CUI Global Reports Unaudited First Quarter 2014 Financial Results

TUALATIN, Ore., May 19, 2014 /PRNewswire/ -- CUI Global, Inc. (CUI), a platform company dedicated to the acquisition, development, and commercialization of new, innovative products, today reported their unaudited financial results for the first quarter, ended March 31, 2014.

First Quarter 2014 Financial Performance Summary: (Comparisons to Q1 2013)

  • Revenue was up 68% to $16.9 million from $10.1 million
  • Gross Profit margin was 41%, as compared to 39%
  • Consolidated net loss of $(488) thousand or $(0.02) per share versus $(462) thousand or $(0.04) per share
  • Adjusted EBITDA was $900 thousand or $0.04 a share, as compared to $(25) thousand in Q1 2013 
  • Cash and cash equivalents were $15.2 million with an additional $11.7 million in short-term investments
  • Power and Electro-Mechanical segment unaudited backlog of $15.2 million as of March 31, 2014
  • Gas segment unaudited backlog of $22.7 million as of March 31, 2014

For the quarter ended March 31, 2014, CUI Global produced consolidated total revenues of $16.9 million.  Gross revenues for the first quarter grew 11% sequentially from fourth quarter revenues of $15.2 million and 68% year-over-year, when compared to $10.1 million in the first quarter of 2013.  SG&A decreased as a percentage of revenues from 39% in Q1 2013 to 37% in Q1 2014.  Gross profit was for the quarter was $7.0 million, a 77% increase from the $3.9 million in first quarter 2013.

The cost of revenue for the quarter ended March 31, 2014 was $9.9 million, versus $6.1 million for the same period in 2013.  The increase when compared to the first quarter of 2013 is primarily the result of increased revenues associated with the addition of Orbital Gas Systems in Q2 2013 and approximately $1.2 million of revenue growth in the power and electro-mechanical segment during the first quarter of 2014.  As a percentage of sales, the cost of revenue remained relatively consistent at 59% for Q1 2014 compared with 61% in Q1 2013 with the change associated with the product mix delivered during the period.

The company reported a net loss of $(487,918) or $(0.02) per share (EPS) for the quarter ended March 31, 2014.  In the prior year period, the Company reported a net loss of $(462,092) or $(0.04) per share.  The net loss, during the quarter ended March 31, 2014 as compared to the prior year period is primarily the result of $785 thousand of amortization expense associated with the intangibles from the Orbital Gas Systems Limited acquisition and consistent increases in operating expenses offset by increased revenues.  Adjusted net income for the first quarter of 2014 was $521,676 or $0.03 per share as compared with an adjusted loss of $(374,303) or $(0.03) per share in the prior year comparable quarter.

The earnings before interest, taxes, depreciation and amortization (EBITDA) for the first quarter were $728 thousand or $0.04 EBITDA per share. Adjusted EBITDA for the first quarter 2014 was $900 thousand or $0.04 per share.

Operating activities generated negative cash flow of $103 thousand during the quarter ended March 31, 2014, versus positive cash flow from operations of $63 thousand for the same period in 2013.  The change in cash provided by operations is related to the changes in the operating assets and liabilities balances associated with increases revenues during the quarter as well as the net loss during the quarter.   

In addition, as an operating unit, the power and electro-mechanical segment (CUI, Inc. and CUI Japan) posted YTD revenues of $10.8 million, which represented a $1.2 million (12%) increase as compared to the same period in 2013. 

The sales order back log at March 31, 2014 was a consolidated $37.9 million.

The company had $15.2 million of cash and cash equivalents as of March 31, 2014, a decrease of $1.34 million since December 31, 2013. The Company had an additional $11.7 million in short-term investments, an increase of $0.86 million since December 31, 2013.

CUI Global's president & CEO, William Clough commented, "We are pleased to be off to a good start in 2014 as we have been able to build on the momentum created towards the end of 2013.  We saw significant increases in revenues in both segments and our backlog remains robust."

"Our distribution agreements with Ives Equipment Corporation and Benchmark Instrumentation & Analytical Services represent significant steps in our plan to develop a substantial distribution network for our ground breaking technology, while our agreement with Yokogawa United Kingdom Ltd., is another example of the value (in both credibility and revenue) of the Orbital acquisition," Clough continued.

Clough explained, "Additionally, we were pleased to hear that National Grid had recognized our VE® Technology as the preferred option for British Natural Gas Pipelines, and plan to recommend the technology to the European Union and Britain as best practice.  We were especially pleased to announce the adoption of our IRIS-RTU units by National Grid in a joint press release between ourselves and GE Intelligent Platforms Group – A release that was included on GE's proprietary website (http://www.ge-ip.com/news/national-grid-adopts-cui-global-inc-s-iris-software-for-improved-monitoring-and-control-of-its-natural-gas-transmission-system/n3204) and publicized through GE's social networks.

"We also introduced a new family of digital point of load dc-dc modules that set performance benchmarks in efficiency, power density, and transient response to address the rapidly-rising power challenges in distributed power architectures.  We believe these products will be a key driver in our future revenue growth.  I believe our positive results are a testament to the entire CUI Global team.  Today, the company has some of the 'best-in-class' engineering solutions being delivered to a broad customer base in the natural gas, energy, utility, power generation, emissions, manufacturing, networking and automotive industries and we are optimistic about the future.  Each of the announcements we made in the first quarter represents another major stride for CUI Global as we continue to put the pillars for success in place.  We are at the forefront of an abundant opportunity as a Company, and we look forward to carrying forward our focus and determination throughout the remainder of 2014 and beyond," concluded Clough.

CONFERENCE CALL

The Company will conduct a conference call and webcast to review the results on Monday, May 19, 2014 at 4:30pm ET.

To access the call, please dial the toll free number at (888) 734-0328 and provide the Conference ID: 41597858. For international callers, please dial (678) 894-3054. At the conclusion of the call, a replay will be available until May 30, 2014.  To access the replay of the call dial (855) 859-2056 and provide the same Conference 41597858.

A simultaneous webcast will also be available via: http://www.media-server.com/m/p/3koyep5c

 

Condensed Consolidated Balance Sheets






March 31,

2014


December 31,

2013





(unaudited)



Assets:





Current Assets:






Cash and cash equivalents

$      15,235,396


$           16,575,508


Short term investments held to maturity

11,733,934


10,868,961


Trade accounts receivable, net of allowance of $187,009 and $285,348, respectively

10,729,587


9,055,561


Inventories, net of allowance of $552,466 and $549,981, respectively

6,811,660


7,027,644


Costs in excess of billings

404,818


552,012


Prepaid expenses and other

1,173,773


603,960



Total current assets

46,089,168


44,683,646








Property and equipment, net

8,401,164


8,206,563








Other assets:






Investment - equity method

298,381


283,011


Other intangible assets, net

22,782,154


23,512,394


Deposits and other

33,718


25,364


Notes receivable, net of allowance of $564,194 and $564,194

-


-


Goodwill, net


22,536,713


22,448,613



Total other assets

45,650,966


46,269,382



Total assets


$    100,141,298


$           99,159,591








Liabilities and stockholders' equity:




Current liabilities:






Accounts payable

$        5,241,673


$             4,146,262


Mortgage note payable, current portion

77,789


76,814


Leases payable, current

78,741


83,904


Accrued expenses

1,705,895


2,253,773


Accrued taxes payable

462,821


263,804


Accrued compensation

570,279


426,402


Billings in excess of costs

6,446,357


6,787,231


Unearned revenue

1,669,386


1,257,346



Total current liabilities

16,252,941


15,295,536


Long term leases payable

102,532


58,363


Derivative liability

483,398


427,818


Long term mortgage note payable, net of current portion due of $77,789 and $76,814, respectively

3,584,226


3,604,242


Long term notes payable, related party

5,303,683


5,303,683


Deferred tax liabilities, net

2,957,448


3,111,361



Total long term liabilities

12,431,287


12,505,467



Total liabilities

28,684,228


27,801,003








Commitments and contingencies











Stockholders' equity:





Common stock, par value $0.001; 325,000,000 shares authorized; 20,620,358 shares issued
    and outstanding at March 31, 2014 and  20,566,663 shares issued and outstanding at
    December 31, 2013 

20,620


20,567


Additional paid-in capital

146,954,437


146,614,995


Accumulated deficit

(77,602,853)


(77,114,935)


Accumulated other comprehensive gain

2,084,866


1,837,961



Total stockholders' equity

71,457,070


71,358,588



Total liabilities and stockholders' equity

$    100,141,298


$           99,159,591

 

Condensed Consolidated Statements of Operations

(unaudited)





For the three months ended March 31,




2014


2013

Revenues:





Product Sales

$         16,890,121


$         10,052,246


Revenue from freight

9,788


7,114



Total revenue

16,899,909


10,059,360

Cost of revenues

9,905,687


6,115,212







Gross profit

6,994,222


3,944,148







Operating expenses





Selling, general and administrative

6,191,700


3,938,621


Depreciation and amortization

1,053,013


143,529


Research and development

269,852


244,690


Bad debt

(108,000)


(5,000)



Total operating expenses

7,406,565


4,321,840







Loss from operations

(412,343)


(377,692)







Other income (expense)





Other income

81,869


61,238


Other expense

(5,049)


(4,945)


Unrealized (loss) on derivative

(55,580)


-


Earnings from equity investment

15,370


2,103


Amortization of investment premiums and discounts

(14,982)


-


Amortization of debt offering costs and debt discount

-


(18,333)


Interest expense

(125,491)


(114,474)

Total other income (expense), net

(103,863)


(74,411)







Loss before taxes

(516,206)


(452,103)


(Benefit) provision for taxes

(28,288)


9,989

Consolidated net (loss)

$            (487,918)


$            (462,092)













Basic and diluted (loss) per common share

$                  (0.02)


$                  (0.04)

Basic weighted average common and common
    equivalent shares outstanding

20,587,523


10,883,280

 

 

 

Condensed Consolidated Statements of Cash Flows

(unaudited)





For the three months ended March 31,




2014


2013

CASH FLOWS FROM OPERATING ACTIVITIES:




Net (loss)

$           (487,918)


$           (462,092)

Adjustments to reconcile net (loss) to net cash provided by (used in) operating activities:





Stock, warrants, options and notes issued for compensation and services

224,495


87,789


Unrealized loss on derivative

55,580


-


Non-cash interest expense, including amortization of debt offering costs

-


18,333


Non-cash profit on equity method investment

(15,370)


(2,103)


Allowance for bad debt expense and returns allowance

(108,000)


(5,000)


Amortization of intangibles

862,970


67,527


Deferred income taxes

(181,057)


-


Inventory reserve

2,485


(30,000)


(Gain) loss on disposal of assets

4,754


-


Depreciation

255,475


143,609

(Increase) decrease in assets:





Trade accounts receivable

(1,535,010)


1,133,052


Inventories

236,996


(289,625)


Costs in excess of billings

152,182


-


Prepaid expenses and other current assets

(431,235)


(684,307)


Deposits and other assets

(8,354)


10,380

Increase (decrease) in liabilities:





Accounts payable

1,075,676


(237,010)


Accrued expenses

(553,904)


214,090


Accrued compensation

141,402


(25,259)


Accrued taxes payable

196,467


-


Unearned revenue

412,040


123,124


Billings in excess of costs

(402,209)


-



NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES

(102,535)


62,508

CASH FLOWS FROM INVESTING ACTIVITIES:











Purchase of short term investments held to maturity

(864,973)


-


Purchase of property and equipment

(356,423)


(103,955)



NET CASH (USED IN) INVESTING ACTIVITIES

(1,221,396)


(103,955)

CASH FLOWS FROM FINANCING ACTIVITIES:





Proceeds from (payments to) demand notes payable, net of debt offering costs

-


(459,448)


Proceeds from (payments to) leases payable, net of proceeds

(42,118)


-


Proceeds from (payments to) notes and loans payable

(19,041)


-



NET CASH (USED IN) FINANCING ACTIVITIES

(61,159)


(459,448)

EFFECT OF EXCHANGE RATE CHANGES ON CASH

44,978


(20,770)

Cash and cash equivalents at beginning of period

16,575,508


3,039,840

Cash and cash equivalents at end of period

15,235,396


2,518,175

NET (DECREASE) IN CASH AND CASH EQUIVALENTS

$         (1,340,112)


$            (521,665)

About CUI Global, Inc.
Delivering Innovative Technologies for an Interconnected World . . . . .

CUI Global, Inc. is a publicly traded company dedicated to maximizing shareholder value through the acquisition and development of innovative companies, products and technologies. From Orbital Gas Systems' advanced GasPT2 platform targeting the energy sector, to CUI Inc's digital power platform serving the networking and telecom space, CUI Global and its subsidiaries have built a diversified portfolio of industry leading technologies that touch many markets. As a publicly traded company, shareholders are able to participate in the opportunities, revenues, and profits generated by the products, technologies, and market channels of CUI Global and its subsidiaries. But most importantly, a commitment to conduct business with a high level of integrity, respect, and philanthropic dedication allows the organization to make a difference in the lives of their customers, employees, investors and global community.

For more information please visit www.cuiglobal.com

About CUI Inc. 
CUI Inc. is a technology company dedicated to the development, commercialization, and distribution of new, innovative electro-mechanical products.  Over the past 20 years, CUI has become a recognized name in electronic components worldwide in the areas of power, interconnect, motion control, and sound. CUI's solid customer commitment and honest corporate message are a hallmark in the industry. CUI is a wholly owned subsidiary of CUI Global, Inc. 

For more information, please visit www.cui.com.

About Orbital Gas Systems Ltd.
Orbital Gas Systems Ltd ("Orbital-UK") is the largest natural gas systems integrator in the United Kingdom. For over 25 years, Orbital-UK has developed its portfolio of products, services and resources to offer a diverse range of personalized gas engineering solutions to the gas utilities, power generation, emissions, manufacturing and automotive industries.  Orbital-UK's internationally recognized expertise in the natural gas industry, including bringing together the patented VE-technology with the ground-breaking GasPTi device, offers natural gas operators and users a comprehensive engineering array for the next generation of energy metering systems.  Orbital-UK is a wholly owned subsidiary of CUI Global, Inc. 

For more information, please visit www.orbital-uk.com.

Important Cautions Regarding Forward Looking Statements 
This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements are subject to risks and uncertainties that could cause actual results to vary materially from those projected in the forward-looking statements. The company may experience significant fluctuations in future operating results due to a number of economic, competitive, and other factors, including, among other things, our reliance on third-party manufacturers and suppliers, government agency budgetary and political constraints, new or increased competition, changes in market demand, and the performance or reliability of our products.  These factors and others could cause operating results to vary significantly from those in prior periods, and those projected in forward-looking statements. Additional information with respect to these and other factors, which could materially affect the company and its operations, are included in certain forms the company has filed with the Securities and Exchange Commission.

Reconciliation of Non-GAAP Financial Measures 

EBITDA and Adjusted EBITDA are a non-GAAP financial measures and are reconciled in the table below. EBITDA and Adjusted EBITDA do not represent funds available for management's discretionary use and is not intended to represent cash flow from operations. EBITDA and Adjusted EBITDA should not be construed as a substitute for net loss or as a better measure of liquidity than cash flow from operating activities, which is determined in accordance with United States generally accepted accounting principles ("GAAP"). EBITDA and Adjusted EBITDA exclude components that are significant in understanding and assessing the company's results of operations and cash flows. In addition, EBITDA and Adjusted EBITDA are not terms defined by GAAP and as a result our measure of EBITDA and Adjusted EBITDA might not be comparable to similarly titled measures used by other companies. However, EBITDA and Adjusted EBITDA are used by management to evaluate, assess and benchmark the company's operational results and the company believes EBITDA and Adjusted EBITDA are relevant and useful information which are often reported and widely used by analysts, investors and other interested parties in the company's industry. Accordingly, the company is disclosing this information to permit a more comprehensive analysis of its operating performance, to provide an additional measure of performance and liquidity and to provide additional information with respect to the company's ability to meet future debt service, capital expenditure and working capital requirements.  

Adjusted net income eliminates the amortization expenses associated with intangible assets acquired with Orbital Gas Systems Limited in April 2013 as well as non-cash expenses associated with stock, warrants, options and notes issued for compensation and services during the period ended.

Reconciliation of Unaudited Adjusted net income (loss)

For the period ended March 31,


2014


2013

Consolidated net (loss)

$  (487,918)


$  (462,092)

    Plus:  Amortization expense of Orbital acquisition related intangible assets

785,099


-

    Plus:  Stock, warrants, options and notes issued for compensation and services

224,495


87,789

Adjusted net income (loss)

$   521,676


$  (374,303)

Adjusted income (loss) per common share

$         0.03


$       (0.03)

Basic weighted average common and common equivalent shares outstanding

20,587,523


10,883,280





Reconciliation of Unaudited EBITDA and Adjusted EBITDA

For the period ended March 31,


2014


2013

Consolidated net (loss)

$  (487,918)


$  (462,092)

    Plus: Amortization of debt offering costs and debt discount

-


18,333

    Plus:  Interest expense

125,491


114,474

    Plus:  Depreciation and amortization

1,118,445


211,136

    Plus:  (Benefit) provision for taxes

(28,288)


9,989

Earnings before interest, taxes, depreciation and amortization (EBITDA)

$   727,730


$  (108,160)

    Plus:  Bad debt

(108,000)


(5,000)

    Plus:  Unrealized loss on derivative

55,580


-

    Plus:  Stock, warrants, options and notes issued for compensation and services

224,495


87,789





Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA)

$    899,805


$ (25,371)





  EBITDA per share

$         0.04


$       (0.01)

  Adjusted EBITDA per share

$         0.04


$       (0.00)

      Basic weighted avg shares outstanding

20,587,523


10,883,280

 

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SOURCE CUI Global, Inc.



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