Universal Power Group Inc. (fka UPGI)

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Universal Power Group Reports Second Quarter 2008 Financial Results
Date : 08/11/2008 @ 7:30AM
Source : Business Wire
Stock : Universal Power Group, Inc. (UPG)
Quote : 3.9 0.1 (2.63%) @ 8:00PM


Universal Power Group Reports Second Quarter 2008 Financial Results




Universal Power Group, Inc. (AMEX: UPG), (“UPG”) a leading provider of third-party logistics and supply chain management services and a global distributor of batteries, related portable power and security products, today announced its financial results for the second quarter ended June 30, 2008.

Revenues for the quarter ended June 30, 2008 rose 14.4% to $30.2 million, compared to $26.4 million in the second quarter of 2007. Second quarter revenues from sources other than Brinks Home Security (“Brinks”) rose 35.0% to $16.8 million, from $12.4 million in the prior year period. 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 approximately 21% by volume and 79% by price increases. Revenues from Brinks declined by 3.9% to $13.5 million in the second quarter of 2008, compared to $14.0 million in the prior year period. The concentration of revenues from Brinks fell to 44.6% of total revenues in the second quarter 2008, compared to 53.0% in the second quarter of 2007.

Gross profit grew by 8.9% in the second quarter, to $4.5 million, compared to $4.1 million in the prior year period. As a percentage of sales, the gross profit margin narrowed to 15.0%, from 15.7% in the second quarter of 2007, as the improvement in product mix was offset by higher raw material costs. Also, second quarter 2008 margins did not fully reflect the benefit of price increases, which were implemented slowly due to a very competitive market for commodity influenced products. In addition to pricing, UPG will continue to focus on and develop higher margin products and markets in efforts to maintain or expand the gross margin.

Operating expenses rose 28.6% to $3.5 million in the second quarter of 2008, compared to $2.7 million in the prior year period. Operating expenses were approximately $200,000 above budget due to a number of non-routine costs that fell in the second quarter of 2008; these costs were primarily related to legal and consulting fees, Sarbanes Oxley compliance and employee healthcare programs. UPG had operating income of $1.0 million, or 3.5% of sales, for the second quarter of 2008, compared to $1.4 million, or 5.5% in the second quarter of 2007. Net income in the second quarter of 2008 was $0.5 million, or $0.09 per share, compared to net income of $0.7 million, or $0.15 per share, in the prior year period.

For the six-months ended June 30, 2008, revenues increased by 19.6% to $59.7 million, up from $49.9 million in the prior year period. Operating income was $2.2 million in the first six-months of 2008, modestly below the approximately $2.3 million in operating income generated in the first six-months of 2007. Net income was $1.0 million, or $0.21 per share, compared to $1.1 million, or $0.22 per share, in the prior year period.

Randy Hardin, President and Chief Executive Officer of UPG, commented, “During the second quarter, we continued to focus on increasing our share of the growing battery-related and supply chain management industries through higher penetration of new and existing customers, an expanded product line and a broader geographic reach. We believe that UPG has made a lot of progress on this front since we became public in December 2006.

However, higher raw material costs and higher operating expenses impacted our margins in the second quarter, resulting in lower operating profit. While disappointed with our year over year decline for the quarter, we expect to see an improvement in the balance of the year. Regarding our gross margins, we will continue to take price increases as necessary, balancing this out with our goal to maintain strong and long-lasting relationships with our customers. We also expect operating expenses in the second half of the year to grow more in-line with revenues, which should yield an improvement in our operating margin,” he concluded.

2008 Guidance UPG continues to expect organic growth in revenues of 12% - 15% for the full-year 2008. UPG believes that operating income growth will be at the low-end of its previously forecasted range of 15% - 18%.

Conference Call Information Universal Power Group will host an investor conference call today, Monday, August 11, 2008, at 11:30 am EST (10:30 am CST) to discuss financial results for the second quarter of 2008.

Interested parties may access the conference call by dialing 1.866.510.0704; passcode 96261275. The conference call will also be broadcast live on 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 the call via Thomson StreetEvents (www.streetevents.com), a password-protected event management site.

A replay of the teleconference will be made available through August 18, 2008 by calling 1.888.268.8010; passcode 57250431 and an archived webcast will be available at www.upgi.com.