Attached files
Exhibit 99.1
[UPG LOGO]
COMPANY CONTACTS: INVESTOR RELATIONS:
Universal Power Group, Inc Lambert, Edwards & Associates
469.892.1122 616.233.0500
Mimi Tan, SVP Jeff Tryka, CFA or Karen Keller
tanm@upgi.com jtryka@lambert-edwards.com
UNIVERSAL POWER GROUP REPORTS SECOND QUARTER 2011 EARNINGS
CARROLLTON, TEXAS -- AUG. 11, 2011 -- Universal Power Group, Inc. (NYSE Amex:
UPG), a Texas-based distributor and supplier of batteries and related power
accessories and a third-party logistics provider, today announced results for
the second quarter ended June 30, 2011.
For the second quarter, UPG reported net income of $0.1 million, or $0.02 per
diluted share, on net sales of $21.7 million, compared with net income of 0.8
million, or $0.17 per diluted share, on net sales of $28.4 million in the second
quarter of 2010.
"Our results for the second quarter reflect a number of challenges that affected
our financial results," stated Ian Edmonds, UPG's President and Chief Executive
Officer. "Despite these factors, we remain focused on driving growth in all
parts of our business, and we are making progress through diversification
initiatives, including our recent acquisition of Progressive Technologies."
SECOND QUARTER AND SIX MONTH RESULTS
Net sales for the second quarter fell 23.7 percent, to $21.7 million, from $28.4
million in the second quarter of 2010. Net sales of batteries and related power
accessories to customers other than ADT Security Services and its authorized
dealers grew 14.1 percent, to $20.2 million in the second quarter of 2011,
compared to $17.7 million for the second quarter of 2010.
Net sales to ADT Security Services and its authorized dealers in the second
quarter of 2011 were $1.5 million, a decrease of approximately 86.1 percent from
$10.7 million in the same quarter of 2010. This decline was due to the
integration of Broadview Security, which was acquired by Tyco International in
May 2010, into ADT Security Services.
Gross profit decreased to $4.4 million in the quarter, compared with $5.1
million in the second quarter of 2010, due mainly to the lower sales levels.
Operating expenses increased to $4.0 million in the second quarter of 2011 from
$3.7 million in the second quarter of 2010. The increase in operating expenses
included $365,000 in expenses attributable to the acquisition of Progressive
Technologies (PTI) on April 20, 2011, including $120,000 in closing costs.
Reflecting the lower sales levels, UPG reported a decrease in operating income,
to $0.4 million, from $1.4 million in the prior year. Interest expense decreased
by $86,000, to $151,000 from $237,000 in the second quarter of 2010, resulting
in pre-tax income of $0.2 million for the second quarter of 2011, down from $1.2
million in the prior year. Net income was $0.1 million, or $0.02 per diluted
share, compared to net income of $0.8 million, or $0.17 per diluted share in the
prior year's quarter.
For the first six months of 2011, net sales fell 20.5 percent, to $43.3 million,
from $54.4 million in the comparable period of 2010. Net sales of batteries,
related power accessories and other products to customers other than ADT
Security Services and its authorized dealers grew 13.2 percent, to $37.0 million
in the first six months of 2011, compared to $32.7 million for the comparable
period of 2010. Net sales to ADT Security Services and its authorized dealers in
the first six months of 2010 were $6.2 million, a decrease of 71.4 percent from
$21.7 million in the same period of 2010.
Lower net sales contributed to lower gross profit of $8.7 million, or 20.1
percent of net sales, compared to $9.5 million, or 17.4 percent of sales for the
first six months of 2010. Total operating expenses increased $0.4 million, or
5.6 percent, to $7.5 million from $7.1 million in the prior year. Operating
expenses for the first six months of 2011 included $376,000 in PTI
acquisition-related expenses.
For the first six months of 2011, UPG reported operating income of $1.2 million
and pre-tax income of $0.9 million, compared to operating income of $2.4 million
and pre-tax income of $2.0 million in the comparable period of 2010. The
decrease in operating income in 2011 was due primarily to decreases in net sales
and associated gross profit compared to the prior year. Interest expense for the
first six months of 2011 was reduced by approximately $0.1 million due to lower
average borrowings reflected by lower inventory levels and lower effective
interest rates compared to the prior year. UPG reported net income for the first
six months of 2011 of $0.5 million, or $0.10 per diluted share, compared to net
income of $1.3 million, or $0.27 per diluted share, in the first six months of
2010.
BALANCE SHEET AND FINANCIAL POSITION
At June 30, 2011 inventory decreased by $3.5 million, to $29.4 million, from
$32.9 million at December 31, 2010, despite a $0.6 million increase in inventory
from the acquisition of PTI. Accounts receivable increased to $12.3 million,
from $10.2 million at the end of 2010. This increase reflects the inclusion of
additional accounts receivable from the acquisition of Progressive Technologies,
as well as past due payments from a number of customers received after the end
of the quarter. Accounts payable increased by $0.2 million, to $7.8 million
during the period. Total working capital decreased to $19.7 million, compared to
$20.9 million at the end of the prior year.
For the first six months of 2011, UPG generated net cash from operating
activities of $2.8 million, compared to net cash from operating activities of
$2.1 million during the same period in 2010. The increase in operating cash flow
for 2011 reflects decreases in inventory and increases in accrued liabilities,
which were offset by lower net income and increases in accounts receivable. UPG
ended the quarter with $312,000 in cash and cash equivalents, up from
$215,000 at the end of 2010. The outstanding balance on UPG's line of credit
decreased to $16.1 million, compared to $16.3 million at the end of 2010,
reflecting the increased cash generated by operations over the period, offset by
borrowings used for the acquisition of PTI.
Edmonds concluded: "While our results for the second quarter reflect the
challenges of customer concentration, we will continue with our plan to control
costs and pursue the growth of our business, with the assurance that we have the
strong financial structure necessary to support our efforts."
CONFERENCE CALL INFORMATION
Universal Power Group will host an investor conference call today, Thursday,
Aug. 11, 2011 at 11:30 a.m. ET (10:30 a.m. CT) to discuss the Company's
financial results for the quarter and six months ended June 30, 2011.
Interested parties may access the conference call by dialing 1.800.260.8140,
passcode 49178363. The conference call will also be broadcast live at
www.upgi.com and through the Thomson StreetEvents Network. Individual investors
can listen to the call at www.earnings.com, Thomson's individual investor
portal. Institutional investors can access a webcast of the call via Thomson
StreetEvents (www.streetevents.com), a password-protected event management site.
A replay of the conference call will be made available through Aug. 18, 2011 by
calling 1.888.286.8010, passcode 96063143, and an archived webcast will be
available at www.upgi.com.
ABOUT UNIVERSAL POWER GROUP, INC.
Universal Power Group, Inc. (NYSE Amex: UPG) is a leading supplier and
distributor of batteries and power accessories, and a provider of supply chain
and other value-added services. UPG's product offerings include proprietary
brands of industrial and consumer batteries of all chemistries, chargers,
jump-starters, 12-volt accessories, and solar and security products. UPG's
supply chain services include procurement, warehousing, inventory management,
distribution, fulfillment and value-added services such as sourcing, battery
pack assembly and coordinating battery recycling efforts, as well as product
development. For more information, please visit the UPG website at www.upgi.com.
FORWARD-LOOKING STATEMENTS
Statements in this press release that are not statements of historical or
current fact constitute "forward-looking statements." Such forward-looking
statements involve known and unknown risks, uncertainties and other unknown
factors that could cause the Company's actual operating results to be materially
different from any historical results or from any future results expressed or
implied by such forward-looking statements. In addition to statements that
explicitly describe these risks and uncertainties, readers are urged to consider
statements that contain terms such as "believes," "belief," "expects," "expect,"
"intends," "intend," "anticipate," "anticipates," "plans," "plan," to be
uncertain and forward-looking. The forward-looking statements contained herein
are also subject generally to other risks and uncertainties that are described
from time to time in the Company's filings with the Securities and Exchange
Commission. Historical financial results are not necessarily indicative of
future performance.
###
UNIVERSAL POWER GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
JUNE 30, DECEMBER 31,
2011 2010
------------- -------------
(UNAUDITED)
CURRENT ASSETS
Cash and cash equivalents $ 311,922 $ 215,375
Accounts receivable:
Trade, net of allowance for doubtful accounts of $642,801
(unaudited) and $656,989 12,290,863 10,189,716
Other 27,866 25,607
Inventories - finished goods, net of allowance for
obsolescence of $1,515,647 (unaudited) and $1,155,852 29,421,058 32,893,837
Current deferred tax asset 1,460,033 1,564,433
Income tax receivable 617,032 --
Prepaid expenses and other current assets 1,291,126 1,237,047
------------- -------------
Total current assets 45,419,900 46,126,015
PROPERTY AND EQUIPMENT
Logistics and distribution systems 1,834,125 1,834,124
Machinery and equipment 1,035,780 991,260
Furniture and fixtures 512,310 467,632
Leasehold improvements 388,586 408,128
Vehicles 171,492 199,992
------------- -------------
Total property and equipment 3,942,293 3,901,136
Less accumulated depreciation and amortization (2,826,199) (2,561,314)
------------- -------------
Net property and equipment 1,116,094 1,339,822
GOODWILL 1,386,988 --
INTANGIBLES, net 684,416 --
OTHER ASSETS 127,651 127,018
NON-CURRENT DEFERRED TAX ASSET 54,056 17,784
------------- -------------
TOTAL ASSETS $ 48,789,105 $ 47,610,639
============= =============
UNIVERSAL POWER GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
LIABILITIES AND SHAREHOLDERS' EQUITY
JUNE 30, DECEMBER 31,
2011 2010
------------- -------------
(UNAUDITED)
CURRENT LIABILITIES
Line of credit $ 16,068,126 $ 16,323,528
Accounts payable 7,836,936 7,559,445
Income taxes payable 23,119 25,588
Accrued liabilities 710,368 456,418
Current portion of settlement accrual 599,895 733,540
Current portion of capital lease and note obligations 487,921 25,906
Current portion of deferred rent 8,759 52,672
------------- -------------
Total current liabilities 25,735,124 25,177,097
LONG-TERM LIABILITIES
Settlement accrual, less current portion -- 241,490
Capital lease and note obligations, less current portion 286,834 25,183
------------- -------------
Total long-term liabilities 286,834 266,673
------------- -------------
TOTAL LIABILITIES 26,021,958 25,443,770
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock - $0.01 par value, 50,000,000 shares
authorized, 5,020,000 shares issued and outstanding 50,200 50,200
Additional paid-in capital 16,089,929 16,075,771
Retained earnings 6,733,358 6,205,127
Accumulated other comprehensive loss (106,340) (164,229)
------------- -------------
Total shareholders' equity 22,767,149 22,166,869
------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 48,789,105 $ 47,610,639
============= =============
UNIVERSAL POWER GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
----------------------------- -----------------------------
2011 2010 2011 2010
------------- ----------------------------- -------------
Net sales $ 21,665,287 $ 28,393,923 $ 43,251,928 $ 54,428,718
Cost of sales 17,275,315 23,333,195 34,553,505 44,935,023
------------- ------------- ------------- -------------
Gross profit 4,389,972 5,060,728 8,698,423 9,493,695
Operating expenses 3,992,061 3,657,219 7,527,745 7,130,494
------------- ------------- ------------- -------------
Operating income 397,911 1,403,509 1,170,678 2,363,201
Interest expense (150,798) (236,936) (291,860) (398,296)
------------- ------------- ------------- -------------
Income before provision for
income taxes 247,113 1,166,573 878,818 1,964,905
Provision for income taxes (121,559) (323,044) (350,587) (615,667)
------------- ------------- ------------- -------------
Net income $ 125,554 $ 843,529 $ 528,231 $ 1,349,238
============= ============= ============= =============
Net income per share
Basic $ 0.03 $ 0.17 $ 0.11 $ 0.27
Diluted $ 0.02 $ 0.17 $ 0.10 $ 0.27
Weighted average shares
outstanding
Basic 5,020,000 5,000,000 5,020,000 5,000,000
Diluted 5,029,463 5,008,976 5,037,020 5,008,976
UNIVERSAL POWER GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED JUNE 30,
-------------------------------
2011 2010
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 528,231 $ 1,349,238
Items not requiring (providing) cash, net of effect of
acquisition:
Depreciation and amortization 374,586 381,965
Provision for bad debts 93,753 168,341
Provision for obsolete inventory 360,000 420,000
Deferred income taxes 68,128 49,718
Gain on disposal of property (1,500) (2,000)
Stock-based compensation 14,158 31,610
Changes in operating assets and liabilities
Accounts receivable - trade (1,553,933) (983,304)
Accounts receivable - other (1,348) (278,541)
Inventories 3,745,623 3,387,683
Income taxes receivable/payable (642,620) (698,654)
Prepaid expenses and other assets (32,058) (20,818)
Accounts payable (40,181) (1,629,551)
Accrued liabilities 334,958 497,429
Settlement accrual (375,135) (479,709)
Deferred rent (43,913) (45,933)
-------------- --------------
Net cash provided by operating activities 2,828,750 2,147,474
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash paid in Progressive Technologies, Inc.
acquisition (2,267,601) --
Purchase of property and equipment -- (34,889)
Proceeds from sales of equipment 1,500 2,000
-------------- --------------
Net cash used in investing activities (2,266,101) (32,889)
CASH FLOWS FROM FINANCING ACTIVITIES
Net activity on line of credit (255,402) (3,484,595)
Payments on capital lease and note obligations (210,700) (27,188)
-------------- --------------
Net cash used in financing activities (466,102) (3,511,783)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 96,547 (1,397,198)
Cash and cash equivalents at beginning of period 215,375 2,059,475
-------------- --------------
Cash and cash equivalents at end of period $ 311,922 $ 662,277
============== ==============
SUPPLEMENTAL DISCLOSURES
Income taxes paid $ 954,383 $ 1,579,341
============== ==============
Interest paid $ 225,128 $ 197,061
============== ==============
