DNX Dynex Power Inc.

Return To Profitability

Listing: TSX Venture Exchange
Symbol: DNX

LINCOLN, England, Nov. 28, 2016 /CNW/ - Dynex Power Inc., a leading, high power semiconductor company, today announced its financial results for the third quarter and nine months ended September 30th, 2016.

Summary financial information for the three and nine months ended September 30th, 2016 is as follows:

Revenue in the third quarter of 2016 was $1.2 million or 10% lower than in the corresponding quarter of last year. The whole of this reduction was as a result of the strengthening of the Canadian Dollar against Sterling. In the UK operating company, revenue in Sterling had risen by approximately 5% with a significant increase in service revenue being partially offset by a reduction in bipolar revenue. For the year to date, revenue was $3.3 million or 10% lower than in the corresponding period of last year.  Approximately 60% of the reduction was as a result of the strengthening of the Canadian Dollar against Sterling. The rest of the reduction was as a result of a significant fall in bipolar revenue partially offset by stronger service revenue.

The gross margin was 18.7% of revenue in the third quarter of 2016 compared to a gross margin of 8.8% of revenue in the third quarter of 2015. For the year to date, the gross margin was 10.3% compared to 0.1% in the corresponding period of last year. Despite the strong improvement, gross margin for the year to date is still below the level targeted by management.

Sales and marketing and administration expenses represented 12.0% of revenue in the third quarter and 13.2% of revenue for the year to date compared to 7.4% and 10.5% in the corresponding periods in 2015. The increase reflected a conscious decision by management to strengthen the sales team and a lower cross charge to R&D in the quarter.

The net expenditure on research and development for the third quarter of 2016 was $266,000. In the corresponding quarter of last year, there had been a surplus from research and development of $198,000. For the year to date, net expenditure was $1.0 million compared to a credit of $100,000 in the corresponding period of last year. The increase in the cost to the Group reflected the increase in R&D work being undertaken whilst third party support had not risen as quickly.

As a consequence of these changes, Dynex reported a profit before tax in the quarter of $352,000 compared to a profit before tax of $603,000 in the corresponding quarter of last year. For the year to date, a loss before tax of $2.3 million was recorded compared to a loss before tax of $3.3 million in the corresponding period of last year.

At the end of the third quarter, the Company's order book stood at $17.2 million, approximately 22% higher than at the end of the second quarter. At the end of 2015, the order book had stood at $15.2 million.

Revenue is expected to be rise in the fourth quarter and management expects to remain profitable.

Dr. Paul Taylor, President and Chief Executive Officer commented, "Market conditions remain tough. Our customers remain cautious but we have managed to increase revenue in the third quarter and to return to profitability and we expect to increase revenue further and remain profitable in the fourth quarter."

Bob Lockwood, Chief Financial Officer commented, "Third quarter results show an improvement and we are pleased to be back in profit. But management is clear that we need to make further improvements in order to reach the levels of profitability that we are targeting."

Liu Ke'an, the Chairman of Dynex said, "I am pleased to be able to report a net profit for the quarter. We are determined that we should remain profitable going forward and management is clear about the improvements that need to be made.."

Forward-looking Statements
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 September 30th , 2016 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; 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.

About the Company
Dynex designs and manufactures high power bipolar semiconductors, high power insulated gate bipolar transistor (IGBT) modules and die, high power electronic assemblies and radiation hard silicon-on-sapphire integrated circuits (SOS IC's). The company's power products are used worldwide in power electronic applications including electric power transmission and distribution, renewable and distributed energy, marine and rail traction motor drives, aerospace, electric vehicles, industrial automation and controls and power supplies. The Company's IC products are used in demanding applications in the aerospace industry. Dynex Semiconductor Ltd is its only operating business and is based in Lincoln, England in a facility housing the fully integrated silicon fabrication, assembly and test, sales, design and development operations.  In 2008, a majority of the shares of Dynex were acquired by Zhuzhou CSR Times Electric Co., Ltd. In April 2016 this company changed its name to Zhuzhou CRRC Times Electric Co., Ltd.

Zhuzhou CRRC Times Electric Co., Ltd. is based in Hunan Province in the People's Republic of China. It is listed on the Hong Kong Stock Exchange. CRRC Times Electric is mainly engaged in the research, development, manufacture and sales of locomotive train power converters, control systems and other train-borne electrical systems, as well as the development, manufacturing and sales of urban railway train electrical systems. In addition, CRRC Times Electric is also engaged in the design, manufacturing and sale of electric components including power semiconductor devices for the railway industry, urban railway industry and non-railway purposes.

Press announcements and other information about Dynex are available at www.dynexpower.com.

Further information on CRRC Times Electric can be found at www.timeselectric.cn/en

All monetary values expressed in this release are in Canadian Dollars unless stated otherwise.

The TSX Venture Exchange has neither approved nor disapproved of the information in this press release.

SOURCE Dynex Power Inc.