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Dynex's Third Quarter Results Remain in Line with Expectations
(Canada Newswire Via Acquire Media NewsEdge)
Results Continue to be Affected by External Factors
Listing: TSX Venture ExchangeSymbol: DNX
LINCOLN, England, Nov. 5 /CNW/ - Dynex Power Inc., a leading specialist
high power semiconductor company, today announced results for the third
quarter of 2010.
Summary financial information in Canadian dollars for the three and nine
months ended September 30th, 2010 is as follows:
Sept 30, 2010
Sept 30, 2009
YTD 2010
YTD 2009
$'000
$'000
$'000
$'000
Revenue
8,116
9,347
27,782
30,072
Gross Margin
1,392
1,894
3,901
4,237
Earnings before Income Taxes
394
823
2,092
3,035
Net Earnings
281
701
1,456
2,591
No. of Common Shares-average
80,509,047
40,195,637
80,440,113
40,195,105
Earnings per Share in Dollars-diluted
0.00
0.02
0.02
0.06
As anticipated, third quarter revenue declined. Reported revenue was 13%
lower than the corresponding quarter of last year, with declines
reported by all four product groups. The performance was adversely
affected by the weakness of Sterling, a softer market for high power
semiconductors and the operational disruption from the current capital
expenditure programme which is being undertaken to increase capacity
and enhance manufacturing capability.
In formulating the Company's 2010 financial plans, management
anticipated that the combination of weak economic conditions and the
disruption from the transformational capital expenditure programme
would negatively impact financial performance in the third and fourth
quarters of 2010 as well as the first quarter of 2011. However,
management did not anticipate the sharp decline in the Sterling Dollar
exchange rate. Virtually all the decline was as a result of an 11%
reduction in the value of Sterling against the Canadian dollar.
Measured in Sterling terms, the revenue of the UK business was just 3%
lower than in the corresponding quarter of last year.
Year to date revenue was 8% lower than in the same nine-month period
last year, more than accounted for by the year over year currency
fluctuation. In Sterling terms, revenue of the UK business rose by 4%.
The Power Electronic Assemblies Group was the strongest performer,
reporting growth of 30% even when measured in Canadian dollars. There
was a 7% decrease in revenue reported by the Bipolar Discrete Group,
although growth was achieved in Sterling terms. Significant decreases
were reported in Power Modules and Integrated Circuit revenues.
Nevertheless, management was pleased with the Company's revenue
performance in the challenging economic environment.
The gross profit margin for the third quarter of 2010 was 17.1% compared
to 20.3% in the corresponding quarter of 2009. The year to date gross
profit margin was 21.0% compared to 24.0% last year. The decline in
gross margins was attributable to the additional depreciation relating
to the first new 6 inch IGBT line and the costs of running test batches
through the new line. Similar costs will arise in the fourth quarter,
temporarily impacting the gross margin. Management expects the new line
to begin producing revenue early in 2011.
Dynex reported earnings before income taxes of $394,000 in the quarter
and $2.1 million for the year to date, compared to $823,000 for the
third quarter and $3.0 million for the year to date in 2009. Management
believes that this is a creditable result given the weakness of
Sterling, the additional costs related to the new 6 inch IGBT line and
the tougher market environment currently being encountered.
The book to bill ratio was at its highest level in the eighteen months
and Dynex's order book increased from $20.5 million to $21.4 million
during the quarter. The order book at the end of September represents
just over 6 months revenue at current levels.
Following the exhaustion of UK tax losses last year, tax has been
provided for on UK earnings at the statutory tax rate of 28%. However,
the Company will be able to defer this tax charge and so there will be
no cash tax payments in the UK this year.
Dr Paul Taylor, President and Chief Executive Officer said, "It was good
to see an improvement in the book to bill ratio, but it is still too
early to be certain that our markets will see steady growth. Management
focus remains on the installation and commissioning of the new IGBT
lines and on qualifying our products for use in CSR Times Electric
applications. These developments will continue to negatively impact our
performance for one or two more quarters. However, we continue to make
good progress and are well prepared to generate strong growth in
earnings once our expansion and product qualification programmes are
completed and the high power semiconductor market recovers."
Bob Lockwood, Chief Financial Officer, added, "The level of earnings in
the third quarter was again pleasing given the operational disruptions
and additional costs associated with our IGBT expansion. In addition,
the full tax charge in 2010 impacts on reported earnings compared to
last year. We remain committed to controlling our costs through this
difficult period, as reflected in our expense ratio for the year to
date of 14.0% compared to 14.1% for the same period last year. Looking
forward, revenue is expected to be at or slightly above the third
quarter level. This should enable the business to remain profitable for
the balance of the year, despite the impact of the work being done to
position the company for growth in 2011 and beyond."
Li Donglin, Chairman of Dynex and General Manager of CSR Times Electric,
said, "These continue to be challenging times for Dynex, with the
disruption caused by expansion, the need to qualify their products for
use by CSR Times Electric and the continuing global soft market
conditions caused by the economic recession. However, I remain pleased
with the way Dynex is performing during this difficult time. The
management and the employees are managing to balance these different
demands and I look forward to seeing improved performance in 2011."
Conference Call
A conference call for analysts and interested listeners will be held
Wednesday, November 10th at 11:00 a.m. (ET). The call-in numbers for participants are 888 231
8191 and 647 427 7450. The conference ID number is 22620734.
A replay of the call will be available on Wednesday, November 10th until Wednesday, November 17th, 2010. To access the replay, call 416 849 0833 or 800 642 1687 enter
pass code number 22620734, and then press the pound (#) key.
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, 2010 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; the worldwide demand for and supply of
silicon; 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, 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. Its IC products are used in
demanding applications in the aerospace industry. Dynex Semiconductor
Limited 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. Dynex is
majority owned by Zhuzhou CSR Times Electric Co., Ltd.
Zhuzhou CSR 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. CSR 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, CSR 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.dynexsemi.com.
Further information on CSR Times Electric can be found at www.timeselectric.cn/en
Neither TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this release.
DYNEX POWER INC. Consolidated Statements of Earnings and Deficit (Unaudited)Quarters Ended September 30th, 2010 and 2009
3 months
3 months
YTD
YTD
Sept 30th
Sept 30th
Sept 30th
Sept 30th
2010
2009
2010
2009
Revenue$8,116,242
$
9,347,401
$27,781,609
$
30,072,492
Cost of sales
6,724,364
7,453,418
21,945,729
22,864,053
Gross margin
1,391,878
1,893,983
5,835,880
7,208,439
Expenses
General and administration
678,533
702,683
2,325,853
2,352,821
Sales and marketing
205,544
198,541
656,243
717,098
Research and development
259,845
295,727
821,204
786,031
Interest expense
28,845
119,159
97,796
381,091
1,172,767
1,316,110
3,901,096
4,237,041
Earnings before other income (expenses) and income taxes
219,111
577,873
1,934,784
2,971,398
Other income (expenses)
Interest and other income
79,376
63,240
209,085
182,627
Foreign exchange gain (loss)
95,999
181,403
(52,156)
(118,766)
175,375
244,643
156,929
63,861
Earnings before income taxes
394,486
822,516
2,091,713
3,035,259
Income taxes
(113,934)
(121,858)
(635,771)
(444,679)
NET EARNINGS
280,552
700,658
1,455,942
2,590,580
DEFICIT, BEGINNING OF PERIOD
(2,580,081)
(5,279,222)
(3,755,471)
(7,169,144)
DEFICIT, END OF PERIOD$(2,299,529)
$
(4,578,564)
$(2,299,529)
$
(4,578,564)
DYNEX POWER INC. Consolidated Statements of Comprehensive Income (Loss) (Unaudited)Quarters Ended September 30th, 2010 and 2009
3 months
3 months
YTD
YTD
Sept 30th
Sept 30th
Sept 30th
Sept 30th
2010
2009
2010
2009
Net earnings$280,552
$
700,658
$1,455,942
$
2,590,580
Other Comprehensive income (loss), net of tax:
Unrealized foreign exchange gain (loss) on translating financial
statements of self-sustaining foreign operations
485,021
(1,020,340)
(1,223,304)
(349,551)
OTHER COMPREHENSIVE INCOME (LOSS)
485,021
(1,020,340)
(1,223,304)
(349,551)
COMPREHENSIVE INCOME (LOSS)$765,573
$
(319,682)
$232,638
$
2,241,029
DYNEX POWER INC.Consolidated Statements of Accumulated Other Comprehensive Loss and Deficit (Unaudited)As At September 30th, 2010 and December 31st, 2009
Sept 30th
Dec 31st
2010
2009
Accumulated other comprehensive loss, beginning of period
$(1,853,191)
$
(1,380,101)
Other comprehensive loss
(1,223,304)
(473,090)
Accumulated other comprehensive loss
(3,076,495)
(1,853,191)
Deficit
(2,299,529)
(3,755,471)
TOTAL ACCUMULATED OTHER COMPREHENSIVE LOSS AND DEFICIT
$(5,376,024)
$
(5,608,662)
DYNEX POWER INC. Consolidated Balance Sheets (Unaudited)As At September 30th, 2010 and December 31st, 2009
Sept 30th
Dec 31st
2010
2009
CURRENT ASSETS
Cash
$2,793,666
$
22,942,550
Accounts receivable
6,159,704
6,439,200
Inventories
8,598,406
8,872,155
Amounts owing from parent company
696,141
218,568
Income tax recoverable
56,982
96,413
Prepaid expenses and deposits
378,220
794,170
18,683,119
39,363,056
PROPERTY, PLANT & EQUIPMENT
21,232,902
17,420,677
$39,916,021
$
56,783,733
CURRENT LIABILITIES
Accounts payable and accrued liabilities
$3,906,216
$
4,964,864
Short-term loan
1,616,500
16,273,732
Amounts owing to parent company
233,497
955,026
Current portion of long-term debt
4,267
24,921
Current portion of obligation under capital leases
113,671
113,602
Current portion of deferred revenue
157,350
1,174,803
6,031,501
23,506,948
LONG-TERM DEBT
-
942
LONG-TERM OBLIGATION UNDER CAPITAL LEASES
397,197
512,935
LONG-TERM DEFERRED REVENUE
812,631
949,290
FUTURE INCOME TAXES
999,783
380,756
8,241,112
25,350,871SHAREHOLDERS' EQUITY
Share capital
37,050,933
37,041,524
Deficit
(2,299,529)
(3,755,471)
Accumulated other comprehensive loss
(3,076,495)
(1,853,191)
31,674,909
31,432,862
$39,916,021
$
56,783,733
DYNEX POWER INC.Consolidated Statements of Cash Flows (Unaudited)Quarters Ended September 30th, 2010 and 2009
3 months
3 months
YTD
YTD
Sept 30th
Sept 30th
Sept 30th
Sept 30th
2010
2009
2010
2009
OPERATING
Net earnings
$280,552
$
700,658
$1,455,942
$
2,590,580
Items not affecting cash
Amortization
434,282
177,182
1,076,108
447,599
Gain on disposal of property, plant and equipment
(31,117)
(34,768)
(93,188)
(104,597)
Future income taxes
113,934
-
633,400
-
Non-cash interest
131
1,407
1,032
5,232
Provision for inventory obsolescence
(20,959)
31,942
122,669
510,500
Changes in non-cash operating working capital
(246,072)
(718,403)
(945,579)
(1,129,074)
530,751
158,018
2,250,384
2,320,240
FINANCING
Shares issued for cash
-
71
9,409
71
Cost of share issue
-
-
(308,069)
-
Increase in amounts owing to parent company
341,339
-
341,339
2,521,141
Decrease in amounts owing to parent company
-
(2,291,448)
(1,473,358)
(3,355,478)
Increase in short-term loans
-
5,973,584
1,541,100
12,029,984
Decrease in short-term loans
-
-
(15,790,230)
(2,198,850)
Payments on capital leases
(19,864)
(30,681)
(86,401)
(67,415)
Decrease in long-term debt
(3,419)
(13,120)
(21,340)
(1,223,365)
318,056
3,638,406
(15,787,550)
7,706,088
INVESTING
Proceeds of disposal of property, plant and equipment
80
-
14,360
263
Purchase of property, plant and equipment
(1,307,826)
(4,849,737)
(6,072,406)
(7,780,890)
(1,307,746)
(4,849,737)
(6,058,046)
(7,780,627)
Effect of foreign currency translation on cash
6,044
(401,819)
(553,672)
(161,681)
NET (DECREASE) INCREASE IN CASH
(452,895)
(1,455,132)
(20,148,884)
2,084,020
Cash, beginning of period
3,246,561
3,943,790
22,942,550
404,638
CASH, END OF PERIOD$2,793,666
$
2,488,658
$2,793,666
$
2,488,658
%SEDAR: 00010667E
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