CUI Global Reports Unaudited Second Quarter 2014 Financial Results

11 Aug, 2014, 16:43 ET from CUI Global, Inc.

TUALATIN, Ore., Aug. 11, 2014 /PRNewswire/ -- CUI Global, Inc. (NASDAQ: CUI), a platform company dedicated to the acquisition, development, and commercialization of new, innovative products, today reported their unaudited financial results for the second quarter, ended June 30, 2014.

Second Quarter 2014 Financial Performance Summary: (Comparisons to 2Q 2013)

  • Quarterly revenue was up 6% to $19.2 million from $18.2 million
  • Gross Profit margin was 40%, as compared to 39%
  • Consolidated loss of $(66) thousand or $(0.00) per share versus $437 thousand profit or $0.02 per share
  • Quarterly adjusted EBITDA was $1.3 million or $0.06 a share, as compared to $1.8 million or $0.10 a share in Q2 2013
  • Year to date Adjusted EBITDA was $2.2 million or $0.10 a share, as compared to $1.8 million or $0.12 a share in 2013
  • Cash and cash equivalents were $15.2 million with an additional $12.0 million in short-term investments
  • Power and Electro-Mechanical segment unaudited backlog of $14.0 million as of June 30, 2014
  • Gas segment unaudited backlog of $23.7 million as of June 30, 2014

CUI Global's President & CEO, William Clough commented, "We are pleased with our second quarter and year to date results, as we continue to build on our momentum from the first quarter.  We saw increases in revenues in both segments and our backlog remains robust."

"We have now signed up 33 new distributors in Europe and North America.  In addition, we announced in early May the fact that National Grid had selected our IRIS technology for use in remotely controlling their entire grid.  Since that announcement, we have continued discussions with GE and are now preparing a presentation of the IRIS technology for joint marketing and sales presentation with GE to such North American customers as Kinder-Morgan, Williams Pipeline, Spectra Energy and others," Clough continued.

Clough explained, "We believe these distributor agreements and our cooperation with GE's Intelligent Platform Group represent significant steps in our plan to develop a substantial distribution network for our ground breaking technology and, specifically, for sales targeting North American energy producers and transporters."

"Sales of our GasPTi product remain steady, as we have now received orders for 21 units in 2014. In addition, we have now completed a four month field trial of six units by Snam Rete Gas.  Those trials went very well, with all six units passing the testing. The VE technology remains a strong product for us and is now being considered by a number of large energy producers and transporters in North America and Europe for implementation on their pipelines, both as sampling systems and as thermowell replacements," concluded Clough.

For the quarter ended June 30, 2014, CUI Global produced consolidated total revenues of $19.2 million and year to date consolidated total revenues of $36.1 million.  Gross revenues for the second quarter grew 14% sequentially from first quarter revenues of $16.9 million and 6% year-over-year, when compared to $18.2 million in the second quarter of 2013. 

The cost of revenue for the quarter ended June 30, 2014, was $11.5 million, versus $11.1 million for the same period in 2013.  The increase when compared to the second quarter of 2013 is primarily the result of increased revenues associated with growth in the power and electro-mechanical segment.  As a percentage of sales, the cost of revenue remained relatively consistent at 60% for Q2 2014 compared with 61% in Q2 2013 with the change associated with the product mix delivered during the period.  Gross profit was $14.7 million year to date versus $10.9 million in 2013 and $7.7 million for the quarter ended June 30, 2014 versus $7.0 million during Q2 2013.

SG&A decreased 3% as a percentage of revenues for the second quarter sequentially from first quarter and increased 5% as a percentage of revenues as compared to the quarter ended 2013. 

The company reported a net loss of $(66) thousand or $(0.00) per share (EPS) for the quarter ended June 30, 2014 as compared with a net profit of $437 thousand or $0.02 per share in the prior year period.  The net loss, during the quarter ended June 30, 2014 as compared to the prior year period is primarily the result of consistent increases for selling, general and administrative expenses related to the increased revenues and selling and marketing efforts associated with introducing new technologies and Orbital to the global marketplace. 

The earnings before interest, taxes, depreciation and amortization (EBITDA) for the second quarter were $868 thousand or $0.04 EBITDA per share. Adjusted EBITDA for the second quarter 2014 was $1.3 million or $0.06 per share.

Operating activities generated positive cash flow of $49 thousand during the six months ended June 30, 2014, versus positive cash flow from operations of $603 thousand for the same period in 2013.  The change in cash provided by operations is primarily related to the changes in the operating assets associated primarily with increased revenues during the period as well as the net income generated by operating activities exclusive of non-cash expenses during the year to date period.  

In addition, as an operating unit, the power and electro-mechanical segment (CUI, Inc. and CUI Japan) posted revenues of $13.6 million for the quarter, which represented a $985 thousand (8%) increase as compared to the same period in 2013. The gas segment posted revenues of $5.6 million in the second quarter. 

The power and electro-mechanical segment unaudited order back log was $14.0 million and the gas segment unaudited order back log was $23.7 million as of June 30, 2014.

The company had $15.2 million of cash and cash equivalents as of June 30, 2014, a decrease of $1.4 million since December 31, 2013.  The Company had an additional $12.0 million in short-term investments, an increase of $1.1 million since December 31, 2013.

CONFERENCE CALL

The Company will conduct a conference call and webcast to review the results on Tuesday, August 12, 2014 at 9:00am ET.

To access the call, please dial the toll free number at (888) 734-0328 and provide the Conference ID: 81760447. For international callers, please dial (678) 894-3054. At the conclusion of the call, a replay will be available until August 23, 2014.  To access the replay of the call dial (855) 859-2056 and provide the same Conference 81760447. This replay will be available until August 23, 2014.

A simultaneous webcast will also be available via: http://www.media-server.com/m/p/fpj9fmny

 

Condensed Consolidated Balance Sheets

June 30, 2014

December 31, 2013

(unaudited)

Assets:

Current assets:

Cash and cash equivalents

$    15,182,145

$    16,575,508

Short term investments held to maturity

11,955,454

10,868,961

Trade accounts receivable, net of allowance of $239,102 and   $285,348, respectively

11,257,374

9,055,561

Inventories, net of allowance of $511,128 and $549,981,   respectively

7,175,904

7,027,644

Costs in excess of billings

-

552,012

Prepaid expenses and other

1,116,496

603,960

Total current assets

46,687,373

44,683,646

Property and equipment, net

8,315,414

8,206,563

Other assets:

Investment - equity method

325,121

283,011

Other intangible assets, net

22,236,921

23,512,394

Deposits and other

34,219

25,364

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

-

-

Goodwill, net

22,761,679

22,448,613

Total other assets

45,357,940

46,269,382

Total assets

$   100,360,727

$    99,159,591

Liabilities and Stockholders' Equity:

Current liabilities:

Accounts payable

$      4,686,227

$      4,146,262

Mortgage note payable, current portion

78,764

76,814

Leases payable, current portion

64,279

83,904

Accrued expenses

2,368,734

2,253,773

Accrued taxes payable

397,047

263,804

Accrued compensation

553,959

426,402

Billings in excess of costs

5,766,757

6,787,231

Unearned revenue

1,684,932

1,257,346

Total current liabilities

15,600,699

15,295,536

Long term leases payable

93,644

58,363

Derivative liability

544,981

427,818

Long term mortgage note payable, net of current portion due of   $78,764 and $76,814, respectively

3,564,210

3,604,242

Long term notes payable, related party

5,303,683

5,303,683

Deferred tax liabilities, net

2,856,846

3,111,361

Total long term liabilities

12,363,364

12,505,467

Total liabilities

27,964,063

27,801,003

Commitments and contingencies

Stockholders' equity

Common stock, par value $0.001; 325,000,000 shares   authorized; 20,634,072 shares issued and outstanding at   June 30, 2014 and 20,566,663 shares issued and outstanding   at December 31, 2013

20,634

20,567

Additional paid-in capital

147,263,288

146,614,995

Accumulated deficit

(77,669,315)

(77,114,935)

Accumulated other comprehensive gain

2,782,057

1,837,961

Total stockholders' equity

72,396,664

71,358,588

Total liabilities and stockholders' equity

$   100,360,727

$    99,159,591

 

 

 

Condensed Consolidated Statements of Operations

(unaudited)

For the three months ended June 30,

For the six months ended June 30,

2014

2013

2014

2013

Revenues:

Product sales

$    19,202,860

$    18,138,599

$    36,092,981

$    28,190,845

Revenue from freight

11,333

12,492

21,121

19,606

Total revenue

19,214,193

18,151,091

36,114,102

28,210,451

Cost of revenues

11,506,825

11,148,154

21,412,512

17,263,366

Gross profit

7,707,368

7,002,937

14,701,590

10,947,085

Operating expenses:

Selling, general and administrative

6,494,599

5,289,249

12,686,299

9,227,870

Depreciation and amortization

1,076,155

920,478

2,129,168

1,064,007

Research and development

328,765

198,775

598,617

443,465

Bad debt

30,231

47,470

(77,769)

42,470

Total operating expenses

7,929,750

6,455,972

15,336,315

10,777,812

Income (loss) from operations

(222,382)

546,965

(634,725)

169,273

Other income (expense):

Other income

70,195

56,057

152,064

117,295

Other expense

(65,580)

(4,961)

(65,875)

(9,906)

Unrealized (loss) on derivative

(61,583)

-

(117,163)

-

Earnings (loss) from equity investment

26,740

(6,229)

42,110

(4,126)

Gain (loss) on disposals of fixed assets

-

-

(4,754)

-

Amortization of investment premiums and discounts

(17,319)

-

(32,301)

-

Amortization of debt offering costs and debt discount

-

(18,333)

-

(36,666)

Interest expense

(127,783)

(86,979)

(253,274)

(201,453)

Total other income (expense), net

(175,330)

(60,445)

(279,193)

(134,856)

Income (loss) before taxes

(397,712)

486,520

(913,918)

34,417

(Benefit) provision for taxes

(331,250)

49,287

(359,538)

59,276

Consolidated net income (loss)

$          (66,462)

$         437,233

$        (554,380)

$          (24,859)

Basic income (loss) per common share

$             (0.00)

$              0.02

$             (0.03)

$             (0.00)

Diluted income (loss) per common share

$             (0.00)

$              0.02

$             (0.03)

$             (0.00)

Basic weighted average common shares outstanding

20,628,347

18,835,103

20,608,048

14,881,158

Diluted weighted average common and common   equivalent shares outstanding

20,628,347

18,851,315

20,608,048

14,881,158

 

Condensed Consolidated Statements of Cash Flows (unaudited)

For the six months ended June 30,

2014

2013

CASH FLOWS FROM OPERATING ACTIVITIES

Net (loss)

$        (554,380)

$          (24,859)

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

Stock,  options and notes issued for compensation and services

526,692

295,541

Unrealized loss on derivative

117,163

-

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

-

36,666

Non-cash (profit) loss on equity method investment

(42,110)

4,126

Allowance for bad debt expense and returns allowance

(47,769)

42,470

Amortization of investment premiums and discounts

32,301

-

Amortization of intangibles

1,739,207

866,403

Deferred income taxes

(349,127)

(142,455)

Inventory reserve

(47,859)

18,400

Loss on disposal of assets

4,754

-

Depreciation

516,844

327,999

(Increase) decrease in assets:

Trade accounts receivable

(2,020,815)

1,654,312

Inventories

(21,082)

(898,397)

Costs in excess of billings

570,091

90,871

Prepaid expenses and other current assets

(358,939)

(673,266)

Deposits and other assets

(8,855)

11,360

Increase (decrease) in liabilities:

Accounts payable

470,658

456,307

Accrued expenses

93,371

(1,514,443)

Accrued compensation

119,169

124,547

Accrued taxes payable

124,546

(401,223)

Unearned revenue

427,586

259,539

Billings in excess of costs

(1,242,763)

68,803

NET CASH PROVIDED BY OPERATING ACTIVITIES

48,683

602,701

CASH FLOWS FROM INVESTING ACTIVITIES:

Cash paid upon acquisition, net of cash received

-

(17,709,507)

Investment in patents

-

(2,500)

Purchase of short term investments held to maturity

(6,282,980)

-

Maturities of short term investments held to maturity

5,164,186

-

Proceeds from notes receivable

-

18,116

Purchase of property and equipment

(483,262)

(442,086)

NET CASH USED IN INVESTING ACTIVITIES

(1,602,056)

(18,135,977)

CASH FLOWS FROM FINANCING ACTIVITIES:

Payments on demand notes payable, net of debt offering costs

-

(459,448)

Payments on leases payable, net of proceeds

(70,719)

(3,736)

Payments on notes and loans payable

(38,082)

-

Payments on notes payable, related party

-

(2,000,000)

Proceeds from sales of common stock, and exercise of warrants and options, net of   offering costs

-

45,135,280

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES

(108,801)

42,672,096

EFFECT OF EXCHANGE RATE CHANGE ON CASH

268,811

(73,111)

Cash and cash equivalents at beginning of period

16,575,508

3,039,840

Cash and cash equivalents at end of period

15,182,145

28,105,549

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

$     (1,393,363)

$    25,065,709

 

For the six months ended June 30,

2014

2013

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Income taxes paid

$         138,663

$           62,948

Interest paid

$         254,925

$         201,233

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Capital leases

$           81,716

$           16,381

 

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

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, Adjusted EBITDA, and Adjusted Net Income are a non-GAAP financial measures and are reconciled in the tables below. These non-GAAP financial measures do not represent funds available for management's discretionary use and are not intended to represent cash flow from operations. EBITDA, Adjusted EBITDA, and Adjusted Net Income should not be construed as substitutes 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, Adjusted EBITDA, and Adjusted Net Income exclude components that are significant in understanding and assessing the company's results of operations and cash flows. In addition, EBITDA, Adjusted EBITDA, and Adjusted Net Income are not terms defined by GAAP and as a result our measure of these non-GAAP financial measures might not be comparable to similarly titled measures used by other companies. However, EBITDA, Adjusted EBITDA, and Adjusted Net Income are used by management to evaluate, assess and benchmark the company's operational results and the company believes these non-GAAP financial measures 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.

 

For the 3 months ended June 30,

For the 6 months ended June 30,

2014

2013

2014

2013

EBITDA:

Consolidated Income (loss)

$      (66,462)

$     437,233

$    (554,380)

$      (24,859)

Plus:  Interest expense

127,783

86,979

253,274

201,453

Plus:  (Benefit) provision for taxes

(331,250)

49,287

(359,538)

59,276

 Plus: Depreciation 

261,369

184,390

516,844

327,999

Plus:  Amortization

876,237

798,876

1,739,207

866,403

Plus:  Amortization of debt offering costs and debt discount

-

18,333

-

36,666

EBITDA

$     867,677

$   1,575,098

$   1,595,407

$   1,466,938

Adjusted EBITDA:

Plus: Bad debt

30,231

47,470

(77,769)

42,470

Plus:  Unrealized loss on derivative

61,583

-

117,163

-

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

302,197

207,752

526,692

295,541

Adjusted EBITDA

$   1,261,688

$   1,830,320

$   2,161,493

$   1,804,949

EBITDA per share

$           0.04

$           0.08

$           0.08

$           0.10

Adjusted EBITDA per share

$           0.06

$           0.10

$           0.10

$           0.12

Basic weighted average shares outstanding

20,628,347

18,835,103

20,608,048

14,881,158

Adjusted net income (loss):

Consolidated Income (loss)

$      (66,462)

$     437,233

$    (554,380)

$      (24,859)

Plus:  Amortization expense of Orbital acquisition related intangible assets

798,193

731,345

1,583,292

731,345

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

302,197

207,752

526,692

295,541

Adjusted net income

$   1,033,928

$   1,376,330

$   1,555,604

$   1,002,027

Adjusted income per common share

$           0.05

$           0.07

$           0.08

$           0.07

Basic weighted average shares outstanding

20,628,347

18,835,103

20,608,048

14,881,158

 

 

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SOURCE CUI Global, Inc.



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