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8-K - FORM 8-K - DDI CORPd247278d8k.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 / Kimberly Esterkin
Chief Executive Officer    Addo Communications
   (310) 829-5400
Wayne Slomsky    andrewg@addocommunications.com
Interim Chief Financial Officer    kimberlye@addocommunications.com
(714) 688-7200   

DDi Corp. Announces Third Quarter 2011 Results

ANAHEIM, Calif., October 25, 2011 — 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 third quarter ended September 30, 2011.

Third Quarter 2011 Highlights:

 

   

Net sales and bookings of $66.2 million and $65.2 million, respectively, a 0.98 book-to-bill ratio

 

   

Military/Aerospace net sales increase 12% sequentially, to 35% of total net sales

 

   

Net income of $5.2 million, or $0.25 per fully diluted share

 

   

Adjusted EBITDA of $8.7 million

 

   

Paid dividend of $0.10 per share of common stock on September 30, 2011

 

   

Increased cash and working capital to $28.4 million and $59.8 million, respectively

Mikel Williams, President and Chief Executive Officer of DDi Corp. stated, “During the third quarter we continued to execute for both our customers and shareholders, despite the softer demand environment in the industry. While our top line was flat sequentially, our continued profitability and cash flows enabled us to invest in our technical capabilities while also strengthening our financial position and returning value to our shareholders with continued cash dividends. We remain focused on our operational and financial discipline while delivering differentiated technology and service to our customers. Further, we are in solid position to exploit acquisition opportunities that may present themselves as we go forward.”

Third Quarter Results

Net sales for the third quarter of 2011 were $66.2 million, flat sequentially, and a decrease of 4.0% from the third quarter of 2010.

 


DDi Corp. Third Quarter 2011 Earnings Results
Page 2

 

Gross profit margin for the third quarter of 2011 decreased to 21.0% from 21.8% in the second quarter of 2011 and declined from 22.5% in the third quarter of 2010. The sequential decline and the year over year decline reflect continued pressure from rising manufacturing input costs, including gold and copper, both of which have recently demonstrated market price reductions that may lead to input cost relief in future periods.

Operating income in the third quarter of 2011 was $5.2 million compared to $5.5 million in the second quarter of 2011 and $6.7 million in the third quarter of 2010.

Adjusted EBITDA for the third quarter of 2011 was $8.7 million representing a decrease from $9.0 million in the second quarter of 2011 and $9.4 million in the third quarter of 2010. Reconciliations of this non-GAAP measure are provided after the GAAP unaudited condensed consolidated financial statements below.

Net income and fully diluted earnings per share in the third quarter of 2011 were $5.2 million and $0.25, up slightly from $5.0 million and $0.24 in the second quarter of 2011 and a decline from $6.5 million, or $0.31 per share in the third quarter of 2010.

Third Quarter Balance Sheet and Liquidity

As of September 30, 2011, DDi increased our cash and cash equivalents by $2.8 million to $28.4 million and net working capital to $59.8 million, after cash dividends of $2.0 million and capital expenditures of $3.4 million.

Quarterly Dividend

The Company paid a dividend of $0.10 per share of common stock on September 30, 2011. Further, on October 11, 2011 the Company declared the fourth quarter 2011 dividend of $0.10 per share payable on December 30 to shareholders of record on December 15. This marks the seventh consecutive quarterly dividend and reflects the Company’s continued focus on returning value to its shareholders.

Conference Call and Webcast

A conference call with simultaneous webcast to discuss third quarter 2011 financial results will be held today at 5:00 p.m. Eastern / 2:00 p.m. Pacific. Participants may access the call by dialing (877) 941-2068 (domestic) or (480) 629-9712 (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 November 9, 2011 by dialing (877) 870-5176 (domestic) or (858) 384-5517 (international) and entering the conference ID 4476676. 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.

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DDi Corp. Third Quarter 2011 Earnings Results
Page 3

 

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; potential impacts of natural disasters on the electronics industry and the Company’s supply chain; 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. Third Quarter 2011 Earnings Results
Page 4

 

DDi Corp.

Unaudited Condensed Consolidated Statements of Income

(In thousands, except per share amounts)

 

     Qtr. Ended
Sep. 30, 2011
    Qtr. Ended
Sep. 30, 2010
    Qtr. Ended
Jun. 30, 2011
 

Net sales

   $ 66,175      $ 68,988      $ 66,224   

Cost of goods sold

     52,267        53,450        51,781   
  

 

 

   

 

 

   

 

 

 

Gross profit

     13,908        15,538        14,443   
     21.0     22.5     21.8

Operating expenses:

      

Sales and marketing

     4,142        4,330        4,284   

General and administrative

     3,968        4,250        3,846   

Amortization of intangible assets

     190        190        190   

Restructuring and other related charges

     392        48        623   
  

 

 

   

 

 

   

 

 

 

Operating income

     5,216        6,720        5,500   

Interest and other expense, net

     110        152        449   
  

 

 

   

 

 

   

 

 

 

Income before income taxes

     5,106        6,568        5,051   

Income tax expense (benefit)

     (46     69        100   
  

 

 

   

 

 

   

 

 

 

Net income

   $ 5,152      $ 6,499      $ 4,951   
  

 

 

   

 

 

   

 

 

 

Net income per share:

      

Basic

   $ 0.25      $ 0.33      $ 0.24   

Diluted

   $ 0.25      $ 0.31      $ 0.24   

Dividends declared per share:

   $ 0.10      $ 0.06      $ 0.10   

Weighted-average shares used in per share computations:

      

Basic

     20,317        19,916        20,302   

Diluted

     20,845        20,671        21,005   


DDi Corp. Third Quarter 2011 Earnings Results
Page 5

 

DDi Corp.

Unaudited Condensed Consolidated Statements of Income

(In thousands, except per share amounts)

 

     9 Mo. Ended
Sep. 30, 2011
     % of
Net
Sales
    9 Mo. Ended
Sep. 30, 2010
     % of
Net
Sales
 

Net sales

   $ 198,858         $ 202,035      

Cost of goods sold

     156,355           157,196      
  

 

 

      

 

 

    

Gross profit

     42,503         21.4     44,839         22.2

Operating expenses:

          

Sales and marketing

     13,064         6.6     13,131         6.5

General and administrative

     11,773         5.9     12,463         6.2

Amortization of intangible assets

     570         0.3     570         0.3

Restructuring and other related charges

     1,015         0.5     338         0.2
  

 

 

      

 

 

    

Operating income

     16,081         8.1     18,337         9.1

Interest and other expense, net

     855         0.4     1,252         0.6
  

 

 

      

 

 

    

Income before income taxes

     15,226         7.7     17,085         8.5

Income tax expense

     119         0.1     790         0.4
  

 

 

      

 

 

    

Net income

   $ 15,107         7.6   $ 16,295         8.1
  

 

 

      

 

 

    

Net income per share:

          

Basic

   $ 0.74         $ 0.82      

Diluted

   $ 0.72         $ 0.80      

Dividends declared per share:

   $ 0.30         $ 0.12      

Weighted-average shares used in per share computations:

          

Basic

     20,282           19,868      

Diluted

     21,013           20,396      


DDi Corp. Third Quarter 2011 Earnings Results
Page 6

 

DDi Corp.

Unaudited Condensed Consolidated Balance Sheets

(In thousands)

 

     Sep. 30, 2011     Dec. 31, 2010  
Assets     

Current assets:

    

Cash and cash equivalents

   $ 28,436      $ 28,347   

Accounts receivable, net

     40,799        40,821   

Inventories

     23,854        20,970   

Prepaid expenses and other

     2,778        1,889   
  

 

 

   

 

 

 

Total current assets

     95,867        92,027   

Property, plant and equipment, net

     43,089        42,605   

Intangible assets, net

     44        614   

Goodwill

     3,664        3,664   

Other assets

     888        954   
  

 

 

   

 

 

 

Total assets

   $ 143,552      $ 139,864   
  

 

 

   

 

 

 
Liabilities and Stockholders’ Equity     

Current liabilities:

    

Accounts payable

   $ 22,663      $ 25,137   

Accrued expenses and other current liabilities

     12,225        14,113   

Current portion of long term debt

     1,209        1,751   
  

 

 

   

 

 

 

Total current liabilities

     36,097        41,001   

Long term debt

     8,783        9,704   

Other long-term liabilities

     416        527   
  

 

 

   

 

 

 

Total liabilities

     45,296        51,232   
  

 

 

   

 

 

 

Stockholders’ equity:

    

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

     224,200        228,881   

Accumulated other comprehensive income

     261        1,063   

Accumulated deficit

     (126,205     (141,312
  

 

 

   

 

 

 

Total stockholders’ equity

     98,256        88,632   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 143,552      $ 139,864   
  

 

 

   

 

 

 


DDi Corp. Third Quarter 2011 Earnings Results
Page 7

 

DDi Corp.

Unaudited Schedule of Non-GAAP Reconciliations

(In thousands)

 

     Qtr. Ended
Sep.  30, 2011
    Qtr. Ended
Sep.  30, 2010
     Qtr. Ended
Jun.  30, 2011
 
       

Adjusted EBITDA:

       

GAAP net income

   $ 5,152      $ 6,499       $ 4,951   

Add back:

       

Interest and other expense, net

     110        152         449   

Income tax expense (benefit)

     (46     69         100   

Depreciation

     2,541        2,138         2,341   

Amortization of intangible assets

     190        190         190   

Non-cash compensation

     355        352         306   

Restructuring and other related charges

     392        48         623   
  

 

 

   

 

 

    

 

 

 

Adjusted EBITDA

   $ 8,694      $ 9,448       $ 8,960   
  

 

 

   

 

 

    

 

 

 
     9 Mo. Ended
Sep. 30, 2011
    9 Mo. Ended
Sep. 30, 2010
        
       

Adjusted EBITDA:

       

GAAP net income

   $ 15,107      $ 16,295      

Add back:

       

Interest and other expense, net

     855        1,252      

Income tax expense

     119        790      

Depreciation

     7,021        6,501      

Amortization of intangible assets

     570        570      

Non-cash compensation

     931        1,041      

Non-recurring Coretec acquisition costs

     —          850      

Restructuring and other related charges

     1,015        338      
  

 

 

   

 

 

    

Adjusted EBITDA

   $ 25,618      $ 27,637