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Dynex Power Inc. - Third Quarter Results Remain in Line with Expectations(Canada Newswire Via Acquire Media NewsEdge) Year to Date Shows Strong Growth in Revenue Listing: TSX Venture Exchange Symbol: DNX LINCOLN, England, Nov. 17 /CNW Telbec/ - Dynex Power Inc., a leading specialist high power semiconductor company, today announced results for the third quarter of 2009. Summary financial information in Canadian dollars for the three and nine months ended September 30th, 2009 is as follows: << ------------------------------------------------------------------------- Sept 30, 2009 Sept 30, 2008 YTD 2009 YTD 2008 $'000 $'000 $'000 $'000 ------------------------------------------------------------------------- Revenue 9,347 9,349 30,072 27,206 Gross Margin 1,894 2,146 7,208 8,628 Earnings before Tax 823 395 3,035 3,857 Net Earnings 701 395 2,591 3,857 No. of Common Shares-average 40,195,637 39,748,782 40,195,105 36,147,746 Earnings per Share in Dollars-diluted 0.02 0.01 0.06 0.10 ------------------------------------------------------------------------- ------------------------------------------------------------------------- >> Revenue remained strong in the third quarter matching that reported in the corresponding quarter of last year. Once again, there were particularly good sales of Bipolar Discrete and Power Electronic Assembly products, while revenue from Power Modules and Integrated Circuit products both declined. Overall, revenue remains in line with expectations. Year to date revenue was 11% ahead of the same nine-month period last year. Here again, the strong performing product groups were Bipolar Discrete and Power Electronic Assemblies. There was a small decrease in Power Modules revenue and a significant decrease in Integrated Circuit revenue. Overall, management remained pleased with the Company's revenue performance in the challenging economic environment. Dynex's product mix in the quarter was slightly less favourable than in 2008, resulting in a gross profit margin for the third quarter of 20.3% compared to 23.0% in 2008. The year to date gross profit margin was 24.0% compared to 31.7% last year. The Company indicated last year that the gross profit margin in the first half of 2008 was exceptionally high and could not be maintained. Dynex reported earnings before income tax of $823,000 in the quarter, significantly ahead of the $395,000 reported in the corresponding period of 2008. For the year to date, earnings before income tax was $3.0 million compared to $3.9 million in the corresponding period of last year. Earnings in the first half of last year had been exceptionally high. Brought forward tax losses in the UK will be exhausted during 2009 and the Company is now providing for tax on its earnings. The average tax rate is estimated to be 14% of UK earnings (15% of consolidated earnings) for this year. The Company expects the rate to rise to nearer to the statutory UK rate of 28% in future years. The book to bill ratio (a measure of whether new orders are being received as fast as existing orders are being completed) fell to 0.9 to 1 during the quarter indicating a weaker marketplace and a more competitive environment. However, to date Dynex has not experienced the revenue contraction described by some semiconductor analysts. In fact, Dynex's order book remains strong with backlog equivalent to approximately eleven months' billings. The strength of the order book gives management some confidence that revenue can be maintained at the current level for at least the next two quarters. Dr Paul Taylor, President and Chief Executive Officer commented that "The order book remains strong and we still expect revenue overall in 2009 to be well ahead of last year and to continue at this level at least into the early part of next year. The Bipolar Discrete business is performing particularly strongly. Our outlook is for continuing growth in the Bipolar Discrete and Power Electronic Assemblies businesses, but sales in Power Modules and Integrated Circuits will remain depressed for the time being. However, we are working together with CSR Times Electric to qualify our IGBT parts for use in their power converter systems and it is our objective that this will lead to significant sales of IGBT die to them in future. We have announced a major expansion of our IGBT capacity to meet this expected demand and completion of this expansion and qualification of the parts with CSR Times Electric is our major priority at the moment". Bob Lockwood, Chief Financial Officer, stated that "the third quarter earnings remained strong. Looking forward, revenue is expected to continue at levels similar to those seen in the last two quarters. This should enable the business to continue reporting quarterly profits albeit that the net earnings for the year will be lower than in 2008 as a result of a less favourable product mix and the Company having to provide for tax on its earnings. The expansion of our IGBT facility is a major project and it will limit the growth we can achieve next year, but should lead to exciting new opportunities for the Company thereafter". Mr Lu, Chairman of Dynex and President and Executive Director of CSR Times Electric, commented again on how well he thought Dynex was performing in the current economic conditions. In addition, he said "I am pleased with the progress that has taken place on the expansion of Dynex's facilities and the qualification of die for use by CSR Times Electric. Mr Lu confirmed that CSR Times Electric was providing every assistance it could to Dynex with these two vital projects". The Company announced that it had filed a preliminary prospectus for a rights issue on 26th October 2009 to raise the finance required for the expansion of its IGBT fabrication facility. The Company expects to file a final prospectus in the next few days setting out full details of the issue. In the meantime, the Company has borrowed money to finance the initial work on the project. The loan was guaranteed by CSR Times Electric. 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, 2009 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 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. 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, 2009 and 2008 ------------------------------------------------------------------------- 3 months 3 months YTD YTD Sept 30th Sept 30th Sept 30th Sept 30th 2009 2008 2009 2008 ------------------------------------------------------- Revenue $ 9,347,401 $ 9,348,952 $ 30,072,492 $ 27,206,284 Cost of sales 7,453,418 7,203,244 22,864,053 18,578,186 ------------------------------------------------------------------------- Gross margin 1,893,983 2,145,708 7,208,439 8,628,098 ------------------------------------------------------------------------- Expenses General and administration 702,683 1,261,504 2,352,821 3,230,102 Sales and marketing 198,541 230,918 717,098 724,061 Research and development 295,727 216,176 786,031 635,152 Interest expense 119,159 135,587 381,091 499,892 ------------------------------------------------------------------------- 1,316,110 1,844,185 4,237,041 5,089,207 ------------------------------------------------------------------------- Earnings before other income (expenses) and income taxes 577,873 301,523 2,971,398 3,538,891 ------------------------------------------------------------------------- Other income (expenses) Interest and other income 63,240 86,470 182,627 178,615 Foreign exchange gain (loss) 181,403 7,116 (118,766) 139,080 ------------------------------------------------------------------------- 244,643 93,586 63,861 317,695 ------------------------------------------------------------------------- Earnings before income taxes 822,516 395,109 3,035,259 3,856,586 Income taxes (121,858) - (444,679) - NET EARNINGS 700,658 395,109 2,590,580 3,856,586 DEFICIT, BEGINNING OF PERIOD (5,279,222) (8,269,350) (7,169,144) (11,730,827) ------------------------------------------------------------------------- DEFICIT, END OF PERIOD $ (4,578,564) $ (7,874,241) $ (4,578,564) $ (7,874,241) ------------------------------------------------------------------------- DYNEX POWER INC. Consolidated Statements of Comprehensive Income (Unaudited) Quarters Ended September 30th, 2009 and 2008 ------------------------------------------------------------------------- 3 months 3 months YTD YTD Sept 30th Sept 30th Sept 30th Sept 30th 2009 2008 2009 2008 ------------------------------------------------------- Net earnings $ 700,658 $ 395,109 $ 2,590,580 $ 3,856,586 ------------------------------------------------------------------------- Other Comprehensive loss, net of tax: Unrealized foreign exchange on translating financial statements of self-sustaining foreign operations (1,020,340) (390,137) (349,551) (291,322) ------------------------------------------------------------------------- OTHER COMPREHENSIVE LOSS (1,020,340) (390,137) (349,551) (291,322) ------------------------------------------------------------------------- COMPREHENSIVE (LOSS) INCOME $ (319,682) $ 4,972 $ 2,241,029 $ 3,565,264 ------------------------------------------------------------------------- ------------------------------------------------------------------------- DYNEX POWER INC. Consolidated Statements of Accumulated Other Comprehensive Loss and Deficit (Unaudited) As at September 30th, 2009 and December 31st, 2008 ------------------------------------------------------------------------- Sept 30th Dec 31st 2009 2008 --------------------------- Accumulated other comprehensive loss, beginning of period $ (1,380,101) $ (760,787) Other comprehensive loss (349,551) (619,314) ------------------------------------------------------------------------- Accumulated other comprehensive loss (1,729,652) (1,380,101) Deficit (4,578,564) (7,169,144) ------------------------------------------------------------------------- TOTAL ACCUMULATED OTHER COMPREHENSIVE LOSS AND DEFICIT $ (6,308,216) $ (8,549,245) ------------------------------------------------------------------------- ------------------------------------------------------------------------- DYNEX POWER INC. Consolidated Balance Sheets (Unaudited) As At September 30th, 2009 and December 31st, 2008 ------------------------------------------------------------------------- Sept 30th Dec 31st 2009 2008 --------------------------- CURRENT ASSETS Cash $ 2,488,658 $ 404,638 Accounts receivable 6,441,129 6,081,965 Inventories 8,277,217 8,041,747 Income tax recoverable - 2,838 Prepaid expenses and deposits 673,872 696,625 ------------------------------------------------------------------------- 17,880,876 15,227,813 PROPERTY, PLANT & EQUIPMENT 12,230,406 5,433,347 ------------------------------------------------------------------------- $ 30,111,282 $ 20,661,160 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CURRENT LIABILITIES Accounts payable and accrued liabilities $ 4,417,468 $ 5,688,807 Income tax payable 126,889 - Amounts owing to parent company 850,531 - Short-term loans 12,747,012 3,551,495 Current portion of long-term debt 33,210 45,610 Obligation under capital leases 117,525 114,146 Current portion of deferred revenue 1,266,449 137,271 ------------------------------------------------------------------------- 19,559,084 9,537,329 LONG-TERM DEBT 4,531 2,846,811 LONG-TERM OBLIGATION UNDER CAPITAL LEASES 549,868 642,659 LONG-TERM DEFERRED REVENUE 995,714 1,132,483 FUTURE INCOME TAX 259,107 - ------------------------------------------------------------------------- 21,368,304 14,159,282 SHAREHOLDERS' EQUITY Share capital 15,051,194 15,051,123 Deficit (4,578,564) (7,169,144) Accumulated other comprehensive loss (1,729,652) (1,380,101) ------------------------------------------------------------------------- 8,742,978 6,501,878 ------------------------------------------------------------------------- $ 30,111,282 $ 20,661,160 ------------------------------------------------------------------------- ------------------------------------------------------------------------- DYNEX POWER INC. Consolidated Statements of Cash Flows (Unaudited) Quarters Ended September 30th, 2009 and 2008 ------------------------------------------------------------------------- 3 months 3 months YTD YTD Sept 30th Sept 30th Sept 30th Sept 30th 2009 2008 2009 2008 ------------------------------------------------------- OPERATING Net earnings $ 700,658 $ 395,109 $ 2,590,580 $ 3,856,586 Items not affecting cash Amortization 177,182 87,832 447,599 207,046 Gain on disposal of property, plant and equipment (34,768) (37,895) (104,597) (115,422) Shares and options issued for services - 6,890 - 20,625 Non-cash interest 1,407 17,454 5,232 70,984 Non-cash grant income - - - (2,355) Provision for inventory obsolescence 31,942 186,287 510,500 463,787 Changes in non-cash operating working capital items (718,403) 909,840 (1,129,074) (416,922) ------------------------------------------------------------------------- 158,018 1,565,517 2,320,240 4,084,329 ------------------------------------------------------------------------- FINANCING Shares issued for cash 71 - 71 34,500 Increase in amounts owing to parent company - - 2,521,141 - Decrease in amounts owing to parent company (2,291,448) - (3,355,478) - Increase (repayment) of short-term loans 5,973,584 (259,035) 9,831,134 (1,171,755) Payments on capital leases (30,681) - (67,415) - Repayment of long-term debt (13,120) (108,941) (1,223,365) (265,473) ------------------------------------------------------------------------- 3,638,406 (367,976) 7,706,088 (1,402,728) ------------------------------------------------------------------------- INVESTING Proceeds of disposal of property, plant and equipment - - 263 401 Purchase of property, plant and equipment (4,849,737) (1,228,181) (7,780,890) (2,625,016) ------------------------------------------------------------------------- (4,849,737) (1,228,181) (7,780,627) (2,624,615) ------------------------------------------------------------------------- NET (DECREASE) INCREASE IN CASH (1,053,313) (30,640) 2,245,701 56,986 Effect of foreign currency translation on cash (401,819) 30,646 (161,681) 2,122 Cash, beginning of period 3,943,790 199,969 404,638 140,867 ------------------------------------------------------------------------- CASH, END OF PERIOD $ 2,488,658 $ 199,975 $ 2,488,658 $ 199,975 ------------------------------------------------------------------------- ------------------------------------------------------------------------- >> %SEDAR: 00010667E |