“Our actions to integrate the operations of our most recent acquisition are running at, or ahead of, our planned pace,” continued Mr. Sindelar. “While an integration of this magnitude is always a continuing challenge, I am happy with the progress our team has so far made to streamline the combined cost environment and to achieve the anticipated economies of scale.”
“As I look forward,” commented Sindelar, “similar to reports by many of our customers, suppliers and competitors, we are seeing signs of soft demand as we enter the final quarter of 2012. Further, I believe the effects of reduced demand for our company are being exaggerated by the required closure of our Huizhou, China factory and the production interruption caused by the fire in our Guangzhou, China factory. I expect a more significant fire-related impact in our fourth quarter than we experienced in our third quarter. Taken together with seasonally lower fourth quarter expectations, our book-to-bill ratio was less than one-to-one for the third quarter.”
“While each of our end markets is feeling some effect of declining general market conditions,” added Sindelar, “the most significant impacts were experienced in our automotive business. In automotive, the overall slowing was exaggerated by the fire in Guangzhou, by certain customers’ reactions to our selling price increases last year, and by the re-introduction of a competitor’s capacity in Thailand after last year’s flood.”
Financial ResultsThe company reported net sales of $327.4 million for the three months ended September 30, 2012. Year-over-year and sequential increases of 17.4% and 10.3%, respectively, were primarily the result of the company’s acquisition of DDi on May 31, 2012. Giving pro forma effect to the May 2012 acquisition of DDi Corp., net sales declined 5.1% year-over-year and 4.0% sequentially. The pro forma decline was driven primarily by reduced demand for the company’s automotive products, which the company attributes to the effects of i) softening global economic conditions, ii) the company’s announced closure of its Huizhou, China printed circuit board factory that served primarily automotive customers, and iii) certain customers’ adverse reaction to the company’s selling price increases implemented in the second half of 2011.