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CUI Global Reports Full Year 2013 Financial Results

TUALATIN, Ore., March 31, 2014 /PRNewswire/ -- CUI Global, Inc. (NASDAQ: 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.

CUI Global, Inc. Logo.

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.

To access the call, please dial the toll free number at (888) 734-0328 or (678) 894-3054 international and provide the Conference ID: 16397057. At the conclusion of the call, a replay will be available until April 11, 2014.  To access the replay of the call dial (855) 859-2056 or (404) 537-3406 international and provide the same Conference ID.

A simultaneous webcast will also be available via: http://www.media-server.com/m/p/jzzrb8fq

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 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.

 

Consolidated Balance Sheets

As of December 31, 2013 and 2012






 December 31,
2013 


 December 31,
2012 

 Assets:  




 Current Assets:  




   Cash and cash equivalents

$       16,575,508


$          3,039,840

   Short term investments held to maturity

10,868,961


-

   Trade accounts receivable, net of allowance of $285,348 and $130,000, respectively 

9,055,561


4,965,926

   Inventories, net of allowance of $549,981 and $250,000, respectively  

7,027,644


4,843,905

   Costs in excess of billings 

552,012


-

   Prepaid expenses and other 

603,960


378,885

    Total current assets  

44,683,646


13,228,556





 Property and equipment, net  

8,206,563


1,016,219

 Other assets:  




   Investment -equity method  

283,011


258,244

   Other intangible assets, net  

23,512,394


8,618,524

   Deposits and other  

25,364


11,360

   Notes receivable, net of allowance of $564,194 and $62,000  

-


501,422

   Debt offering costs, net  

-


42,778

   Goodwill, net 

18,521,427


13,046,358

    Total other assets

42,342,196


22,478,686

    Total assets

$       95,232,405


$       36,723,461





 Liabilities and stockholders' equity:  




 Current liabilities:  




   Accounts payable  

$          4,146,262


$          2,496,881

   Line of credit  

-


459,448

   Mortgage note payable, current portion  

76,814


-

   Leases payable, current

83,904


-

   Accrued expenses

2,253,773


1,140,743

   Accrued taxes payable  

310,412


2,096

   Accrued compensation  

426,402


186,636

   Billings in excess of costs 

6,787,231


-

   Unearned revenue

1,257,346


371,541

    Total current liabilities

15,342,144


4,657,345

   Long term leases payable  

58,363


-

   Derivative liability

427,818


-

   Long term mortgage note payable, net of current portion due of $76,814
    and $0, respectively  

3,604,242


-

   Long term notes payable, related party 

5,303,683


7,303,683

    Total long term liabilities

9,394,106


7,303,683

    Total liabilities

24,736,250


11,961,028





Commitments and contingencies








 Stockholders' equity:  




   Common stock, par value $0.001; 325,000,000 shares authorized; 20,566,663 shares
    issued and outstanding at December 31, 2013 and 10,883,280 shares issued and
    outstanding at December 31, 2012  

20,567


10,883

   Additional paid-in capital  

146,614,995


100,947,708

   Accumulated deficit  

(77,930,497)


(76,171,822)

   Accumulated other comprehensive income (loss) 

1,791,090


(24,336)

    Total stockholders' equity   

70,496,155


24,762,433

    Total liabilities and stockholders' equity

$       95,232,405


$       36,723,461

 

Consolidated Statements of Operations

For the Years Ended December 31, 2013, 2012 and 2011








2013


2012


2011

 Revenues:  






   Product revenues  

60,610,353


41,031,050


38,877,698

   Revenue from freight 

41,312


53,539


60,628

    Total revenue  

60,651,665


41,084,589


38,938,326







 Cost of revenues  

36,878,895


25,707,893


24,133,073







 Gross profit  

23,772,770


15,376,696


14,805,253







 Operating expenses  






   Selling, general and administrative  

19,498,526


15,491,080


12,577,089

   Depreciation and amortization  

3,279,074


730,293


770,764

   Research and development 

890,461


791,332


716,321

   Bad debt  

211,546


65,763


82,192

   Impairment of intangible, trademark and trade name V-Infinity 

-


278,428


-

    Total operating expenses  

23,879,607


17,356,896


14,146,366







 Income (loss) from operations

(106,837)


(1,980,200)


658,887







 Other income (expense)  






   Other income  

235,913


95,069


53,657

   Other expense  

(57,029)


(18,567)


(38,678)

   Derivative expense  

(427,818)


-


-

   Gain on sale of technology rights  

-


-


143,636

   Impairment on note receivable  

(502,194)


-


-

   Earnings (loss) from equity investment  

24,766


59,623


41,472

   Amortization of investment premiums and discounts  

(22,732)


-


-

   Amortization of debt offering costs and debt discount  

(42,777)


(73,333)


(334,747)

   Interest expense

(442,849)


(575,199)


(918,189)

Total other income (expense), net 

(1,234,720)


(512,407)


(1,052,849)







(Loss) before taxes   

(1,341,557)


(2,492,607)


(393,962)

  Provision for taxes 

417,118


33,714


29,810

Consolidated (Loss) from continuing operations

(1,758,675)


(2,526,321)


(423,772)







 Income (loss) from discontinued operations  






   (Loss) from discontinued operations  

-


-


(160,153)

   Gain on divestment of Comex Electronics  

-


-


603,034

   Net income from discontinued operations

-


-


442,881

 Consolidated Net income (loss) 

(1,758,675)


(2,526,321)


19,109

  Less: Net income from discontinued operations -noncontrolling interest 

-


-


67,872

Net (loss) allocable to common stockholders

$        (1,758,675)


$        (2,526,321)


$              (48,763)







 Basic and diluted (loss) per common share from continuing operations to CUI Global, Inc.

$                  (0.10)


$                  (0.25)


$                  (0.06)

Basic and diluted income per common share from discontinued operations -attributable to
  CUI Global, Inc.

$                         -


$                         -


$                    0.05

 Basic and diluted (loss) per common share  

$                  (0.10)


$                  (0.25)


$                  (0.01)

 Basic and diluted weighted average common and common equivalent shares outstanding  

17,751,042.00


10,175,989.00


7,249,180.00

 

 EBITDA from continuing operations is a non-GAAP financial measure and is reconciled as follows:


For the period ended


12/31/2013


12/31/2012

Consolidated net (loss) from continuing operations

$ (1,758,675)


$ (2,526,321)

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

42,777


73,333

    Plus:  Interest expense

442,849


575,199

    Plus:  Depreciation and amortization

3,279,074


730,293

    Plus:  Provision for taxes

417,118


33,714

EBITDA

$   2,423,143


$ (1,113,782)

    Plus:  Bad Debt Expense

211,546


65,763

    Plus:  Derivative expense

427,818


-

    Plus:  Impairment on note receivable

502,194


-

    Plus:  Acquisition Expenses

240,958


-

Adjusted EBITDA

$   3,805,659


$ (1,048,019)





  EBITDA Per Share

$              0.14


$            (0.11)

  Adjusted EBITDA Per Share

$              0.21


$            (0.10)

      Basic weighted avg shares outstanding

17,751,042


10,175,989

 

Logo- http://photos.prnewswire.com/prnh/20120320/FL72629LOGO

 

SOURCE CUI Global, Inc.

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