Dynex Power Announces 2018 Second Quarter Results
Results in line with guidance
Listing: TSX Venture Exchange
Symbol: DNX
LINCOLN, England, Aug. 29, 2018 /CNW/ - Dynex Power Inc. (TSXV: DNX), a leading, high power semiconductor company, today announced its financial results for the second quarter ended June 30, 2018.
Summary financial information for the three months to June 30, 2018 is as follows:
| Canadian Dollars (000's) |
June 30, 2018 |
June 30, 2017 |
||
| Revenue |
10,590 |
11,546 |
||
| Gross Profit/(Loss) |
265 |
998 |
||
| Other Income, Expenses and Costs |
(2,013) |
(2,133) |
||
| (Loss) before Tax |
(1,748) |
(1,135) |
||
| Income Tax Recovery |
322 |
191 |
||
| Net (Loss) |
(1,426) |
(944) |
||
| EBITDA |
(299) |
270 |
||
| Operating cash |
(1,501) |
2,099 |
||
| Common shares outstanding – diluted |
80,509,047 |
80,509,047 |
||
| (Loss) per share in Canadian Dollars - diluted |
(0.02) |
(0.01) |
First quarter revenue of $10.6 million was 8% lower than the corresponding quarter of last year, or, 10% lower before the impact of exchange rates. Gross margin was 2.5% of revenue, compared with a gross margin of 8.6% in the corresponding quarter in 2017. The reduction in gross margin in 2018 reflects lower revenues and an unfavourable product mix in a high fixed cost business.
The combination of other income, expenses and costs represented 19.0% of revenue in the second quarter compared to 18.4% in the corresponding period in 2017. The absolute level of such expenditure decreased by $120,000 compared to the corresponding period of last year.
As a consequence of these results, the Company recorded a loss before tax of $1,748,000 compared to a loss before tax of $1,135,000 in the corresponding quarter of last year. The net loss after tax for the quarter was $1,426,000 or $0.02 per share, compared with a net loss of $944,000, or $0.01 per share, in the corresponding period of last year.
EBITDA for the quarter was negative $299,000 compared with a positive $270,000 in the corresponding period last year.
Operating cash outflow was $1,501,000 for the quarter compared with an inflow of $2,099,000 in the corresponding period of last year.
Clive Vacher, President and Chief Executive Officer, commented, "In my Q1 report, I stated that the second quarter performance would be broadly similar to that of the first, albeit with modest cash usage, and this has indeed been the case. The losses are attributable to the diminished order book in the first half of the year. However, the increased focus on improvements in sales and marketing are starting to show positive results. Our June order intake was the highest since July 2016 in sterling terms, and the full-quarter book-to-bill was 1.1.
"More importantly, our focus on new product introduction, improved product quality and cost reduction is starting to yield dividends in terms of orders. We are seeing improved customer interest across our new IGBT module lines, and expect volume orders for our new 3.3kV and 4.5kV modules during quarters 3 and 4 2018. This, coupled with new bipolar and power assemblies order discussions that are at an advanced stage, gives Management confidence to expect that the quarter 3 book-to-bill will continue to show improvement.
"In addition, we are now able to demonstrate, to customers, improved performance of Dynex IGBT modules, versus competitor products. This is in line with our aim to turn Dynex into a technological leader in the industry on the latest-generation power semiconductors. It has also given us the confidence to launch a project aimed at a substantial increase in manufacturing capacity, to be on-line in late 2018 and early 2019, in anticipation of the refreshed and expanded product range yielding significant incremental orders.
"The timing of the volume orders for our new products continues to present us with a short-term challenge, due to the timeframes of qualification by customers. Management expects that quarter 3 results will be similar to quarters 1 and 2. Our expectation for quarter 4 is to show improvement in financial results, as we start to execute the improved order book. Thereafter, our performance will largely depend on successfully turning the current customer interest into firm orders during the second half of 2018.
"Overall, therefore, we are continuing to position Dynex for a bright future. However, it will take some more time for this to translate into our commitment to sustained profitability."
Liu Ke'an, the Chairman of Dynex, added, "While the financial results are still a considerable distance from where they need to be, the Dynex team delivered on their quarter 2 guidance. I am impressed with the improvements in product development and quality over the first half of 2018. All indications are that, in releasing new products, Dynex will be able to capitalise on future market opportunities. I look forward to progressive improvement to profitability over the coming quarters."
Forward-looking Statements
In commenting on its expectations, the Company cautioned existing and potential shareholders about relying on the Company's expectations in that the Company's expectations contain forward looking statements and assumptions which are subject to the risks and uncertainties of the markets and the future, which could cause actual results to differ materially from expectations, and which are each difficult and subjective to forecast. Certain of those risks and uncertainties are discussed in the Management's Discussion and Analysis for the quarter ended September 30th , 2017 and include, among other things, risks and uncertainties relating to: the level of worldwide demand for power semiconductors and power semiconductor assemblies; the level of investment in power electronic equipment, electrification of transport systems, alternative power generation and high quality power transmission and distribution; and fluctuations in exchange rates between Canadian Dollars, Sterling, US dollars and Euros. As a consequence of these and other risks and uncertainties, shareholders and potential investors must make their own independent judgments about the accuracy and reliability of the Company's expectations. Dynex disclaims any intention or obligation to update or revise any forward looking statement whether as a result of new information, future events or otherwise.
About the Company
Dynex designs and manufactures high power bipolar semiconductors, high power insulated gate bipolar transistor (IGBT) modules and die, high power electronic assemblies and radiation hard silicon-on-sapphire integrated circuits (SOS IC's). The company's power products are used worldwide in power electronic applications including electric power transmission and distribution, renewable and distributed energy, marine and rail traction motor drives, aerospace, electric vehicles, industrial automation and controls and power supplies. The Company's IC products are used in demanding applications in the aerospace industry. Dynex Semiconductor Ltd is its only operating business and is based in Lincoln, England in a facility housing the fully integrated silicon fabrication, assembly and test, sales, design and development operations. In 2008, a majority of the shares of Dynex were acquired by Zhuzhou CSR Times Electric Co., Ltd. In April 2016 this company changed its name to Zhuzhou CRRC Times Electric Co., Ltd.
Zhuzhou CRRC Times Electric Co., Ltd. is based in Hunan Province in the People's Republic of China. It is listed on the Hong Kong Stock Exchange. CRRC Times Electric is mainly engaged in the research, development, manufacture and sales of locomotive train power converters, control systems and other train-borne electrical systems, as well as the development, manufacturing and sales of urban railway train electrical systems. In addition, CRRC Times Electric is also engaged in the design, manufacturing and sales of electric components including power semiconductor devices for the railway industry, urban railway industry and non-railway purposes.
Press announcements and other information about Dynex are available at www.dynexpower.com.
Further information on CRRC Times Electric can be found at www.timeselectric.cn/en
All monetary values expressed in this release are in Canadian Dollars unless stated otherwise.
The TSX Venture Exchange has neither approved nor disapproved of the information in this press release.
| DYNEX POWER INC. |
|||||
| Interim Condensed Consolidated Statements of Comprehensive Income (unaudited) in Canadian Dollars |
|||||
| Quarter Ended June 30th, 2018 |
|||||
| 3 months |
3 months |
YTD |
YTD |
||
| Jun 30th |
Jun 30th |
Jun 30th |
Jun 30th |
||
| 2018 |
2017 |
2018 |
2017 |
||
| Note |
Note |
$ |
$ |
||
| Revenue |
5, 6 |
10,590,361 |
11,546,462 |
21,167,219 |
23,099,110 |
| Cost of sales |
(10,325,532) |
(10,548,470) |
(20,011,147) |
(19,368,800) |
|
| Gross profit |
264,829 |
997,992 |
1,156,072 |
3,730,310 |
|
| Other income |
6 |
58,272 |
48,038 |
130,882 |
86,401 |
| Sales and marketing expenses |
(470,972) |
(391,691) |
(950,250) |
(697,628) |
|
| Administration expenses |
(1,125,475) |
(839,787) |
(2,445,683) |
(2,371,437) |
|
| Research and development expenses |
7 |
(377,457) |
(725,618) |
(948,741) |
(919,998) |
| Finance costs |
(175,100) |
(182,738) |
(386,957) |
(323,332) |
|
| Other (losses)/gains |
77,666 |
(41,600) |
14,324 |
(94,395) |
|
| Loss before tax |
7 |
(1,748,237) |
(1,135,404) |
(3,430,353) |
(590,079) |
| Income tax recovery |
322,678 |
191,795 |
625,657 |
52,269 |
|
| Net loss |
(1,425,559) |
(943,609) |
(2,804,696) |
(537,810) |
|
| Other comprehensive (loss)/ income |
|||||
| Items that may be reclassified subsequently to net profit/loss: |
|||||
| Exchange differences on translation of foreign operations (net of tax of $nil) |
(1,075,715) |
461,726 |
629,595 |
648,136 |
|
| Total comprehensive (loss)/income for the period |
(2,501,274) |
(481,883) |
(2,175,101) |
110,326 |
|
| Loss per share |
|||||
| Basic |
8 |
(0.02) |
(0.01) |
(0.03) |
(0.01) |
| Diluted |
8 |
(0.02) |
(0.01) |
(0.03) |
(0.01) |
| DYNEX POWER INC. |
||||
| Interim Condensed Consolidated Statement of Financial Position (unaudited) in Canadian Dollars |
||||
| As at June 30th, 2018 |
||||
| Jun 30th |
Dec 31st |
|||
| 2018 |
2017 |
|||
| Note |
$ |
$ |
||
| NON-CURRENT ASSETS |
||||
| Intangible assets |
9 |
1,307,871 |
1,475,016 |
|
| Property, plant & equipment |
9 |
28,277,746 |
29,338,663 |
|
| Deferred tax asset |
2,003,012 |
1,292,441 |
||
| Total non-current assets |
31,588,629 |
32,106,120 |
||
| CURRENT ASSETS |
||||
| Inventories |
11,742,820 |
10,961,596 |
||
| Trade receivables |
5,002,936 |
4,637,011 |
||
| Amounts owing from group undertakings |
13 |
8,649,853 |
8,704,381 |
|
| Prepayments, deposits & other receivables |
2,621,607 |
2,138,954 |
||
| Cash |
4,410,480 |
3,564,624 |
||
| Total current assets |
32,427,696 |
30,006,566 |
||
| CURRENT LIABILITIES |
||||
| Trade payables |
3,273,246 |
1,271,903 |
||
| Amounts owing to group undertakings |
13 |
6,872,102 |
3,701,225 |
|
| Other payables and accruals |
4,837,061 |
7,204,708 |
||
| Borrowings |
10 |
22,702,710 |
20,292,764 |
|
| Provisions |
58,306 |
173,339 |
||
| Total current liabilities |
37,743,425 |
32,643,939 |
||
| Jun 30th |
Dec 31st |
|||
| 2018 |
2017 |
|||
| Note |
$ |
$ |
||
| NON-CURRENT LIABILITIES |
||||
| Borrowings |
10 |
2,124,228 |
3,146,100 |
|
| Provisions |
52,058 |
50,932 |
||
| Total non-current liabilities |
2,176,286 |
3,197,032 |
||
| NET ASSETS |
24,096,614 |
26,271,715 |
||
| EQUITY |
||||
| Share capital |
11 |
37,096,192 |
37,096,192 |
|
| Accumulated deficit |
(14,169,838) |
(11,365,142) |
||
| Foreign currency translation reserve |
1,170,260 |
540,665 |
||
| TOTAL EQUITY |
24,096,614 |
26,271,715 |
||
| DYNEX POWER INC. |
||||
| Interim Condensed Consolidated Statement of Changes in Equity (unaudited) in Canadian Dollars |
||||
| Six Months Ended June 30th, 2018 |
||||
| Share |
Deficit |
Foreign |
Total |
|
| $ |
$ |
$ |
$ |
|
| At January 1st, 2017 |
37,096,192 |
(10,528,225) |
(259,137) |
26,308,830 |
| Total comprehensive income for the period |
- |
(537,810) |
648,136 |
110,326 |
| At June 30th, 2017 |
37,096,192 |
(11,066,035) |
388,999 |
26,419,156 |
| Total comprehensive (loss)/income for the period |
- |
(299,107) |
151,666 |
(147,441) |
| At December 31st, 2017 |
37,096,192 |
(11,365,142) |
540,665 |
26,271,715 |
| Total comprehensive (loss)/income for the period |
- |
(2,804,696) |
629,595 |
(2,175,101) |
| At June 30th, 2018 |
37,096,192 |
(14,169,838) |
1,170,260 |
24,096,614 |
| DYNEX POWER INC. |
||||
| Interim Condensed Consolidated Statement of Cash Flows (unaudited) in Canadian Dollars |
||||
| Six Months Ended June 30th, 2018 |
||||
| YTD |
YTD |
|||
| Jun 30th |
Jun 30th |
|||
| 2018 |
2017 |
|||
| Note |
$ |
$ |
||
| CASH FLOW FROM OPERATING ACTIVITIES |
||||
| Loss before tax |
(3,430,353) |
(590,079) |
||
| Finance costs recognised in loss before tax |
386,957 |
323,332 |
||
| Investment income recognised in loss before tax |
- |
542 |
||
| Amortization of intangible assets |
202,865 |
103,079 |
||
| Depreciation of property, plant & equipment |
2,353,860 |
2,309,759 |
||
| Loss on disposal of property, plant & equipment and intangibles |
186 |
- |
||
| Provision for slow moving and obsolete inventory |
302,653 |
(3,179,780) |
||
| Non cash movement in provisions |
- |
42,294 |
||
| Movements in working capital |
12 |
968,754 |
3,211,927 |
|
| Income taxes paid |
(66,964) |
(64,859) |
||
| Net cash generated by operating activities |
717,958 |
2,156,215 |
||
| CASH FLOW FROM INVESTING ACTIVITIES |
||||
| Payments for intangible assets |
- |
(9,522) |
||
| Payments for property, plant & equipment |
(617,585) |
(1,012,384) |
||
| Interest received |
- |
(542) |
||
| Net cash used in investing activities |
(617,585) |
(1,022,448) |
||
| CASH FLOW FROM FINANCING ACTIVITIES |
||||
| Proceeds from borrowings |
2,313,327 |
1,382,927 |
||
| Repayments of borrowings |
(1,432,839) |
(1,202,716) |
||
| Interest paid |
(216,511) |
(148,176) |
||
| Payments for other finance costs |
- |
(14,465) |
||
| Net cash generated by financing activities |
663,977 |
17,570 |
||
| NET INCREASE IN CASH |
764,350 |
1,151,337 |
||
| Cash at beginning of period |
3,564,626 |
898,855 |
||
| Effect of foreign currency translation on cash |
81,504 |
(9,739) |
||
| CASH AT END OF PERIOD |
4,410,480 |
2,040,453 |
||
SOURCE Dynex Power Inc.
Clive Vacher, President and Chief Executive Officer; Alan Lyons, Chief Financial Officer, Dynex Power Inc., Tel: +44 1522 500 500, Email: [email protected]
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