Tundra Semiconductor Corporation (TSX:TUN), the leader in System Interconnect, reported financial results for the final quarter of fiscal 2006, which ended April 30, 2006.
- Q4-2006 revenue of $19.0M (up 1% quarter-over-quarter; up 10% compared to Q4-2005)
- Pro forma earnings of $2.6M (up 15% quarter-over-quarter; up 92% compared to Q4-2005)
- Pro forma diluted earnings per share were $0.13 (up from $0.11 in Q3-2006; up from $0.07 in Q4-2005)
- GAAP earnings for Q4-2006 were $6.8M or $0.35 per diluted share (up from $1.5M or $0.08 in Q3-2006; up from $641K or $0.03 in Q4-2005)
FY 2006 RESULTS:
- FY 2006 revenue of $74.5M compared to $79.6M in FY 2005
- FY 2006 pro forma earnings were $8.9M compared to $10.4M in FY 2005
- FY 2006 pro forma diluted earnings per share were $0.45 compared to $0.53 for FY 2005
- GAAP earnings for FY 2006 were $10.8M or $0.55 per diluted share compared to $7.5M or $0.38 for FY 2005
“I am pleased with the results we have achieved this quarter. Not only did we grow the company by building on our market and product leadership, we also completed three key acquisitions. I can report that our teams are working well together as we integrate product roadmaps and company operations,” said Jim Roche, President and CEO of Tundra. “Executing against our acquisition strategy has strengthened our financial position, broadened our System Interconnect portfolio and increased penetration of our strategic customers.”
GUIDANCE FOR Q1-2007:
- Revenue will grow to between $21.0M and $23.5M
- Pro forma diluted earnings per share will be in the range of $0.09 to $0.15
- Gross margins will be in the mid-to-high sixties
“The fourth quarter was a solid quarter for us. We built profitability and grew revenue while introducing new products and integrating recent acquisitions,” said Norm Paquette, Chief Financial Officer of Tundra. “Our disciplined approach, leveraging strong operational controls while building on our increasingly diverse product portfolio, positions us well for future growth.”
Tundra has announced today that Norm Paquette has resigned as Chief Financial Officer of the Company. Norm will continue in his current role until the new CFO has been hired and he will assist Tundra in identifying his successor. After a successful and respected tenure with the Company, Norm has decided to make a change and pursue other opportunities.
“Since the founding of Tundra in 1995, Norm has been one of the key contributors to our success. He led the company’s successful IPO in 1999 and has managed our finances through nearly forty quarters of revenue and profit growth,” said Roche. “Norm leaves Tundra in a solid financial position with growing revenues and profits and a strong financial team. I appreciate his dedication and his many efforts over the years and wish him well in his future pursuits.”
STRONG EXECUTION AGAINST ACQUSITION STRATEGY
Silicon Logic Engineering, Inc.
On June 1, 2006 Tundra announced that it had acquired Silicon Logic Engineering, Inc. (“SLE”) of Eau Claire, Wisconsin for US$14 million. SLE is a leader in developing high-performance communications and computer chip products for some of the world’s largest networking and computing customers. The addition of SLE’s highly advanced resources, expertise and intellectual property strengthens Tundra’s leadership in System Interconnect for the communications and computing markets. Tundra’s leadership in delivering world-class standards-based System Interconnect products combined with SLE’s excellent track record of delivering high-performance chips creates a formidable product offering well positioned to respond to the growing System Interconnect outsourcing trend.
Alliance Semiconductor Corporation Systems Solutions Business Unit
On May 8, 2006, Tundra announced it had completed the acquisition of the Systems Solutions Business Unit of Alliance Semiconductor Corporation (“Alliance SSBU”). Tundra entered into a definitive agreement on April 19, 2006 to acquire the assets of the Alliance SSBU for US$5.8 million in cash. The acquisition includes intellectual property and several products both in production and under development. Tundra also has hired over fifty former-Alliance SSBU employees as a result of the acquisition. In addition to the immediate benefit of a broader product offering by adding PCI Express(R), HyperTransportTM and PCI bridge products, Tundra gains Alliance SSBU’s world-class intellectual property and two highly experienced and innovative teams in Santa Clara, California and Hyderabad, India. Tundra’s leading portfolio of System Interconnect products combined with Alliance SSBU’s design expertise uniquely positions Tundra to develop a market-leading PCI Express product portfolio that will fuel growth for Tundra’s communications customers.
Potentia Semiconductor Corporation
On April 7, 2006 Tundra announced the acquisition of Potentia Semiconductor Corporation (“Potentia Canada”) for $1.4 million in cash. The acquisition included the power controller business of Potentia Canada, which Tundra continues to operate. The acquisition added five new power controllers to Tundra’s product portfolio. The Tsi205TM, Tsi206TM, Tsi248TM, Tsi252TM and Tsi257TM Power Controllers are now available from Tundra’s worldwide sales network. With the addition of the power controller devices to Tundra’s product portfolio, customers can take advantage of Tundra’s leadership in System Interconnect combined with industry-leading power controller devices.
Tundra continues to strengthen its position as the industry’s leading provider of serial RapidIO(R) switches. In May, Tundra launched the Tsi574TM Serial RapidIO Switch, which expanded Tundra’s portfolio of switches to include an optimal offering for DSP aggregation on line cards. Ideally suited for a for a wide range of applications such as wireless base stations, media gateways, video infrastructure and DSP-intensive image processing, the Tsi574 demonstrates Tundra is broadening its RapidIO System Interconnect portfolio to address the full spectrum of features that customers and partners need to design successful RapidIO-based systems. With multiple RapidIO switches launched and in production combined with commercially-available development platforms and a strong roadmap, Tundra is recognized as the market leader in RapidIO System Interconnect.
In the quarter, Tundra also strengthened its position as the industry’s leading provider of host bridges for PowerPC(R) with its announcement that the Tsi109TM Host Bridge is in production. Ideal for power sensitive and cost sensitive applications, the Tsi109 supports PCI-X, DDR2 memory, Gigabit Ethernet and Flash memory with integrated power management features to address demanding, low power applications. Well suited as a companion chip for both Freescale Semiconductor MPC74xx and IBM PPC 750xx PowerPC processors, Tundra’s Tsi109 and complete host bridge portfolio offers designers the benefits of greater overall system performance, reduced system design complexity, better integration and superior power efficiency.
CONFERENCE CALL AND WEBCAST
Tundra management will be held a conference call June 8, 2006 at 5:00pm EST to discuss additional details regarding this earnings update. You may access the conference call via any of the following:
Replay: 416-640-1917, Passcode: 21191050#. (Available up until June 16, 2006)
Tundra Semiconductor Corporation (TSX:TUN) is the global leader in System Interconnect providing world-class support and leading edge semiconductor solutions to the world’s foremost communications, networking, storage system, and information technology vendors. Consistently delivering on system level performance promises that reduce time to market, Tundra System Interconnect ensures market advantage in wireless infrastructure, storage networking, network access, military, industrial automation, and information technology applications.
The difference between pro forma and GAAP earnings is due to stock-based compensation expense, goodwill impairment charges and amortization of intangibles and backlog associated with Tundra’s acquisitions. Tundra uses pro forma measures internally to evaluate and manage operating performance as well as to forecast and plan.
Tundra Semiconductor Corporation is a public company with common shares listed for trading on the Toronto Stock Exchange (TSX:TUN) in Canada. All figures, unless otherwise noted, are stated in Canadian dollars in accordance with accounting principles generally accepted in Canada.
The Company cautions that the forward-looking information in this release is based on certain assumptions made by the Company that may prove to be inaccurate. Assumptions made include customer demand for the Company’s products and services, the Company’s ability to maintain and enhance existing customer relationships, as well as the Company’s ability to bring to market the products currently under development. Furthermore, the Company cautions that the forward-looking statements in this release are based on current expectations that are subject to risks and uncertainties. Actual results may differ due to factors such as customer demand, customer relationships, new product development, new services offerings, product shipping schedules, product mix, competitive products and services, pricing pressure, and changes in the embedded systems market specifically. Additional information identifying risks and uncertainties is contained in the Company’s filings with the various provincial securities commissions.
TUNDRA is a registered trademark of Tundra Semiconductor Corporation (Canada, U.S. and U.K.). TUNDRA and the Tundra logo are registered marks of Tundra Semiconductor Corporation (Canada – registration in the United States, European Union, and People’s Republic of China pending). Tsi109 and Tsi574 are trademarks of Tundra Semiconductor Corporation. RapidIO is a trademark of the RapidIO Trade Association, Inc. The PowerPC name, Power Architecture name, and the PowerPC logotype are trademarks of International Business Machines Corporation, used under license therefrom.
Development of the Tundra Tsi574TM was made possible in part with the assistance of the Technology Partnerships Canada Program.