Second Quarter Results in Line with Expectations
Lincoln, England, August 10th, 2009 – Dynex Power Inc., a leading specialist high power semiconductor company, today announced results for the second quarter of 2009.
Revenue remained robust in the second quarter, but the volume was slightly lower than the corresponding quarter of last year. There were particularly good sales of Bipolar Discrete and Power Electronic Assembly products, while revenue from Power Modules and Integrated Circuit products declined. Overall, revenue was in line with expectations, as well as the Company’s announcements at the Annual General Meeting and in the press release announcing the first quarter results.
Year to date revenue was 16% ahead of the same six-month period last year. Once 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 was particularly pleased with the Company’s revenue performance in the challenging economic environment.
Dynex’s product mix was less favourable than in 2008, resulting in a gross profit margin for the second quarter of 20.9% compared to 40.2% in 2008. The year to date gross profit margin was 25.6% compared to 36.3% last year. The Company indicated last year that the gross profit margin in the second quarter and first six months periods of 2008 was exceptionally high and could not be maintained.
Dynex reported earnings before tax of $568,000 in the quarter and $2.2 million for the year to date. That contrasted with the exceptionally high before tax earnings of $2.3 million for the second quarter and $3.5 million for the year to date in 2008.
Dynex’s order book remained strong, although for the first time in a long time the amount of quarterly billings was larger than the quarterly bookings, which was the Company’s initial experience of the negative impact of the global economic slowdown. Competitive pricing was more intense.
Dynex successfully claimed some additional UK tax relief on its research and development expenditure over the last two years. Nevertheless, the Company’s UK tax loss carry forwards will be fully utilised this year and the Company will have to start providing for taxes on its earnings. The average tax rate is estimated to be 15% this year. The Company expects the rate to rise to nearer to the statutory UK rate of 28% in future years.
Dr Paul Taylor, President and Chief Executive Officer commented that “Although we are not seeing any further growth in quarterly revenue at the moment, the order book remains strong and we still expect revenue overall in 2009 to be well ahead of last year. The Bipolar Discrete business is performing particularly strongly. The book to bill ratio for the quarter was below one to one for the first time for three years. However, following a good month for bookings in July, it is above one for one for the first seven months of the year. Our outlook is for continuing growth in the Bipolar Discrete and Power Electronic Assemblies businesses, but we expect sales in Power Modules and Integrated Circuits to remain depressed until at least the year end.”
Bob Lockwood, Chief Financial Officer, stated that “the second quarter earnings were strong, although not as strong as the corresponding quarter of last year which had been enhanced by extraordinarily high sales of Integrated Circuits. Looking forward, revenue is expected to continue at levels similar to those seen in the current quarter. 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.
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 work that has taken place on the expansion of Dynex’s facilities. The £12 million investment in IGBT capacity announced in June will enable Dynex to meet the demand from CSR Times Electric for IGBT silicon wafers”.
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 June 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.