CUI Global, Inc. Reports Unaudited First Quarter 2018 Financial Results
CUI Global, Inc. Reports Unaudited First Quarter 2018 Financial Results
- Increases Backlog $11.0 Million to Record $43.8 Million -
TUALATIN, Ore., May 7, 2018 /PRNewswire/ -- CUI Global, Inc. (NASDAQ: CUI), (the "Company") today reported its unaudited financial results for the three months ended March 31, 2018.
Note: Effective January 1, 2018, the Company adopted Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), utilizing the modified retrospective method. The Company also provides its results for the three months ended March 31, 2018 under old revenue rules, ASC Topic 605, following the 'Recent Business and Operational Highlights' section below as required under the modified retrospective transition method to allow easier comparison with prior results.
First Quarter 2018 Financial Performance Summary: (comparisons to prior year period)
-- Total revenues were $22.0 million compared to $17.8 million;
-- Gross profit was $6.6 million compared to $5.7 million;
-- Gross margin was 29.9% compared to 31.9%;
-- Consolidated net loss was $(3.3) million compared to $(3.9) million;
-- Loss per basic share was $(0.11) compared to $(0.18) per basic share;
-- Adjusted EBITDA was $(2.7) million compared to $(3.2) million;
-- Cash and cash equivalents were $9.6 million and restricted cash was $0.5
million at March 31, 2018;
-- Power and Electromechanical (P&EM) segment unaudited backlog was $26.1
million at March 31, 2018, up from $20.2 million at December 31, 2017;
and,
-- Energy segment unaudited backlog was $17.7 million at March 31, 2018, up
from $12.6 million at December 31, 2017.
"Strong revenue and record backlog in the first quarter reflect continued execution on our strategy to leverage our industry-disrupting technologies to build demand with new customers and across new geographies," said William Clough, president and CEO of CUI Global. "Our P&EM segment continues to benefit from new and expanded distributor relationships supplemented this quarter by initial ICE Technology sales. In our Energy segment, with a new, larger facility in Houston we are winning higher-dollar integration projects from leading energy providers in North America, and are advancing Energy products opportunities internationally that offer significant revenue optionality even as we await the restart of our largest Energy product contract in Italy.
"Looking ahead, we are well positioned to drive volume and sales growth and improve the profitability of our sales mix," continued Mr. Clough. "In our P&EM segment, UL certification for our ICE Switch and ICE Block products enables us to more vigorously promote this full solution to the data center market that has already demonstrated its interest with significant orders received in Q4 2017 for the ICE Switch and Q1 2018 for the ICE Block.
"In our Energy segment, we continue to cultivate demand for our Energy products across Europe and North America. In particular, the recent certification of our GasPT solution by Ofgem should serve to catalyze interest in the U.K. at a time when energy providers there are moving to utilize a government subsidy program to build biomethane terminals. We are progressing GasPT opportunities in North America for process control and fiscal monitoring applications, and concurrently building demand for our VE Technology as demonstrated by the receipt of recent orders with several Fortune 100 energy providers. We are also increasingly leveraging integration projects across both geographies to drive Energy product sales. These joint solutions create significant incremental value and generate higher gross margins for us. As business development activities in prior quarters convert to opportunities and orders, we are building a stronger business and ensuring our long-term success," concluded Mr. Clough.
Recent Business and Operational Highlights:
-- CUI Global announced that its Orbital Gas Systems North America (Orbital
N.A.) subsidiary deployed its proprietary VE Technology across leading
North American energy companies. Orders for VE probes and thermowells
were received from several Fortune 100 energy companies.
-- CUI Global's Orbital Gas Systems Ltd. (Orbital-UK) subsidiary received
new, broader certification of its proprietary GasPT analyzer and
software from the U.K. regulator, the Office of Gas and Electricity
Markets. Certification further opens the U.K. gas market to GasPT, and
was necessary for continued implementation of the Future Billing
Methodology, biomethane applications and other projects on which the
solution is applicable.
-- The Company's CUI Inc. subsidiary entered into a global distribution
agreement with Master Electronics, one of the largest global
distributors of electronic components to distribute and market CUI's
extensive product portfolio of power, interconnect, motion, audio and
thermal management technologies to the design, OEM and contract
manufacturer communities.
-- CUI Global announced that its Orbital-UK subsidiary secured contracts
totaling $4.58 million to enhance fuel gas metering and compressor
efficiency on the U.K.'s gas transmission network. The award is the
Company's first non-biomethane project to include GasPT and VE products;
-- The Company received UL 9540 certification for its ICE Block data center
hardware. With the receipt of UL certification, ICE Block is now fully
certified and saleable in the market;
-- CUI Global announced that its Orbital N.A. subsidiary was awarded a $2.1
million integration project from a large U.S.-based energy, procurement,
and construction firm for which Orbital N.A. is the sole-source
integrator. The award follows the recent opening of Orbital N.A.'s new,
larger production facility in Houston to service bigger opportunities
with the region's largest gas operators;
-- The Company's CUI Inc. subsidiary received an initial purchase order for
400 of its ICE Block devices and additional ICE Switches valued at
approximately $2.9 million for expected delivery in the late 2018;
-- CUI Global's Orbital N.A. subsidiary was awarded a fourth purchase order
in as many months for its GasPTi device from a leading U.S.-based power
and energy producer. The devices are being utilized in a process control
application to optimize the efficiency and minimize maintenance on
certain of the customer's gas-fired compressor turbines in the
northeastern United States.
First Quarter 2018 Financial Performance Summary: (ASC Topic 605 basis)
-- Total revenues would have been $21.7 million compared to $17.8 million;
-- Gross profit would have been $6.0 million compared to $5.7 million;
-- Gross margin would have been 27.5% compared to 31.9%;
-- Consolidated net loss would have been $(3.8) million compared to $(3.9)
million;
-- Loss per basic share would have been $(0.13) compared to $(0.18) per
basic share.
Conference Call
Management will host a conference call today, May 7, 2018 at 8:30 a.m. 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) 462-6700 and provide conference ID 6592666. For international callers, please dial (720) 545-0016. 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 May 22, 2018. To access the replay of the call dial (855) 859-2056 or (404) 537-3406 and provide conference ID 6592666. 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.
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.
Media Contact: External IR Counsel:
CUI Global, Inc. LHA Investor Relations
Jeff Schnabel Sanjay M. Hurry
Main: 503-612-2300 212-838-3777
press@cuiglobal.com cuiglobal@lhai.com
------------------- ------------------
- Financial Tables to Follow -
CUI Global, Inc.
Condensed Consolidated Balance Sheets
March 31, December 31,
(in thousands, except share and per share data) 2018 2017
---- ----
(unaudited)
Assets:
Current Assets:
Cash and cash equivalents $9,637 $12,646
Trade accounts receivable, net of allowance of $140
and $135, respectively 11,993 10,833
Inventories, net of allowance of $996 and $946, respectively 11,906 13,892
Contract assets 1,196 2,299
Prepaid expenses and other 1,691 1,606
----- -----
Total current assets 36,423 41,276
Property and equipment, less accumulated depreciation of
$4,430 and $4,155, respectively 11,318 11,242
Goodwill 17,820 17,641
Other intangible assets, less accumulated amortization of $12,681
and $11,900, respectively 15,608 15,568
Note receivable, less current portion 305 317
Restricted cash 523 -
Deposits and other assets 1,928 1,865
Total assets $83,925 $87,909
======= =======
Liabilities and Stockholders' Equity:
Current Liabilities:
Accounts payable $4,494 $5,110
Short-term overdraft facility 837 -
Mortgage note payable, current portion 95 94
Accrued expenses 3,609 4,186
Contract liabilities 5,168 8,829
Refund liabilities 1,951 695
----- ---
Total current liabilities 16,154 18,914
Long term mortgage note payable, less current portion 3,231 3,256
Long term note payable, related party 5,304 5,304
Derivative liability 272 356
Deferred tax liabilities 1,999 2,414
Other long-term liabilities 190 179
--- ---
Total liabilities 27,150 30,423
------ ------
Commitments and contingencies
Stockholders' Equity:
Preferred stock, par value $0.001; 10,000,000 shares authorized;
no shares issued at March 31, 2018 or December 31, 2017 - -
Common stock, par value $0.001; 325,000,000 shares
authorized; 28,485,898 shares issued and outstanding at
March 31, 2018 and 28,406,856 shares issued and
outstanding at December 31, 2017 28 28
Additional paid-in capital 169,747 169,527
Accumulated deficit (109,929) (108,559)
Accumulated other comprehensive loss (3,071) (3,510)
Total stockholders' equity 56,775 57,486
------ ------
Total liabilities and stockholders' equity $83,925 $87,909
======= =======
CUI Global, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(in thousands, except per share amounts) For the Three Months Ended March
31,
2018 2017
---- ----
Total revenues $21,966 $17,844
Cost of revenues 15,389 12,160
------ ------
Gross profit 6,577 5,684
----- -----
Operating expenses:
Selling, general and administrative 9,201 8,554
Depreciation and amortization 529 552
Research and development 620 610
Provision (credit) for bad debt 6 (27)
Other operating expenses - 5
--- ---
Total operating expenses 10,356 9,694
------ -----
Loss from operations (3,779) (4,010)
Other income 330 46
Interest expense (114) (116)
---- ----
Loss before taxes (3,563) (4,080)
Income tax benefit (302) (226)
---- ----
Net loss $(3,261) $(3,854)
======= =======
Basic and diluted weighted average common
shares outstanding 28,488,032 20,949,251
========== ==========
Basic and diluted loss per common share $(0.11) $(0.18)
====== ======
CUI Global, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands) For the Three Months Ended March 31,
2018 2017
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(3,261) $(3,854)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation 264 236
Amortization of intangibles 466 464
Stock issued and stock to be issued for compensation, royalties and services 66 91
Unrealized gain on derivative liability (84) (33)
Provision for (credit to) bad debt expense and returns allowances 6 (28)
Deferred income taxes (250) (294)
Inventory reserve 58 179
Non-cash unrealized foreign currency gains (295) (176)
Loss on disposal of assets - 5
(Increase) decrease in operating assets:
Trade accounts receivable (1,040) (643)
Inventories 910 (296)
Contract assets 625 475
Prepaid expenses and other current assets (137) (371)
Deposits and other assets - (3)
Increase (decrease) in operating liabilities:
Accounts payable (694) 1,410
Accrued expenses (308) (210)
Refund liabilities 386 40
Contract liabilities 385 1,526
NET CASH USED IN OPERATING ACTIVITIES (2,903) (1,482)
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (154) (198)
Proceeds from sale of property and equipment - 1
Investments in other intangible assets (239) (71)
Proceeds from notes receivable - 19
NET CASH USED IN INVESTING ACTIVITIES (393) (249)
---- ----
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from overdraft facility 4,982 -
Payments on overdraft facility (4,155) -
Proceeds from line of credit 1,166 -
Payments on line of credit (1,166) -
Payments on capital lease obligations (1) (3)
Payments on mortgage note payable (24) (22)
Payments on contingent consideration (45) (61)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 757 (86)
--- ---
Effect of exchange rate changes on cash 53 162
--- ---
Net decrease in cash, cash equivalents and restricted cash (2,486) (1,655)
------ ------
Cash, cash equivalents and restricted cash at beginning of period 12,646 4,617
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD $10,160 $2,962
======= ======
Reconciliation of Non-GAAP Financial Measures
EBITDA, Adjusted EBITDA and Adjusted Net 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 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 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 loss are not terms defined by GAAP and as a result our measure of EBITDA, Adjusted EBITDA and Adjusted Net loss might not be comparable to similarly titled measures used by other companies. However, EBITDA, Adjusted EBITDA and Adjusted Net 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 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 loss eliminates the amortization expenses associated with intangible assets acquired with Orbital Gas Systems Limited and CUI-Canada, non-cash expenses associated with stock and stock options for compensation, royalties and services during the period, and impairment of goodwill and intangible assets.
(in thousands)
For the Three Months Ended
March 31,
2018 2017
---- ----
EBITDA:
Net loss $(3,261) $(3,854)
Plus: Interest expense 114 116
Plus: Income tax benefit (302) (226)
Plus: Depreciation and amortization 730 700
--- ---
EBITDA $(2,719) $(3,264)
Adjusted EBITDA:
Plus: Provision (credit) for bad debt $6 $(27)
Plus: Unrealized gain on derivative (84) (33)
Plus: Stock issued and stock to be issued for 66 91
compensation, royalties and services
Adjusted EBITDA $(2,731) $(3,233)
======= =======
Adjusted net loss:
Net loss $(3,261) $(3,854)
Plus: Amortization expense of Orbital and CUI - 325 298
Canada acquisition intangibles
Plus: Stock issued and stock to be issued for 66 91
compensation, royalties and services
Adjusted net loss $(2,870) $(3,465)
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SOURCE CUI Global, Inc.
