CUI Global Reports Fourth Quarter and Full Year 2019 Financial Results
HOUSTON, March 30, 2020 /PRNewswire/ -- CUI Global, Inc. (Nasdaq: CUI) ("CUI Global" or the "Company") today reported unaudited financial results for the three and twelve months ended December 31, 2019.
Financial and Operating Highlights:
-- Reported total revenues of $5.7 million for the fourth quarter of 2019
and $23.5 million for the full year 2019, compared to $7.4 million and
$20.3 million for the fourth quarter and full year 2018, respectively;
-- Gross profit was $1.5 million for the fourth quarter of 2019 and $5.8
million for the full year 2019, compared to a gross loss of $0.5 million
for the fourth quarter of 2018 and gross profit of $2.6 million for the
full year 2018;
-- Gross margin was 26.0% for the fourth quarter of 2019 and 24.7% for the
full year 2019, compared to (6.6%) and 12.6% for the fourth quarter and
full year 2018, respectively;
-- Operating loss was $4.9 million for the fourth quarter of 2019 and $16.0
million for the full year 2019, compared to $8.9 million for the fourth
quarter of 2018 and $22.1 million for the full year 2018;
-- Cash and cash equivalents were $23.4 million at December 31, 2019;
-- Energy segment backlog was $9.6 million at December 31, 2019, compared
to $15.7 million at December 31, 2018;
-- Completed the sale of electromechanical components business of the
Company's Power and Electromechanical segment to a private entity for
total consideration of $15 million;
-- Sold the majority of its remaining Power business to Bel Fuse (Nasdaq:
BELFA and Nasdaq: BELFB) for $32.0 million in cash, subject to
post-closing adjustments;
-- Authorized a share repurchase program under which CUI may repurchase up
to $5.0 million of CUI Global common stock at market prices;
-- Subsequent to year end, announced the acquisition of Reach Construction
Group ("Reach"), an engineering, procurement and construction ("EPC")
company with expertise in the renewable energy industry.
Commentary
"In 2019, our Energy segment continued to take advantage of operators increasing capital investment in energy services infrastructure," said Jim O'Neil, vice chairman and CEO of CUI Global. "At the same time, we laid the groundwork for our plan to become a diversified energy infrastructure services company. This included the sale of our electromechanical components business of our legacy Power and Electromechanical segment for a total consideration of $15 million. Following this, we sold the majority of our remaining Power business to Bel Fuse for $32 million in gross proceeds, which continued our transformation and strengthened our balance sheet. More recently, we announced another major milestone with the accretive, platform acquisition of Reach Construction Group.
Mr. O'Neil continued, "Reach's utility-scale solar energy expertise and established relationships with solar developers and panel manufacturers represents a strong addition to our energy infrastructure services focused operations. This acquisition extends our energy services business into the rapidly growing areas of alternative and renewable energy, and also expands our engineering and construction capabilities to deploy a broader set of service offerings in the energy infrastructure market. Going forward, we will continue to grow our existing energy business and use our strong balance sheet to pursue attractive acquisition opportunities. By executing on this targeted acquisition strategy, focused on innovative companies in complementary industries, we will develop a diversified platform for growth and create long-term value for our shareholders."
Conference Call
Management will host a conference call today, March 30, 2020 at 5:00 PM ET to discuss these results as well as recent corporate developments. After management's opening remarks, there will be a question and answer period. To access the call, please dial (888) 734-0328 and provide conference ID 7065114. For international callers, please dial (678) 894-3054. The live webcast of the conference call and accompanying slide presentation can be accessed through the 'Events & Presentations' page of the CUI Global Investor Relations website (www.cuiglobal.com).
For those unable to attend the live call, a telephonic replay will be available until April 16, 2020. To access the replay of the call dial (855) 859-2056 or (404) 537-3406 and provide conference ID 7065114. An archived copy of the webcast and slide presentation will also be available on the 'Events & Presentations' page of the CUI Global Investor Relations website.
About CUI Global, Inc.
CUI Global, Inc. is a publicly traded company dedicated to maximizing shareholder value through the acquisition and development of innovative companies to create a diversified energy services platform. CUI Global's Energy business, Orbital Gas Systems is a leader in innovative gas solutions with more than 30 years of experience in design, installation and the commissioning of industrial gas sampling, measurement and delivery systems providing solutions to the energy, power and processing markets. Orbital Gas Systems manufactures and delivers a broad range of technologies including environmental monitoring, gas metering, process control, telemetry, gas sampling and BioMethane. As a publicly traded company, shareholders can participate in the opportunities, revenues, and profits generated by the products, technologies, and market channels of CUI Global and its subsidiaries. But most important, 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: http://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.
Investor Relations:
KCSA Strategic Communications
David Hanover
T: 212-896-1220
dhanover@kcsa.com
CUI Global, Inc.
Consolidated Balance Sheets
December 31, December 31,
(In thousands, except
share and per share
amounts) 2019 2018
---
Assets:
Current Assets:
Cash and cash
equivalents $
23,351 $
3,979
Trade accounts receivable, net of
allowance of $47
and $17, respectively 5,295 5,034
Inventories 1,631 1,622
Contract assets 2,309 1,744
Note receivable,
current portion - 318
Prepaid expenses and
other current assets 2,215 1,512
Assets held for sale,
current portion 6,893 21,272
Total current assets 41,694 35,481
Property and equipment, less
accumulated depreciation of
$1,441 and $1,284, respectively 4,454 4,540
Investment in VPS -
equity method 4,865
Right of use assets -
Operating leases 5,524
Other intangible assets, less
accumulated amortization of $11,191
and $9,601,
respectively 4,298 5,353
Restricted cash - 523
Note receivable 3,253
Convertible note
receivable - 655
Deposits and other
assets 70 508
Assets held for sale,
noncurrent portion - 23,107
Total assets $
64,158 $
70,167
Liabilities and Stockholders' Equity:
Current Liabilities:
Accounts payable $
2,904 $
1,520
Short-term overdraft
facility - 1,344
Notes payable, current 473
Operating lease
obligations -current
portion 821
Accrued expenses 5,159 1,893
Contract liabilities 1,668 1,956
Deferred gain on
leaseback, current
portion - 289
Liabilities held for
sale, current portion 4,970 11,584
Total current
liabilities 15,995 18,586
Operating lease
obligations, less
current portion 4,852
Deferred gain on
leaseback, less
current portion - 2,599
Liabilities held for
sale, noncurrent
portion - 7,241
Other long-term
liabilities 194 203
Total liabilities 21,041 28,629
Commitments and contingencies
Stockholders' Equity:
Preferred stock. par value $0.001;
10,000,000 shares authorized
no shares issued at
December 31, 2019 or
2018 -
Common stock, par value $0.001;
325,000,000 shares
authorized; 28,383,373 shares issued
and outstanding at
December 31, 2019 and 28,552,886 shares
issued and
outstanding at
December 31, 2018 29 29
Additional paid-in
capital 170,106 169,898
Treasury stock at
cost; 353,063 shares
held at December 31,
2019 and 0 (413)
shares held at December 31, 2018
Accumulated deficit (122,234) (123,993)
Accumulated other
comprehensive loss (4,371) (4,396)
Total stockholders'
equity 43,117 41,538
Total liabilities and
stockholders' equity $
64,158 $
70,167
CUI Global, Inc.
Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts) For the three months ended December
31, For the year ended December 31,
2019 2018 2019 2018
---
Revenues $
5,700 $
7,434 $
23,492 $
20,342
Cost of revenues 4,217 7,924 17,680 17,783
Gross profit 1,483 (490) 5,812 2,559
Operating expenses:
Selling, general and administrative 5,972 4,855 20,063 18,629
Depreciation and amortization 389 387 1,544 1,549
Research and development 16 39 139 155
Provision (credit) for bad debt 21 8 131 13
Impairment of goodwill and intangible assets - 3,084 4,347
Other operating expenses (7) (20)
Total operating expenses 6,391 8,373 21,857 24,693
Loss from operations (4,908) (8,863) (16,045) (22,134)
Other (expense) income 1,132 (254) 567 (316)
Interest expense (26) (52) (61) (216)
Loss before income taxes and equity in net loss of affiliate (3,802) (9,169) (15,539) (22,666)
Net loss of affiliate (333) (1,043)
Loss from continuing operations before taxes (4,135) (9,169) (16,582) (22,666)
Income tax expense (benefit) (1,191) (300) (2,956) (1,342)
Net loss from continuing operations, net of income taxes (2,944) (8,869) (13,626) (21,324)
Income from operations of discontinued power 6,673 1,478 12,908 5,135
and electromechanical components businesses
(including gain on disposal of $14,100)
Income tax expense (722) 374 411 1,136
Income from discontinued operations, net of 7,395 1,104 12,497 3,999
income taxes
Net loss $
4,451 $
(7,765) $
(1,129) $
(17,325)
Basic and diluted weighted average number of 28,706,671 28,547,149 28,654,500 28,517,339
shares outstanding
Loss from continuing operations per common $
(0.10) $
(0.31) $
(0.48) $
(0.75)
share - basic and diluted
Earnings from discontinued operations per $
0.26 $
0.04 $
0.44 $
0.14
common share - basic and diluted
Basic and diluted loss per common share $
0.16 $
(0.27) $
(0.04) $
(0.61)
CUI Global, Inc.
Consolidated Statements of Cash Flows
(in thousands) For the year ended December 31,
2019 2018
---
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $
(1,129) $
(17,325)
Adjustments to reconcile net loss to net
cash used in
operating activities:
Depreciation 724 1,103
Amortization of
intangibles 1,637 1,902
Amortization of note
receivable discount (70)
Stock issued and stock
to be issued for
compensation,
royalties and services 215 229
Unrealized gain on
derivative liability - (129)
Non-cash loss on
equity method
investment in
affiliate 1,043
Non-cash fair value
gain on equity method
investment purchase (629)
Non-cash royalties,
net 5 (7)
Provision for (credit
to) bad debt expense
and returns allowances 136 33
Deferred income taxes (2,574) (352)
Non-cash unrealized
foreign currency
(gain) loss (422) 246
Impairment of goodwill
and other intangible
assets 278 4,347
Inventory reserve 79 1,592
Impairment of deposits
and other assets - 1,509
Loss on disposal of
assets 31 13
Gain on sale of
businesses (14,100)
(Increase) decrease in operating assets:
Trade accounts
receivable 1,510 (3,841)
Inventories (119) (2,235)
Contract assets (512) (61)
Prepaid expenses and
other current assets 121 (392)
Right of use assets -
Operating leases 1,825
Deposits and other
assets 31 (59)
Increase (decrease) in operating
liabilities:
Accounts payable 1,708 1,436
Operating lease
liabilities (1,755)
Accrued expenses 2,189 1,116
Refund liabilities (1,339) 852
Contract liabilities (401) (2,260)
NET CASH USED IN
OPERATING ACTIVITIES (11,518) (12,283)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of
businesses 35,396
Proceeds from sale of
building, net - 7,720
Proceeds from sale of
restricted investment 400
Cash paid for
restricted investment - (400)
Purchases of property
and equipment (321) (1,042)
Proceeds from sale of
property and equipment 21
Cash paid for other
intangible assets (353) (492)
Cash paid for
convertible note
receivable - (655)
Cash paid for equity-
method investment (2,068)
Proceeds from Notes
receivable 313 19
NET CASH PROVIDED BY
INVESTING ACTIVITIES 33,388 5,150
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from overdraft
facility 6,842 19,532
Payments on overdraft
facility (8,208) (18,122)
Proceeds from line of
credit 27,483 19,955
Payments on line of
credit (28,462) (18,976)
Payments on capital
lease obligations (4) (3)
Payments on mortgage
note payable - (3,350)
Payments on notes
payable (303)
Cash payments for
repurchases of common
stock (413)
Payment to closeout
derivative liability - (227)
Payments on contingent
consideration - (45)
NET CASH USED IN
FINANCING ACTIVITIES (3,065) (1,236)
Effect of exchange rate
changes on cash 44 225
Net increase (decrease)
in cash, cash
equivalents and
restricted cash 18,849 (8,144)
Cash, cash equivalents
and restricted cash at
beginning of year 4,502 12,646
CASH, CASH EQUIVALENTS
AND RESTRICTED CASH AT
END $
23,351 $
4,502
OF YEAR
Reconciliation of Non-GAAP Financial Measures
EBITDA, Adjusted EBITDA and Adjusted Net Income (loss) are non-GAAP financial measures and are reconciled in the table below. These non-GAAP financial measures do not represent funds available for management's discretionary use and is not intended to represent cash flow from operations. EBITDA, Adjusted EBITDA and Adjusted Net Income (loss) 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, Adjusted EBITDA and Adjusted Net Income (loss) 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 (loss) are not terms defined by GAAP and as a result our measure of EBITDA, Adjusted EBITDA and Adjusted Net Income (loss) might not be comparable to similarly titled measures used by other companies. However, EBITDA, Adjusted EBITDA and Adjusted Net Income (loss) are used by management to evaluate, assess and benchmark the company's operational results and the company believes EBITDA, Adjusted EBITDA, and Adjusted Net Income (loss) 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 (loss) eliminates the amortization expenses associated with intangible assets acquired with Orbital Gas Systems Limited and CUI-Canada, as well as non-cash expenses associated with impairments, Gains on sale of businesses, non-cash gains and losses related to the Company's equity method investment in VPS and stock and stock options for compensation, royalties and services during the period.
(In thousands)
(Unaudited) For the Three Months Ended
For the year ended
December 31
December 31
2019 2018 2019 2018
EBITDA:
Net income (loss) $
4,451 $
(7,765) $
(1,129) $
(17,325)
Plus: Interest expense 29 132 338 502
Plus: (Benefit) provision for taxes (1,913) 74 (2,545) (206)
Plus: Depreciation and amortization 390 760 2,361 3,005
EBITDA $
2,957 $
(6,799) $
(975) $
(14,024)
Adjusted EBITDA:
Less: Gain on disposal of discontinued operation (10,469) (14,100)
Plus: Bad debt 46 43 136 33
Plus: Impairment of goodwill and intangible assets 278 3,084 278 4,347
Plus: Impairment of Energy segment deposits and other 1,509 1,509
assets
Non-cash loss (gain) and unrealized gain on derivative liability 35 (129)
Plus: Stock and options issued and stock to be issued for 60 41 215 229
compensation, royalties and services
Less: Pretax gain on assets contributed as part of the (629)
purchase of VPS
Plus: Non-cash loss on equity method investment in VPS 333 1,043
Adjusted EBITDA $
(6,795) $
(2,087) $
(14,032) $
(8,035)
Adjusted net income (loss):
Net income (loss) $
4,451 $
(7,765) $
(1,129) $
(17,325)
Less: Gain on disposal of discontinued operation (10,469) (14,100)
Plus: Impairment of goodwill and intangible assets 278 3,084 278 4,347
Plus: Impairment of Energy segment deposits and other 1,509 1,509
assets
Plus: Amortization expense of Orbital and CUI - 243 297 1,126 1,233
Canada acquisition intangibles
Plus: Stock and options issued and stock to be issued for 60 41 215 229
compensation, royalties and services
Less: Pretax gain on assets contributed as part of the (629)
purchase of VPS
Plus: Non-cash loss on equity method investment in VPS 333 1,043
Adjusted net loss $
(5,104) $
(2,834) $
(13,196) $
(10,007)
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SOURCE CUI Global, Inc.
