Gennum Reports Strong First Quarter Results
53% revenue growth year-over-year
BURLINGTON, ON, April 7 /PRNewswire-FirstCall/ - Gennum Corporation (TSX: GND) today reports unaudited financial results for the first quarter of fiscal 2010. First quarter revenue of $29.5 million increased 53% over the first quarter of 2009 and diluted earnings per share was $0.12 compared to a loss of $0.02 in 2009.
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(in millions of U.S. dollars except per share amounts)
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Feb 28, 2010 Feb 28, 2009
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First quarter
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Revenue 29.5 19.4
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Gross margin 21.5 14.3
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Gross margin as a percentage of revenue 72.9% 73.6%
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Operating income 6.1 (0.3)
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EBITDA(1) 8.9 2.0
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Net earnings 4.0 (0.8)
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Net earnings per share 0.12 (0.02)
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(all per share amounts are basic and diluted)
"The first quarter was the third consecutive quarter with sequential double digit revenue growth," said Dr. Franz Fink, President and Chief Executive Officer of Gennum. "New products now represent 33% of our business, and we are seeing strong demand across all products and regions."
"This momentum is the result of our business strategy to capitalize on the network expansion and the resulting requirement for products that can meet the demands of high-definition signals and high data rates across the broadcast, telecommunication, networking, storage and consumer connectivity markets."
"Looking forward, we remain confident in our strategy," continued Dr. Fink, "and as a result we expect to see greater than projected market growth this year, and to continue to achieve our target operating returns of greater than twenty percent of revenue."
Gennum recorded revenue growth of 18% over the fourth quarter of 2009 and 53% over the comparable quarter in 2009. Bookings continue to be strong in the second quarter to date.
On a geographical basis, all regions demonstrated sequential growth in revenue in the first quarter. Asia Pacific and Japan led in terms of sequential growth percentage primarily as a result of sales to a new segment of telecom customers in China and strong video and data communications product sales in Japan. North America also exhibited double digit sequential growth, while growth in Europe was more modest.
EBITDA(1) in the quarter was $8.9 million, up $2.9 million compared to the prior quarter and $6.9 million higher than the prior year.
Outlook
During the first quarter, Gennum continued to experience solid demand from our customers which resulted in the third consecutive quarter of double digit revenue growth. Our order book for the second quarter to date continues to be strong and as a result we expect to see another quarter of double digit growth.
New products released over the past three years represented 33% of revenue in the first quarter which was up from 28% in the fourth quarter. The trend to higher data rates is 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. These market trends are expected to continue to drive the demand for Gennum products in fiscal 2010.
We expect continued positive performance for fiscal 2010 with some moderating effect for seasonality in the third quarter.
Operating income in the first quarter was 20.7% of revenue which is in line with our business model. With a continued emphasis on cost containment and a positive revenue outlook for the second quarter, we are expecting to achieve another solid quarter of operating income.
New Product Introductions and Business Development
In the first quarter of 2010 Gennum delivered six new products for the video and datacom markets.
Gennum introduced three integrated CDRs (clock and data recovery) ICs for telecom and datacom optical module applications. The GN2012, GN2010D and GN2010E, with integrated laser drivers, offer customers a low power, small footprint and cost effective solution for 8 Gb/s and 10 Gb/s optical modules. All three variants provide retime support for 8G Fibre Channel allowing a single device to support Fibre Channel, 10 Gb Ethernet and OC-192 SONET. The GN2010 family also integrates the APC loop, reducing the need for external components. This highly integrated solution offers performance, power and cost benefits for XFP and SFP+ modules.
Gennum also introduced two new fully integrated ICs for SFP+ modules. The GN1411 DML driver with integrated limiting amplifier for 6 Gb/s to 11.3 Gb/s data rates and the GN1412 EML driver with integrated limiting amplifier for up to 11.3 Gb/s data rates. Bandwidth requirements are increasing at a rapid pace, resulting in the demand for high port density, high speed, routing and switching equipment. Gennum's integrated limiting amplifier and laser devices are targeted at SFP+ modules needed for these high port density systems. Increases in video transmission over wireless networks have also created a need for high bandwidths in wireless backhaul equipment.
The Company introduced its second generation 16G Fibre Channel CDR, designed to address the ever increasing signal integrity requirements in data communications and storage area networks. The GN2017, a dual CDR with integrated VCSEL driver and limiting amplifier, addresses signal integrity issues at 14 Gb/s speeds, the data rate adopted for 16G Fibre Channel. The GN2017 builds on the success of its predecessors by adding additional features to enhance signal integrity and to reduce the overall bill of materials (BOM) cost. The GN2017 has the ability to detect a 16G Fibre Channel input or a legacy Fibre Channel input, and can automatically configure itself accordingly. It can also detect between a 16G Fibre Channel input and Fibre Channel over Ethernet input, and can retime the signal to ensure a high quality output. The GN2017 is a unique differentiated product that enables Gennum to address its customers' requirements in the fast developing market.
Gennum announced that its 6G solutions for SFP+ modules have been adopted for a large scale wireless backhaul build-out in China. With the widespread adoption of video transmission over wireless networks, data rates and bandwidth requirements have exponentially increased for wireless OEMs. Wireless OEMs are now moving from third and fourth generation platforms to new platforms such as SFP+ which support data rates of 6 Gb/s and 10 Gb/s, the fastest speeds available for global large scale build-outs. Optical module suppliers have selected Gennum's industry-leading solutions to accommodate these unprecedented data rates.
Dividend
Gennum's Board of Directors has declared a regular cash dividend of 3.5 cents per share Canadian to be paid on May 5, 2010 to shareholders of record on April 21, 2010.
Our interim financial statements for the first 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/q1fy10-financials.pdf
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Gennum's Annual Meeting will begin at 4:30pm (ET) on Wednesday, April 7,
and Management will present year end and first quarter results as part of
the Annual Meeting broadcast. To access the call, shareholders and
general public should dial 1-800-814-4860 and Gennum's financial analyst
community should dial 1-416-644-3415. The conference call will also be
Webcast live at www.gennum.com or
www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3013120.
To access the rebroadcast, dial 1-877-289-8525 Passcode: 4278090 followed
by the number sign. Download a slide presentation to accompany the
discussion at: www.gennum.com/q1fy10-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 terms, 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 February 28, 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).
SOURCE Gennum Corporation
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