile.com.

THIS NEWS RELEASE MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO SUCH MATTERS AS EXPECTED FINANCIAL PERFORMANCE, BUSINESS PROSPECTS, TECHNOLOGICAL DEVELOPMENTS, DEVELOPMENT ACTIVITIES AND LIKE MATTERS. THESE STATEMENTS INVOLVE RISK AND UNCERTAINTIES, INCLUDING BUT NOT LIMITED TO RISK FACTORS DESCRIBED IN DOCUMENTS FILED WITH REGULATORY AUTHORITIES, SUCH AS THE COMPANY'S MOST RECENTLY FILED ANNUAL AND QUARTERLY REPORTS AND ANNUAL INFORMATION FORM. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED AS A RESULT OF THESE RISKS AND SHOULD NOT BE RELIED UPON AS A PREDICTION OF FUTURE EVENTS. ADEPTRON TECHNOLOGIES CORPORATION UNDERTAKES NO OBLIGATION TO UPDATE ANY FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE ON WHICH SUCH STATEMENT IS MADE, OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

%SEDAR: 00012076E

SOURCE ADEPTRON TECHNOLOGIES CORPORATION

For further information: For further information: Adeptron Company Contact: F. Michael Marti, President & Chief Executive Officer, Tel: (416) 705-6534, fmmarti@adeptron.com; Adeptron Company Contact: Francis K. Lindayen, Chief Financial Officer, Tel: (905) 470-0109 x2223, flindayen@adeptron.com

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ADEPTRON TECHNOLOGIES CORPORATION

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