Exhibit 99.1
| Investor Contacts: | ||||
| Universal Power Group, Inc. | Cameron Associates | |||
| Mimi Tan, 469-892-1122 | Amy Glynn, CFA, 212-554-5464 | |||
| tanm@upgi.com | amy@cameronassoc.com | |||
Universal Power Group Reports Fourth Quarter and Year
End 2006 Financial Results
Recent Highlights:
CARROLLTON, Texas—March 5, 2007— Universal Power Group, Inc. (AMEX: UPG), a leading provider of third-party logistics and supply chain management services and a global distributor of batteries, security products and related portable power products, today announced its financial results for the fourth quarter and year ended December 31, 2006.
For the three month period ended December 31, 2006, UPG reported revenue growth of 15.3% to $24.6 million, compared to $ $21.3 million in the prior year period. The increase in revenue was driven primarily by sales volume increases in batteries and battery-related and battery-powered products, as well as price increases implemented by UPG. Excluding stock-based compensation expense and the related tax effects, for the fourth quarter of 2006, UPG recorded net income of $0.5 million.
Taking into account stock-based compensation expense and the related tax effects, UPG recorded a net loss of $0.9 million, or $0.29 per share loss, in the fourth quarter of 2006.
For the full year ended December 31, 2006, revenue increased 14% to $92.6 million, from $81.3 million for the full year 2005. Excluding stock-based compensation expense and the related tax effects, net income was $1.6 million, compared to $1.1 million, in 2005. Taking into account stock based compensation expense and the related tax effect, net income for 2006 was $0.3 million or $0.10 per share.
Stock based compensation expense for 2006 was $2.2 million and reflects the fair value of options granted in December 2006 simultaneous with the effectiveness of UPG’s IPO. For financial reporting purposes, the value of the options was recorded as an expense in the fourth quarter of 2006 even though there was no cash expenditure. While UPG expects to grant stock options to its employees and directors in future periods, UPG cannot predict the financial statement impact of those grants at this time.
On December 31, 2006, UPG had cash and cash equivalents of $13.0 million. On December 21, 2006, UPG completed its IPO, selling 2.0 million shares of its common stock at $7.00 per share. Total shares issued and outstanding following the IPO are 5.0 million. Total net proceeds received by UPG from the offering were approximately $11.9 million. The IPO proceeds enable UPG to execute on several previously announced growth initiatives, such as the purchase of new warehouse management system and the expansion of its warehouse facility.
Randy Hardin, President and CEO, commented, “We are pleased to report strong sales and earnings growth in the fourth quarter, which resulted largely from continued demand for our products and services by new
and existing customers. However, the key highlight over the past several months was the completion of our IPO. With $13 million in cash on the balance sheet as of year-end 2006, we now have greater financial flexibility to support our long-term growth objectives.
“We expect to see continued growth in both the battery and supply chain management industries and our goal is to capitalize on this expected growth. For example, we are currently in the process of implementing a new warehouse management system, which should enhance our service offerings and enable UPG to strengthen and expand existing customer relationships, and attract new ones. We are also focused on expanding our distribution centers and our products and service offerings to more readily address the needs of our customers. We are excited about the prospects ahead for UPG and believe we are well-positioned to continue to grow our market share in our dynamic industries.”
Outlook for 2007
UPG currently expects 10% growth for the full-year 2007 in net sales and operating income (excluding charges relating to stock-based compensation).
About Universal Power Group, Inc.
Universal Power Group, Inc. (www.upgi.com) is a leading provider of third-party logistics and supply chain management services and a global distributor of batteries, security products and related portable power products to various industries. UPG’s supply chain services include procurement, warehousing, inventory management, distribution, fulfillment, and value-added services such as sourcing, custom battery pack assembly, coordination of battery recycling efforts, custom kitting, and product development. UPG’s range of product offerings include proprietary brands of industrial and consumer batteries of all chemistries, chargers, related portable power products, 12-volt DC accessories, and security products such as alarm panels, perimeter controls, speakers, sirens, and more.
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 Securities and Exchange Commission. Historical financial results are not necessarily indicative of future performance.
UNIVERSAL POWER GROUP, INC.
UNAUDITED BALANCE SHEETS
ASSETS
| CURRENT ASSETS | ||||
| Cash and cash equivalents | $13,036,447 | $ 176,295 | ||
| Accounts receivable: | ||||
| Trade, net of allowance for doubtful accounts | ||||
| of $114,257 and $200,002 | 10,171,055 | 8,405,089 | ||
| Other (including $186,617 and $121,086 | ||||
| from related party) | 211,854 | 235,305 | ||
| Inventories – finished goods, net of allowance for | ||||
| obsolescence of $200,715 and $150,715 | 22,571,534 | 19,110,278 | ||
| Current deferred tax asset | 1,087,163 | 187,300 | ||
| Prepaid expenses and other current assets | 571,073 | 606,281 | ||
| Total current assets | 47,649,126 | 28,720,548 | ||
| PROPERTY AND EQUIPMENT | ||||
| Machinery and equipment | 595,902 | 557,683 | ||
| Furniture and fixtures | 288,457 | 239,639 | ||
| Leasehold improvements | 188,691 | 181,232 | ||
| Vehicles | 151,598 | 151,597 | ||
| 1,224,648 | 1,130,151 | |||
| Less accumulated depreciation and amortization | (787,554 | ) | (633,356 | ) |
| Net property and equipment | 437,094 | 496,795 | ||
| OTHER ASSETS | 33,073 | 34,923 | ||
| TOTAL ASSETS | $48,119,293 | $29,252,266 | ||
UNIVERSAL POWER GROUP, INC.
UNAUDITED BALANCE SHEETS (Continued)
LIABILITIES AND SHAREHOLDER’S EQUITY
| 2006 | 2005 | |||
| CURRENT LIABILITIES | ||||
| Line of credit | $14,573,595 | $ 9,261,435 | ||
| Accounts payable | 11,543,002 | 12,387,887 | ||
| Accrued liabilities | 405,070 | 224,151 | ||
| Due to former parent | 2,769,929 | |||
| Current portion of capital lease obligations | 18,726 | 20,977 | ||
| Current portion of deferred rent | 15,423 | 42,637 | ||
| Total current liabilities | 26,555,816 | 24,707,016 | ||
| CAPITAL LEASE OBLIGATIONS, less current portion | 6,613 | 25,339 | ||
| NOTES PAYABLE TO FORMER PARENT | 5,850,000 | |||
| NON-CURRENT DEFERRED TAX LIABILITY | 64,663 | 53,728 | ||
| DEFERRED RENT, less current portion | 206,975 | 210,510 | ||
| Total liabilities | 32,684,067 | 24,996,593 | ||
| COMMITMENTS AND CONTINGENCIES | ||||
| SHAREHOLDER’S EQUITY | ||||
| Common stock - $0.01 par value, 50,000,000 shares | ||||
| authorized, 5,000,000 and 3,000,000 shares issued | ||||
| and outstanding | 50,000 | 30,000 | ||
| Additional paid-in capital | 15,385,226 | 3,822,597 | ||
| Retained earnings | — | 403,076 | ||
| Total shareholder’s equity | 15,435,226 | 4,255,673 | ||
| TOTAL LIABILITIES AND | ||||
| SHAREHOLDER’S EQUITY | $48,119,293 | $29,252,266 | ||
| UNIVERSAL POWER GROUP, INC. | |||||||||||||||||||
| UNAUDITED STATEMENTS OF OPERATIONS | |||||||||||||||||||
| Net sales | $24,566,568 | $21,314,414 | $92,583,521 | $81,275,175 | |||||||||||||||
| Cost of sales | 21,083,622 | 18,772,841 | 79,426,270 | 70,960,235 | |||||||||||||||
| Gross profit | 3,482,946 | 2,541,573 | 13,157,251 | 10,314,940 | |||||||||||||||
| Operating | |||||||||||||||||||
| expenses | 4,706,955 | 1,990,926 | 11,803,071 | 7,888,475 | |||||||||||||||
| Operating | |||||||||||||||||||
| income | |||||||||||||||||||
| (loss) | (1,224,009 | ) | 550,647 | 1,354,180 | 2,426,465 | ||||||||||||||
| Other income | |||||||||||||||||||
| (expense) | |||||||||||||||||||
| Interest | |||||||||||||||||||
| expense | (237,553 | ) | (143,462 | ) | (833,731 | ) | (490,096 | ) | |||||||||||
| Interest | |||||||||||||||||||
| income | 22,077 | – | 40,109 | 1,599 | |||||||||||||||
| Other, net | - | 10,152 | - | 10,151 | |||||||||||||||
| Total other | |||||||||||||||||||
| expense | (215,476 | ) | (133,310 | ) | (793,622 | ) | (478,346 | ) | |||||||||||
| Income (loss) | |||||||||||||||||||
| before | |||||||||||||||||||
| provision | |||||||||||||||||||
| for income | |||||||||||||||||||
| taxes | (1,439,485 | ) | 417,337 | 560,558 | 1,948,119 | ||||||||||||||
| Provision for | |||||||||||||||||||
| income taxes | 559,090 | (173,726 | ) | (272,645 | ) | (813,783 | ) | ||||||||||||
| Net income | |||||||||||||||||||
| (loss) | ($880,395 | ) | $243,611 | 1.1 | (461.4) | $287,913 | .3 | $1,134,336 | 1.4 | ||||||||||
| Net income | |||||||||||||||||||
| (loss) per | |||||||||||||||||||
| share | |||||||||||||||||||
| Basic | $(0.29 | ) | $0.08 | $0.10 | $0.38 | ||||||||||||||
| Diluted | $(0.29 | ) | $0.08 | $0.07 | $0.38 | ||||||||||||||
| Weighted | |||||||||||||||||||
| average | |||||||||||||||||||
| shares | |||||||||||||||||||
| outstanding | |||||||||||||||||||
| Basic | 3,088,889 | 3,000,000 | 3,021,918 | 3,000,000 | |||||||||||||||
| Diluted | 3,088,889 | 3,000,000 | 4,174,817 | 3,000,000 | |||||||||||||||
UNIVERSAL POWER GROUP, INC.
UNAUDITEDSTATEMENTS OF CASH FLOWS
| CASH FLOWS FROM OPERATING | ||||||||
| ACTIVITIES | ||||||||
| Net income | $287,913 | $1,134,336 | ||||||
| Adjustments to reconcile net income to | ||||||||
| net cash provided by (used in) | ||||||||
| operating activities: | ||||||||
| Depreciation and amortization of | ||||||||
| property and equipment | 154,197 | 137,978 | ||||||
| Provision for bad debts | 126,127 | 48,187 | ||||||
| Provision for obsolete inventory | 50,000 | 55,962 | ||||||
| Deferred income taxes | (888,928 | ) | 2,301 | |||||
| Loss on disposal of property and | ||||||||
| equipment | — | 962 | ||||||
| Non-cash compensation – stock | ||||||||
| options | 2,175,035 | — | ||||||
| Non-cash tax expense | 1,088,633 | __ | ||||||
| Change in operating assets and | ||||||||
| liabilities: | ||||||||
| Accounts receivable – trade | (1,892,093 | ) | (1,104,788 | ) | ||||
| Accounts receivable – other | 88,982 | 77,356 | ||||||
| Inventories | (3,511,256 | ) | (5,913,069 | ) | ||||
| Prepaid expenses and other current | ||||||||
| assets | 1,850 | (214,237 | ) | |||||
| Other assets | 35,208 | 2,724 | ||||||
| Accounts payable | (844,885 | ) | 5,305,613 | |||||
| Accrued liabilities | 180,919 | 58,811 | ||||||
| Due to former parent | (334,711 | ) | 811,482 | |||||
| Deferred rent | (30,749 | ) | (8,696 | ) | ||||
| Net cash provided by (used in) | ||||||||
| operating activities | (3,313,758 | ) | 394,922 | |||||
| CASH FLOWS FROM INVESTING | ||||||||
| ACTIVITIES | ||||||||
| Purchase of property and equipment | (94,496 | ) | (185,649 | ) | ||||
| CASH FLOWS FROM FINANCING | ||||||||
| ACTIVITIES | ||||||||
| Net activity on line of credit | 5,312,160 | 734,532 | ||||||
| Net proceeds from IPO | 11,941,223 | — | ||||||
| Payments on capital lease obligations | (20,977 | ) | (20,968 | ) | ||||
| Payment of dividends to former parent | (964,000 | ) | (882,491 | ) | ||||
| Net cash provided by (used in) | ||||||||
| financing activities | 16,268,406 | (168,927 | ) | |||||
UNIVERSAL POWER GROUP, INC.
UNAUDITEDSTATEMENTS OF CASH FLOWS (CONTINUED)
| | ||||
| NET INCREASE IN CASH | ||||
| AND CASH EQUIVALENTS | $12,860,152 | $ 40,346 | ||
| Cash and cash equivalents at beginning | ||||
| of year | 176,295 | 135,949 | ||
| Cash and cash equivalents at end of | ||||
| year | $13,036,447 | $176,295 | ||
| SUPPLEMENTAL DISCLOSURES | ||||
| Income taxes paid | $ 72,939 | $ 74,243 | ||
| Interest paid | $ 833,731 | $490,096 | ||
| SUPPLEMENTAL SCHEDULE OF | ||||
| NONCASH INVESTING AND | ||||
| FINANCING ACTIVITIES | ||||
| Payable to former parent converted to note | ||||
| payable | $2,850,000 | $ — | ||
| Dividends due to former parent | $3,000,000 | $269,180 | ||
Non-GAAP Measures
UPG has elected to provide guidance on a pro forma non-GAAP basis, by excluding stock-based compensation from net income, believing that it provides meaningful information for the Company in evaluating operations and managing and benchmarking performance. UPG has chosen to provide this supplemental information to investors, analysts and other interested parties to enable them to perform additional analyses of the Company’s business outlook and to illustrate the effect that future performance could have. The pro forma non-GAAP financial information presented herein should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
A reconciliation of cash operating expenses and non-cash items for the fourth quarter of 2006 and the year ended December 31, 2006 is shown below.
| For the three months ended | For the year ended | |||
| December 31, 2006 | December 31, 2006 | |||
| Net sales | $24,566,568 | $92,583,521 | ||
| Cost of sales | 21,083,622 | 79,426,270 | ||
| Gross profit | 3,482,946 | 13,157,251 | ||
| Operating expenses | 4,706,955 | 11,803,071 | ||
| Operating income (loss) | (1,220,078 | ) | 1,354,180 | |
| Other expense | (215,476 | ) | (793,622 | ) |
| Income (loss) before (provision) | ||||
| benefit for income taxes | (1,439,485 | ) | 560,558 | |
| (Provision) benefit for income | ||||
| taxes | 559,090 | (272,645 | ) | |
| Net income (loss) | ($880,395 | ) | $ 287,913 | |
| Non-GAAP adjustments: | ||||
| Non-cash stock option | ||||
| compensation expenses | $ 2,175,035 | $ 2,175,035 | ||
| Approximate federal income tax | ||||
| adjustment associated with | ||||
| stock option compensation | ||||
| expenses | (837,388 | ) | (837,388 | ) |
| Net Non-GAAP adjustments | 1,337,647 | 1,337,647 | ||
| Non-GAAP net income before option | ||||
| compensation expenses | $ 457,252 | $ 1,625,560 | ||
