Gennum Reports Fourth Quarter and Year End Results
17% Sequential Revenue Growth in Q4 and Positive Q1 Outlook
BURLINGTON, ON, Feb. 10 /PRNewswire-FirstCall/ - Gennum Corporation (TSX: GND) today reported unaudited financial results for the fourth quarter of fiscal 2009 and the audited financial results for the year ended November 30, 2009.
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(in millions of U.S. dollars except per share amounts)
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2009 2008
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Fourth quarter
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Revenue 25.1 30.3
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Gross margin 18.3 23.1
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Operating income 3.0 5.1
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Restructuring charge 0.4 -
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Operating income before restructuring charge and
deferred development impairment 3.4 5.1
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Adjusted EBITDA (see note 1) 6.0 8.5
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Net earnings from continuing operations 3.6 2.4
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Net earnings per share from continuing operations 0.10 0.07
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Fiscal Year 2009
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Revenue 85.2 126.9
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Gross margin 60.9 96.4
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Operating income (loss) (3.4) 27.7
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Restructuring charge 5.9 -
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Operating income before restructuring charge and
deferred development impairment 2.5 27.7
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Adjusted EBITDA (see note 1) 12.3 39.3
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Net earnings (loss) from continuing operations (2.6) 19.3
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Net earnings (loss) per share from continuing
operations (0.07) 0.54
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Cash and cash equivalents 37.0 48.7
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(all per share amounts are basic and diluted)
"Through 2009, Gennum remained focused on its business strategy. We made difficult decisions to reduce spending while we continued to focus on technology innovation and bringing new products to market," said Dr. Franz Fink, President and Chief Executive Officer of Gennum. "A broadening customer base that is eager for solutions to address the ever expanding requirements for bandwidth has resulted in an increase in our business momentum.
"We were particularly pleased with our results this quarter," continued Dr. Fink. "Sequential improvement in the top line, significant improvement in gross margin through volume ramps, as well as tight controls on operating expenses puts us in a very good position to build shareholder value in our business in 2010."
In the fourth quarter, customer orders continued to increase resulting in consolidated revenue growing 17% quarter over quarter. The increased revenue allowed Gennum to deliver positive operating income before restructuring charges of $3.4 million compared to $0.3 million in the third quarter, and compared to $5.1 million in the fourth quarter of 2008. Gross margins for the quarter were up to 73%, compared to 69% in the third quarter.
The fourth quarter resulted in positive cash flow of $4.7 million from operating activities, compared to a use of $0.3 million of cash in the third quarter. Net earnings from continuing operations for the fourth quarter of 2009 were $3.6 million or $0.10 per share compared to a loss of $4.3 million or $0.12 per share in the third quarter of 2009. This compares to earnings of $2.4 million or $0.07 per share for the fourth quarter in 2008. The relative strength in earnings despite a reduction in annual revenue was a result of the quick and decisive actions to contain operating expenses in response to the global recession. Gennum recorded a net loss from continuing operations for the fiscal year 2009 of $2.6 million, or $0.07 per share compared to earnings of $19.3 million, and $0.54 in 2008. Gennum ended the year in a solid financial position with cash and cash equivalents of $37.0 million.
Outlook
Our fourth quarter was a period in which we saw customer demand continue to strengthen. It was the second consecutive quarter of double-digit growth in revenue. Our order book for the first quarter to date is approximately 10% up over the same point in the fourth quarter, indicating another quarter of solid sequential growth.
We are encouraged by the continued positive demand in our business which is coming from multiple products, customers, and regions. We are also encouraged by the positive impact of new products released over the past two years on our top-line growth. As a result, we are optimistic for continued positive business performance through the year and expect to grow faster than the current industry forecast of 10% to 20% for 2010.
The trend to high data rates is already benefiting Gennum, due to the continued build out of the global 3 Gb/s video broadcast infrastructure and the migration to data rates at and above 10 Gb/s in data centre, enterprise and storage applications. We expect these market trends to continue to drive the demand for Gennum products throughout fiscal 2010.
The fourth quarter also brought a return to operating ratios which are much closer to our business model targets. This occurred due to several factors, including higher volumes and actions taken to control costs. Looking ahead to 2010, we expect to see our operating ratios continue to improve in line with our 2008 performance and, as a result, we continue to target greater than 20% operating earnings for the year. We remain confident in our strategy and will work to continue to deliver more new products, capitalize on new customer opportunities and grow our leadership in our target markets.
Our interim financial statements for the fourth quarter of 2009, and our audited consolidated financial statements for our year ended November 30, 2009 and the related management discussion and analysis have been filed and may be viewed on our website (www.gennum.com) and on SEDAR (www.sedar.com).
New product introductions and business developments
In the fourth quarter of 2009, Gennum launched two new products further expanding its portfolio of signal integrity solutions.
- In October, Gennum announced the industry's first single-chip 10G
EPON transceiver with integrated CDR. This solution offers customers
a high performance single-chip solution that will help reduce power
and cost while enhancing ONU (optical network unit) performance.
- Also in October, Gennum announced a new HD transmitter/receiver
combination that delivers seamless upgrade to HD over coax cabling.
The Aviia(TM) receiver (Advanced Video Interface for Industrial
Applications) is a robust interface for high definition (HD) video
over coaxial cable lengths up to and beyond 100 metres. The complete
transmitter/receiver combination now allows customers to upgrade
existing analog video over coax applications to full HD video.
Dividend
Gennum's Board of Directors has declared a regular cash dividend of 3.5 cents per share Canadian to be paid on March 10, 2010 to shareholders of record on February 24, 2010.
Download the complete financial results (PDF)
http://www.gennum.com/extranet/file/q4fy09-financials.pdf
http://www.gennum.com/extranet/file/fiscal09-financials.pdf
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Management will hold a conference call to discuss fourth quarter and year
end results on Wednesday, February 10 at 6:30 p.m. (ET). To access the
call, participants should dial 1-877-974-0445. The conference call will
also be Webcast live at www.gennum.com or www.newswire.ca/en/webcast and
subsequently archived on the Gennum site. A rebroadcast of the call will
be available until midnight on March 10, 2010. To access the rebroadcast,
dial 1-877-289-8525 and enter the passcode 4200049 followed by the number
sign. Download a slide presentation to accompany the discussion at:
www.gennum.com/q4fy09-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" and "Adjusted EBITDA" are non-GAAP financial measures which do not have standardized meanings under Canadian generally accepted accounting principles ("GAAP") and are 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). Adjusted EBITDA relates to EBITDA before restructuring charge and deferred development impairment. 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 is set forth under the heading "Non-GAAP Reporting" in our MD&A for the year ended November 30, 2009.
Caution Regarding Forward-Looking Information
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 and earnings; 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.
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; 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; 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).
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SOURCE Gennum Corporation
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