Adeptron Technologies reports third quarter loss of $0.03 per share including restructuring charge for consolidation of facilities



    Company: Adeptron Technologies Corporation
    Stock Symbol: ATQ
    Listing: Toronto Stock Exchange (TSX)
    Outstanding Shares: 36.7 Million
    Web Site: www.adeptron.com

    Revenue to Rebound in Q4 and Grow in 2008 from New Customer Activity

    TORONTO, Nov. 14 /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 its third quarter financial results for the three-month and nine-month
periods ended September 30, 2007. All dollar figures are reported in Canadian
currency.
    Adeptron reports a third quarter loss of $1.1 million, which includes a
one-time $450,000 restructuring charge for consolidation of its Markham
manufacturing facilities.
    F. Michael Marti, President and CEO of Adeptron commented, "Although Q3
results were a disappointment, we see Q4 bouncing back with an expected
revenue increase over Q3, along with significant growth in 2008."
    Marti continued, "We made the conscious decision earlier this year to be
proactive in the delivery of efficiency improvements in preparation for the
strong Canadian currency in 2008. Management completed execution of a
restructuring plan in Q3 resulting in the consolidation of Adeptron's two
Markham facilities to provide ongoing cost savings with no loss of production
capacity."
    "A further hedge against exposure to foreign exchange fluctuations is
derived from our new customer activity in the USA. As our USA based business
activity grows it provides balance to Adeptron's operations between Canada and
the United States," said Marti.
    "By being part of the Adeptron organization as a full service EMS
provider, our recently acquired San Jose, CA facility, Pacific Circuit
Assembly Inc. ("PCA") enhanced its business development capability and ability
to attract larger prospective customers," added Marti. "As a result,
PCA/Adeptron has been awarded new customer programs that will be delivered
from the San Jose facilities and are expected to increase the Company's
quarterly sales beginning in Q1 2008."
    Marti continued, "The expected resurgence in our sales growth, our lower
per unit cost structure resulting from the restructuring, and a reduced impact
of foreign exchange fluctuations are expected to be the catalysts which should
lead to a healthy 2008 for Adeptron."
    "I look forward in the immediate future and beyond to the opportunity to
communicate with the investment community regarding Adeptron's business
developments that we expect will lead to greater returns for shareholders in
the future," said Marti.
    Marti concluded, "In 2008 Adeptron's management will continue to actively
explore acquisition opportunities to increase sales, expand geographic
coverage and continue to broaden the suite of manufacturing solutions offered
by Adeptron."
    For the three months ended September 30, 2007, sales were $8.2 million
compared to $10.6 million for the corresponding period of 2006, a decrease of
$2.4 million, or 23%. This decrease is primarily attributable to a significant
reduction in sales generated from the Company's former largest customer. In
the current quarter, sales to that customer decreased by approximately
$3.0 million when compared to the third quarter of 2006.
    Also contributing to the decrease in sales was the fact that
approximately 70% of the Company's sales were derived from USA-based and
domestic-based customers with sales denominated in $US. In comparison to the
first quarter of 2007, the third quarter average $US to $CDN exchange rate
declined by 11%. For the nine months ended September 30, 2007, revenue totaled
$28.5 million compared to $33.0 million for the corresponding period of 2006,
a decrease of $4.5 million, or 14%.
    Gross profit percentage decreased to 10.5% for the three months ended
September 30, 2007 compared to 18.2% for the same period in the prior year.
This decrease in gross profit percentage is attributed to the lower sales
levels in this quarter, the exchange rate impact and a change in the customer
sales mix. Gross profit percentage decreased to 14.6% for the nine months
ended September 30, 2007 compared to 17.5% for the same period in the prior
year. This decrease in gross profit percentage for the nine-month period is
attributable to the same factors as stated above which led to the gross profit
decrease for the three months ended September 30, 2007.
    As at September 30, 2007 the Company did not comply with certain
financial covenants contained in its credit agreement and its debenture
agreement. The Company's lenders have been supportive of the Company and
subsequently, the Company has entered into an amendment to the credit
agreement with its senior lender which in effect waived the default conditions
and revised the financial covenant calculations on a prospective basis. As
well, for nominal consideration, the Company entered into a forbearance
agreement with its subordinated lender in which it agreed to waive its right
to enforce its security in relation to such breach until September 30, 2008.
    Selling, General and Administrative ("SG&A") expense for the third
quarter of 2007 was $1,153,000, essentially unchanged from the same period in
2006 in spite of carrying $113,000 of expense attributable to PCA which was
not present in 2006.
    For the nine months ended September 30, 2007, SG&A expense was
$3.6 million, slightly reduced from the same period in 2006 but again carrying
$158,000 of expense related to PCA which was not present in 2006.
    In the third quarter, the Company recorded a restructuring expense of
$450,000. The Company restructured its operations resulting in the closing of
a manufacturing facility in Markham, Ontario and the consolidation of all its
operations into its main facility also in Markham, Ontario. The restructuring
resulted in staff reductions and consolidation of office and manufacturing
space. The Company had no restructuring charges in either the three or nine
month corresponding periods in 2006.
    In the third quarter, the Company recorded a net loss of $1.1 million and
loss per share of $0.03. In the third quarter of 2006, net income and basic
income per share were $506,000 and $0.01, respectively.
    For the nine months ended September 30, 2007, the Company recorded a net
loss of 929,000 and loss per share of $0.03, compared to net income and basic
income per share of $1.3 million and $0.04 for the same period in 2006.
    Earnings before Interest, Taxes, Depreciation, Amortization and
Stock-based Compensation (EBITDA(*)) for the third quarter of 2007 was an EBITDA
loss of $514,000 compared to an EBITDA gain of $894,000 for the same period in
the prior year.
    EBITDA(*) for the nine-month period ended September 30, 2007 was $569,000
compared to $2.5 million for the same period in the prior year.
    Working capital, defined as current assets less current liabilities, at
September 30, 2007 was $2.4 million compared to working capital of
$4.8 million at December 31, 2006. The decrease in working capital is
primarily the result of the loss incurred in the current quarter as well as
the cash used to acquire all the issued and outstanding shares of PCA.


    Q3-2007 Financial Summary

    Selected comparative financial information for the three-month and
nine-month periods ended September 30, 2007 and 2006 is shown below. (All
numbers below expressed in thousands except per share information and gross
margin percentages):

    
    Income Statement                   3-Month   3-Month   9-Month   9-Month
                                        Period    Period    Period    Period
                                      ---------  -------- --------- ---------
                                      Sept. 30, Sept. 30, Sept. 30, Sept. 30,
                                          2007      2006      2007      2006
                                      ---------  -------- --------- ---------

    Sales                             $  8,180  $ 10,609  $ 28,489  $ 32,980
    Gross Profit                           857     1,935     4,151     5,763
    Gross Profit %                       10.5%     18.2%     14.6%     17.5%
    Net Income (loss)                   (1,102)      506      (929)    1,307
    Net Income (loss) per Share-basic
     & diluted                          ($0.03) $   0.01    ($0.03) $   0.04
    Weighted average number of shares
     outstanding - diluted              36,707    34,657    36,208    34,637
    EBITDA(*) (loss)                     ($514) $    894  $    569  $  2,451

    Adeptron's 2007 Q3 financial statements and MD&A will be available on
November 15, 2007 on Adeptron's web site at www.adeptron.com and
www.sedar.com.

    EBITDA(*) reconciliations, as reported above, to GAAP Net Income/(Loss) for
the three-month and nine-month periods ended September 30, 2007 and 2006 are
shown below. (All numbers below expressed in thousands):

                                       3-Month   3-Month   9-Month   9-Month
                                        Period    Period    Period    Period
                                      ---------  -------- --------- ---------
                                      Sept. 30, Sept. 30, Sept. 30, Sept. 30,
                                          2007      2006      2007      2006
                                      ---------  -------- --------- ---------

    Net income (loss) per GAAP         ($1,102) $    506     ($929) $  1,307
    Add:
    Interest on subordinated notes         Nil        75       Nil       302
    Interest on long-term debt             223        24       639        24
    Interest on bank operating loan         85       123       202       334
    Depreciation and amortization          263       155       602       441
    Stock-based compensation                37        11        89        43
    Tax Recovery                           (20)      Nil       (34)      Nil
    EBITDA(*)                            ($514) $    894  $    569  $  2,451

    (*) - EBITDA represents Earnings before Interest, Taxes, Depreciation,
          Amortization and Stock-based Compensation.
    

    EBITDA(*) is not a recognized measure under Canadian generally accepted
accounting principles. However, management believes that EBITDA(*) is a useful
supplemental measure to net income (loss), as it provides investors with an
indication of cash earnings prior to debt service, capital expenditure, income
tax and other non-cash items. Readers should be cautioned, however, that
EBITDA(*) should not be construed as an alternative to net income (loss)
determined in accordance with generally accepted accounting principles as an
indicator of the Company's performance or to cash flows from operating,
investing and financing activities as a measure of liquidity and cash flows.
The Company's method of calculating EBITDA(*) may differ from the methods by
which other companies calculate EBITDA(*) and, accordingly, the EBITDA(*) used
herein may not be comparable to measures used by other companies.

    About Adeptron:

    Adeptron's business is Integrating Ideas with Solutions(TM) within the
technology and electronics industries, to enhance our customers' competitive
advantage. Adeptron delivers global product solutions and support for the
complete product life cycle, including design, prototyping, supply chain
management, manufacturing, assembly, testing, product assurance, distribution
and after-sales service solutions. Adeptron's facilities are ISO 9001:2000
registered.
    Adeptron is a public company whose common shares are listed for trading
on The Toronto Stock Exchange under the symbol: "ATQ". The Company has
approximately 36.7 million common shares outstanding. 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




For further information:

For further information: Adeptron Company Contact: F. Michael Marti,
President & Chief Executive Officer, Tel: (416) 705-6534,
fmmarti@adeptron.com; Adeptron Investor Relations: Gerry Wimmer,
INVESTORFILE.com, Tel: (416) 360-8895, Toll Free: 1-888-894-8222,
gwimmer@investorfile.com

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ADEPTRON TECHNOLOGIES CORPORATION

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