UGE Reports First Quarter 2016 Financial Results
Company Continues Strong Growth with 47% Increase in Revenue
NEW YORK, NEW YORK-- (May 30, 2016) - UGE International Ltd. (the "Company" or "UGE") (TSX VENTURE:UGE) (OTCQB:UGEIF), a leader in renewable energy solutions for the commercial and industrial sector, reported its financial results for the three months ended March 31, 2016. UGE reports all amounts in US dollars, unless otherwise noted.
First Quarter 2016 Highlights
- UGE completed the acquisition of Endura Energy Project Corp. ("Endura") on February 22, 2016, adding significant scale and technical expertise to its commercial solar platform. Endura had reported approximately CAD $11 million of revenue and CAD $1 million in net income in its most recent fiscal year ended October 31, 2015. Combined revenues will be fully reflected in UGE's second quarter financial statements.
- For the first quarter, revenue increased 47%, while selling, general and administrative ("SG&A") expenses declined 18% as compared to the same period in the prior year, despite the acquisition of Endura, as UGE began to realize savings from cost synergies and operational streamlining performed as part of its business strategy of focusing on the commercial solar business.
Selected Financial Information
Analysis of Financial Results
The first quarter of 2016 saw UGE complete the acquisition of Endura, an important step in its efforts to strengthen its position in the commercial solar industry through organic and inorganic growth. The acquisition was coupled with efforts to streamline operations around key markets and its commercial solar offering, leading to increasing revenues, decreasing SG&A expenses, and a narrowing loss, exclusive of the non-cash finance costs.
Revenue for the three months ended March 31, 2016 was $1.0 million, an increase of 47% from the same period of the prior year. The gross profit margin for the three months ended March 31, 2016 was 15%; as mentioned in prior quarters, UGE's gross margins vary greatly on a quarterly basis depending on project mix, especially as it relates to stage of project completion and project composition. Each individual quarter may not be an accurate representation of average project margins, as projects are typically deployed over several quarters.
With the acquisition of Endura, UGE was able to achieve operational and cost synergies that resulted in its SG&A expenses decreasing 18% to $1.3 million from $1.6 million in the same period of the prior period. This was primarily due to decreases in employee compensation (including stock based compensation), and partly offset by an increase in professional fees attributable to the acquisition of Endura. UGE expects further cost synergies to be realized in the second quarter of 2016 as it works towards profitability through increased revenues and streamlined operations.
The net loss for the three months ended March 31, 2016 was $1.7 million, which included a one-time non-cash finance expense of $0.4 million, related to settlement of certain related party loans. Excluding the non-cash finance expense, UGE's loss would have decreased versus the comparable period from 2015.
"UGE is growing and maturing, as we continue to strengthen our market position and gain operational efficiencies at scale" stated Nick Blitterswyk, CEO of UGE. "We are looking forward to moving towards profitability throughout the balance of 2016."
Full financial results and Management's Discussion and Analysis are posted to SEDAR (www.sedar.com) and are available through the Company's website.