Dynex Power Announces Third Quarter Results

Dynex Power (TSXV:DNX) has announced its financial results for the third and nine months ended September 30, 2017.
As quoted in the press release:

Third quarter revenue of $13.1 million was 18% higher than the corresponding quarter of last year, and represents the highest quarterly revenue in the history of the company. This increase was despite a 4% strengthening of the Canadian Dollar exchange rate against Sterling. In Sterling terms, revenue increased by 23%. For the year to date, revenue was $5.7 million or 19% higher than in the first nine months of 2016 (32% higher on a constant currency basis). This reflected significant increases in bipolar sales and services which more than offset smaller reductions in sales of power assemblies.  IGBT sales are similar to last year.
Operating cash flow for the first 9 months of 2017 was strong. The company generated positive operating cash of $3.3 million in this period, versus negative cash of $0.4 million in the equivalent period in 2016.  This represents significantly improved income performance, together with improved management of working capital, consistent with the overall business turnaround plan.
The gross margin was 11.6% of revenue in the third quarter of 2017, compared to a gross margin of 18.7% of revenue in the third quarter of 2016. For the year to date, gross margin was 14.5%, compared to 10.3% in the corresponding period of last year. The improvement in gross margin in 2017 reflects increased revenues in a high fixed cost business. However, it remains below the range targeted by management, in part due to the closeout this year of a number of loss-making contracts, particularly in the Power Assemblies business unit. Going forward, the development of a core competence in program management will ensure a more efficient execution of contracts; this, coupled with a review of our bidding and pricing strategy, will largely eliminate loss-making and low-margin business.
The combination of other income, expenses and costs represented 11.5% of revenue in the third quarter and 16.1% of revenue for the year to date compared to 15.5% and 17.8% in the corresponding periods in 2016.  The absolute level of such expenditure decreased by $215,000 in the third quarter and increased by $409,000 for the year to date compared to the corresponding periods of last year, reflecting changes to the management team, increased research and development costs and the cost of a small redundancy exercise to rebalance resources in the business.
As a consequence of these results, the Company recorded a quarter 3 profit before tax of $31,000 compared to a profit before tax of $352,000 in the corresponding quarter of last year. For the year to date, a loss before tax of $559,000 was recorded compared to a loss before tax of $2.3 million for the corresponding period of last year. The net profit after tax for the third quarter was $11,000 or $0.00 per share, compared with a net profit of $236,000, or $0.00 per share, in the corresponding period of last year. For the year to date the net loss was $527,000 or $0.01 per share compared to $2.0 million or $0.02 per share, a loss reduction of 73%.
Clive Vacher, President and Chief Executive Officer, commented, “The record quarterly revenue has contributed to greater than 30% increase in year-to-date revenue versus 2016, on a constant-currency basis.  This, coupled with a year-to-date reduction in losses of 73%, and strong positive operating cash flow of $3.3 million, are encouraging signs that the business turnaround plan is yielding positive results.

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