Gennum Reports Strong Third Quarter of Growth and Earnings Increase
Achieves Fifth Consecutive Quarter of Revenue Growth
BURLINGTON, ON, Sept. 22 /CNW/ - Gennum Corporation (TSX: GND) today reports unaudited financial results for the third quarter of fiscal 2010. Third quarter revenue of $34.4 million increased 61% over the third quarter of 2009 and diluted earnings per share was $0.15 compared to a loss of $0.12 in 2009.
(in millions of U.S. dollars except per share amounts)
2010 2009
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Third quarter
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Revenue 34.4 21.4
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Gross margin 25.1 14.7
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Gross margin as a percentage of revenue 72.9% 68.9%
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Restructuring charge - 5.5
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Operating income (loss) 7.6 (5.2)
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Adjusted EBITDA* 10.6 2.9
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Net earnings (loss) 5.3 (4.3)
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Net earnings (loss) per share (xx) $0.15 ($0.12)
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* See note regarding non-GAAP financial measures below.
(xx) All per share amounts are basic and diluted.
"The third quarter was a strong performance with revenues up 9% and profits up 31% over the previous quarter as we saw strong demand during the quarter" said Dr. Franz Fink, President and Chief Executive Officer of Gennum. "We've launched one of the most innovative crosspoint product portfolios in the industry and we have more high-speed optical, analog and mixed signal products in the pipeline. We feel confident about our future and remain committed to our investment in innovation."
Gennum recorded its fifth consecutive quarter of revenue growth, with revenue growing 9% over the second quarter of 2010. Third quarter and year-to-date 2010 revenue represented a 61% and 59% increase respectively over the comparable periods in 2009.
Operating income in the third quarter of 2010 was $7.6 million compared to an operating loss of $5.2 million in the third quarter of 2009. The improvement was driven primarily by increased sales volumes. Restructuring charges taken in the third quarter of 2009 were partially offset by higher operating expenses, primarily research and development, in the third quarter of 2010. Net earnings in the third quarter of 2010 was $5.3 million or $0.15 per share compared to a net loss of $4.3 million or a loss per share of $0.12 in the third quarter of 2009.
Adjusted EBITDA* in the third quarter of 2010 was $10.6 million, up $7.7 million compared to the third quarter of 2009 and up $1.4 million compared to the prior quarter.
Outlook
Gennum's third fiscal quarter of 2010 was its fifth consecutive quarter of revenue growth. Gennum achieved 9% growth over its fiscal second quarter of 2010 and 61% over the comparable quarter in 2009. Sales of new products continue to grow and now account for 37% of total product sales.
We are encouraged by the continuing solid demand that we are experiencing. Our current order book is similar to our order book at this time in the third quarter. With our current revenue outlook, we expect to deliver another solid quarter of operating income, in line with our business model, and to achieve another quarter of positive cash flow.
Independent of the short-term market environment, we remain confident in our strategy. Our commitment to introducing innovative new products continues to be validated with the increasing percentage of our sales from these new products, expanding customer engagements and increasing penetration into our global markets.
New Product Introductions
During the third quarter, Gennum introduced six new 3Gb/s crosspoint products. The crosspoint family, anchored by the industry's largest video switch at 290x290, enables equipment manufacturers and broadcasters to more effectively handle next-generation video formats and the increasing data rate requirements in the studio. We are sampling our new crosspoints now and expect to begin full production in the fourth quarter of 2010.
Dividend
Gennum has declared a regular cash dividend of 3.5 cents per share Canadian to be paid on October 20, 2010 to shareholders of record on October 6, 2010.
Our interim financial statements for the third quarter of 2010 and the related management's discussion and analysis have been filed and may be viewed on our website (www.gennum.com) and on SEDAR (www.sedar.com).
Download the complete financial results (PDF)
http://www.gennum.com/extranet/file/q3fy10-financials.pdf
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Gennum will hold a conference call to discuss third quarter results on
Wednesday, September 22, 2010 at 5:30 pm (EST). To access the call,
participants should dial 1-877-974-0446. The conference call will also be
webcast live at www.gennum.com or www.newswire.ca and subsequently
archived on the Gennum site. A rebroadcast of the call will be available
until midnight on October 22, 2010. To access the rebroadcast, dial 1-
877-289-8525 and enter the passcode 4360264 followed by the number sign.
Download a slide presentation to accompany the discussion at
http://www.gennum.com/q3fy10-downloads.
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About Gennum Corporation
Gennum Corporation (TSX: GND) designs innovative semiconductor solutions and intellectual property (IP) cores for the world's most advanced consumer connectivity, enterprise, video broadcast and data communications products. Leveraging the company's proven optical, analog and mixed-signal products and IP, Gennum enables multimedia and data communications products to send and receive information without compromising the signal integrity. Recognized as an award winner for advances in high definition (HD) broadcasting, Gennum is headquartered in Burlington, Canada, and has global design, research and development and sales offices in Canada, Mexico, Japan, Germany, United States, Taiwan, India and the United Kingdom. www.gennum.com
Note Regarding Non-GAAP Financial Measures: "EBITDA" is a non-GAAP financial measure which does not have a standardized meaning under Canadian generally accepted accounting principles ("GAAP") and is therefore unlikely to be comparable to similar measures presented by other issuers. We define EBITDA as earnings before interest, taxes, depreciation and amortization (related to intangible assets and stock-based compensation). We define adjusted EBITDA as EDITDA before restructuring charges and deferred development impairments. Further information regarding these terms, a description of why management believes they are useful measures, and a quantitative reconciliation to the most directly comparable measures calculated in accordance with GAAP are set forth under the heading "Non-GAAP Reporting - EBITDA" in our MD&A for the quarter ended August 31, 2010.
Caution Regarding Forward-Looking Information
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This document contains statements which constitute forward-looking statements. These forward-looking statements are not descriptive of historical matters and may refer to management's expectations or plans. These statements include but are not limited to statements concerning: Gennum's business objectives and plans including Gennum's corporate strategy and strategic priorities; Gennum's future financial performance and prospects including revenues, gross margins, earnings and Gennum's ability to achieve targeted operating income and cash flow levels; future trends in the semiconductor and intellectual property licensing industries and, in particular, market trends for analog and mixed-signal products, optical products and intellectual property products and licensing; Gennum's expectations for sales and licensing of its products in these markets including anticipated costs, sales, size, duration, growth or decline of market opportunities and competitive and pricing pressures in these markets; Gennum's product roadmap and the speed at which Gennum is able to introduce new products; the adoption of new standards in the markets in which Gennum competes and the ability of Gennum to anticipate these changes and successfully address new opportunities; sales and capital spending plans and estimates, shipment levels and operating expenses; exchange rate fluctuations in, and the relative values of, the Canadian dollar, the U.S. dollar and the Japanese yen; Gennum's ability to finance its growth plans and make necessary investment; and litigation in which Gennum is involved or might become involved with.
Inherent in forward-looking statements are risks and uncertainties beyond Gennum's ability to predict or control including, but not limited to, risks associated with: competitive and pricing pressures in the increasingly competitive environment in which Gennum operates; economic cycles in the semiconductor industry including downturns which can result from adverse general economic conditions; our ability to anticipate needs for future products and successfully execute our product roadmap, including the possibility of the emergence of disruptive technologies which negatively impact our positioning in the marketplace; the risk that unforeseen factors may arise that result in us not being able to achieve our operating income targets; fluctuations in foreign exchange rates and their potential adverse impact upon our financial results; our reliance on external foundries and suppliers and the potential adverse effects of disruptions in any of these arrangements; the successful integration of acquisitions and the ability to achieve expected synergies and operating efficiencies within expected time-frames (or at all); our ability to attract and retain key personnel necessary for our business; our ability to successfully protect our intellectual property rights; and the initiation and outcome of legal proceedings. Readers should also refer to the sections entitled "Risks and Uncertainties" in our 2009 annual report and "Risk Factors" in our most recent annual information form.
Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this document. Such statements are based on a number of assumptions which may prove to be incorrect including, but not limited to, the following assumptions: there is no material deterioration in the business and economic conditions in the marketplace for Gennum's products; Gennum's expectations regarding market trends for analog and mixed-signal products, optical products and intellectual property products and licensing are not materially incorrect; Gennum is able to execute its product roadmap without delays or disruptions having a material impact on Gennum; Gennum's expectations relating to the needs and direction of the marketplace for its products are within reasonable bounds of accuracy and Gennum is able to introduce products and capitalize on new opportunities generally as expected; our ability to successfully predict our operating expenses; material disruptions in the manufacture and supply of products and services to Gennum by foundries and suppliers will not materialize; Gennum's expectations relating to competitive pressures, including pricing pressures, are not materially incorrect; significant fluctuations in foreign exchange rates which materially adversely affect Gennum's financial results do not arise; customer demand for Gennum's products remains generally as anticipated; Gennum is able to successfully integrate acquisitions and to achieve synergies generally as anticipated; and Gennum is able to continue to retain and attract technical and other key employees.
Readers are cautioned that the foregoing list of important factors and assumptions is not exhaustive. Forward-looking statements are not guarantees of future performance. Events or circumstances could cause Gennum's actual results to differ materially from those estimated or projected and expressed in, or implied by, these forward-looking statements. Consequently, readers should not place any undue reliance on these forward-looking statements. Forward-looking statements are provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that such information may not be appropriate for other purposes. In addition, these forward-looking statements relate to the date on which they are made. We disclaim any intention or obligation to update or revise any forward-looking statements or the foregoing list of factors, whether as a result of new information, future events or otherwise, except to the extent required by law.
All financial results referenced are unaudited, in United States currency and, unless otherwise indicated, are determined in accordance with Canadian generally accepted accounting principles (GAAP).
For further information: Gennum Media Contact: Robin Vaitonis, Tel: 1-480-381-6302, E-mail: [email protected]; Gennum Investor Relations Contact: Greg Miller, Senior Vice-President, Finance & Administration and Chief Financial Officer, Gennum Corporation, Tel: 905-632-2999 ext. 3060, E-mail: [email protected]
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