Gennum Second Quarter Results Deliver Solid Growth and Operating Earnings
Fourth Consecutive Quarter of Growth and Third Quarter Orders Point to Continued Momentum
BURLINGTON, ON, June 23 /CNW/ - Gennum Corporation (TSX: GND) today reports unaudited financial results for the second quarter of fiscal 2010. Second quarter revenue of $31.7 million increased 63% over the second quarter of 2009 and diluted earnings per share was $0.12 compared to a loss of $0.03 in 2009.
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(in millions of U.S. dollars except per share amounts)
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2010 2009
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Second quarter
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Revenue 31.7 19.4
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Gross margin 22.5 13.6
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Gross margin as a percentage of revenue 71.0% 70.0%
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Operating income (loss) 5.8 (1.0)
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EBITDA(1) 9.2 1.4
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Net earnings (loss) 4.1 (1.1)
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Net earnings (loss) per share* $0.12 $(0.03)
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* all per share amounts are basic and diluted
"The second quarter was the fourth consecutive quarter of revenue growth underscoring our continued market momentum," said Dr. Franz Fink, President and Chief Executive Officer of Gennum. "We are seeing excellent market acceptance of our new products which now represent 35% of our product revenue and demand continues to remain strong across all product segments and regions."
"We remain confident in our strategy," continued Dr. Fink. "The investments we have made in our product portfolio are securing our leadership position in broadcast and accelerating our market traction in the fast growing telecom, storage, networking and computing markets. Through this, we are securing more customer design wins in fast growing regions such as China and expect to continue to deliver growth through the rest of 2010."
Gennum recorded revenue growth of 7% over the first quarter of 2010 and 63% over the comparable quarter in 2009. This was the fourth consecutive quarter of sequential revenue growth for the Company. The second quarter and year-to-date revenue of 2010 represented a 63% and 58% increase respectively over the comparable periods in 2009. Customer orders continue to be solid in the third quarter to date.
Operating income was $5.8 million in the second quarter, compared to $6.1 million in the first quarter of 2010 and a loss of $1.0 million in the second quarter of 2009. The increase over the same period in the prior year was mainly due to higher revenue while maintaining strong gross margins as a percentage of revenue. The decrease compared to the prior quarter is mainly attributable to currency impacts on conversion to the Company's U.S. dollar reporting currency.
EBITDA(1) in the second quarter was $9.2 million, up $7.8 million compared to the second quarter of 2009 and up slightly compared to the prior quarter.
Outlook
Our second fiscal quarter was a period in which we saw continued momentum achieving 7% sequential quarterly revenue growth and revenue from new products accounted for 35% of our product revenue. New customers and geographies also contributed to the momentum in our business, particularly in fast growing regions like China.
We are encouraged by continued strong market demand across all product segments and regions. Our order book for the third quarter to date continues to be solid and as a result we expect flat to moderate sequential third quarter revenue growth.
With this revenue momentum, we expect to achieve another solid quarter of operating income. For the full year, we continue to believe that we will achieve better than industry revenue growth, achieve positive cash flow and deliver operating results that are in line with our business model.
We remain confident in our strategy. We will continue to make strategic investments in R&D enabling us to deliver more new products, capitalize on new customer opportunities and grow our leadership in our target markets. We believe Gennum is well positioned to continue to deliver shareholder value.
New Product Introductions and Business Development
During the second quarter, Gennum introduced seven new products. These products included five new video optical modules optimized for broadcast and networking applications and two cable equalizers targeted for 3Gb/s and standard definition broadcast applications. Additionally, Gennum's expanded portfolio of Serial Digital Interface (SDI) solutions, launched in the spring of 2009, were widely showcased in video broadcast 3D demonstrations at the National Association of Broadcasters (NAB) in April 2010. Gennum's SDI solutions are broadly enabling 3D solutions in the broadcast industry, including equipment produced and manufactured by Panasonic, Harris, Miranda, Nevion, and Astro.
Dividend
Gennum has declared a regular cash dividend of 3.5 cents per share Canadian to be paid on July 21, 2010 to shareholders of record on July 7, 2010.
Our interim financial statements for the second 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/q2fy10-financials.pdf
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Gennum will hold a conference call to discuss second quarter results on
Wednesday, June 23, 2010 at 5:30 pm (EST). To access the call,
participants should dial 1-800-814-4861. 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 July 23, 2010. To access the rebroadcast, dial 1-877-
289-8525 and enter the passcode 4317383 followed by the number sign.
Download a slide presentation to accompany the discussion at
http://www.gennum.com/q2fy10-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 (1): "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). Further information regarding this term, a description of why management believes it is a useful measure, and a quantitative reconciliation to the most directly comparable measures calculated in accordance with GAAP is set forth under the heading "Non-GAAP Reporting" in our MD&A for the quarter ended May 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 as a percentage of revenue; 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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