IRVING, Texas, May 2, 2014 (GLOBE NEWSWIRE) -- Global Power Equipment Group Inc. (Nasdaq:GLPW) ("Global Power" or "Company") today reported its financial results for the first quarter 2014.
Luis Manuel Ramírez, President and CEO of Global Power, commented, "We delivered a strong quarter and are off to a solid start for achieving our 2014 operational and financial goals. Our strategy to invest in the natural gas sector is working and our commercial efforts are yielding results. We have expanded our capabilities to more fully participate in increasing infrastructure investments. In addition, our business realignment, energized leadership and focus on providing value-added solutions are driving orders."
He continued, "Of note, our efforts at improving productivity and creating a portfolio of higher margin products and services resulted in adjusted EBITDA of $3.7 million in our historically weakest quarter. We see this as a solid indicator for the rest of the year."
FIRST QUARTER 2014 HIGHLIGHTS
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Gross margin expanded to 17.6% compared with 13.7% on 10% lower revenue.
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Revenue was $104.9 million, coming off strong deliveries in the fourth quarter.
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Product Solutions delivered $38.9 million of revenue driven by investments in natural gas infrastructure, power generation, distributed power supply and the oil and gas space creating demand. Electrical Solutions offset reduced Auxiliary Products revenue which represented $23.6 million in sales.
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Energy Services' revenue of $8.9 million included the addition of Hetsco Inc. ("Hetsco"), which diversified the Company's offerings to the industrial gas processing, chemical/petrochemical and oil and gas industries. Hetsco, which was acquired in April 2013, added $3.6 million of revenue in the quarter.
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Nuclear Services had revenue of $57.1 million and included the completion of one outage contract and one in process that was completed in April 2014.
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Product Solutions delivered $38.9 million of revenue driven by investments in natural gas infrastructure, power generation, distributed power supply and the oil and gas space creating demand. Electrical Solutions offset reduced Auxiliary Products revenue which represented $23.6 million in sales.
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Earnings Before Interest, Taxes, Depreciation and Amortization ("adjusted EBITDA") was $3.7 million (refer to adjusted EBITDA Reconciliation table on page 7 for important disclosures regarding the use of non-GAAP measures). Operating income was $0.6 million.
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Income after tax was essentially breakeven.
- Product Solutions' orders were $49.8 million and backlog was a record $187.6 million.
Results for the 2014 first quarter include those of IBI LLC ("IBI"), acquired on July 9, 2013 and Hetsco, acquired on April 30, 2013.
FIRST QUARTER 2014 CONSOLIDATED RESULTS
Gross profit was $18.5 million, or 17.6% of sales. Higher gross profit was the result of expanded profit margins in the Company's Product Solutions and Energy Services segments which were driven by improved mix and increased productivity, despite lower volume for Energy Services. Total operating expenses in the quarter were $17.9 million, unchanged when compared with the prior-year period. Acquisitions and the associated depreciation and amortization added approximately $3.1 million of incremental operating expenses in the quarter. Operating income of $0.6 million, or 0.6% of sales, improved significantly from the prior-year period, on expanded gross profit, productivity and cost discipline.
Adjusted EBITDA from continuing operations was $3.7 million in the first quarter compared with $1.3 million in the prior-year quarter. Adjusted EBITDA margin as a percent of sales was 3.5%.
Global Power believes that when used in conjunction with measures prepared in accordance with GAAP, adjusted EBITDA, which is a non-GAAP measure, helps in the understanding of its operating performance. See the attached tables for additional important disclosures regarding Global Power's use of adjusted EBITDA as well as a reconciliation of GAAP income from continuing operations to adjusted EBITDA from continuing operations.
SOLID CASH GENERATION AND BALANCE SHEET
Cash from operations in the first quarter was $1.6 million. Cash and equivalents at quarter end was $14.7 million. During the quarter, $12.0 million was borrowed on the revolving credit line, of which $10.0 million was repaid within the period. At the end of the quarter, there was $115.9 million undrawn against the Company's $150 million revolving credit line.
Capital expenditures during the first quarter were $0.8 million. For 2014, capital expenditures are expected to be approximately $10.0 million, half of which is for general maintenance purposes and the remainder for organic growth initiatives.
FIRST QUARTER ORDERS AND BACKLOG
Orders for Product Solutions were $49.8 million, representing a book-to-bill ratio of 1.3x. Backlog for Product Solutions at quarter end was a record $187.6 million, up 6% from the trailing quarter. Approximately 85% of Product Solutions' backlog is expected to ship in 2014.
Orders for Energy Services were $12.9 million in the quarter, with a book-to-bill ratio of 1.4x, and its backlog was $20.9 million at quarter end. Approximately 80% of backlog is expected to convert to revenue in 2014.
Orders for Nuclear Services were $34.9 million, with a book-to-bill ratio of 0.6x in the quarter. Backlog was $174.5 million at quarter end, with approximately 64% expected to convert to revenue in 2014.
Backlog for Nuclear Services and Energy Services is comprised of expected maintenance work to be performed over the next twelve months as well as defined projects.
2014 OUTLOOK REMAINS UNCHANGED
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Consolidated revenue is expected to be in the range of $525 million to $550 million.
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Product Solutions - expected to improve on stronger power generation and oil and gas markets, and full year of acquisition revenue.
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Energy Services - expected to improve primarily due to a full year of acquisition revenue.
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Nuclear Services - expected to be down modestly, primarily due to fewer outages.
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Product Solutions - expected to improve on stronger power generation and oil and gas markets, and full year of acquisition revenue.
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Gross margin is expected to improve moderately as a percent of revenue (20 to 30 basis points from 17.6% in 2013).
- Operating expenses are expected to moderately decline as a percent of revenue (30 to 40 basis points from 15.1% in 2013).
Mr. Ramírez concluded, "We believe our strategy to diversify our offerings, customers and markets is positioning us well to recognize our long-term growth and solid returns. Our focus to help customers deliver value has created new opportunities to develop solutions that should ultimately yield strengthened, sustained earnings power. We also expect that the process and productivity improvements we are executing will drive us toward our long-term goals."
Webcast and Conference Call
Global Power Equipment Group will host a conference call and live webcast today at 9:00 a.m. Central Time (10:00 a.m. ET). A slide presentation that accompanies the discussion on the call will also be available on the Company's website at www.globalpower.com. Global Power's conference call can be accessed by dialing (201) 493-6780. Alternatively, the webcast can be monitored at http://ir.globalpower.com/.
A telephonic replay will be available from 12:00 p.m. CT (1:00 p.m. ET) the day of the teleconference until Friday, May 16, 2014. To listen to the archived call, dial (858) 384-5517, and enter conference ID number 13579883. Alternatively, an archive of the webcast will be available on the Company's website at www.globalpower.com. A transcript will also be posted to the website, once available.
About Global Power
Texas-based Global Power Equipment Group Inc. is a design, engineering and manufacturing firm providing a broad array of equipment and services to the global power infrastructure, energy and process industries. It is comprised of three segments. Product Solutions includes two primary product categories: Auxiliary Products designs, engineers and manufactures a comprehensive portfolio of equipment for utility-scale natural gas turbines while Electrical Solutions provides custom configured electrical houses and generator enclosures for the midstream oil & gas industry, the power generation market to include distributed and backup power as well as other industrial and commercial operations. Energy Services provides lifecycle maintenance, repair, construction and fabrication services for the industrial, chemical/petrochemical process, oil and gas and power generation industries. Nuclear Services provides on-site specialty support, outage management and maintenance services to domestic utilities' nuclear power facilities. The Company routinely provides information at its website: www.globalpower.com.
Forward-looking Statement Disclaimer
This press release contains "forward-looking statements" within the meaning of that term set forth in the Private Securities Litigation Reform Act of 1995. These statements reflect our current views of future events and financial performance and are subject to a number of risks and uncertainties. Our actual results, performance or achievements may differ materially from those expressed or implied in the forward-looking statements. Risks and uncertainties that could cause or contribute to such material differences include, but are not limited to, decreased demand for new gas turbine power plants, reduced demand for, or increased regulation of, nuclear power, loss of any of our major customers, cost increases and project cost overruns, unforeseen schedule delays, poor performance by our subcontractors, cancellation of projects, competition for the sale of our products and services, shortages in, or increases in prices for, energy and materials such as steel that we use to manufacture our products, damage to our reputation, warranty or product liability claims, increased exposure to environmental or other liabilities, failure to comply with various laws and regulations, failure to attract and retain highly-qualified personnel, loss of customer relationships with critical personnel, effective integration of acquisitions, modification of preliminary 2014 outlook, volatility of our stock price, deterioration or uncertainty of credit markets, and changes in the economic, social and political conditions in the United States and other countries in which we operate, including fluctuations in foreign currency exchange rates, the banking environment or monetary policy. Other important factors that may cause actual results to differ materially from those expressed in the forward-looking statements are discussed in our filings with the Securities and Exchange Commission, including the section of our Annual Report on Form 10-K filed with the SEC on March 17, 2014 titled "Risk Factors." Except as may be required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, and we caution you not to rely upon them unduly.
Financial Tables Follow.
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GLOBAL POWER EQUIPMENT GROUP INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share amounts) (unaudited) |
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| Three Months Ended | ||||
| March 31,(1) | Variance | |||
| 2014 | 2013 | $ | % | |
| Product Solutions revenue | $ 38,931 | $ 38,894 | $ 37 | 0.1% |
| Energy Services revenue | 8,889 | 12,804 | (3,915) | -30.6% |
| Nuclear Services revenue | 57,062 | 65,012 | (7,950) | -12.2% |
| Total revenue | 104,882 | 116,710 | (11,828) | -10.1% |
| Cost of revenue | 86,404 | 100,744 | (14,340) | -14.2% |
| Gross profit | 18,478 | 15,966 | 2,512 | 15.7% |
| Gross margin | 17.6% | 13.7% | ||
| Operating expenses: | ||||
| Selling and marketing expenses | 1,823 | 2,223 | (400) | -18.0% |
| General and administrative expenses | 13,754 | 14,554 | (800) | -5.5% |
| Depreciation and amortization expense(2) | 2,314 | 1,073 | 1,241 | 115.6% |
| Total operating expenses | 17,891 | 17,850 | 41 | 0.2% |
| Operating income (loss) | 587 | (1,884) | 2,471 | NM |
| Operating margin | 0.6% | -1.6% | ||
| Interest expense, net | 413 | 86 | 327 | 380.2% |
| Other (income) expense, net | 270 | (150) | 420 | NM |
| Loss from continuing operations before income tax | (96) | (1,820) | 1,724 | NM |
| Income tax benefit | (24) | (619) | 595 | NM |
| Loss from continuing operations | (72) | (1,201) | 1,129 | NM |
| Discontinued operations: | ||||
| Loss from discontinued operations | (7) | (40) | 33 | NM |
| Net loss | $ (79) | $ (1,241) | $ 1,162 | NM |
| Basic and diluted earnings per weighted average common share: | ||||
| Loss from continuing operations | $ — | $ (0.07) | $ 0.07 | NM |
| Loss from discontinued operations | — | — | — | NM |
| Loss per common share - diluted | $ — | $ (0.07) | $ 0.07 | NM |
| Weighted average number of shares of common stock outstanding – basic and diluted | 17,090,074 | 16,772,195 | 317,879 | 1.9% |
| (1) The Company uses a 4-4-5 close methodology, which changes the accounting periods to month-end dates that could be different from the traditional last day of the month, but labels quarterly information using a calendar convention, that is, first quarter will be labeled as ending on March 31, second quarter as ending on June 30, and third quarter as ending on September 30. | ||||
| (2) Excludes depreciation and amortization expense for the three months ended March 31, 2014 and 2013 of $428 and $358, respectively, included in cost of revenue. | ||||
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GLOBAL POWER EQUIPMENT GROUP INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) |
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| March 31, | December 31, | |
| 2014 | 2013 | |
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $ 14,693 | $ 13,942 |
| Restricted cash | 71 | 120 |
| Accounts receivable, net of allowance of $697 and $557, respectively | 69,875 | 93,484 |
| Inventories | 8,318 | 6,476 |
| Costs and estimated earnings in excess of billings | 58,509 | 41,804 |
| Deferred tax assets | 3,301 | 3,301 |
| Other current assets | 7,892 | 8,215 |
| Total current assets | 162,659 | 167,342 |
| Property, plant and equipment, net | 20,457 | 20,644 |
| Goodwill | 106,884 | 109,930 |
| Intangible assets, net | 63,243 | 60,594 |
| Deferred tax assets | 6,507 | 7,630 |
| Other long-term assets | 1,115 | 1,258 |
| Total assets | $ 360,865 | $ 367,398 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Accounts payable | $ 13,498 | $ 19,664 |
| Accrued compensation and benefits | 19,916 | 14,798 |
| Billings in excess of costs and estimated earnings | 9,054 | 12,757 |
| Accrued warranties | 2,290 | 3,261 |
| Other current liabilities | 7,179 | 8,483 |
| Total current liabilities | 51,937 | 58,963 |
| Long-term debt | 25,000 | 23,000 |
| Other long-term liabilities | 5,904 | 5,844 |
| Total liabilities | 82,841 | 87,807 |
| Commitments and contingencies | ||
| Stockholders' equity: | ||
| Common stock, $0.01 par value, 170,000,000 shares authorized and 18,381,931 and 18,294,998 shares issued, respectively, and 17,121,812 and 17,059,943 shares outstanding, respectively | 184 | 183 |
| Paid-in capital | 69,201 | 69,049 |
| Accumulated other comprehensive income | 3,385 | 3,473 |
| Retained earnings | 205,266 | 206,898 |
| Treasury stock, at par (1,260,119 and 1,235,055 common shares, respectively) | (12) | (12) |
| Total stockholders' equity | 278,024 | 279,591 |
| Total liabilities and stockholders' equity | $ 360,865 | $ 367,398 |
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GLOBAL POWER EQUIPMENT GROUP INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) |
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Three Months Ended March 31, |
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| 2014 | 2013 | |
| Operating activities: | ||
| Net loss | $ (79) | $ (1,241) |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Deferred income tax benefit | (7) | (1,086) |
| Depreciation and amortization on plant, property and equipment and intangible assets | 2,632 | 1,431 |
| Amortization on deferred financing costs | 56 | 45 |
| Stock-based compensation | 651 | 1,629 |
| Changes in operating assets and liabilities, net of businesses acquired and sold | (1,647) | 7,720 |
| Net cash provided by operating activities | 1,606 | 8,498 |
| Investing activities: | ||
| Net transfers of restricted cash | 49 | — |
| Purchase of property, plant and equipment | (796) | (788) |
| Net cash (used in) investing activities | (747) | (788) |
| Financing activities: | ||
| Repurchase of stock-based awards for payment of statutory taxes due on | ||
| stock-based compensation | (498) | (585) |
| Debt issuance costs | 8 | — |
| Dividends paid | (1,530) | (1,518) |
| Proceeds from long-term debt issuance | 12,000 | — |
| Payments of long-term debt | (10,000) | — |
| Net cash (used in) financing activities | (20) | (2,103) |
| Effect of exchange rate changes on cash | (88) | (1,103) |
| Net change in cash and cash equivalents | 751 | 4,504 |
| Cash and cash equivalents, beginning of period | 13,942 | 31,951 |
| Cash and cash equivalents, end of period | $ 14,693 | $ 36,455 |
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GLOBAL POWER EQUIPMENT GROUP INC. ADJUSTED EBITDA RECONCILIATION (in thousands) (unaudited |
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Three Months Ended March 31, |
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| 2014 | 2013 | |||
| GAAP (loss) from continuing operations | $ (72) | $ (1,201) | ||
| Add back: | ||||
| Income tax benefit | (24) | (619) | ||
| Interest expense, net | 413 | 86 | ||
| Depreciation and amortization | 2,741 | 1,431 | ||
| Stock based compensation | 651 | 1,629 | ||
| Non-GAAP adjusted EBITDA from continuing operations(1) | $ 3,709 | $ 1,326 | ||
| (1) Adjusted EBITDA from continuing operations represents income from continuing operations adjusted for income taxes, interest, depreciation and amortization, and stock based compensation. The Company believes adjusted EBITDA from continuing operations is an important supplemental measure of operating performance and uses it to assess performance and inform operating decisions. However, adjusted EBITDA from continuing operations is not a GAAP financial measure. The Company's calculation of adjusted EBITDA from continuing operations should not be used as a substitute for GAAP measures of performance, including net cash provided by operations, operating income and net income. The Company's method of calculating adjusted EBITDA from continuing operations may vary substantially from the methods used by other companies and investors are cautioned not to rely unduly on it. | ||||
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GLOBAL POWER EQUIPMENT GROUP INC. SEGMENT DATA ($ in thousands) |
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| Three Months Ended | ||||
| 3/31/2014 | 3/31/2013 | |||
| Product Solutions | (unaudited) | |||
| Revenue | $ 38,931 | $ 38,894 | ||
| Gross Profit | 9,871 | 5,957 | ||
| Gross Margin | 25.4% | 15.3% | ||
| Energy Services | ||||
| Revenue | 8,889 | 12,804 | ||
| Gross Profit | 1,586 | 1,523 | ||
| Gross Margin | 17.8% | 11.9% | ||
| Nuclear Services | ||||
| Revenue | 57,062 | 65,012 | ||
| Gross Profit | 7,021 | 8,486 | ||
| Gross Margin | 12.3% | 13.1% | ||
| Consolidated | ||||
| Revenue | 104,882 | 116,710 | ||
| Gross Profit | 18,478 | 15,966 | ||
| Gross Margin | 17.6% | 13.7% | ||
| Shipping/Service Days by Quarter | |||||
| Q1 | Q2 | Q3 | Q4 | Total | |
| 2014 | 62 | 64 | 63 | 66 | 255 |
| 2013 | 58 | 64 | 63 | 65 | 250 |
| GLOBAL POWER EQUIPMENT GROUP INC. | |||||
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BACKLOG BY SEGMENT (in thousands) (unaudited) |
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| March 31, | June 30, | September 30, | December 31, | March 31, | |
| 2013 | 2013 | 2013 | 2013 | 2014 | |
| Product Solutions | $130,198 | $145,307 | $174,907 | $176,621 | $187,560 |
| Energy Services | 21,989 | 20,226 | 18,105 | 17,028 | 20,890 |
| Nuclear Services | 235,077 | 243,331 | 215,389 | 196,674 | 174,503 |
| Total | $387,264 | $408,864 | $408,401 | $390,323 | $382,953 |
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PRODUCT SOLUTIONS ORDERS (in thousands) (unaudited) |
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| Q1 | Q2 | Q3 | Q4 | Total | |
| 2014 | $49,776 | $49,776 | |||
| 2013 | $55,899 | $51,039 | $64,277 | $80,506 | $251,721 |
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PRODUCT SOLUTIONS SHIPMENTS BY GEOGRAPHY ($ in thousands) (unaudited) |
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| 2014 | |||||||
| Products Shipped to | Q1 | Q2 | Q3 | Q4 | Total | % of total | |
| Middle East | $366 | $366 | 1% | ||||
| North America | 24,849 | 24,849 | 64% | ||||
| Asia | 4,193 | 4,193 | 11% | ||||
| South America | 2,720 | 2,720 | 7% | ||||
| Europe & Other | 6,803 | 6,803 | 17% | ||||
| Total | $38,931 | $38,931 | 100% | ||||
| 2013 | |||||||
| Products Shipped to | Q1 | Q2 | Q3 | Q4 | Total | % of total | |
| Middle East | $9,065 | $14,615 | $10,695 | 6,198 | $40,573 | 20% | |
| North America | 20,919 | 14,676 | 27,375 | 45,740 | 108,710 | 52% | |
| Asia | 4,129 | 1,315 | 7,399 | 10,781 | 23,624 | 11% | |
| South America | 3,668 | 1,325 | 8,544 | 8,244 | 21,781 | 10% | |
| Europe & Other | 1,113 | 3,999 | 564 | 7,829 | 13,505 | 7% | |
| Total | $38,894 | $35,930 | $54,577 | $78,792 | 208,193 | 100% | |