UGE Reports Fiscal Year 2015 Financial Results
Annual revenue increases 60% in 2015 as strong growth continues
NEW YORK, NEW YORK--(April 29, 2016) - UGE International Ltd. (the "Company" or "UGE") (TSX VENTURE:UG)(OTCQB:UGEIF), a leader in renewable energy solutions for the commercial and industrial sector, reported its financial results for the three months and year ended December 31, 2015. UGE reports all amounts in US dollars.
- Revenue increased by 60% to $6.1 million, as the Company continues to focus on its growth plan by providing immediate savings to commercial clients through financed solar systems
- During the fourth quarter of 2015, the Company negotiated the acquisition of Endura Energy Project Corp. ("Endura"), which subsequently closed on February 22, 2016. Endura recorded nearly CAD $11 million of revenue, and over CAD $1 million in net income, in the year ended October 31, 2015, and adds significant scale and technical expertise to UGE's commercial solar platform.
- As part of the Company's strategy to gain leadership positions in new key markets, strategic projects at below-market margins have temporarily impacted gross margins, as did a one-time inventory adjustment in the fourth quarter of 2015.
Selected Financial Information
Analysis of Financial Results
The Company strengthened its position in the commercial solar industry through organic growth and through the acquisition of Endura (announced in November, 2015, and closed in February, 2016), while decreasing expenses in noncore areas, such as through the licensing of its street lighting offering in the third quarter of 2015.
Revenue for the year ended December 31, 2015 was $6,140,100, compared with $3,837,801 in 2014, an increase of 60%, as the Company implemented new commercial solar projects in each of its key markets (the United States, Panama, the Philippines and China).
The gross profit margin for the year ended December 31, 2015 was 8%, compared with 20% in the prior year. Reasons for the decrease primarily result from:
- an inventory adjustment of $272,141 in the fourth quarter of 2015, partly related to obsolete wind components, and partly related to the disposal of low-value components at the Company's warehouse that no longer fit the Company's sales strategy;
- the Company's revenue recognition policy for the development of solar projects that include a service component, for which revenue and costs are recognized in equal parts until the project is substantially completed, meaning recognition of gross profit margin occurs at a later date; and
- strategic projects at below market margins to build relationships and market share in new key markets. ΓÇï
Net of an increase of $550,000 in stock-based compensation, our selling, general and administrative expenses, excluding listing costs, for the year ended December 31, 2015 decreased slightly, despite the Company's 60% increase in revenue, as the Company focuses on scaling revenue while streamlining operations. The Company expects further cost synergies to occur in early 2016 as a result of the acquisition of Endura.
As a result of increased revenue, decreased gross profit margins, and the absence of listing costs in 2015, we recorded a net loss in 2015 of $5,606,087, compared with $7,031,900 in 2014.
"2015 was a key year in our history, as we achieved strong revenue growth and made structural changes to the business to support our future growth and profitability," said Nick Blitterswyk, CEO of UGE. "We look forward to growing significantly in 2016, both organically and through our recent acquisition of Endura Energy, as well as working towards profitability at an even faster pace."
Full financial results and Management's Discussion and Analysis are posted to SEDAR (www.sedar.com) and are available through the Company's website.