CUI Global Reports Fourth Quarter and Full Year 2019 Financi

|Mar 30|magazine39 min read

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
[email protected]

 

 

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
shares held at December 31, 2018
 

(413)




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
and electromechanical components businesses
(including gain on disposal of $14,100)

6,673



1,478



12,908



5,135


Income tax expense

(722)



374



411



1,136


Income from discontinued operations, net of
income taxes

7,395



1,104



12,497



3,999


Net loss

$

4,451



$

(7,765)



$

(1,129)



$

(17,325)


Basic and diluted weighted average number of
shares outstanding

28,706,671



28,547,149



28,654,500



28,517,339










Loss from continuing operations per common
share - basic and diluted

$

(0.10)



$

(0.31)



$

(0.48)



$

(0.75)


Earnings from discontinued operations per
common share - basic and diluted

$

0.26



$

0.04



$

0.44



$

0.14


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
OF YEAR

$

23,351



$

4,502


 

 


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
assets




1,509





1,509


Non-cash loss (gain) and unrealized gain on derivative liability




35





(129)


Plus:  Stock and options issued and stock to be issued for
compensation, royalties and services


60



41



215



229


Less: Pretax gain on assets contributed as part of the
purchase of VPS






(629)




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
assets




1,509





1,509


Plus:  Amortization expense of Orbital and CUI -
    Canada acquisition intangibles


243



297



1,126



1,233


Plus:  Stock and options issued and stock to be issued for
compensation, royalties and services


60



41



215



229


Less: Pretax gain on assets contributed as part of the
purchase of VPS






(629)




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.