Revenue Growth of 7% and Adjusted EPS* of $0.14
Burlington, Ontario (September 21, 2011) – Gennum Corporation (TSX: GND) today reported unaudited financial results for the third quarter of fiscal 2011. Third quarter revenue of $36.7 million, a record, increased 7% over each of the third quarter of 2010 and the second quarter of 2011. Diluted earnings per share was $0.10 compared to $0.15 in 2010 and $0.10 in the second quarter of 2011. Net earnings per share adjusted for non-recurring items after tax, was $0.14.
| Third Quarter |
| (in millions of U.S. dollars except per share amounts) | August 31, 2011 | August 31, 2010 |
| Revenue | 36.7 | 34.4 |
| Gross margin | 26.0 | 25.1 |
| Gross margin as a percentage of revenue | 70.9% | 72.9% |
| Restructuring charge | 1.5 | -- |
| Operating income | 5.0 | 7.6 |
| Net earnings | 3.3 | 5.3 |
| Net earnings per share (basic and diluted) | $0.10 | $0.15 |
| Net earnings per share adjusted for non-recurring items after tax (basic and diluted) | $0.14 | $0.15 |
"We achieved solid results, delivering record quarterly revenue with 7% sequential and year-over-year growth and net earnings adjusted for non-recurring items after tax of $0.14 per share. We also generated over $6 million in cash during the quarter," said Dr. Franz Fink, President and CEO. "Looking forward, our fourth quarter order book is at this time in a range between the second and third quarter order books at a similar point. While there is more near-term economic uncertainty than usual in the semiconductor market, I remain confident in our strategy and ability to capitalize on our solid position in broadcast, data communications and consumer markets."
Today, in a separate news release, the Company announced its intention to commence a normal course issuer bid to acquire common shares of the Company. The normal course issuer bid is subject to the acceptance of the Toronto Stock Exchange.
Financial Results
Gennum recorded revenue of $36.7 million in the third quarter of 2011 compared to $34.4 million in the third quarter of 2010. Net earnings in the third quarter of 2011 was $3.3 million or $0.10 per share compared to $5.3 million or $0.15 per share in the third quarter of 2010. Year to date, net earnings was $11.5 million or diluted earnings per share of $0.33 compared to $13.4 million or $0.39 per share for the first nine months of 2010.
Third quarter net earnings adjusted for non-recurring items after tax*, which excludes restructuring charges and short term purchase accounting adjustments related to the Nanotech acquisition, was $4.9 million or $0.14 per share. Year to date, net earnings adjusted for non-recurring items after tax was $13.9 million or $0.40 per share. Please refer to "Non-GAAP Reporting" in our management’s discussion and analysis for our third quarter ended August 31, 2011 as filed on SEDAR at www.sedar.com, for further information describing net earnings adjusted for non-recurring items after tax, Nanotech acquisition charges and restructuring charges.
The $1.5 million restructuring charge in the quarter relates to the plan announced in June to outsource the Company’s test and logistics capabilities. The plan is expected to be completed over the next year and is expected to enable Gennum to improve its production capacity, customer lead times, logistical support, and to remain cost competitive in its marketplace.
Cash and cash equivalents increased $6.6 million to $20.8 million as of August 31, 2011 compared to May 31, 2011.
Outlook
Despite the current uncertain economic environment, our new product design-in activities remain strong across all regions and our current fourth quarter order book is between order levels experienced to this point in our second and third quarters of this year.
During the quarter, we have made good progress on our previously announced manufacturing outsourcing project. We are now expecting restructuring charges, during the life of the project, to be between $2.5 million and $3.0 million, of which $1.5 has been accrued to date. This is a reduction in the expected level of restructuring charges of approximately $0.8 million from our previous preliminary estimate. We continue to expect to incur between $0.5 million and $0.8 million of incremental operating expenses over the life of the project, which is unchanged from our prior expectations.
We expect that the manufacturing outsourcing project will achieve an annual cost savings of between $4.0 and $5.0 million when fully implemented, strengthen our operational capability, and maintain our financial competitiveness in the face of expected pressure on prices and margins.
We continue to evolve our Company, leveraging the strong foundation we have put in place. The investments we have made are strengthening our core market position and expanding our capability to address faster growing data communication and consumer connectivity markets.
Business Developments
During the quarter, Gennum announced the following product related developments:
- Advanced 3Gb/s cable drivers for the broadcast video market. These next-generation 3Gb/s cable drivers feature industry-first signal pre-emphasis on non-inverted outputs which helps further extend the reach offered by our long reach equalizers introduced at NAB 2011.
- Third generation of silicon-proven Multi-Standard PHY IP Platform on TSMC 28nm which is capable of supporting a number of different high-speed serial standards up to 12.5 Gb/s.
- Hitachi Ltd., Information & Telecommunication Systems Company-Micro Device Division selected Gennum’s PCI Express ® 3.0 PHY IP and the Inventure Z-core PCI Express 3.0 Controller for its next generation chips.
Dividend
Gennum’s Board of Directors has declared a regular cash dividend of 3.5 cents per share Canadian to be paid on October 19, 2011 to shareholders of record on October 5, 2011.
Our interim financial statements for the third quarter of 2011 and related management’s discussion and analysis have been filed and may be viewed on our website www.gennum.com and on SEDAR at www.sedar.com.
Download the complete financial results (PDF)
http://www.gennum.com/extranet/file/q3fy11-financials.pdf
Gennum will hold a conference call to discuss 2011 third quarter results on Wednesday, September 21, 2011 at 5:30 pm (ET). To access the call, participants should dial 1-800-814-4860. 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 October 21, 2011. To access the rebroadcast, dial 1-877-289-8525 and enter the passcode 4471537#. Download a slide presentation to accompany the discussion: http://www.gennum.com/q3fy11-downloads.
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
