Attached files

file filename
8-K - FORM 8-K - VIASYSTEMS GROUP INCd580365d8k.htm

Exhibit 99.1

 

LOGO

 

NEWS COPY

  
FOR IMMEDIATE RELEASE   

VIASYSTEMS ANNOUNCES SECOND QUARTER 2013 RESULTS

ST. LOUIS, August 6, 2013 – Viasystems Group, Inc. (NASDAQ:VIAS), a leading provider of complex multi-layer printed circuit boards and electro-mechanical solutions, today announced results for the second quarter ended June 30, 2013.

Highlights

 

   

Net sales were $285.6 million in the quarter ended June 30, 2013, a year-over-year decrease of 3.8%, and a sequential increase over the immediately preceding quarter of 4.6%.

 

   

Giving pro forma effect to the May 2012 acquisition of DDi Corp., net sales for the quarter ended June 30, 2013, declined 16.2% year-over-year.

 

   

Operating income in the quarter ended June 30, 2013, was $4.5 million, or 1.6% of net sales.

 

   

Adjusted EBITDA in the quarter ended June 30, 2013, was $30.7 million, or 10.8% of net sales, compared with $44.7 million, or 15.0% of net sales, in the quarter ended June 30, 2012, and compared with $29.5 million, or 10.8% of net sales, in the immediately preceding quarter.

 

   

U.S. GAAP loss per basic and diluted share was $(0.52) for the quarter ended June 30, 2013, on approximately 20 million average shares outstanding.

 

   

Adjusted EPS was a loss of $(0.28) for the quarter, excluding certain non-cash and special income and expense items. Adjusted EPS for the quarters ended June 30, 2012, and March 31, 2013, was $0.75 and $(0.39), respectively.

“While consolidated net sales for our second quarter were in line with analysts’ expectations, our earnings came in slightly below,” noted Viasystems’ Chief Executive Officer, David M. Sindelar. “However, I believe we gained momentum in the quarter and still expect to see sales and earnings improvements in the second half of the year. In particular, we have been awarded significant new projects in most of our end markets. These new project awards are a subset of a solid book-to-bill ratio in the second quarter. The new projects are also expected to complement our continued recovery from the setbacks we suffered in both our PCB and Assembly segments last year.”

“Like all manufacturers with a significant presence in China, we continue to face the challenges of increasing employment costs, and several provinces in China increased wages during the second quarter,” commented Sindelar. “In addition, we incurred costs for the new project ramp ups as well as increased priority shipping caused by capacity limitations related to last year’s site closure and factory fire in China. We expect the adverse cost effects of project ramp ups and priority shipping to decline following improved efficiencies in our manufacturing processes.”

“While the outlook for the global economy remains lackluster, most of our near-term challenges are within our control and our entire team is focused on execution to improve the bottom line,” observed Sindelar.


Financial Results

The company reported net sales of $285.6 million for the three months ended June 30, 2013. The year-over-year decrease of 3.8% was primarily the result of reduced demand in the automotive, industrial & instrumentation and computer/datacom end markets, partially offset by the sales attributable to the company’s acquisition of DDi on May 31, 2012. Giving pro forma effect to the acquisition of DDi, net sales for the quarter declined 16.2% year-over-year. The pro forma year-over-year decline was driven primarily by reduced demand across all of the company’s end markets. The company attributes this to the effects of i) softening global economic conditions, ii) reduced manufacturing capacity due to the involuntary closure of the company’s Huizhou, China printed circuit board factory that served primarily automotive customers, iii) inefficiencies and reduced manufacturing capacity levels related to the Guangzhou Fire and iv) reduced sales orders due to price competitiveness. Sequentially, net sales increased 4.6% in comparison to the first quarter of 2013. The sequential sales increase was driven by improved demand in the industrial & instrumentation, automotive and telecommunication end markets and increased capacity at the company’s Guangzhou factory as it recovered from the fire.

Cost of goods sold (excluding items shown separately in the income statement) as a percent of net sales was 81.4% for the quarter ended June 30, 2013, compared to 79.3% in the corresponding quarter a year ago, and compared to 80.3% in the immediately preceding quarter ended March 31, 2013. The primary contributors to the sequential increase were i) the higher level of Assembly sales as a percentage of total net sales, ii) increased costs of employment in China, and iii) increased freight costs.

Operating income was $4.5 million, or 1.6% of net sales, in the three months ended June 30, 2013, compared with $8.7 million, or 2.9% of net sales, for the second quarter of 2012, and compared with $2.6 million, or 0.9% of net sales, for the three months ended March 31, 2013.

Adjusted EBITDA, on a non-GAAP basis, was $30.7 million, or 10.8% of net sales, for the three months ended June 30, 2013, compared with $44.7 million, or 15.0% of net sales, for the second quarter of 2012, and compared with $29.5 million, or 10.8% of net sales, for the three months ended March 31, 2013. A reconciliation of operating income to Adjusted EBITDA is provided at the end of this news release.

For the three months ended June 30, 2013, net loss was $(10.3) million, of which $(10.4) million was attributable to common stockholders, and resulted in $(0.52) of loss per basic and diluted share. Adjusted EPS, on a non-GAAP basis, for the three months ended June 30, 2013, was a loss of $(0.28). A reconciliation of GAAP diluted earnings per share to Adjusted EPS is provided at the end of this news release.

Segment Information

Net sales and operating income in the company’s Printed Circuit Boards segment for the second quarter of 2013 were $240.7 million and $4.7 million, respectively, compared with Printed Circuit Boards segment net sales and operating income of $240.4 million and $15.1 million, respectively, for the second quarter of 2012, and compared with Printed Circuit Boards segment net sales and operating income of $241.0 million and $3.7 million, respectively, for the quarter ended March 31, 2013. Solid demand for PCBs used in the company’s automotive, telecom and military/aerospace end markets was offset by soft demand in the company’s computer/datacom and industrial & instrumentation end markets during the quarter ended June 30, 2013.

Net sales and operating loss in the company’s Assembly segment for the second quarter of 2013 were $44.9 million and $(0.1) million, respectively, compared with Assembly segment net sales and operating income of $56.5 million and $1.6 million, respectively, for the second quarter of 2012 and compared with Assembly segment net sales and operating loss of $31.9 million and $(1.0) million, respectively, for the quarter ended March 31, 2013. Compared to the second quarter of 2012, Assembly segment net sales decreased in the industrial & instrumentation end market, but increased or was flat in all of our other end markets. Compared to the immediately preceding three months ended March 31, 2013, increased Assembly segment net sales to customers in our industrial & instrumentation and telecommunication end markets were responsible for the segment’s sequential improvement.

Pro Forma Information

The company’s net sales of $285.6 million for the quarter ended June 30, 2013 declined by approximately 16.2% compared to approximately $341.0 million pro forma combined net sales of Viasystems and DDi for the three months ended June 30, 2012, which included approximately $44.1 million of net sales by DDi. Year-over-year, pro forma net sales decreased in all end markets.

Cash and Working Capital

Cash and cash equivalents at June 30, 2013, were $73.9 million, compared with $74.8 million at December 31, 2012. Cash provided by operating activities during the six months ended June 30, 2013, was $40.4 million. The company’s cash cycle metric of 34.7 days at June 30, 2013 was in line with expectations. During six months ended June 30, 2013, the company used a net of approximately $22.3 million cash for interest payments and used a net of approximately $3.9 million cash for payment of income taxes.

 

2


During the six months ended June 30, 2013, the company used a net $39.2 million of cash for investing activities. In particular, capital expenditures during the six months ended June 30, 2013, were $39.5 million. During the six months ended June 30, 2013, approximately $16.5 million of capital expenditures were incurred in connection with capacity expansion, relocation of facilities, replacement of fire-damaged equipment and other special projects.

During the six months ended June 30, 2013, financing activities used a net $2.2 million of cash, including approximately $1.6 million of cash used to make scheduled debt payments and $0.6 million cash used for withholding taxes related to net share settlements of vested stock compensation.

Use of Non-GAAP Financial Measures

In addition to the condensed consolidated financial statements presented in accordance with U.S. GAAP, management uses certain non-GAAP financial measures, including “Adjusted EBITDA” and “Adjusted EPS”.

Adjusted EBITDA is not a recognized financial measure under U.S. GAAP, and does not purport to be an alternative to operating income or an indicator of operating performance. Adjusted EBITDA is presented to enhance an understanding of operating results and is not intended to represent cash flows or results of operations. The Board of Directors, lenders and management use Adjusted EBITDA primarily as an additional measure of operating performance for matters including executive compensation and competitor comparisons. The use of this non-GAAP measure provides an indication of the company’s ability to service debt, and management considers it an appropriate measure to use because of the company’s leveraged position.

Adjusted EBITDA has certain material limitations, primarily due to the exclusion of certain amounts that are material to the company’s consolidated results of operations, such as interest expense, income tax expense, and depreciation and amortization. In addition, Adjusted EBITDA may differ from the Adjusted EBITDA calculations reported by other companies in the industry, limiting its usefulness as a comparative measure.

The company uses Adjusted EBITDA to provide meaningful supplemental information regarding operating performance and profitability by excluding from Adjusted EBITDA certain items that the company believes are not indicative of its ongoing operating results or will not impact future operating cash flows, which include restructuring and impairment charges, loss on early extinguishment of debt, stock compensation, costs associated with acquisitions and equity registrations, and other, net.

Adjusted EPS is not a recognized financial measure under U.S. GAAP, does not purport to be an indicator of the company’s financial performance, and might not be consistent with measures used by other companies. The company’s management believes this supplemental measure is useful in understanding underlying trends of the business and analyzing the effects of certain events that are infrequent or unusual for the company.

Adjusted EPS has certain material limitations, primarily due to the exclusion of certain amounts from earnings that are material to the company’s consolidated results of operations, such as costs associated with acquisitions and equity registrations, restructuring and impairment charges, certain interest and other expenses, and certain adjustments to net income to arrive at net income available to common stockholders. As a result, Adjusted EPS differs materially from the earnings per share calculations reported by other companies in the industry, limiting its usefulness as a comparative measure.

Investor Conference Call

Viasystems will broadcast live via internet an investor conference call at 3:30 p.m. Eastern Time today, August 6, 2013. The live listen-only audio of the conference call will be available at http://investor.viasystems.com. The live conference call will be available by telephone for professional investors and analysts by dialing 877-640-9867 (toll-free) or 914-495-8546.

A telephonic replay of the conference call will be available for one week at 855-859-2056 or 404-537-3406. Replay listeners should enter the conference ID 23478079. The webcast replay will be available at http://investor.viasystems.com for an indefinite period.

 

3


Forward Looking Statements

Certain statements in this communication constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are made on the basis of the current beliefs, expectations and assumptions of the management of Viasystems regarding future events and are subject to significant risks and uncertainty. Statements regarding our expected performance in the future are forward-looking statements. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. Viasystems undertakes no obligation to update or revise these statements, whether as a result of new information, future events or otherwise, except to the extent required by law. Actual results may differ materially from those expressed or implied. Such differences may result from a variety of factors, including but not limited to: legal or regulatory proceedings; the ability of Viasystems to successfully integrate DDi’s operations, product lines and technology and to realize additional opportunities for growth; any actions taken by the company, including but not limited to, restructuring or strategic initiatives (including capital investments or asset acquisitions or dispositions); or developments beyond the company’s control, including but not limited to, changes in domestic or global economic conditions, competitive conditions and consumer preferences, adverse weather conditions or natural disasters, health concerns, international, political or military developments and technological developments. Additional factors that may cause results to differ materially from those described in the forward-looking statements are set forth under the heading “Item 1A. Risk Factors,” in the Annual Report on Form 10-K filed by Viasystems with the SEC on February 15, 2013, and in Viasystems’ other filings made from time to time with the SEC and available at the SEC’s website, www.sec.gov.

About Viasystems

Viasystems Group, Inc. is a technology leader and a worldwide provider of complex multi-layer printed circuit boards (PCBs) and electro-mechanical solutions (E-M Solutions). Its PCBs serve as the “electronic backbone” of almost all electronic equipment, and its E-M Solutions products and services include integration of PCBs and other components into finished or semi-finished electronic equipment, for which it also provides custom and standard metal enclosures, cabinets, racks and sub-racks, backplanes and busbars. Viasystems’ approximately 15,300 employees around the world serve over 1,000 customers in the automotive, industrial & instrumentation, computer and datacommunications, telecommunications, and military and aerospace end markets. For additional information about Viasystems, please visit the company’s website at www.viasystems.com.

Contacts

Kelly Wetzler

SVP Corporate Development

314-746-2217

kelly.wetzler@viasystems.com

Erica Mannion

Investor Relations

Sapphire Investor Relations, LLC

415-471-2700

emannion@saphireir.com

 

4


VIASYSTEMS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

( dollars in thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended  
     June 30,
2013
    March 31,
2013
    June 30, 2012  

Net sales

   $ 285,553      $ 272,940      $ 296,861   

Operating expenses:

      

Cost of goods sold, exclusive of items shown separately

     232,448        219,058        235,556   

Selling, general and administrative

     25,001        27,693        31,228   

Depreciation

     21,878        21,958        18,579   

Amortization

     1,678        1,678        802   

Restructuring and impairment

     —          —          1,958   
  

 

 

   

 

 

   

 

 

 

Operating income

     4,548        2,553        8,738   

Other expense (income):

      

Interest expense, net

     11,259        11,199        12,144   

Amortization of deferred financing costs

     724        725        766   

Loss on early extinguishment of debt

     —          —          24,234   

Other, net

     941        748        (710
  

 

 

   

 

 

   

 

 

 

Loss before income taxes

     (8,376     (10,119     (27,696

Income taxes

     1,892        3,163        5,342   
  

 

 

   

 

 

   

 

 

 

Net loss

   $ (10,268   $ (13,282   $ (33,038
  

 

 

   

 

 

   

 

 

 

Less:

      

Net income attributable to noncontrolling interest

     101        173        271   
  

 

 

   

 

 

   

 

 

 

Net loss attributable to common stockholders

   $ (10,369   $ (13,455   $ (33,309
  

 

 

   

 

 

   

 

 

 

Basic loss per share

   $ (0.52   $ (0.67   $ (1.67
  

 

 

   

 

 

   

 

 

 

Diluted loss per share

   $ (0.52   $ (0.67   $ (1.67
  

 

 

   

 

 

   

 

 

 

Basic weighted average shares outstanding

     20,010,029        19,994,820        19,990,628   
  

 

 

   

 

 

   

 

 

 

Diluted weighted average shares outstanding

     20,010,029        19,994,820        19,990,628   
  

 

 

   

 

 

   

 

 

 

This information is intended to be reviewed in conjunction with the company’s filings with the Securities and Exchange Commission.

 

5


VIASYSTEMS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

( dollars in thousands)

 

     June 30,
2013
     December 31,
2012
 
     (unaudited)         

ASSETS

     

Current assets:

     

Cash and cash equivalents

   $ 73,870       $ 74,816   

Accounts receivable, net

     186,869         183,148   

Inventories

     114,371         111,029   

Prepaid expenses and other

     37,563         38,838   
  

 

 

    

 

 

 

Total current assets

     412,673         407,831   

Property, plant and equipment, net

     422,818         427,968   

Goodwill and other noncurrent assets

     265,537         270,382   
  

 

 

    

 

 

 

Total assets

   $ 1,101,028       $ 1,106,181   
  

 

 

    

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current liabilities:

     

Current maturities of long-term debt

   $ 11,356       $ 12,250   

Accounts payable

     176,696         161,890   

Accrued and other liabilities

     84,288         90,812   
  

 

 

    

 

 

 

Total current liabilities

     272,340         264,952   

Long-term debt, less current maturities

     562,566         563,446   

Other non-current liabilities

     51,700         45,926   
  

 

 

    

 

 

 

Total liabilities

     886,606         874,324   
  

 

 

    

 

 

 

Total stockholders’ equity

     214,422         231,857   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 1,101,028       $ 1,106,181   
  

 

 

    

 

 

 

This information is intended to be reviewed in conjunctions with the company’s filings with the Securities and Exchange Commission.

 

6


VIASYSTEMS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

( dollars in thousands)

(unaudited)

 

     Six Months Ended
June 30,
 
     2013     2012  

Net cash provided by operating activities

   $ 40,430      $ 32,152   
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Capital expenditures

     (39,496     (52,490

Proceeds from disposals of property

     297        102   

Acquisition of DDi, net of cash acquired

     —          (253,464

Acquisition of remaining interest in Huizhou, China facility

     —          (10,106
  

 

 

   

 

 

 

Net cash used in investing activities

     (39,199     (315,958
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Repayment of Senior Subordinated Convertible Notes Due 2013

     (895     —     

Repayments of borrowings under mortgages, capital leases and credit facilities, net of borrowings

     (670     (82

Withholding taxes related to stock awards

     (612     —     

Proceeds from 7.875% Senior Secured Notes

     —          550,000   

Repayment of 12.0% Senior Secured Notes

     —          (236,295

Financing and other fees

     —          (16,006
  

 

 

   

 

 

 

Net cash (used in) provided by financing activities

     (2,177     297,617   
  

 

 

   

 

 

 

Net change in cash and cash equivalents

     (946     13,811   

Beginning cash

     74,816        71,281   
  

 

 

   

 

 

 

Ending cash

   $ 73,870      $ 85,092   
  

 

 

   

 

 

 

This information is intended to be reviewed in conjunction with the company’s filings with the Securities and Exchange Commission.

 

7


VIASYSTEMS GROUP, INC. AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

NET SALES AND BALANCE SHEET STATISTICS

(dollars in millions)

(Unaudited)

 

     Three Months Ended  
     June 30, 2013     March 31, 2013     June 30, 2012(a)  

Net sales by segment

               

Printed Circuit Boards (a)

   $ 240.7         84   $ 241.0         88   $ 240.4         81

Assembly

     44.9         16     31.9         12     56.5         19
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 
   $ 285.6         100   $ 272.9         100   $ 296.9         100
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

 

(a) Excludes $44.1 net sales by DDi Corp. during the three months ended June 30, 2012 prior to its acquisition.

 

     Percentage of Net Sales     Net Sales Change  
     Three Months Ended     Sequential:     Year/Year:  
     June 30,     March 31,     June 30,     2Q13 vs     2Q13 vs  
     2013     2013     2012 PF (b)     1Q13     2Q12 PF (b)  

Net sales by end market

          

Automotive

     30     29     30     8     (18 )% 

Industrial & Instrumentation

     26     25     29     11     (23 )% 

Telecommunications

     17     16     15     9     (5 )% 

Computer and Datacommunications

     16     18     17     (9 )%      (20 )% 

Military and Aerospace

     11     12     9     (2 )%      (1 )% 
  

 

 

   

 

 

   

 

 

     
     100     100     100     5     (16 )% 
  

 

 

   

 

 

   

 

 

     

 

(b) Includes the effects of $44.1 net sales by DDi Corp. during the three months ended June 30, 2012 prior to its acquisition.

 

     2Q13      1Q13      4Q12      3Q12      2Q12(c)  

Working capital metrics

              

Days’ sales outstanding

     58.9         59.1         60.2         59.0         58.8   

Inventory turns

     8.1         8.0         7.9         8.8         8.0   

Days’ payables outstanding

     68.5         68.0         66.7         66.1         70.0   

Cash cycle (days)

     34.7         35.9         39.3         33.7         33.8   

 

(c) Adjusted for the effects of working capital acquired from DDi Corp.

 

8


VIASYSTEMS GROUP, INC. AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

RECONCILIATION OF OPERATING INCOME

TO ADJUSTED EBITDA

(dollars in millions)

(Unaudited)

 

     Three Months Ended  
     June 30,
2013
     March 31,
2013
     June 30,
2012
 

Operating income

   $ 4.5       $ 2.6       $ 8.7   

Add-back:

        

Depreciation and amortization

     23.6         23.6         19.4   

Non-cash stock compensation expense

     2.6         3.2         2.7   

Restructuring and impairment

     —           —           2.0   

Costs relating to acquisitions and equity registrations

     —           0.1         11.9   
  

 

 

    

 

 

    

 

 

 

Adjusted EBITDA

   $ 30.7       $ 29.5       $ 44.7   
  

 

 

    

 

 

    

 

 

 

 

9


VIASYSTEMS GROUP, INC. AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

RECONCILIATION OF DILUTED EARNINGS PER SHARE

TO ADJUSTED EARNINGS PER SHARE

(dollars in thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended  
     June 30,
2013
    March 31,
2013
    June 30,
2012
 

Net loss attributable to common stockholders (GAAP)

   $ (10,369   $ (13,455   $ (33,309

Adjustments:

      

Non-cash stock compensation expense

     2,597        3,207        2,669   

Amortization

     2,403        2,403        1,568   

Loss on early extinguishment of debt

     —          —          24,234   

Restructuring and impairment

     —          —          1,958   

Costs related to acquisitions and equity registrations

     31        124        11,925 (a) 

Transition period interest

     —          —          4,169 (b) 

Non-cash interest

     —          —          266   

Special income taxes

     (183     (29     1,716   

Income tax effects of adjustments

     (39     (43     (44
  

 

 

   

 

 

   

 

 

 

Adjusted net (loss) income attributable to common stockholders

   $ (5,560   $ (7,793   $ 15,152   
  

 

 

   

 

 

   

 

 

 

Diluted weighted average shares outstanding

     20,010,029        19,994,820        20,252,446   
  

 

 

   

 

 

   

 

 

 

Diluted loss per share (GAAP)

   $ (0.52   $ (0.67   $ (1.67
  

 

 

   

 

 

   

 

 

 

Adjusted EPS

   $ (0.28   $ (0.39   $ 0.75   
  

 

 

   

 

 

   

 

 

 

 

(a) Includes i) approximately $7,978 fees and expenses related to the acquisition of DDi, plus ii) $3,947 representing the fair value write-up of inventories purchased in connection with the DDi acquisition.
(b) Represents i) approximately $2,200 cash interest expense on the 12.0% 2015 Notes incurred during the “call period” between the April 30, 2012 issuance date of the 7.875% 2019 Notes and the May 30, 2012 final termination date of the 12.0% 2015 Notes, plus ii) approximately $1,969 cash interest expense on the 7.875% 2019 Notes between the April 30, 2012 issuance of the 2019 Notes and the May 31, 2012 acquisition date of DDi.

 

10