--- the subscriber area has no ads and those above are not selected or endorsed by this site ---


CUI Global 4Q18 results -2

17:13 18-Mar-19


CUI Global's call was short, and management opened it by attempting to brush aside non-cash charges as "a lot of accounting noise."  It makes some good points about top line growth, and it continues to move to avoid dilution, which is admirable.  Coordination with customers is still concerning, though.  In U.K., FPM has been delayed by 1 year due to sensor problem not related to CUI Global.  Similarly, Italian gas regulations require monitoring for 2020-2025 that only CUI Global can provide.  Consequently, management characterizes business there as a matter of when, not if.  That glosses over the fact that when can still be a life or death question.  The good news is that Orbital Goodwill has been fully written down, and the sale and lease-back of corporate headquarters was not recognized last quarter.  That means next report should look better, but not with fundamental impact, which is reciprocal to this report

Demand in both the natural gas and data center markets are looking progressively more favorable.  California's commitment to biomethane is one example of this, as is Canadian certification of GasPT.  Natural gas fueled tankers are a longer term opportunity which requires applicable monitoring.  That said, governments in Italy and the U.K. need to start moving forward in more meaningful ways.  If that doesn't happen in the next quarter or so, management will probably still have to raise cash.  Management continues to expect data center orders this year, but I very much doubt they will come soon enough for balance sheet purposes.

On 3/18/19 4:25 PM, Esekla wrote:

CUI Global has reported its earnings for the fourth quarter:

  • a loss of 27 cents per share misses by 21 cents
  • on $27M in revenue, which beats by $3.2M

The big EPS miss is due to write-downs on slow moving contracts, which is not too surprising given Brexit.  Additionally, the company is taking ~20% stake in VPS, its data center partner on ICE blocks and switches, and is improved its terms of credit.  The conference call begins shortly, more after that.