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8-K - FORM 8-K - VIASYSTEMS GROUP INCc21056e8vk.htm
EX-99.1 - EXHIBIT 99.1 - VIASYSTEMS GROUP INCc21056exv99w1.htm
EXHIBIT 99.1A
(VIASYSTEMS LOGO)
 
NEWS COPY   INFORMATION CONTACT:
    Dee Johnson
FOR IMMEDIATE RELEASE   (314) 719-1869
VIASYSTEMS ANNOUNCES SECOND QUARTER 2011 EARNINGS
ST. LOUIS, August 9, 2011 — Viasystems Group, Inc. (NASDAQ:VIAS), a leading provider of complex multi-layer printed circuit boards and electro-mechanical solutions, today announced earnings for the second quarter ended June 30, 2011.
Highlights
    Net sales were $270.7 million in the quarter, a year-over-year increase of 13.1% and a sequential increase over the immediately preceding quarter of 13.4%.
 
    Operating income in the quarter was $15.1 million or 5.6% of net sales.
 
    Adjusted EBITDA was $34.3 million or 12.7% of net sales, compared with $37.0 million or 15.5% of net sales in the quarter ended June 30, 2010, and compared with $29.3 million or 12.2% of net sales in the immediately preceding quarter ended March 31, 2011.
 
    GAAP earnings per basic and diluted share were $0.16 for the quarter ended June 30, 2011, on approximately 20 million average shares outstanding.
 
    Adjusted EPS were $0.31 for the quarter, excluding certain non-cash and special income and expense items. On a comparable basis, Adjusted EPS for the quarters ended June 30, 2010 and March 31, 2011, were $0.51 and $0.07, respectively.
“I am pleased with our net sales growth for the quarter ended June 30, 2011,” commented David M. Sindelar, Chief Executive Officer. “The record level of net sales was consistent with our expectations and reflected the strong backlog of orders on which we have commented for the past several quarters, and the partial period benefit of price increases implemented in the second quarter. Our backlog remains strong as we also achieved a record level of bookings during the second quarter, with the pace of second quarter orders running at parity with our reported net sales. Except for a minor sequential decline in net sales to military and aerospace customers, our 13.4% net sales growth over the first quarter of 2011 was fairly consistent across all of our end markets. Our outlook for the second half of 2011 remains solid overall. However, we are beginning to hear some news of inventory level corrections from customers in our industrial & instrumentation sector and our computer and datacommunications sector.”
“During the second quarter, we essentially completed the expected price increases we referred to on our last earnings call. This was needed to offset the adverse effects of the first half’s rising costs of materials and labor in our Chinese operations,” continued Mr. Sindelar. “Unfortunately, the improved pricing arrangements were implemented a little later than anticipated, so we did not enjoy the level of gross margin improvement that we expected for the full second quarter.”
“Consistent with the sustained demand we are experiencing, we have continued to execute our capacity expansion plans, which should amount to the $100 million investment we announced last year. We anticipate that the third quarter and remainder of the year will reflect the consistently strong demand we continue to see and the full effect of the recently implemented price increase impact, assuming no further material cost increases, coupled with the first phase of capacity expansion projects initiated late in 2010 that went on-line during the second quarter. Additionally, we are aggressively implementing the second phase of capacity expansion projects which we announced last quarter, thus enabling us to meet demand for 2012, notwithstanding the Huizhou plant shutdown and the recently announced mandated electricity rationing in China,” concluded Sindelar.

 

 


 

Financial Results
The Company reported net sales of $270.7 million for the three months ended June 30, 2011, a 13.1% year-over-year increase compared with net sales during the second quarter of 2010. A year-over-year increase in net sales to customers in the Company’s automotive, industrial & instrumentation, computer and datacommunications, and military and aerospace end markets more than offset a decline in net sales to telecommunications customers. Compared with the three months ended March 31, 2011, net sales increased 13.4% for the quarter ended June 30, 2011. Sequentially, net sales increased in all end markets, with the exception of military and aerospace, which declined by approximately 0.3% of total net sales.
Cost of goods sold (excluding items shown separately in the income statement) as a percent of net sales increased to 81.1% for the quarter ended June 30, 2011, compared to 80.9% in the immediately preceding quarter. As compared to the quarter ended March 31, 2011, the composition of the Company’s net sales during the second quarter was more heavily weighted to Assembly segment products, for which the gross margins are generally lower than Printed Circuit Boards segment products. In addition, a full-quarter effect of increased costs of materials and labor were not fully offset by the portion of selling price increases that took effect during the second quarter.
Operating income was $15.1 million or 5.6% of net sales for the three months ended June 30, 2011, compared with $18.6 million or 7.8% of net sales for the second quarter of 2010 and $11.2 million or 4.7% of net sales for the three months ended March 31, 2011. The year-over-year decrease is primarily the result of higher cost of goods sold relative to net sales and increased depreciation costs. Sequentially, the Company’s costs of selling, general and administrative resources, as well as depreciation expenses, declined as a percentage of net sales, reflecting favorable economies of scale.
Adjusted EBITDA was $34.3 million or 12.7% of net sales for the three months ended June 30, 2011, compared with $37.0 million or 15.5% of net sales for the second quarter of 2010 and $29.3 million or 12.2% of net sales for the three months ended March 31, 2011. The year-over-year decrease is primarily the result of higher cost of goods sold relative to net sales. A reconciliation of operating income to Adjusted EBITDA is provided at the end of this news release.
For the three months ended June 30, 2011, net income was $3.6 million, of which $3.2 million was attributable to common stockholders, and resulted in $0.16 earnings per basic and diluted share. Adjusted EPS for the three months ended June 30, 2011, were $0.31. A reconciliation of GAAP diluted EPS 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 were $215.1 million and $12.3 million, respectively, compared with Printed Circuit Boards segment net sales and operating income of $195.7 million and $18.3 million, respectively, for the second quarter of 2010 and compared with Printed Circuit Boards segment net sales and operating income of $192.7 million and $9.8 million, respectively, for the quarter ended March 31, 2011. Printed Circuit Boards segment net sales to customers in the automotive, the industrial & instrumentation, and the computer and datacommunications end markets for the quarter ended June 30, 2011 each reflected increased demand on both a year-over-year basis and a sequential basis. While Printed Circuit Boards segment net sales to customers in the telecommunications end market declined year-over-year, sequential demand in that market improved for the second quarter compared to the quarter ended March 31, 2011. Printed Circuit Boards segment net sales to military and aerospace customers declined modestly on a sequential basis, yet still increased slightly on a year-over-year basis.
Net sales and operating income in the Company’s Assembly segment for the second quarter were $55.6 million and $2.9 million, respectively, compared with Assembly segment net sales and operating income of $43.7 million and $1.0 million, respectively, for the second quarter of 2010 and compared with Assembly segment net sales and operating income of $46.0 million and $1.4 million, respectively, for the quarter ended March 31, 2011. Assembly segment net sales in each of the served end markets improved sequentially for the second quarter compared to the quarter ended March 31, 2011. Only the telecommunications end market reflected decreased net sales on a year-over-year basis in the Assembly segment.

 

 


 

Cash and Working Capital
Cash and cash equivalents at June 30, 2011, were $71.2 million, compared with $103.6 million at December 31, 2010. Cash provided by operating activities was $17.7 million during the six months ended June 30, 2011, of which $16.7 million was provided by second quarter operating activities. The Company’s working capital metrics at the end of the second quarter were in line with historical levels.
Capital expenditures for the six months ended June 30, 2011 were $49.8 million, of which $25.8 million was spent during the second quarter. Cash used for capital expenditures during the six months ended June 30, 2011 was the primary cause for the overall use of cash as compared to cash and cash equivalents at December 31, 2010. Approximately $17 million and $11 million of the Company’s capital expenditures during the six months and three months ended June 30, 2011, respectively, related to the approximate $100 million capacity expansion projects announced in September 2010.
Use of Non-GAAP Financial Measures
In addition to 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 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 highly 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 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, stock compensation and costs associated with acquisitions and equity registrations.
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. 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 merger-related costs, restructuring 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 3:00 p.m. Eastern Time today, August 9, 2011. 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 84643708. The webcast replay will be available at http://investor.viasystems.com for an indefinite period.
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; 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 9, 2011 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 electronic equipment, and its E-M Solutions products and services integrate PCBs and other components into electronic equipment, including metal enclosures, cabinets, racks and sub-racks, backplanes, cable assemblies and busbars. Viasystems’ 15,000 employees around the world serve more than 800 customers in the automotive, telecommunications, industrial & instrumentation, computer and datacommunications and military and aerospace end markets. For additional information about Viasystems, please visit the Company’s website at www.viasystems.com.

 

 


 

VIASYSTEMS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share amounts)
(Unaudited)
                         
    Three Months Ended  
    June 30,     March 31,     June 30,  
    2011     2011     2010  
 
                       
Net sales
  $ 270,744     $ 238,710     $ 239,411  
Operating expenses:
                       
Cost of goods sold, exclusive of items shown separately
    219,574       193,188       182,954  
Selling, general and administrative
    19,268       18,170       20,591  
Depreciation
    16,332       15,860       14,437  
Amortization
    430       436       450  
Restructuring and impairment
          (134 )     2,415  
 
                 
Operating income
    15,140       11,190       18,564  
Other expense (income):
                       
Interest expense, net
    7,225       7,208       7,424  
Amortization of deferred financing costs
    504       504       513  
Other, net
    532       289       (110 )
 
                 
Income before taxes
    6,879       3,189       10,737  
Income taxes
    3,311       (589 )     3,660  
 
                 
Net income
  $ 3,568     $ 3,778     $ 7,077  
 
                 
 
                       
Less:
                       
Net income attributable to noncontrolling interest
    385       312       537  
 
                 
Net income attributable to common stockholders
  $ 3,183     $ 3,466     $ 6,540  
 
                 
 
                       
Basic earnings per share
  $ 0.16     $ 0.17     $ 0.33  
 
                 
Diluted earnings per share
  $ 0.16     $ 0.17     $ 0.33  
 
                 
Basic weighted average shares outstanding
    19,980,153       19,980,153       19,979,015  
 
                 
Diluted weighted average shares outstanding
    20,135,530       20,100,961       19,982,252  
 
                 
This information is intended to be reviewed in conjunction with the Company’s filings with the Securities
and Exchange Commission.

 

 


 

VIASYSTEMS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
                 
    June 30,     December 31,  
    2011     2010  
    (unaudited)        
ASSETS
               
Current assets:
               
Cash and cash equivalents
  $ 71,187     $ 103,599  
Accounts receivable, net
    192,479       169,247  
Inventories
    102,031       94,877  
Prepaid expenses and other
    31,859       22,940  
 
           
Total current assets
    397,556       390,663  
Property, plant and equipment, net
    290,217       273,113  
Goodwill and other noncurrent assets
    114,055       116,797  
 
           
Total assets
  $ 801,828     $ 780,573  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current liabilities:
               
Current maturities of long-term debt
  $ 10,105     $ 10,258  
Accounts payable
    188,660       162,322  
Accrued and other liabilities
    71,014       83,798  
 
           
Total current liabilities
    269,779       256,378  
Long-term debt, less current maturities
    215,953       215,139  
Other non-current liabilities
    46,844       51,951  
 
           
Total liabilities
    532,576       523,468  
 
           
 
               
Total stockholders’ equity
    269,252       257,105  
 
           
Total liabilities and stockholders’ equity
  $ 801,828     $ 780,573  
 
           
This information is intended to be reviewed in conjunctions with the Company’s filings with the Securities
and Exchange Commission.

 

 


 

VIASYSTEMS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(Unaudited)
                 
    Six Months     Six Months  
    Ended     Ended  
    June 30,     June 30,  
    2011     2010  
 
               
Net cash provided by operating activities
  $ 17,675     $ 16,089  
 
           
 
               
Cash flows from investing activities:
               
Capital expenditures
    (49,808 )     (20,405 )
Proceeds from disposals of property
    104       13  
Acquisition of Merix
          (35,326 )
Cash acquired in acquisition of Merix
          13,667  
 
           
Net cash used in investing activities
    (49,704 )     (42,051 )
 
           
 
               
Cash flows from financing activities:
               
Repayments of capital lease obligations
    (154 )     (58 )
Distribution to noncontrolling interest
    (229 )      
Borrowings under credit facilities, net of repayments
           
Repayment of 10.5% Senior Subordinated Notes
          (105,904 )
Change in restricted cash
          105,734  
Repayment of 2013 Notes
          (515 )
Financing and other fees
          (2,223 )
 
           
Net cash used in financing activities
    (383 )     (2,966 )
 
           
 
               
Net change in cash and cash equivalents
    (32,412 )     (28,928 )
 
               
Beginning cash
    103,599       108,993  
 
           
Ending cash
  $ 71,187     $ 80,065  
 
           
This information is intended to be reviewed in conjunction with the Company’s filings with the Securities
and Exchange Commission.

 

 


 

VIASYSTEMS GROUP, INC. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
NET SALES AND BALANCE SHEET STATISTICS
(dollars in millions)
(Unaudited)
                                                 
    Three Months Ended  
    June 30, 2011     March 31, 2011     June 30, 2010  
Net sales by segment
                                               
Printed Circuit Boards
  $ 215.1       79 %   $ 192.7       81 %   $ 195.7       82 %
Assembly
    55.6       21 %     46.0       19 %     43.7       18 %
 
                                   
 
  $ 270.7       100 %   $ 238.7       100 %   $ 239.4       100 %
 
                                   
                                         
    Percentage of Net Sales     Net Sales Increase  
    Three Months Ended     Sequential:     Year/Year:  
    Jun. 30,     Mar. 31,     Jun. 30,     2Q11 vs     2Q11 vs  
    2011     2011     2010     1Q11     2Q10  
Net sales by end market
                                       
Automotive
    37 %     38 %     35 %     11 %     22 %
Telecommunications
    19 %     18 %     25 %     17 %     (15 %)
Industrial & Instrumentation
    27 %     26 %     23 %     17 %     30 %
Computer and Datacommunications
    13 %     13 %     13 %     16 %     17 %
Military and Aerospace
    4 %     5 %     4 %     (6 %)     3 %
 
                                 
 
    100 %     100 %     100 %     13 %     13 %
 
                                 
                                         
    2Q11     1Q11     4Q10     3Q10     2Q10  
Working capital metrics
                                       
Days’ sales outstanding
    64.0       65.3       62.5       60.6       62.0  
Inventory turns
    8.6       7.4       8.1       8.4       8.8  
Days’ payables outstanding
    77.4       84.3       76.3       74.6       75.8  
Cash cycle (days)
    28.4       29.6       30.8       28.8       27.5  

 

 


 

VIASYSTEMS GROUP, INC. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF OPERATING INCOME
TO ADJUSTED EBITDA
(dollars in millions)
(Unaudited)
                         
    Three Months Ended  
    June 30,     March 31,     June 30,  
    2011     2011     2010  
Operating income
  $ 15.1     $ 11.2     $ 18.6  
Add-back:
                       
Depreciation and amortization
    16.8       16.3       14.9  
Non-cash stock compensation expense
    2.3       1.6       0.3  
Costs relating to acquisitions and equity registrations
    0.1       0.3       0.8  
Restructuring and impairment
          (0.1 )     2.4  
 
                 
Adjusted EBITDA
  $ 34.3     $ 29.3     $ 37.0  
 
                 

 

 


 

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,     March 31,     June 30,  
    2011     2011     2010  
Net income attributable to common stockholders (GAAP)
  $ 3,183     $ 3,466     $ 6,540  
 
                       
Adjustments:
                       
Non-cash stock compensation expense
    2,339       1,565       285  
Amortization
    934       940       963  
Non-cash interest
    399       399       399  
Costs related to acquisitions and equity registrations
    99       312       788  
Restructuring and impairment
          (134 )     2,415  
Special income tax items
    (745 )     (5,260 )     (655 )
Income tax effects of adjustments
    2       27       (490 )
 
                 
 
                       
Adjusted net income attributable to common stockholders
  $ 6,211     $ 1,315     $ 10,245  
 
                 
 
                       
Diluted weighted average shares outstanding (GAAP)
    20,135,530       20,100,961       19,982,252  
 
                 
 
                       
Diluted earnings per share (GAAP)
  $ 0.16     $ 0.17     $ 0.33  
 
                 
Adjusted earnings per share
  $ 0.31     $ 0.07     $ 0.51