(CUI) research, news, and more from GeoInvesting

Company description

Mon, 21 May 2018 13:06:53 GMT

CUI Global, Inc., through its subsidiaries, engages in the acquisition, development, and commercialization of power and electromechanical components worldwide. The company operates in two segments, Power and Electromechanical, and Energy. The Power and Electromechanical segment offers power solutions that consists of external and embedded ac-dc power supplies, dc-dc converters, and intelligent control of energy products; components, including connectors, speakers, and buzzers; and control solutions comprising encoders and sensors, which addresses power and related accessories to consumer electronics, medical, and defense industries. The Energy segment provides natural gas infrastructure and advanced technologies, including metering, odorization, remote telemetry units, and a range of personalized gas engineering solutions to the gas utilities, power generation, emissions, manufacturing, and automotive industries. CUI Global, Inc. was founded in 1998 and is based in Tualatin, Oregon.

Research

Mon, 20 May 2019 14:11:16 GMT

Closing Out Our Speculative Long Position In CUI

On June 1, 2018, we initiated a starter position in Cui Global Inc. (NASDAQ:CUI) ($0.99, $28.6M market cap) while we prepared our RFT (Reasons for Tracking), eventually publishing it two weeks later on June 14, 2018. We continued to hold a very small position as numerous regulatory risks weighed on the story.

The decision for our speculative play was based on a chance that the company's business in Italy and U.K., supported by large backlogs, would begin to materialize. Part of the reason some of the backlog was not being monetized was regulatory issues and gridlock in the Italian government. It's nearly 11 months later and these issues still seem to be present. Furthermore, the move last week of entering a non-binding letter of intent to acquire 4 companies by issuing 160 million shares caught us by surprise and seems out of focus, even though the company feels the transaction will result in combined EBITDA of $43 million. One of the red flags we had talked about in the original RFT note was management's propensity to over-promise/under-deliver through a highly acquisitive growth strategy. We will wait and see how recent developments play out. Stay tuned for a case study pointing out where we went wrong in CUI. Remember, we sometimes learn more from our failures than our successes.

Research

Tue, 19 Mar 2019 14:20:53 GMT

Cui Global Inc. (NASDAQ:CUI) ($1.42, $40.5M market cap), a company that operates through the acquisition and development of innovative companies, products, and technologies announced Q4 2018 results:

Sales of $27.0 million vs $21.1 million in the prior year and ahead of analyst estimates of $23.8 million
Non-GAAP net loss of $0.09 vs a net loss of $0.09 in the prior year and missed analyst estimates of a loss of $0.06

"We delivered record revenues and are reporting a very strong consolidated backlog exiting 2018 while executing on initiatives across our two business segments to sustain our growth trajectory....

...Looking ahead, our optimism for continued growth is founded in a broadened Energy opportunity-set and continued strong P&EM performance. As the evolution of the global energy mix towards less carbon-intensive sources gains pace, we have positioned our gas technology solutions to take advantage of the shift towards natural gas and renewable natural gases (RNG), such as biomethane. The regulatory environment is also becoming increasingly favorable as energy authorities globally advance pipeline reform that include RNGs. Against this backdrop we remain focused on driving further adoption of our gas technology solutions: California's recent adoption of a biomethane procurement program advances the state's environmental and energy policies and should catalyze demand for our biomethane-to-grid solutions, joining an already robust biomethane market in the U.K.; the certification process for GasPT with a leading global turbine manufacturer has resumed, and we have line-of-sight to a limited-scale public utility deployment in North America; and our strategic partnership with SAMSON puts GasPT in front of every energy operator of significance globally."

On June 1, 2018, we initiated a starter position in CUI while we prepared our RFT (Reasons for Tracking) that we published two weeks later on June 14, 2018. We continue to hold a very small position as numerous regulatory risk surround the story. See our reasons for tracking for more color on this.

Research

Wed, 07 Nov 2018 17:07:26 GMT

Cui Global Inc. (NASDAQ:CUI) ($1.69, $48.2M market cap), a company that operates through the acquisition and development of innovative companies, products, and technologies, announced Q3 2018 results:

Sales of $24.7 million vs $21.8 million in the prior year
Loss per share of $0.05 vs loss of $0.09 in the prior year

"Looking ahead, multiple inflection points give us confidence in a revenue ramp in 2019 driven by higher Energy product sales and order flow for our ICE technology," concluded Mr. Clough. "We are implementing pre-sales initiatives and pilot projects in North America to expand our opportunity-set for GasPT as a fiscal monitoring solution while progressing the certification of GasPT for process control applications. Our exclusive global distributor relationship with SAMSON AG is helping build market awareness and speed adoption of our GasPT solution and puts us directly in front of their global customer base's transition to a low carbon future centered on natural gas and biogas. Energy segment momentum extends to our VE sampling systems where several existing customers are expanding their deployments. We also announced yesterday a partnership with Mitsubishi Electric for our next generation IRIS system with the first production units expected to market early next year. In our Power and Electromechanical segment, we are working on multiple proof of concepts with data center ecosystem participants, as illustrated by SAP Innovation Labs' recent selection of the ICE Block for a field trial, to secure volume orders in 2019. Growing market adoption for our products across our two business segments and more diversified revenue opportunities put us firmly on a path for growth."

On June 1, 2018, we initiated a starter position in CUI while we prepared our RFT (Reasons for Tracking) that we published two weeks later on June 14, 2018. We have a very small position due to the numerous risks involved, but we want to be in the stock in case of a major regulatory win for the company once the Italian government stabilizes, which could allow large contracts in the pipeline to be monetized. Until then, significant uncertainty remains as to the timing of profitability. As explained in our RFT, we had some slight reservations regarding the CEO’s ability to deliver profitable growth during his lengthy tenure at CUI.

Research

Thu, 09 Aug 2018 14:03:16 GMT

Cui Global, Inc. (NASDAQ:CUI) ($2.23, $63.6M market cap) - There was insider buying reported on two Form 4’s filed on August 8 as the stock dipped after Q2 numbers. CUI is a company that engages in the acquisition, development, and commercialization of power and electromechanical components worldwide

The CEO purchased 10,000 shares and the CFO purchased 2,750 shares at average prices around $2.23. We also noticed from the company’s conference call that they reiterated language they first used on the Q1 CC suggesting they would be cash flow positive in the second half of the year.

Research

Tue, 07 Aug 2018 04:00:00 GMT

** Potential Conference Call InfoArb

CUI Global, Inc. (NASDAQ:CUI) ($2.38, $68M market cap) - We believe we have found some information arbitrage in the CUI conference call transcript. The company affirmed their goal to be cash flow positive during the second half of this year based on their expectations that the energy segment will begin to show improvement in the second half of 2018. Overall, the two paragraphs below also show that customers in Italy will likely be ready to go once the regulatory environment gets better for the company there. To the best of our understanding, the company had already delivered 50 of its GasPT units in Italy and once regulatory issues are resolved, we expect the remaining amount of product to be sold.

Notes from the conference call transcript:

“From our perspective, we are ready to begin Italian deliveries immediately upon notifications from Socrates. I would however remind everyone that Socrates has approximately 350 GasPT units, some portion of which will need to be progressed through installations before a second purchase order is issued to us.

As a further reminder, the Italian re-metering project is fully funded and given the advantages of GasPT from an ROI and technology standpoint, our device remains integral to the gas operators' infrastructural plans. A restart of the Italy project remains a when and not an if, and when it does, it will have a significant positive impact on our future revenues, earnings and cash flows.

Staying with Europe for a moment longer, let me update you on our Italy project.

With the recent formation of an Italian government, our partner Socrates has made operational inquiries to us in support of a restart of the re-metering project. Discussions around build schedules and lead times have taken place, however, I want to stress that no timetable has been communicated to us. This is nevertheless a positive development. But we're cognizant of the fact that Italy had been without a government for several months, and the new government has a backlog of business to which it must attend.”

CUI is a company that engages in the acquisition, development, and commercialization of power and electromechanical components worldwide.

Research

Mon, 06 Aug 2018 15:08:55 GMT

Cui Global Inc. (NASDAQ:CUI) ($2.65, $75.5M market cap), a company that operates through the acquisition and development of innovative companies, products, and technologies, today announced unaudited second quarter 2018 financial results.

Sales of $23.1 million vs $22.5 million in the prior year
Non-GAAP EPS of -$0.09 vs -$0.06 in the prior year

“Our second quarter performance illustrates continued strength in our P&EM segment that provides us with a stable and profitable foundation for our consolidated business as we pursue sizeable growth prospects in our Energy segment. Uptake of our advanced gas measurement systems, however, remains slow as we continue to seed the market with customers that can scale their orders as their confidence in our innovative gas products builds,” stated William Clough, president and CEO of CUI Global. “During the quarter we saw signs of traction with a series of orders for biomethane applications in the U.K. following the recent broader certification of our GasPT analyzer by the U.K. energy regulator, Ofgem. In our P&EM segment, we continued to promote awareness of our key growth driver, our ICE technology, to the datacenter market following receipt of UL and TUV certifications.”

“As we look ahead to the balance of the year, business development activities cultivated over the past two years offer us the opportunity for incremental Energy revenue as we await a restart to our Italian contract”

“The recent passage of the Domestic Renewable Heat Incentive that incents biomethane generation in the U.K. is catalyzing demand for our integration capabilities and products in-country. Subsequent to the quarter we entered into a Memorandum of Understanding with SAMSON AG to establish our first global Energy products sales and distribution partnership and access to previously untapped large gas markets. We also secured key industry validation from one of Europe’s leading manufacturers of biomethane-to-grid solutions for our GasPT technology as a direct replacement to its legacy gas analyzers, validation that was acknowledged by market leaders in attendance at our presentations at the recent World Gas Conference. The U.K. and other avenues for Energy segment revenue we have developed over the past two years, together with continued strong performance from our P&EM segment, keep us on a path to long-term growth.”

As expected, this earnings report didn’t surprise us much. Our only thesis with CUI is the company getting its Italian business back on track once the regulatory environment improves. Management offered little color on the resumption of its Italian contract, tempering this uncertainty with comments on growth opportunities and the strength of it P&EM segment.

Research

Mon, 16 Jul 2018 14:28:59 GMT

CUI Global Inc. (NASDAQ:CUI) ($2.83; $80.6m market cap), a company that engages in the acquisition, development, and commercialization of power and electromechanical components worldwide, announced it has secured a $660,000 contract:

“from a major UK gas operator for its large scale, biomethane metering skids that includes the Company's proprietary GasPT® analyzer and VE Technology® sample probe. The contract, valued at £500,000 (USD $660,000), is for the first of several skids anticipated to be designed, built, and delivered to the customer following the UK's recent approval of the Domestic and Non-Domestic Renewable Heat Incentive ("RHI") Scheme, which went into effect on May 22, 2018.”

We highlighted CUI in our June 1, 2018 email when we took a starter position. You can see our full reasons for tracking the company here.

Reasons For Tracking

Thu, 14 Jun 2018 15:06:55 GMT

Will Regulatory Headwinds Turn into Tailwinds For CUI Global, Inc. (CUI)?

Today, we’ve published a full RFT on CUI Global Inc. (NASDAQ:CUI) ($2.76; $78.6m market cap), a company that engages in the acquisition, development, and commercialization of power and electromechanical components worldwide. We highlighted CUI in our June 1, 2018 email when we mentioned we took a starter position as we continued our due diligence.

See our full reasons for tracking CUI here.

Research

Fri, 01 Jun 2018 16:26:15 GMT

Taking Starter Position In CUI As We Continue Our Due Diligence

We are working on finalizing our full reasons for tracking, however, we need to speak with management one more time to gain more clarity on several items which could positively or negatively impact a buy decision that we will make today.

Cui Global, Inc. (NASDAQ:CUI) ($2.78; $79.2M market cap) will be our next Reason For tracking (RFT). I interviewed management on Friday (May 25, 2018), after market close, but the interview was cut short due to Memorial Day commitments that management had to attend. A follow up interview is in the works. I have a general idea of the potential reward and risks associated with investing in CUI. Buying CUI entails substantial risk. The company has a deep history of losing money, and some chips need to fall into place in order for the company to turn a profit (most notably, a stabilization of the political climate in Italy regarding formation of a government) so that a growing list of opportunities can start being monetized, including a large partially executed contract that had to be halted. It looks like “warring” factions in Italy are are finally making progress when they swore in a government this morning.

If headwinds abate, really big near-term upside could exist. I am not ready to form a long-term opinion on the stock at this time, but am buying a little CUI with funds I set aside for speculative names, in case short-term catalysts occur and can put a company in position to start reporting quarterly profits. Some of my concern lies in uncertainty I have with the time range that I think profitability can be achieved, which I have estimated would occur either in 2018 or 2019. Furthermore, a bullish thesis assumes that many game changing irons in the fire materialize.

Valuing CUI is currently is a tough task since some unknowns are present that could shift the story meaningfully to the positive or decidedly to the negative. We will have more on this in our final RFT.

We also want to make sure our positive interpretation of the political developments are accurate.

Background

Divisions

CUI’s revenue is generated through two business units.

Power and Electromechanical (P&EM) Acquired 2008; 80% of revenue in 2017. Two divisions:

Power solutions - External and embedded ac-dc power supplies, dc-dc converters and basic digital point of load modules and offering a technology architecture that addresses power and related accessories.
Components - Connectors, speakers, buzzers, and industrial control solutions including encoders and sensors. These offerings provide a technology architecture that addresses power and related accessories to industries as broadly ranging as telecommunications, consumer electronics, medical and defense.

Energy Acquired in 2013; 40% of revenue; 20% of revenue in 2017

The Energy segment subsidiaries, collectively referred to as Orbital, ha

Research

Mon, 21 May 2018 15:04:50 GMT

Possible Reasons For Tracking (RFT)

We may put out an RFT on Cui Global, Inc. (NASDAQ:CUI) ($2.94; $83.8M market cap) due to commentary regarding its turnaround in the Q1 2018 conference call. CUI engages in the acquisition, development, and commercialization of power and electromechanical components worldwide. We are digging into the Q1 release and recent filings to learn more about the Company.