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8-K - FORM 8-K - VIASYSTEMS GROUP INC | c24360e8vk.htm |
EX-99.1 - EXHIBIT 99.1 - VIASYSTEMS GROUP INC | c24360exv99w1.htm |
Exhibit 99.1A
NEWS COPY | INFORMATION CONTACT: | |
FOR IMMEDIATE RELEASE | Kelly Wetzler (314) 722-2217 |
VIASYSTEMS ANNOUNCES THIRD QUARTER 2011 EARNINGS
ST. LOUIS, November 8, 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 third quarter ended September 30, 2011.
Highlights
| Net sales were $278.8 million in the quarter ended September 30, 2011, a year-over-year increase of 7.5%, and a sequential increase over the immediately preceding quarter of 3.0%. |
| Operating income in the quarter was $21.4 million or 7.7% of net sales. |
| Adjusted EBITDA was $40.3 million or 14.5% of net sales, compared with $41.9 million or 16.2% of net sales in the quarter ended September 30, 2010, and compared with $34.3 million or 12.7% of net sales in the immediately preceding quarter ended June 30, 2011. |
| GAAP earnings per basic and diluted share were $0.34 for the quarter ended September 30, 2011, on approximately 20 million average shares outstanding. |
| Adjusted EPS were $0.50 for the quarter, excluding certain non-cash and special income and expense items. Adjusted EPS for the quarters ended September 30, 2010 and June 30, 2011, were $0.64 and $0.31, respectively. |
I am very pleased with our overall results for the third quarter, commented David M. Sindelar,
Chief Executive Officer. Not only did we achieve the year-over-year and sequential top line growth
that we expected, but more importantly, we were able to offset the significant labor and materials
cost inflation we experienced in the first half through our price-increase efforts and, as a
result, we realized sequential margin improvement.
Our third quarter sales benefitted from the new capacity brought on-line during the prior quarter
in our largest automotive products factory in China, added Sindelar. Our continuing capacity
expansion efforts in that factory remain on pace to allow us to seamlessly transfer production out
of one of our smaller automotive products factories before December 31, 2012, the end of the
lease period. In addition, in November we began relocating our Juarez, Mexico operations to our
newly renovated, larger facility nearby.
Of course, we began to see some of the same market softness which others in our industry
experienced, and that contributed to an overall book-to-bill ratio under one-to-one for the first
time in several quarters, noted Sindelar. However, total incoming orders in the third quarter
declined only a couple of percentage points sequentially from our second quarter bookings, so I am
not convinced there is a significant downward trend in overall demand in the near term for our
business. Our fourth quarter is always impacted by holiday periods, including the Chinese
National Day holiday period at the beginning of October and the western world holidays
leading up to New Years. With the combination of slower bookings we experienced in the third
quarter and these holiday effects, we expect to see some sequential decline of total sales, similar
to the decline we experienced in the same period last year, he
concluded.
Financial Results
The Company reported net sales of $278.8 million for the three months ended September 30, 2011, a
7.5% year-over-year increase compared with net sales during the third quarter of 2010.
Year-over-year increases in net sales to the Companys automotive, industrial & instrumentation,
and computer and datacommunications end market customers were partially offset by declines in net
sales to telecommunications, and military and aerospace end market customers. Compared with the
three months ended June 30, 2011, net sales increased 3.0% for the quarter ended September 30,
2011. Sequentially, net sales increased in both automotive and computer and datacommunications end
markets, partly offset by declines in telecommunications, industrial & instrumentation, and
military and aerospace end markets.
Cost of goods sold (excluding items shown separately in the income statement) as a percent of net
sales improved to 78.6% for the quarter ended September 30, 2011, compared to 81.1% in the
immediately preceding quarter. Product selling price increases that began to take effect in the
quarter ended June 30,
2011, were in effect for the full quarter ended September 30, 2011. Further, as compared to the
quarter ended June 30, 2011, the composition of the Companys net sales was more heavily weighted
to Printed Circuit Board products, for which gross margins are generally higher than for Assembly
products.
Operating income was $21.4 million or 7.7% of net sales for the three months ended September 30,
2011, compared with $25.8 million or 9.9% of net sales for the third quarter of 2010, and compared
with $15.1 million or 5.6% of net sales for the three months ended June 30, 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, in addition to the improved costs of goods sold as
a percentage of net sales, depreciation expenses also declined as a percentage of net sales. These
sequential improvements were partially offset by increased costs of selling, general and
administrative resources, reflecting general cost inflation as well as increased incentive
compensation expenses.
Adjusted EBITDA was $40.3 million or 14.5% of net sales for the three months ended September 30,
2011, compared with $41.9 million or 16.2% of net sales for the third quarter of 2010, and compared
with $34.3 million or 12.7% of net sales for the three months ended June 30, 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 September 30, 2011, net income was $7.4 million, of which $6.9 million
was attributable to common stockholders, and resulted in $0.34 earnings per basic and diluted
share. Adjusted EPS for the three months ended September 30, 2011 were $0.50. 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 Companys Printed Circuit Boards segment for the third
quarter of 2011 were $224.4 million and $20.8 million, respectively, compared with Printed Circuit
Boards segment net sales and operating income of $208.9 million and $23.6 million, respectively,
for the third quarter of 2010 and compared with Printed Circuit Boards segment net sales and
operating income of $215.1 million and $12.3 million, respectively, for the quarter ended June 30,
2011. Printed Circuit Boards segment net sales increased both year-over-year and sequentially to
customers in both the automotive and the computer and datacommunications end markets. Those
increases were partially offset by declines in Printed Circuit Boards segment net sales to
customers in the telecommunications and the industrial & instrumentation end markets.
Net sales and operating income in the Companys Assembly segment for the third quarter were $54.4
million and $0.7 million, respectively, compared with Assembly segment net sales and operating
income of $50.4 million and $2.2 million, respectively, for the third quarter of 2010 and compared
with Assembly segment net sales and operating income of $55.6 million and $2.9 million,
respectively, for the quarter ended June 30, 2011. Sustained sequential demand for products used in
industrial & instrumentation applications in the quarter ended September 30, 2011 resulted in a
year-over-year Assembly segment net sales increase, partly offset by a demand decline for products
used in telecommunications applications. Assembly segment net sales to customers in the Companys
computer and datacommunications end market increased both year-over-year and sequentially as a
result of ramping production for a new customer.
Cash and Working Capital
Cash and cash equivalents at September 30, 2011, were $68.5 million, compared with $103.6 million
at December 31, 2010. Cash provided by operating activities was $40.0 million during the nine
months ended September 30, 2011, of which $22.3 million was provided by third quarter operating
activities. Cash used for payment of interest and income taxes during the nine months ended
September 30, 2011 was $27.1 million and $9.8 million, respectively, of which $13.4 million and
$3.2 million, respectively, was paid during the quarter ended September 30, 2011. The Companys
working capital metrics at the end of the third quarter were in line with historical levels.
Capital expenditures for the nine months ended September 30, 2011 were $75.1 million, of which
$25.3 million was spent during the third quarter. Cash used for capital expenditures during the
nine months ended September 30, 2011, was the primary cause for the overall use of cash as compared
to cash and cash equivalents at December 31, 2010.
2
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 Companys ability to service debt, and management considers it an appropriate measure to use
because of our leveraged position.
Adjusted EBITDA has certain material limitations, primarily due to the exclusion of certain amounts
that are material to the Companys 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, 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 Companys 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 Companys 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 5:00 p.m. Eastern Time
today, November 8, 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 22242191. 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; 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
Companys 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 SECs 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, cable assemblies and busbars. Viasystems approximately 15,000 employees
around the world serve approximately 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 Companys website at
www.viasystems.com.
4
VIASYSTEMS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share amounts)
(Unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share amounts)
(Unaudited)
Three Months Ended | ||||||||||||
September 30, | June 30, | September 30, | ||||||||||
2011 | 2011 | 2010 | ||||||||||
Net sales |
$ | 278,818 | $ | 270,744 | $ | 259,325 | ||||||
Operating expenses: |
||||||||||||
Cost of goods sold, exclusive of items shown separately |
219,233 | 219,574 | 198,117 | |||||||||
Selling, general and administrative |
21,216 | 19,268 | 20,536 | |||||||||
Depreciation |
16,508 | 16,332 | 14,426 | |||||||||
Amortization |
428 | 430 | 447 | |||||||||
Restructuring and impairment |
| | 26 | |||||||||
Operating income |
21,433 | 15,140 | 25,773 | |||||||||
Other expense: |
||||||||||||
Interest expense, net |
7,235 | 7,225 | 7,323 | |||||||||
Amortization of deferred financing costs |
503 | 504 | 512 | |||||||||
Other, net |
439 | 532 | 1,033 | |||||||||
Income before income taxes |
13,256 | 6,879 | 16,905 | |||||||||
Income taxes |
5,871 | 3,311 | 5,985 | |||||||||
Net income |
$ | 7,385 | $ | 3,568 | $ | 10,920 | ||||||
Less: |
||||||||||||
Net income attributable to noncontrolling interest |
524 | 385 | 709 | |||||||||
Net income attributable to common stockholders |
$ | 6,861 | $ | 3,183 | $ | 10,211 | ||||||
Basic earnings per share |
$ | 0.34 | $ | 0.16 | $ | 0.51 | ||||||
Diluted earnings per share |
$ | 0.34 | $ | 0.16 | $ | 0.51 | ||||||
Basic weighted average shares outstanding |
19,980,792 | 19,980,153 | 19,979,015 | |||||||||
Diluted weighted average shares outstanding |
20,131,738 | 20,135,530 | 19,979,260 | |||||||||
This information is intended to be reviewed in conjunction with the Companys filings with the Securities and
Exchange Commission.
Exchange Commission.
5
VIASYSTEMS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
( dollars in thousands)
CONDENSED CONSOLIDATED BALANCE SHEETS
( dollars in thousands)
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(unaudited) | ||||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 68,540 | $ | 103,599 | ||||
Accounts receivable, net |
197,969 | 169,247 | ||||||
Inventories |
110,814 | 94,877 | ||||||
Prepaid expenses and other |
31,946 | 22,940 | ||||||
Total current assets |
409,269 | 390,663 | ||||||
Property, plant and equipment, net |
298,288 | 273,113 | ||||||
Goodwill and other noncurrent assets |
113,650 | 116,797 | ||||||
Total assets |
$ | 821,207 | $ | 780,573 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Current maturities of long-term debt |
$ | 10,051 | $ | 10,258 | ||||
Accounts payable |
194,818 | 162,322 | ||||||
Accrued and other liabilities |
73,448 | 83,798 | ||||||
Total current liabilities |
278,317 | 256,378 | ||||||
Long-term debt, less current maturities |
216,365 | 215,139 | ||||||
Other non-current liabilities |
48,462 | 51,951 | ||||||
Total liabilities |
543,144 | 523,468 | ||||||
Total stockholders equity |
278,063 | 257,105 | ||||||
Total liabilities and stockholders equity |
$ | 821,207 | $ | 780,573 | ||||
This information is intended to be reviewed in conjunctions with the Companys filings with the Securities and
Exchange Commission.
Exchange Commission.
6
VIASYSTEMS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(Unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(Unaudited)
Nine Months | Nine Months | |||||||
Ended | Ended | |||||||
September 30, | September 30, | |||||||
2011 | 2010 | |||||||
Net cash provided by operating activities |
$ | 39,978 | $ | 33,336 | ||||
Cash flows from investing activities: |
||||||||
Capital expenditures |
(75,134 | ) | (36,873 | ) | ||||
Proceeds from disposals of property |
516 | 9,769 | ||||||
Acquisition of Merix |
| (35,326 | ) | |||||
Cash acquired in acquisition of Merix |
| 13,667 | ||||||
Net cash used in investing activities |
(74,618 | ) | (48,763 | ) | ||||
Cash flows from financing activities: |
||||||||
Proceeds from exercise of stock options |
18 | | ||||||
Repayments of capital lease obligations |
(208 | ) | (139 | ) | ||||
Distribution to noncontrolling interest |
(229 | ) | (783 | ) | ||||
Borrowings under credit facilities, net of repayments |
| (4,200 | ) | |||||
Repayment of 10.5% Senior Subordinated Notes |
| (105,904 | ) | |||||
Change in restricted cash |
| 105,734 | ||||||
Repayment of 2013 Notes |
| (515 | ) | |||||
Financing and other fees |
| (2,294 | ) | |||||
Net cash used in financing activities |
(419 | ) | (8,101 | ) | ||||
Net change in cash and cash equivalents |
(35,059 | ) | (23,528 | ) | ||||
Beginning cash |
103,599 | 108,993 | ||||||
Ending cash |
$ | 68,540 | $ | 85,465 | ||||
This information is intended to be reviewed in conjunction with the Companys filings with the Securities and
Exchange Commission.
Exchange Commission.
7
VIASYSTEMS GROUP, INC. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
NET SALES AND BALANCE SHEET STATISTICS
(dollars in millions)
(Unaudited)
SUPPLEMENTAL INFORMATION
NET SALES AND BALANCE SHEET STATISTICS
(dollars in millions)
(Unaudited)
Three Months Ended | ||||||||||||||||||||||||
September 30, 2011 | June 30, 2011 | September 30, 2010 | ||||||||||||||||||||||
Net sales by segment |
||||||||||||||||||||||||
Printed Circuit Boards |
$ | 224.4 | 80 | % | $ | 215.1 | 79 | % | $ | 208.9 | 81 | % | ||||||||||||
Assembly |
54.4 | 20 | % | 55.6 | 21 | % | 50.4 | 19 | % | |||||||||||||||
$ | 278.8 | 100 | % | $ | 270.7 | 100 | % | $ | 259.3 | 100 | % | |||||||||||||
Percentage of Net Sales | Net Sales Increase | |||||||||||||||||||
Three Months Ended | Sequential: | Year/Year: | ||||||||||||||||||
Sep. 30, | Jun. 30, | Sep. 30, | 3Q11 vs | 3Q11 vs | ||||||||||||||||
2011 | 2011 | 2010 | 2Q11 | 3Q10 | ||||||||||||||||
Net sales by end market |
||||||||||||||||||||
Automotive |
41 | % | 37 | % | 35 | % | 13 | % | 25 | % | ||||||||||
Telecommunications |
17 | % | 19 | % | 24 | % | (7 | %) | (24 | %) | ||||||||||
Industrial & Instrumentation |
24 | % | 27 | % | 24 | % | (6 | %) | 8 | % | ||||||||||
Computer and
Datacommunications |
14 | % | 13 | % | 13 | % | 11 | % | 22 | % | ||||||||||
Military and Aerospace |
4 | % | 4 | % | 4 | % | (3 | %) | (1 | %) | ||||||||||
100 | % | 100 | % | 100 | % | 3 | % | 8 | % | |||||||||||
3Q11 | 2Q11 | 1Q11 | 4Q10 | 3Q10 | ||||||||||||||||
Working capital metrics |
||||||||||||||||||||
Days sales outstanding |
63.9 | 64.0 | 65.3 | 62.5 | 60.6 | |||||||||||||||
Inventory turns |
7.9 | 8.6 | 7.4 | 8.1 | 8.4 | |||||||||||||||
Days payables outstanding |
80.0 | 77.4 | 84.3 | 76.3 | 74.6 | |||||||||||||||
Cash cycle (days) |
29.4 | 28.4 | 29.6 | 30.8 | 28.8 |
8
VIASYSTEMS GROUP, INC. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF OPERATING INCOME
TO ADJUSTED EBITDA
(dollars in millions)
(Unaudited)
SUPPLEMENTAL INFORMATION
RECONCILIATION OF OPERATING INCOME
TO ADJUSTED EBITDA
(dollars in millions)
(Unaudited)
Three Months Ended | ||||||||||||
September 30, | June 30, | September 30, | ||||||||||
2011 | 2011 | 2010 | ||||||||||
Operating income |
$ | 21.4 | $ | 15.1 | $ | 25.8 | ||||||
Add-back: |
||||||||||||
Depreciation and amortization |
16.9 | 16.8 | 14.9 | |||||||||
Non-cash stock compensation expense |
1.9 | 2.3 | 1.2 | |||||||||
Costs relating to acquisitions and equity registrations |
0.1 | 0.1 | | |||||||||
Adjusted EBITDA |
$ | 40.3 | $ | 34.3 | $ | 41.9 | ||||||
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)
SUPPLEMENTAL INFORMATION
RECONCILIATION OF DILUTED EARNINGS PER SHARE
TO ADJUSTED EARNINGS PER SHARE
(dollars in thousands, except per share amounts)
(Unaudited)
Three Months Ended | ||||||||||||
September 30, | June 30, | September 30, | ||||||||||
2011 | 2011 | 2010 | ||||||||||
Net income attributable to common stockholders (GAAP) |
$ | 6,861 | $ | 3,183 | $ | 10,211 | ||||||
Adjustments: |
||||||||||||
Non-cash stock compensation expense |
1,850 | 2,339 | 1,239 | |||||||||
Amortization |
931 | 934 | 959 | |||||||||
Non-cash interest |
399 | 399 | 399 | |||||||||
Costs related to acquisitions and equity registrations |
95 | 99 | 37 | |||||||||
Restructuring and impairment |
| | 26 | |||||||||
Special income tax items |
(11 | ) | (745 | ) | (13 | ) | ||||||
Income tax effects of adjustments |
| 2 | 1 | |||||||||
Adjusted net income attributable to common stockholders |
$ | 10,125 | $ | 6,211 | $ | 12,859 | ||||||
Diluted weighted average shares outstanding (GAAP) |
20,131,738 | 20,135,530 | 19,979,260 | |||||||||
Diluted earnings per share (GAAP) |
$ | 0.34 | $ | 0.16 | $ | 0.51 | ||||||
Adjusted EPS |
$ | 0.50 | $ | 0.31 | $ | 0.64 | ||||||
10