Universal Power Group Inc. (fka UPGI)

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March 24, 2008 - 7:02 AM EDT

Universal Power Group Reports Fourth Quarter and Full-Year 2007 Financial Results
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 full-year ended December 31, 2007.

Revenues in the fourth quarter of 2007 rose 17.2% to $28.8, compared to $24.6 million in the fourth quarter of 2006. Fourth quarter 2007 revenues from sources other than Brink’s Home Security (“Brink’s”) rose 35% to $14.9 million from $11.0 million in the fourth quarter of 2006. The increase reflects more focused marketing to both existing and new customer accounts, as well as price increases implemented by UPG to offset higher costs of goods sold. Growth in the Company’s higher margin battery business was driven 25% by volume and 75% by price increases in the fourth quarter. Fourth quarter revenues from Brink’s increased to $13.9 million, up 2.5% compared to $13.6 million in the fourth quarter of 2006.

Gross margin for the fourth quarter of 2007 improved slightly to 14.4%, compared to 14.2% in the comparable period in 2006, as the improvement in product mix and price increases offset higher raw material costs. Operating expenses were $3.2 million in the fourth quarter of 2007, compared to $4.7 million in the prior year period. Of note, the Company recorded a non-cash stock option expense $2.2 million in the fourth quarter of 2006. Excluding the $2.2 million charge in the fourth quarter of 2006, the increase in operating expenses for the fourth quarter of 2007 was primarily due to increased costs of being a public company. Operating profit for the fourth quarter of 2007 was $0.9 million, compared to an operating loss of $1.2 million in 2006. Universal Power Group generated net income of $0.4 million, or $0.08 per share, in the fourth quarter of 2007, compared to a net loss of $0.9 million, or $0.29 per share, in the prior year period. Excluding stock-based compensation expense and the related tax effects for the fourth quarter of 2006, UPG recorded net income of $0.5 million.

Full-Year 2007 Results

For the full-year 2007, revenues increased 17.2% to $108.5 million, up from $92.6 million for the full-year 2006. Gross margin widened to 14.7%, from 14.2% in 2006, as improved product mix and increased selling prices more than offset the higher raw material costs. Growth in the Company’s higher margin battery business was driven 49% by volume and 51% by price increases in the full year. Operating expenses for the full-year 2007 were $11.8 million, compared to $11.8 million in 2006; this includes the non-cash charges of $0.1 million and $2.2 million for 2007 and 2006, respectively. Again, excluding the $2.2 million non-cash charge in 2006, the increase in operating expenses for 2007 was primarily due to increased costs of being a public company. Operating profit in 2007 was $4.2 million, compared to $1.4 million in 2006. Net income was $2.2 million, or $0.44 per share, compared to net income of $0.3 million, or $0.07 per share, in 2006. Excluding stock-based compensation expense and the related tax effects, net income in 2006 was $1.6 million, or $0.38 per diluted share.

Randy Hardin, President and Chief Executive Officer of Universal Power Group, commented, “Overall, we are pleased with our performance in 2007, with revenues up 17% for both the fourth quarter and the year. Our non-Brink’s business continued more rapid growth, generating a 35% increase in revenues in the fourth quarter. Importantly, this growth in our higher margin business helped us to essentially maintain our gross margins, despite the increases we saw in raw material prices throughout the year. We also experienced higher operating expenses in the quarter and the year, of which a significant portion was related to being a public company.

“Looking out into 2008, we continue to see strong demand for our products and services. Our financial results announced today indicate that we have been successful in increasing our penetration to new and existing customers, and we expect this trend to continue. Moreover, as raw material costs stabilize, we would expect our improving product mix and our focus on bringing in new, higher margin customers, to ultimately lead to higher margins at Universal Power Group. In summary, we are excited about the year ahead, and we look forward to reporting our progress to you in future quarters.”

UPG Provides Guidance for 2008