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 SECOND QUARTER 2007 FINANCIAL RESULTS
NET INCOME NEARLY DOUBLED ON REVENUE GROWTH OF 12.3%
CARROLLTON, TEXAS -- AUGUST 6, 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 second quarter and
six months ended June 30, 2007. Net income in the second quarter increased 95%
to $733,700, compared to $376,100 in the prior period last year. Earnings per
share increased to $0.15, from $0.13, reflecting a 67% increase in weighted
average number of shares outstanding from 3 million in 2006 to approximately 5
million in 2007 as a result of UPG's December 2006 initial public offering.
Revenues in the second quarter of 2007 rose 12.3% to $26.4 million, compared to
$23.5 million for the second quarter of 2006. Second quarter 2007 revenues from
sources other than Brinks Home Security ("Brinks") rose 26.1% to $12.4 million
from $9.8 million in the second quarter of 2006. The increase reflects growth of
new and existing customer accounts as well as price increases implemented by UPG
to offset higher costs of goods sold. Second quarter revenues from Brinks
increased to $14.0 million, up 2.4% compared to $13.7 million in the second
quarter of 2006.
Gross margin also rose as a percentage of revenues for the three months ended
June 30, 2007 to 15.7% compared to 13.9% in the comparable period in 2006. The
increase in gross margin reflects product mix improvement as well as price
increases to offset higher raw material costs. The battery industry is
experiencing volatility in certain raw materials such as lead, copper and zinc
and raw material prices have continued to increase during the second quarter of
2007. Growth in our higher margin business for the second quarter was driven 70%
by volume and 30% by price increases. Operating income rose to $1.4 million, or
5.5% of revenues, compared to $877,100, or 3.7% of revenues.
For the six-month period ended June 30, 2007, revenues increased 12.9% to $49.9
million, up from $44.2 million in the comparable prior year period. Operating
income rose 37.8% to $2.2 million, up from $1.6 million. Net income increased
54.3% to $1.1 million, or $0.22 per share based on a weighted average of 5
million shares, compared to $713,900, or $0.24 per share based on 3 million
diluted shares.
Randy Hardin, President and CEO of UPG, commented, "Our second quarter and
year-to-date results reflect the ongoing strength in our business and successful
execution of our growth strategy. In particular, we were extremely pleased with
the strong sales growth in our non-Brinks business, as it demonstrates our
continued focus on diversifying our customer base and growing sales through the
penetration of new customer accounts, channels and markets. These higher sales
have helped to offset slower growth in Brinks revenues, which have been
adversely impacted by the overall slowdown in the residential construction
industry. We remain optimistic about the longer-term growth prospects of our
Brinks business.
"Looking out to the balance of the year and beyond, we continue to believe that
the opportunities ahead of UPG are significant. Our goal remains simply to grow
our market share in the rapidly growing battery and
third-party logistics industries, and we believe our strong competitive position
will enable us to achieve our goal," he added.
UPG UPDATES GUIDANCE FOR 2007
Revenues, operating income and net income have risen 12.9%, 37.8% and 54.3%,
respectively, for the six months ended June 30, 2007, reflecting the results of
ongoing strength in our business and successful execution of our growth
strategy. Based on our performance through the first two quarters of 2007, it is
expected we will exceed our previous guidance of 10% growth in revenues and
operating income. However, the risk remains that continued volatility in raw
material prices could adversely impact operations for the balance of the year.
CONFERENCE CALL INFORMATION
UPG will hold a conference call to discuss its financial results at 9:30 Eastern
time on Tuesday, August 7, 2007. Interested parties may access the conference
call by dialing 1-800-299-7635; passcode 14887418. The conference call will also
be broadcast live on www.upgi.com and through the Thomson StreetEvents Network
at www.earnings.com.
A replay of the teleconference will be made available through September 7, 2007
by calling 1-888-286-8010; passcode 52709677 and an archived webcast will be
available at WWW.UPGI.COM.
ABOUT UNIVERSAL POWER GROUP, INC.
Universal Power Group, Inc. is a leading provider of third-party logistics and
supply chain management services, and a 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 design and development. UPG's range of product offerings
include proprietary brands of industrial and consumer batteries of all
chemistries, chargers, cellular and Bluetooth accessories, related portable
power products, jump-starters, 12-volt DC accessories, and security products.
For more information, please visit 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 Securities and Exchange
Commission. Specifically, historical financial results are not necessarily
indicative of future performance. In addition, there can be no assurance that
any of the company's growth initiatives referred to in this press release will
translate into increased revenues.
UNIVERSAL POWER GROUP, INC.
UNAUDITED BALANCE SHEETS
ASSETS
JUNE 30, DECEMBER 31,
2007 2006
----------------- ---------------
CURRENT ASSETS
Cash and cash equivalents...................................... $13,282,195 $13,036,447
Accounts receivable:
Trade, net of allowance for doubtful accounts of $144,257
and $114,257 ........................................... 12,012,917 10,171,055
Other (including $0 and $186,617 from related parties)...... 329,484 211,854
Inventories - finished goods, net of allowance for obsolescence
of $260,715 and $200,715..................................... 23,576,890 22,571,534
Current deferred tax asset..................................... 1,173,267 1,087,163
Prepaid expenses and other current assets...................... 1,275,857 571,073
---------------- ---------------
Total current assets......................................... 51,650,610 47,649,126
PROPERTY AND EQUIPMENT
Machinery and equipment........................................ 713,672 595,902
Furniture and fixtures......................................... 313,522 288,457
Leasehold improvements......................................... 188,691 188,691
Vehicles....................................................... 151,598 151,598
---------------- ---------------
1,367,483 1,224,648
Less accumulated depreciation and amortization................. (878,918) (787,554)
---------------- ---------------
Net property and equipment................................... 488,565 437,094
OTHER ASSETS...................................................... 70,573 33,073
---------------- ---------------
TOTAL ASSETS...................................................... $52,209,748 $48,119,293
================ ===============
UNIVERSAL POWER GROUP, INC.
UNAUDITED BALANCE SHEETS (CONTINUED)
LIABILITIES AND SHAREHOLDERS' EQUITY
JUNE 30, DECEMBER 31,
2007 2006
------------------- -------------------
CURRENT LIABILITIES
Line of credit................................................ $14,982,105 $14,573,595
Accounts payable.............................................. 13,629,361 11,529,002
Accrued liabilities........................................... 1,007,822 540,839
Current portion of capital lease obligations.................. 13,745 18,726
Current portion of deferred rent.............................. 14,155 15,423
------------------- -------------------
Total current liabilities................................... 29,647,188 26,677,585
CAPITAL LEASE OBLIGATIONS, less current portion.................. 666 6,613
NOTES PAYABLE TO ZUNICOM, INC.................................... 5,850,000 5,850,000
NON-CURRENT DEFERRED TAX LIABILITY............................... 56,743 64,663
DEFERRED RENT, less current portion.............................. 193,216 206,975
------------------- -------------------
Total liabilities............................................ 35,747,813 32,805,836
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock - $0.01 par value, 50,000,000 shares authorized,
5,000,000 shares issued and outstanding..................... 50,000 50,000
Additional paid-in capital.................................... 15,310,273 15,263,457
Retained earnings............................................. 1,101,662 --
------------------- -------------------
Total shareholders' equity.................................. 16,461,935 15,313,457
------------------- -------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY....................... $52,209,748 $48,119,293
=================== ===================
UNIVERSAL POWER GROUP, INC.
UNAUDITED STATEMENTS OF INCOME
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
-------------------------------- -----------------------------
2007 2006 2007 2006
--------------- --------------- ------------- ---------------
Net sales..................................................... $26,403,048 $23,504,176 $49,942,922 $44,244,799
Cost of sales................................................. 22,258,190 20,236,158 42,357,431 38,046,168
--------------- --------------- ------------- ---------------
Gross profit.................................................. 4,144,858 3,268,018 7,585,491 6,198,631
Operating expenses (including $0, $120,000, $0 and $240,000
to Zunicom, Inc.).......................................... 2,699,388 2,390,931 5,335,898 4,565,973
--------------- --------------- ------------- ---------------
Operating income.............................................. 1,445,470 877,087 2,249,593 1,632,658
Other income (expense)........................................
Interest expense (including $87,510, $0, $174,058 and $0 to
Zunicom, Inc.) (365,165) (220,874) (732,254) (402,754)
Interest income............................................ 167,377 7,620 340,291 8,763
--------------- --------------- ------------- ---------------
Total other expense...................................... (197,788) (213,254) (391,963) (393,991)
--------------- --------------- ------------- ---------------
Income before provision for income taxes...................... 1,247,682 663,833 1,857,630 1,238,667
Provision for income taxes.................................... (513,977) (287,730) (755,968) (524,759)
--------------- --------------- ------------- ---------------
Net income.................................................... $ 733,705 $ 376,103 $ 1,101,662 $ 713,908
=============== =============== ============= ===============
Net income per share
Basic.................................................... $ 0.15 $ 0.13 $ 0.22 $ 0.24
=============== =============== ============= ===============
Diluted.................................................. $ 0.15 $ 0.13 $ 0.22 $ 0.24
=============== =============== ============= ===============
Weighted average shares outstanding
Basic.................................................... 5,000,000 3,000,000 5,000,000 3,000,000
=============== =============== ============= ===============
Diluted.................................................. 5,002,114 3,000,000 5,005,707 3,000,000
=============== =============== ============= ===============
UNIVERSAL POWER GROUP, INC.
UNAUDITED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30,
---------------------------------------
2007 2006
----------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income.................................................... $ 1,101,662 $ 713,908
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation and amortization of property and equipment.... 103,864 81,059
Provision for bad debts.................................... 55,034 63,745
Provision for obsolete inventory........................... 60,000 90,000
Deferred income taxes...................................... (94,024) (105,921)
Stock-based compensation 46,816 --
Change in operating assets and liabilities:
Accounts receivable - trade................................ (1,896,896) (1,441,426)
Accounts receivable - other................................ (304,246) (30,141)
Inventories................................................ (1,065,356) 1,972,018
Prepaid expenses and other current assets.................. (717,284) 188,954
Other assets............................................... (37,500) 1,850
Accounts payable........................................... 2,100,359 (4,934,405)
Accrued liabilities........................................ 466,983 474,080
Due from Zunicom, Inc...................................... 186,617 635,363
Deferred rent.............................................. (15,027) (10,002)
----------------- -----------------
Net cash used in operating activities........................ (8,998) (2,300,918)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment......................... (142,836) (54,849)
CASH FLOWS FROM FINANCING ACTIVITIES
Net activity on line of credit............................. 408,510 3,412,528
Payments on capital lease obligations...................... (10,928) (10,348)
Payment of dividends to Zunicom, Inc....................... -- (545,180)
----------------- -----------------
Net cash provided by financing activities..................... 397,582 2,857,000
----------------- -----------------
NET INCREASE IN CASH AND CASH EQUIVALENTS..................... 245,748 501,233
Cash and cash equivalents at beginning of period.............. 13,036,447 176,295
----------------- -----------------
Cash and cash equivalents at end of period.................... $13,282,195 $ 677,528
================= =================
SUPPLEMENTAL DISCLOSURES
Interest paid.............................................. $ 732,254 $ 402,754
================= =================
Income taxes paid.......................................... $ 524,960 $ 74,250
================= =================