u-blox announces good results in Fiscal Year 2011

Thalwil, Switzerland – March 21, 2012 – u-blox (SIX: UBXN), a leading provider of embedded positioning and wireless communication solutions, today announces its financial results for 2011.

Financial highlights:

 

u-blox achieved strong top- and bottom line growth:
 

	•	Consolidated revenue of u-blox was CHF 124.7 million in 2011, a growth of 10.6% as compared to 2010 (29% in local currency)
	•	Despite unfavorable exchange rates, gross profit improved from CHF 58.9 million to CHF 62.8 million, with a good gross profit margin of 50.3% in 2011
	•	Profit from operations (EBIT) increased from CHF 19.1 million to CHF 21.2 million, a growth of 11.2% as compared to 2010
	•	EBITDA margin of 23.4%, EBIT margin of 17.0%
	•	Net profit increased by 27.8% from CHF 12.9 million to CHF 16.5 million, representing a 13.2% net profit margin for 2011
	•	Strong net cash flow from operations was CHF 18.6 million
	•	Healthy balance sheet with a high equity ratio of 83.7%
	•	Unfavorable exchange rates negatively influenced financial results
	•	The payout of a dividend of CHF 0.90 per share is to be proposed at the Annual General Meeting

 

A year of consolidation and growth

In 2011 the company recorded revenue growth in APAC (+3.3%), the EMEA (+5.8%) and Americas (+29.9%) resulting in overall growth of 10.6% over 2010. Measured in local currencies the revenue increased by 29%. Growth was experienced in most target market sectors. Both product and service business segments generated positive EBIT during 2011. Consolidated revenue was up by CHF 11.9 million to CHF 124.7 million with increased volumes, while EBIT increased from CHF 19.1 million to CHF 21.2 million, an 11.2% increase over the previous year. Net profit was CHF 16.5 million, representing a 13.2% net profit margin for 2011. These positive figures are especially significant in light of the negative exchange rate development of the Swiss Franc against both US dollar and Euro during the year. 

 

Long term value creation based on solid strategy

u-blox strives to create long-term value for all its stakeholders. To achieve this, the company continued to adhere to a 4-pillar strategy, consistently focusing on innovation, market expansion, operational excellence and strategic partnerships.

 

Acquisitions

During 2011, u-blox entered the North American CDMA market through the acquisition of San Diego based Fusion Wireless. The acquisition immediately gave the company a new, cutting-edge wireless module products plus access to the CDMA market in North America for both consumer and M2M applications. It also expands the company’s wireless module technology roadmap to cover all popular standards used worldwide.

 

A second acquisition of all intellectual property of Australia based SigNav, a leader and 15-year veteran in precision-timing and reference frequency technologies, enhanced u-blox’ market position in the global mobile basestation and femtocell markets which rely on this technology. Both companies where successfully integrated. With healthy liquidity of CHF 81.1 million, u-blox continues to assess additional acquisitions in order to strengthen its product portfolio and global presence.

 

Positioning products highlights

u-blox experienced a strong year of innovation in positioning. Six new products were launched during the year targeting the in-dash automotive navigation sector, precision timing, and handheld consumer markets. A new application sector, Precise Point Positioning (PPP), was entered with a new product that addresses high-accuracy mapping and agriculture applications. Of special significance was the development and verification of new technologies and products that address additional satellite positioning technologies in addition to GPS such as the Russian GLONASS and Japanese QZSS systems. u-blox is now well positioned with products that serve the majority of deployed global positioning technologies and augmentation systems.

 

Wireless products highlights

The wireless product line experienced both market acceptance and enhancement in terms of five new products addressing new markets. 4 new products supporting CDMA were launched during the year. Additionally, important certifications with major carriers such as AT&T, Verizon and Sprint Nextel were achieved. u-blox’ CellLocate hybrid GPS/Wireless positioning technology, announced in 2010, was also integrated into both LEON and LISA wireless module families.

 

Innovations

Innovation is the most important success factor for u-blox. During 2011 the company maintained efforts in research and development with CHF 22.1 million. Innovation was achieved in these distinct areas:

 

	•	Expansion of satellite positioning well beyond GPS: at the end of 2011, u-blox now has commercially available products that support not only GPS, but also Russia’s GLONASS, Europe’s Galileo, and Japan’s QZSS satellite positioning standards.
	•	The SigNav acquisition strengthened u-blox’ market position in precision timing. SigNav’s know-how, software and equipment reinforced u-blox’ position in GPS precision timing, a market where u-blox already has strong presence.
	•	High-precision GPS: introduction of the first product supporting high-precision GPS for applications such as mapping and agriculture. The technology is unique as it is based on a low-cost single frequency GPS receiver which can replace much more expensive techniques.

 

Expansion of production capacities and new facilities

In addition to revenue growth and two acquisitions, production capacity was increased in all manufacturing places and efficiency increased with additional automation and test equipment. The company-wide culture of program and project management was expanded with new tools, allowing quicker reaction to market demands.

 

To address the growing market in Southern China, u-blox opened a new office in Shenzhen, the second office in China, and an office in India. Despite the extreme situation in Japan and Thailand due to the tsunami and catastrophic flooding, no significant impact on the ability to deliver to customers was experienced. This was in part due to a broad network of suppliers and subcontractors, most of who were not affected by these natural disasters.

 

Revenue breakdown

u-blox operates in two segments:

 

	•	GPS and Wireless products u-blox develops and sells GPS chips and modules, and wireless modules which are used in automotive, industrial and consumer applications. Revenue was CHF 123.0 million for 2011 as compared to CHF 110.3 million in 2010.
	•	Wireless services u-blox also offers wireless communication technology services in terms of reference designs and software, an activity which was enforced by the acquisition of Fusion Wireless Inc. In 2011, revenue for Wireless services was CHF 9.2 million compared to CHF 7.0 million in 2010 (including intra-group revenue).

 

In 2011, Asia Pacific generated 45%, EMEA 26% and Americas 29% of total revenue. Revenue for the region Asia Pacific was CHF 55.6 million, an increase of 3.3% compared to 2010. In the Americas revenue grew by 29.9% to CHF 36.3 million as compared to 2010. EMEA grew by 5.8% to CHF 32.7 million.

 

In 2011, the company made about 80% of its total revenue from 65 customers. u-blox’ biggest customer accounted for less than 7% of revenue. u-blox was able to increase its total number of customers to over 3’500, as well as achieve global expansion into new regions and markets.

 

Increased gross profit

Gross profit increased by 6.6% to CHF 62.8 million in 2011 from CHF 58.9 million in 2010. Gross profit margin was 50.3% for 2011, declining slightly from 52.2% in 2010.

 

Distribution and marketing activities

Distribution and marketing expenses remained stable in 2011. Expenses were CHF 14.2 million as compared to CHF 14.6 million in the previous year. As a percentage of revenue distribution and marketing expenses were 11.4% in 2011 compared to 12.9% in 2010.

 

Research and product development

R&D expenses in 2011 were CHF 22.1 million as compared to CHF 21.3 million in 2010. As a percentage of revenue, R&D expenses in 2011 were 17.7% as compared to 18.9% in 2010.

 

Stock option expenses

The stock option expenses recognized in 2011 was CHF 1.6 million as compared to CHF 1.0 million in 2010.

 

Growth of profit from operations (EBIT)

EBIT was CHF 21.2 million in 2011 as compared to CHF 19.1 million in the previous year. Growth rate from 2010 to 2011 was 11.2%. EBIT margin was 17.0% and EBITDA margin was 23.4% in 2011.

 

Financial income and costs

In 2011, financial income was CHF 1.0 million. Financial expenses were CHF 1.3 million, mainly due to negative foreign exchange results.

 

Table 1: Consolidated income statement

 

 

Positive cash flow from operating activities

In 2011, u-blox generated cash from operating activities in the amount of CHF 18.6 million as compared to CHF 20.7 million in 2010. Inventory level was increased in the amount of CHF 4.8 million.

 

 Table 2: Condensed consolidated statement of financial position

 

 

 

 

 

Main investing activities

In 2011, investments in capitalized development costs were CHF 4.0 million as compared to CHF 3.4 million in 2010. CHF 3.3 million was invested in furniture, equipment, tools and test infrastructure for the further expansion of capacity and approximately CHF 2.6 million in intellectual property rights and acquired technology.

 

With the acquisition of the intellectual property of Australia based SigNav u-blox could enhance its market position in precision timing.

 

Through the acquisition in September 2011 of San Diego based Fusion Wireless Inc., u-blox strengthened its wireless module product offering and gained access to the embedded CDMA market in North America.

 

Financing activities

In 2011, there was a repayment of CHF 2.4 million of a financial liability out of acquisitions.

 

Strong financial position

u-blox has a very strong balance sheet with an equity ratio of 83.7%. Cash and cash equivalents and marketable securities were CHF 81.1 million at December 31, 2011 compared to CHF 75.1 million at December 31, 2010.

 

At the end of 2011, goodwill was at CHF 17.1 million and no impairment losses were recognized on the goodwill.

 

Dividend

Due to this strong position and positive outlook, the Board of Directors will propose at the annual shareholders meeting to pay-out dividends. For this year a dividend of CHF 0.90 per share is suggested.

 

Table 3: Condensed consolidated statement of financial position

 

 

 

 

 

New Board and Management members

Two seasoned industry experts strengthened the top management teams; Dr. Paul Van Iseghem was elected as a Member of the Board, and Roland Jud was appointed CFO.

 

Outlook

u-blox’ remains well positioned to serve the global markets for both positioning and wireless communications in the consumer, industrial and automotive markets. Thanks to in-house expertise in both the wireless and positioning sectors, the company is well prepared to address promising markets, including GSM, WCDMA and CDMA wireless modems for M2M markets on a global scale, as well as receivers for new satellite positioning systems in Europe, Russia and Japan. u-blox will continue to follow a dual-track strategy and foresees continued growth in 2012. 

 

Growth drivers will be:

 

	•	The adoption of positioning features in virtually all types of consumer products
	•	The continuing trend of embedded wireless connectivity used in a vast range of industrial M2M applications
	•	Increasing demand for asset and personal trackers to provide accountability and security
	•	Continued global domination of our positioning products in automotive navigation systems
	•	The strong growth of automotive emergency call and anti-theft systems

 

With over 3’500 global customers and a very strong business model and brand, u-blox expects continued revenue growth in 2012.

 

For the year 2012, the company maintains an EBIT guidance at approximately CHF 20 million, and its revenue guidance at CHF 155 million. This outlook is based on the absence of unforeseen economic adversity and exchange rates assumed at budget level (USD/CHF: 0.90; EUR/CHF: 1.22).

 

For more information, please view the Annual Report 2011 and presentation slides online at:

https://content.u-blox.com/sites/default/files/documents/annual_resutls_2011_presentation.pdf