TUALATIN, OR - CUI Global, Inc. (CUI), a platform company dedicated to the acquisition, development, and commercialization of new, innovative products, today reported their financial results for the fourth quarter and full year ended December 31, 2013.
Full Year 2013 Financial Performance Summary: (Comparisons to FY 2012)
Revenue was up 48% to $60.7 million from $41.1 million
Gross Profit margin was 39% up 2% from 37%
Basic and diluted (loss) per common share of $(0.10) versus $(0.25) a 60% improvement
Adjusted EBITDA was $3.8 million or $0.21 a share, up 463% from a loss of $(1.0) million or $(0.10) per share
Cash and cash equivalents were $16.6 million with an additional $10.9 in short-term investments versus $3.0 million in cash and cash equivalents as of December 31, 2012
Electro-Mechanical segment unaudited backlog of $13.4 million as of December 31, 2013 versus $11.7 million in 2012
Orbital Gas Systems unaudited backlog of $25.0 million as of December 31, 2013
“2013 was an exciting and transformative year for the company,” said CUI Global's president & CEO, William Clough. “Early in the year we completed a successful capital raise which facilitated the acquisition of Orbital Gas Systems. With the acquisition of Orbital in April we greatly increased our portfolio of products, services, solutions, as well as our revenue base. In 2013, the company released 808 new product introductions. While doing so, we saw our SG&A decrease as a percentage of revenues from 37.7% in 2012 to 32.1% in 2013. As a result, our cash flow provided by operating activities was $1.65 million versus $1.80 million used by operating activities in 2012.”
“I think these 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 and automotive industries,” continued Mr. Clough.
The company’s revenues were $60,651,665 for 2013 up 48% from revenues of $41,084,589 in 2012. The increase in revenues during 2013 is attributable to the acquisition of Orbital Gas Systems Limited in April 2013 which accounts for $17,460,605 of the increase, in addition to increases through the Power and Electro-Mechanical segment of $2,106,471 which is the result of continued product introductions during 2013 and 2012, sales and marketing efforts, the addition of Future Electronics as a distribution channel following the global distribution agreement between CUI and Future Electronics that began in January 2013, and the increased backlog of CUI orders on hand at December 31, 2013.
The cost of revenue for the year ended December 31, 2013, was $36,878,895, versus $25,707,893 for 2012. The significant increase during 2013 compared to the prior year is primarily the result of the acquisition of Orbital Gas Systems Limited in April 2013 which accounts for $10,610,576 of the increase while the remainder is representative of the growth in revenues through CUI Inc. and CUI Japan. As a percentage of sales, the cost of revenue remained relatively consistent at 60.80% for 2013 compared with 62.57% in 2012.
Gross profit was $23,772,770 or 39% up from the previous year’s total of $15,376,696 or 37%.
The dollar amount of SG&A as a percentage of total revenue decreased to 32.1% for 2013 as compared to 37.7% in 2012. SG&A expenses increased to $19,498,526 for the year ended December 31, 2013 from $15,491,080 for the same period during 2012. This increase of $4,007,446 is primarily the result of the acquisition of Orbital Gas Systems Limited in April 2013 and its ongoing operations which accounts for $4,403,411 of the increase in addition to a decrease of $648,390 in expenses for stock issuances and options expense related to employee compensation and issuances to consultants for strategic investor marketing services, engineering and sales services.
Operating activities generated positive cash flow of $1,653,491 during the year ended December 31, 2013, versus negative cash flow from operations of $1,803,659 for the same period 2012. The change in cash provided by operations is primarily the result of the net loss during the year ended December 31, 2013 of $1,758,675 of which significant non-cash items impacted profitability. Exclusive of those non-cash items, the net result for the year ended December 31, 2013 was positive $3,293,328. The improvement in the net loss, during the year ended December 31, 2013 as compared with 2012 is associated with the increase in revenues and related gross profits, both from the addition of Orbital Gas Systems Limited in April 2013 which contributed approximately $17.5 million of revenues during the last three quarters of 2013 and the growth in the Power and Electro-Mechanical segment of CUI, Inc. and CUI Japan which had increased revenues over the prior year of approximately $2.1 million. The increase in revenues through the Power and Electro-Mechanical segment is associated with growth in revenues through existing customers as well as to new customers, including Future Electronics which was added as a distribution channel during January 2013. The growth in revenues and related gross profits was offset by the continued expenses to reach new customers, promote new product lines including Novum, Solus and GasPT2, increased advertising costs for company products, new product introductions, costs associated with the acquisition and integration of Orbital Gas Systems as well as the overall growth in expenses of the business in relation to the growth in revenues. A factor that impacted the cash provided by operations included decreased receivables of approximately $1.6 million associated primarily with CUI Inc. and CUI Japan associated with the timing of deliveries and related sales terms. Additionally, the cash flow from operations was impacted by an approximately $1.7 million increase in inventory which is primarily a function of product held for scheduled customer orders. An increase in prepaid expenses and other current assets largely associated with prepaid license fees for future sales of the GasPT2 products and prepaid insurance premiums. Further, a payment of $1.8 million was issued toward an accrued obligation for services provided to Orbital. The decrease in accrued taxes payable is primarily associated with payment of value add- tax in the UK of $0.8 million. Unearned revenue and billings in excess of costs increased during the period, these are associated with several customer prepayments and deferred revenues including on certain power and electro-mechanical product sales through distribution.
The Company had a net loss of $1,758,675 or $(0.10) a share for the year ended December 31, 2013 as compared to a net loss of $2,526,321 or $(0.25) a share for the years ended December 31, 2012. The loss in 2013 is largely attributable to the non-cash amortization expenses associated with intangible assets acquired with the April 2013 acquisition of Orbital Gas Systems and the impairment of the Comex Electronics note receivable balance.
Adjusted EBITDA for 2013 was $3,805,659 or $0.21 a share versus $(1,048,019) or minus $(0.10) a share for 2012.
The company had 20,566,663 common shares outstanding at the end of the year compared to 10,883,280 for the 2012 year end.
As of December 31, 2013, CUI Global held Cash and cash equivalents of $16,575,508 and investments of $10,868,961. Operations, acquisitions, investments, patents, equipment, land and buildings have been funded through cash on hand, cash from operations, proceeds from equity financings and debt during the year ended December 31, 2013.
BACKLOG DATA (unaudited):
The Power and Electro-Mechanical segment held a backlog of customer orders of approximately $13,350,030 million as of December 31, 2013 as compared to a backlog of customer orders of approximately $11,674,352 as of December 31, 2012. This increase is reasonable given the overall growth within the Power and Electro-Mechanical segment. At December 31, 2013, Orbital Gas Systems Limited held a backlog of customer orders of approximately $25.0 million.
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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.
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.
Orbital-UK is the largest natural gas systems integrator in the U.K. For over 25 years, Orbital 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 Vergence® GasPT2 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.
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 or Adjusted EBITDA (each as defined below) are non-GAAP financial measures and are reconciled in the table below. EBITDA or Adjusted EBITDA do not represent funds available for management's discretionary use and is not intended to represent cash flow from operations. EBITDA or 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 a term 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 is 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.
EBITDA is defined as net income (loss) with adjustments for depreciation and amortization, interest expense, and taxes. Adjusted EBITDA used by the Company is defined as EBITDA plus adjustments for bad debt expense, derivative expense, impairment on note receivable, and acquisition expenses.