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 FIRST QUARTER 2011 EARNINGS
CARROLLTON, TEXAS -- MAY 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 first quarter ended March 31, 2011.
For the first quarter, UPG reported net income of $402,677, or $0.08 per share,
on net sales of $21.6 million, compared with net income of $505,709, or $0.10
per share, on net sales of $26.0 million in the first quarter of 2010.
"We made a number of significant accomplishments in the first quarter of 2011 to
drive UPG's future growth and profitability," stated Ian Edmonds, UPG's
President and Chief Executive Officer. "Sales to customers other than ADT showed
solid growth, and our gross margins continued to improve over the prior year,
even as our operating expenses remained flat. In April, we completed our
acquisition of Progressive Technologies, Inc. (PTI), which we believe will
further support our long-term growth initiatives."
FIRST QUARTER RESULTS
Net sales for the first quarter fell 17.1 percent, to $21.6 million, from $26.0
million in the first quarter of 2010. Net sales of batteries and related power
accessories to customers excluding ADT Security Services (formerly Broadview
Security) and its authorized dealers grew 12.4 percent, to $16.8 million in the
first quarter of 2011, compared to $15.0 million for the first quarter of 2010.
Net sales to ADT Security Services and its authorized dealers in the first
quarter of 2011 were $4.7 million, a decrease of 57.1 percent from $11.0 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, and
merged into ADT Security Services. The Company continues to work closely with
ADT Security Services and its authorized dealers to maintain the level of
quality and service they have come to expect from UPG, while supporting their
current business. In addition, UPG remains focused on growing sales of batteries
and related power accessories.
Gross profit was slightly lower, at $4.3 million in the quarter compared, with
$4.4 million in the first quarter of 2010. An increase in sales of higher-margin
product lines combined with ongoing efforts to reduce cost and increase
efficiency resulted in gross margins of 20.0 percent for the first quarter of
2011, compared to 17.0 percent for the first quarter of 2010. Operating expenses
remained relatively flat at $3.5 million in the first quarter of 2011, although
as a percent of sales operating expenses increased due to the lower sales
levels.
For the quarter, UPG reported a 19.5 percent decrease in operating income, to
$0.8 million, and a 20.9 percent decrease in pre-tax income to $0.6 million.
This compares to operating income of $1.0 million and pre-tax income of $0.8
million in the first quarter of 2010. The decreased profitability was primarily
the result of lower sales levels. On the bottom line, UPG reported net income of
$0.4 million, or $0.08 per share, compared to net income of $0.5 million, or
$0.10 per share in the prior year's quarter.
BALANCE SHEET AND FINANCIAL POSITION
At March 31, 2011 inventory decreased by $1.6 million, to $31.3 million, from
$32.9 million at Dec. 31, 2010, due primarily to a sell down of inventory of
certain products impacted by peak demand in early 2011. Accounts receivable
decreased to $8.4 million, from $10.2 million at the end of 2010, while accounts
payable increased by $1.1 million, to $8.7 million during the period. The
decrease in accounts receivable was the result of the lower sales levels in the
first quarter.
For the first three months of 2011, UPG generated net cash from operating
activities of $4.9 million, compared to net cash from operating activities of
$0.5 million during the same period in 2010. The increase in operating cash flow
for 2011 reflects decreases in accounts receivable and inventory, as well as
increases in accounts payable and accrued liabilities, which were offset by a
slight decrease in net income. Total working capital increased to $21.3 million
at the end of the first quarter, from $20.9 million at the end of 2010, due
primarily to repayments on the Company's line of credit. UPG ended the quarter
with $120,000 in cash and cash equivalents, down from $215,000 at the end of
2010. The outstanding balance on UPG's line of credit decreased to $11.4
million, compared to $16.3 million at the end of 2010, reflecting the increased
cash generated by operations over the period.
ACQUISITION
On April 20, 2011 UPG completed the acquisition of Progressive Technologies,
Inc. (PTI), a North Carolina company that designs and assembles custom battery
products for specialized OEMs in the medical, technology, government and
military markets. The acquisition provides UPG with expanded capabilities in the
assembly of lithium ion battery packs, enabling the Company to serve the
fast-growing medical and technology markets. The total purchase price of $3.3
million included $1.9 million in cash, $1.0 million in notes payable to PTI, and
the assumption of $0.4 million in notes payable to third parties. PTI's
expertise in lithium-ion battery packs among other chemistries, further enhances
UPG's product and service offerings. In addition, PTI's products will strengthen
the Company's position in the medical field and other market segments.
Edmonds concluded: "Despite the lower revenues and net income for the quarter,
we made progress towards our long-term goals of diversifying our revenue stream
and reinforcing our foundation for future profitability. With the addition of
PTI, we plan to take advantage of new opportunities to grow that business and
expand our combined presence into new, fast-growing medical and technology
markets. While we still face some headwinds from the soft economic recovery and
weak consumer confidence, we see opportunities to grow our business organically
- as we provide the products, quality and service our customers expect - and
through acquisitions like PTI. Fortunately, we are in a strong financial
position that can support these efforts on an ongoing basis."
CONFERENCE CALL INFORMATION
Universal Power Group will host an investor conference call today, Wednesday,
May 11, 2011 at 11:30 a.m. ET (10:30 a.m. CT) to discuss the Company's financial
results for the quarter ended March 31, 2011.
Interested parties may access the conference call by dialing 1.866.761.0748,
passcode 30296285. 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 May 18, 2011 by
calling 1.888.286.8010, passcode 95566896, 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
MARCH 31, DECEMBER 31,
2011 2010
------------- ------------
(UNAUDITED)
CURRENT ASSETS
Cash and cash equivalents ............................................................... $ 120,333 $ 215,375
Accounts receivable:
Trade, net of allowance for doubtful accounts of $702,138 (unaudited) and $656,989 ...... 8,399,327 10,189,716
Other ................................................................................... 47,257 25,607
Inventories - finished goods, net of allowance for obsolescence of $1,335,647
(unaudited) and $1,155,852 ........................................................... 31,337,371 32,893,837
Current deferred tax asset .............................................................. 1,390,962 1,564,433
Income tax receivable ................................................................... 511,291 --
Prepaid expenses and other current assets ............................................... 946,967 1,237,047
------------- ------------
Total current assets ................................................................. 42,753,508 46,126,015
PROPERTY AND EQUIPMENT
Logistics and distribution systems ...................................................... 1,834,125 1,834,124
Machinery and equipment ................................................................. 991,261 991,260
Furniture and fixtures .................................................................. 467,632 467,632
Leasehold improvements .................................................................. 387,620 408,128
Vehicles ................................................................................ 199,992 199,992
------------- ------------
Total property and equipment ......................................................... 3,880,630 3,901,136
Less accumulated depreciation and amortization .......................................... (2,695,329) (2,561,314)
------------- ------------
Net property and equipment ........................................................... 1,185,301 1,339,822
OTHER ASSETS ............................................................................... 127,851 127,018
NON-CURRENT DEFERRED TAX ASSET ............................................................. 31,786 17,784
------------- ------------
TOTAL ASSETS ............................................................................... $ 44,098,446 $ 47,610,639
============= ============
UNIVERSAL POWER GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
LIABILITIES AND SHAREHOLDERS' EQUITY
MARCH 31, DECEMBER 31,
2011 2010
------------- ------------
(UNAUDITED)
CURRENT LIABILITIES
Line of credit .......................................................................... $ 11,360,802 $ 16,323,528
Accounts payable ........................................................................ 8,704,507 7,559,445
Income taxes payable .................................................................... -- 25,588
Accrued liabilities ..................................................................... 563,623 456,418
Current portion of settlement accrual ................................................... 716,822 733,540
Current portion of capital lease and note obligations ................................... 26,131 25,906
Current portion of deferred rent ........................................................ 33,661 52,672
------------- ------------
Total current liabilities ............................................................ 21,405,546 25,177,097
LONG-TERM LIABILITIES
Settlement accrual, less current portion ................................................ 60,566 241,490
Capital lease and note obligations, less current portion ................................ 18,564 25,183
------------- ------------
Total long-term liabilities .......................................................... 79,130 266,673
------------- ------------
TOTAL LIABILITIES .......................................................................... 21,484,676 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 .............................................................. 16,091,051 16,075,771
Retained earnings ....................................................................... 6,607,804 6,205,127
Accumulated other comprehensive loss .................................................... (135,285) (164,229)
------------- ------------
Total shareholders' equity ........................................................... 22,613,770 22,166,869
------------- ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ................................................. $ 44,098,446 $ 47,610,639
============= ============
UNIVERSAL POWER GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31,
------------------------------
2011 2010
------------- -------------
Net sales .................................... $ 21,586,641 $ 26,034,805
Cost of sales ................................ 17,278,190 21,601,838
------------- -------------
Gross profit ................................. 4,308,451 4,432,967
Operating expenses ........................... 3,535,684 3,473,275
------------- -------------
Operating income ............................. 772,767 959,692
Interest expense ............................. (141,062) (161,360)
------------- -------------
Income before provision for income taxes ..... 631,705 798,332
Provision for income taxes ................... (229,028) (292,623)
------------- -------------
Net income ................................... $ 402,677 $ 505,709
============= =============
Net income per share
Basic ..................................... $ 0.08 $ 0.10
============= =============
Diluted ................................... $ 0.08 $ 0.10
============= =============
Weighted average shares outstanding
Basic ..................................... 5,020,000 5,000,000
============= =============
Diluted ................................... 5,046,381 5,017,740
============= =============
UNIVERSAL POWER GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31,
-----------------------------
2011 2010
------------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ................................................................................. $ 402,677 $ 505,709
Items not requiring (providing) cash:
Depreciation and amortization ........................................................... 154,521 192,193
Provision for bad debts ................................................................. 45,000 83,531
Provision for obsolete inventory ........................................................ 180,000 210,000
Deferred income taxes ................................................................... 159,469 109,440
Gain on disposal of property ............................................................ -- (2,000)
Stock-based compensation ................................................................ 15,280 15,805
Changes in operating assets and liabilities
Accounts receivable - trade ............................................................. 1,745,389 706,190
Accounts receivable - other ............................................................. (21,650) (981)
Inventories ............................................................................. 1,376,466 1,916,596
Income tax receivable/payable ........................................................... (536,879) 30,430
Prepaid expenses and other current assets ............................................... 289,247 (44,353)
Accounts payable ........................................................................ 1,145,062 (3,423,445)
Accrued liabilities ..................................................................... 136,149 427,733
Settlement accrual ...................................................................... (197,642) (234,179)
Deferred rent ........................................................................... (19,011) (22,967)
------------- ------------
Net cash provided by operating activities ................................................. 4,874,078 469,702
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment ..................................................... -- (19,826)
Proceeds from sales of equipment ........................................................ -- 2,000
------------- ------------
Net cash used in investing activities ...................................................... -- (17,826)
CASH FLOWS FROM FINANCING ACTIVITIES
Net activity on line of credit .......................................................... (4,962,726) 2,038,290
Payments on capital lease and note obligations .......................................... (6,394) (20,638)
------------- ------------
Net cash provided by (used in) financing activities ........................................ (4,969,120) 2,017,652
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ....................................... (95,042) 2,469,528
Cash and cash equivalents at beginning of period ........................................... 215,375 2,059,475
------------- ------------
Cash and cash equivalents at end of period ................................................. $ 120,333 $ 4,529,003
============= ============
SUPPLEMENTAL DISCLOSURES
Income taxes paid .......................................................................... $ 617,460 $ 150,110
============= ============
Interest paid .............................................................................. $ 106,363 $ 15,627
============= ============
