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Components | September 22, 2011

Gennum reports revenue growth of 7% for 3Q/2011

Gennum reported third quarter revenue of USD 36.7 million, a record, increased 7% over each of the third quarter of 2010 and the second quarter of 2011.
"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."

Financial Results

Gennum recorded revenue of USD 36.7 million in the third quarter of 2011 compared to USD 34.4 million in the third quarter of 2010. Net earnings in the third quarter of 2011 was USD 3.3 million or USD 0.10 per share compared to USD 5.3 million or USD 0.15 per share in the third quarter of 2010. Year to date, net earnings was USD 11.5 million or diluted earnings per share of USD 0.33 compared to USD 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 USD 4.9 million or USD 0.14 per share.

Year to date, net earnings adjusted for non-recurring items after tax was USD 13.9 million or USD 0.40 per share.

The USD 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 USD 6.6 million to USD 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 USD 2.5-3.0 million, of which USD 1.5 has been accrued to date. This is a reduction in the expected level of restructuring charges of approximately USD 0.8 million from our previous preliminary estimate. We continue to expect to incur between USD 0.5-0.8 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 USD 4.0-5.0 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.

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