UGE International Reports Third Quarter 2014 Financial Results
New York, New York – November 27, 2014 - UGE International Ltd. (the “Company” or “UGE”) (TSXV: UG, OTCQB: UGEIF), a leader in renewable energy solutions for business and government customers, today reported its third quarter financial results for the three and nine month periods ended September 30, 2014. UGE is headquartered in New York, New York and reports all amounts in US dollars.
Third Quarter 2014 Highlights
- During the quarter, UGE International Ltd. (formerly Way Ventures Inc.) completed a reverse-takeover transaction with UGE Holdings Limited.
- Confirmed sales orders in Q3’14 were the highest in the Company’s history at $1.74 million and included strategically significant orders in the telecom sector and in Panama, totaling $0.85 million.
- Revenue for Q3’14 from the Company's United States operations increased by $0.11 million over Q3’13.
- Revenue for Q3’14 was $0.99 million, $1.13 million less than reported in Q3’13, attributable to general fluctuations in sales and a strategic shift towards the larger commercial sector.
- Gross profit increased by 6% to 37% in Q3’14 as compared with Q3’13, as the Company continues to streamline its supply chain, enhance its product line, and earn more service revenue.
Results for the three months ended September 30, 2014
The quarter ending September 30, 2014 was a pivotal quarter for UGE, as it saw the Company complete a transaction with UGE Holdings and graduate from a Capital Pool Company on the TSX Venture Exchange. The transaction constitutes a reverse-takeover and is accounted for with UGE Holdings being identified as the accounting acquirer, and the net assets of UGE International being recorded at fair value at the date of the transaction. While that process is associated with unavoidable expenses, the quarter also saw increased traction of the Company’s strategic plan as it experienced its strongest quarter in company history with $1.74 million in confirmed sales orders. A confirmed sales order is typically an order placed with a nonrefundable deposit, making the order a strong commitment from the customer. As such, strong confirmed sales orders in the three months ended September 30, 2014 are expected to result in similar strength in revenue in the three months ended December 31, 2014.
Revenue for the three months ended September 30, 2014 was $0.99 million as compared with $2.12 million in the same period of the prior year. The difference is attributable to a street lighting project in China in the three months ended September 30, 2013, which accounted for $1.22 million in revenue. Due to promising economic conditions for commercial projects, as well as the longer sales cycles associated with government projects, the Company shifted its strategy to emphasize the commercial sector in 2014, which management expects to translate to revenue growth in 2015. Revenue in the most recent quarter from outside of China increased by $0.11 million.
UGE had operating expenses of $3.12 million for the three months ended September 30, 2014 as compared to $0.96 million in the same period of the prior year. Operating expenses for the three month period ended September 30, 2014 include $1.72 million in one-time public listing expenses, associated with the transaction with UGE Holdings Limited, including a one-time non-cash expense of $1.57 million, due to an excess of fair value of the consideration over the net assets of the Company, in line with IFRS accounting for reverse take-over transactions.
UGE’s gross profit was 37% for the three months ended September 30, 2014, as compared with 31% in the same period of the prior year. Maintaining and improving gross margin is one of UGE’s strategic objectives, through supply chain optimization, product enhancements, and a greater emphasis on providing services as part of project sales.
"Q3'14 was an important quarter in UGE’s history, as we completed our qualifying transaction to become a public company and accelerated execution of our strategic plan to capture market share in the $100 billion distributed renewable energy market. The quarter saw us gain significant sales traction, setting a new high water mark for confirmed sales orders, which should translate to strong revenue growth in Q4 and 2015," said Nick Blitterswyk, CEO of UGE. "Our strategic growth plan is already beginning to bear fruit, which we will look to continue to prove out with growth in confirmed orders and revenue.”
Results for the nine months ended September 30, 2014
UGE recognized revenues of $2.52 million and $3.80 million for the nine months ended September 30, 2014 and 2013, respectively. The difference is attributable to the street lighting project mentioned above.
Full financial results and Management's Discussion and Analysis are posted to SEDAR and are available through the Company's website. All amounts are in US dollars.
During the quarter, UGE International Ltd. (formerly Way Ventures Inc.), completed a transaction with UGE Holdings Limited (“UGE Holdings”). The transaction constitutes a reverse-takeover and is accounted for with UGE Holdings being identified as the accounting acquirer. The Company acquired 100% of the issued and outstanding shares of UGE Holdings (the “UGE Shares”), in exchange for the issuance to UGE Holdings shareholders of 8,924,651 common shares of the Company and 17,000,000 Special Warrants. The Special Warrants are held by the Company’s founders and are non-voting and each Special Warrant may be converted into one common share of the Company for no additional consideration at any time so long as at least 20% of the common shares of the Company are held by public shareholders following such conversions. Immediately prior to closing the transaction, the Company completed a 5 for 1 share consolidation. Following the closing, UGE Holdings became a wholly owned subsidiary of the Company.
UGE is a leading developer of distributed renewable energy solutions for business and government clients with projects in over 90 countries, including several for Fortune 1,000 companies. Leveraging its proprietary technology platform, UGE deploys modular energy systems that solve clients' challenges at the nexus of cost, resiliency and sustainability. From solar and wind systems, to microgrids and off-grid lighting, UGE is the solution provider of choice for commercial energy challenges.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Statements made in this press release include forward-looking statements that involve a number of risks and uncertainties. These statements relate to future events or future performance and reflect management's current expectations and assumptions. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements, such as the economy, generally, competition in its target markets, the demand for UGE’s products and the availability of funding. These forward-looking statements are made as of the date hereof and UGE does not assume any obligation to update or revise them to reflect new events or circumstances. Actual events or results could differ materially from UGE’s expectations and projections.