Exhibit 99.1
CUI Global Reports Fourth Quarter and Full Year 2019 Financial Results
Continues Transformation into Diversified Energy Infrastructure Services Company with Accretive, Platform Acquisition of Reach Construction Group
HOUSTON, March 30, 2020 -- 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 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 |
) |
||||