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8-K - FORM 8-K - DDI CORPd8k.htm

Exhibit 99.1

 

   

LOGO

NEWS BULLETIN  

DDi Corp.

1220 Simon Circle

Anaheim, CA 92806

NASDAQ: DDIC

 

 

For Further Information:

 

Mikel H. Williams    Andrew Greenebaum/Laura Foster
Chief Executive Officer    Addo Communications
   (310) 829-5400
J. Michael Dodson    andrewg@addocommunications.com
Chief Financial Officer    lauraf@addocommunications.com
(714) 688-7200   

 

 

DDi Corp. Announces Second Quarter 2010 Results

ANAHEIM, Calif., July 29, 2010 – DDi Corp. (NASDAQ: DDIC), a leading provider of time-critical, technologically advanced electronic interconnect design, engineering and manufacturing services, today reported financial results for the second quarter ended June 30, 2010.

Second Quarter 2010 Highlights:

 

   

Net sales of $68.4 million increased 6% sequentially and 30% over pro-forma second quarter 2009 revenues, which include Coretec net sales

   

Gross margin expanded 77 basis points sequentially to 22.4%

   

Adjusted EBITDA grew to $9.8 million, a 16% sequential increase

   

Net income increased 58% sequentially to $6.0 million, or 29 cents per share

   

2010 bookings for new NextGen-SMV® technology surpassed $1 million

   

Declared first quarterly dividend of $0.06 per share

Mikel Williams, President and Chief Executive Officer of DDi Corp., stated, “We are extremely pleased to achieve another quarter of strong operating and financial performance. Through the ongoing execution of our business strategy, we have continued to build upon our financial position having delivered four consecutive quarters of increasing sales, expanding margins and controlled operating expenses. Our solid performance has been driven by robust customer demand for our products and services coupled with strong operational execution of our business plan. Highlighting our continued focus on developing leading electronic interconnect solutions, during the second quarter we continued to introduce cutting-edge capabilities that underpin DDi’s position in the market place. As an example, we passed the $1 million mark in customer orders in 2010 for our new and disruptive NextGen-SMV® technology, and we look forward to further extending this enabling technology to our customers going forward.”

Mr. Williams continued, “Importantly, with second quarter bookings of approximately $69.7 million and indications of continued solid demand in the marketplace, we are optimistic about our prospects for the second half of 2010. Based upon our performance to-date, we are increasing


DDi Corp. Second Quarter 2010 Earnings Results

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our 2010 estimate for net sales growth, and now expect net sales growth of 20% to 25% over 2009 pro-forma net sales of $220 million.”

Second Quarter Results

Net sales for the second quarter of 2010 were $68.4 million, an 84% increase over the prior year quarter and a 5.7% increase sequentially. The sequential increase reflects continued strength in the end-market, particularly within the Company’s commercial segment, as well as continued progress in targeted vertical markets such as the military/aerospace sector.

Gross margin for the second quarter of 2010 increased 443 basis points year-over-year to 22.4% of net sales from 18.0% of net sales in the prior year period. Sequentially, gross margin increased 77 basis points from 21.6% of net sales. The sequential and year-over-year improvement in gross margin was primarily driven by improved operational efficiencies derived from the net sales increase and operating expense controls. This was partially offset by a decline in gross margin for the Company’s Toronto based facilities, resulting from the facilities’ ongoing integration and consolidation efforts.

Operating income in the second quarter of 2010 was $6.8 million, or 9.9% of net sales, compared to operating income of $0.8 million, or 2.2% of net sales, in the prior year period. Operating income in the first quarter of 2010 was $4.9 million, or 7.5% of net sales.

Adjusted EBITDA for the second quarter of 2010 was $9.8 million, or 14.3% of net sales, compared to $3.6 million, or 9.6% of net sales, in the prior year period. Adjusted EBITDA for the first quarter of 2010 was $8.4 million, or 13.0% of net sales. Reconciliations of this non-GAAP measure are provided after the GAAP condensed consolidated financial statements below and exclude non-recurring costs associated with the Coretec acquisition, including facility closure, severance and professional fees.

Net income in the second quarter of 2010 was $6.0 million, or $0.29 per share, compared to net income of $0.4 million, or $0.02 per share, in the prior year period. Net income in the first quarter of 2010 was $3.8 million, or $0.19 per share.

Second Quarter Balance Sheet and Liquidity

As of June 30, 2010, DDi had total cash and cash equivalents of $15.5 million and total debt of $12.1 million. Net working capital as of June 30, 2010 was $45.5 million, an increase of $5.0 million from March 31, 2010.

For the three and six months ended June 30, 2010, capital expenditures totaled $2.3 million and $3.6 million, respectively.

Second Quarter Developments

On May 13, 2010, the Company announced that its Board of Directors approved the initiation of a cash dividend to its shareholders. The quarterly dividend of $0.06 per share was paid on July 6, 2010, to shareholders of record on the close of business on June 21, 2010.


DDi Corp. Second Quarter 2010 Earnings Results

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Mr. Williams commented, “During the second quarter of 2010 we declared our first quarterly dividend of $0.06 per share. We believe this action reflects our confidence in our financial position and our dedication to enhancing shareholder value. Looking ahead, we will continue to evaluate opportunities that are consistent with our goal of driving shareholder returns.”

Conference Call and Webcast

A conference call with simultaneous webcast to discuss second quarter 2010 financial results will be held today at 5:00 p.m. Eastern / 2:00 p.m. Pacific. Participants may access the call by dialing 888-846-5003 (domestic) or 480-629-9856 (international). In addition, the call is being webcast and can be accessed at the Company’s web site: www.ddiglobal.com/investor. Participants should access the website at least 15 minutes early to register and download any necessary audio software. A telephone replay of the conference call will be available through August 12, 2010 by dialing 877-870-5176 (domestic) or 858-384-5517 (international) and entering the conference ID 4328712. An online replay of the webcast will be available at www.ddiglobal.com/investor under “Financial Calendar.” For more information, visit www.ddiglobal.com.

About DDi

DDi is a leading provider of time-critical, technologically advanced electronic interconnect design, engineering and manufacturing services. Headquartered in Anaheim, California, DDi and its subsidiaries offer services to leading electronics OEMs and contract manufacturers worldwide from its facilities across North America and with manufacturing partners in Asia.

###

Non-GAAP Financial Measures

This release includes ‘adjusted EBITDA’, a non-GAAP financial measure as defined in Regulation G of the Securities Exchange Act of 1934. Management believes that the disclosure of non-GAAP financial measures, when presented in conjunction with the corresponding GAAP measures, provide useful information to the Company, investors and other users of the financial statements and other financial information in identifying and understanding operating performance for a given level of net sales and business trends. Management believes that adjusted EBITDA is an important factor of the Company’s business because it reflects financial performance that is unencumbered by debt service and other non-cash, non-recurring or unusual items. This financial measure is commonly used in the Company’s industry. However, adjusted EBITDA should not be considered as an alternative to cash flow from operating activities, as a measure of liquidity or as an alternative to net income as a measure of operating results in accordance with generally accepted accounting principles. The Company’s definition of adjusted EBITDA may differ from definitions of such financial measure used by other companies. The Company has provided a reconciliation of adjusted EBITDA to GAAP financial information in the attached Schedule of Non-GAAP reconciliations.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995

Except for historical information contained in this release, statements in this release may constitute forward-looking statements regarding the Company’s assumptions, projections, expectations, targets, intentions or beliefs about future events. Words or phrases such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “targets,” “will likely result,” “will continue,” “may,” “could” or similar expressions identify forward-looking statements. Forward-looking statements involve risks and uncertainties, which could cause actual results or outcomes to differ materially from those expressed. The Company cautions that while it makes such statements in good faith and it believes such statements are based on reasonable assumptions, including without limitation, management’s examination of historical operating trends, data contained in records, and other data available from third parties, it cannot assure you that the Company’s projections will be achieved. In addition to other factors and matters discussed from time to time in the Company’s filings with the U.S. Securities and Exchange Commission, or the SEC, some important factors that could cause actual results or outcomes for DDi or its subsidiaries to differ materially from those discussed in forward-looking statements include changes in general economic conditions in the markets in which it may compete and fluctuations in demand in the electronics industry; the Company’s ability to sustain historical margins; increased competition; increased costs; loss or retirement of key members of management; currency exchange rate fluctuations; integration of acquired operations; international operations; compliance with environmental regulations; increases in the Company’s cost of borrowings or unavailability of additional debt or equity capital on terms considered reasonable by management; and adverse state, federal or foreign legislation or regulation or adverse determinations by regulators. Any forward-looking statement speaks only as of the date on which such statement is made, and, except as required by law, the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for management to predict all such factors.


DDi Corp. Second Quarter 2010 Earnings Results

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DDi Corp.

Condensed Consolidated Statements of Income

(In thousands, except per share amounts)

(Unaudited)

 

     Qtr. Ended     Qtr. Ended     Qtr. Ended  
     June 30, 2010     June 30, 2009     March 31, 2010  

Net sales

   $ 68,382      $ 37,177      $ 64,665   

Cost of goods sold

     53,067        30,498        50,679   
                        

Gross profit

     15,315        6,679        13,986   
     22.4     18.0     21.6

Operating expenses:

      

Sales and marketing

     4,294        2,829        4,507   

General and administrative

     4,080        2,835        4,423   

Amortization of intangible assets

     190        190        190   
                        

Operating income

     6,751        825        4,866   

Interest and other expense, net

     442        266        658   
                        

Income before income taxes

     6,309        559        4,208   

Income tax expense

     312        125        409   
                        

Net income

   $ 5,997      $ 434      $ 3,799   
                        

Net income per share – basic

   $ 0.30      $ 0.02      $ 0.19   

Net income per share – diluted

   $ 0.29      $ 0.02      $ 0.19   

Weighted-average shares used in per share computations – basic

     19,863        19,715        19,824   

Weighted-average shares used in per share computations – diluted

     20,544        19,803        19,971   


DDi Corp. Second Quarter 2010 Earnings Results

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DDi Corp.

Condensed Consolidated Statements of Income

(In thousands, except per share amounts)

(Unaudited)

 

     6 Months Ended     6 Months Ended  
     June 30, 2010     June 30, 2009  

Net sales

   $ 133,047      $ 76,452   

Cost of goods sold

     103,746        62,513   
                

Gross profit

     29,301        13,939   
     22.0     18.2

Operating expenses:

    

Sales and marketing

     8,801        5,734   

General and administrative

     8,503        6,259   

Amortization of intangible assets

     380        380   
                

Operating income

     11,617        1,566   

Interest and other expense, net

     1,100        363   
                

Income before income tax expense

     10,517        1,203   

Income tax expense

     721        256   
                

Net income

   $ 9,796      $ 947   
                

Net income per share – basic

   $ 0.49      $ 0.05   

Net income per share – diluted

   $ 0.48      $ 0.05   

Weighted-average shares used in per share computations – basic

     19,844        19,715   

Weighted-average shares used in per share computations – diluted

     20,257        19,772   


DDi Corp. Second Quarter 2010 Earnings Results

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DDi Corp

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

     June 30,     December 31,  
     2010     2009  
Assets     

Current assets:

    

Cash and cash equivalents

   $ 15,547      $ 19,392   

Accounts receivable, net

     45,154        35,280   

Inventories

     20,619        19,342   

Prepaid expenses and other

     1,469        1,265   
                

Total current assets

     82,789        75,279   

Property, plant and equipment, net

     39,296        40,175   

Intangible assets, net

     994        1,374   

Goodwill

     3,388        2,986   

Other assets

     838        659   
                

Total assets

   $ 127,305      $ 120,473   
                
Liabilities and Stockholders’ Equity     

Current liabilities:

    

Accounts payable

   $ 20,108      $ 13,939   

Accrued expenses and other current liabilities

     15,447        20,943   

Revolving credit facility

     1,702        4,227   
                

Total current liabilities

     37,257        39,109   

Other long-term liabilities

     11,008        12,056   
                

Total liabilities

     48,265        51,165   
                

Stockholders’ equity:

    

Common stock, additional paid-in-capital, and treasury stock

     230,684        230,945   

Accumulated other comprehensive income (loss)

     607        410   

Accumulated deficit

     (152,251     (162,047
                

Total stockholders’ equity

     79,040        69,308   
                

Total liabilities and stockholders’ equity

   $ 127,305      $ 120,473   
                


DDi Corp. Second Quarter 2010 Earnings Results

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DDi Corp.

Schedule of Non-GAAP Reconciliations

(In thousands)

(Unaudited)

 

     Qtr. Ended    Qtr. Ended    Qtr. Ended
     June 30, 2010    June 30, 2009    March 31, 2010

Adjusted EBITDA:

        

GAAP net income

   $ 5,997    $ 434    $ 3,799

Add back:

        

Interest and other expense, net

     442      266      658

Income tax expense

     312      125      409

Depreciation

     2,163      2,027      2,200

Amortization of intangible assets

     190      190      190

Non-cash compensation

     341      517      348

Non-recurring Coretec acquisition costs

     50      —        800

Toronto site integration

     290      —        —  
                    

Adjusted EBITDA

   $ 9,785    $ 3,559    $ 8,404
                    
          6 Months Ended    6 Months Ended
          June 30, 2010    June 30, 2009

Adjusted EBITDA:

        

GAAP net income

      $ 9,796    $ 947

Add back:

        

Interest and other expense, net

        1,100      363

Income tax expense

        721      256

Depreciation

        4,363      4,093

Amortization of intangible assets

        380      380

Non-cash compensation

        689      1,137

Non-recurring Coretec acquisition costs

        850      —  

Toronto site integration

        290      —  
                

Adjusted EBITDA

      $ 18,189    $ 7,176