Viasystems Group (VIAS)
Q3 2011 Earnings Call
November 08, 2011 5:00 pm ET
David M Sindelar - Chief Executive Officer, Director and Member of Executive Committee
Kelly Wetzler - Vice President of Corporate Development and Communications
Gerald G. Sax - Chief Financial Officer and Senior Vice President
Eric Reubel - Miller Tabak Roberts Securities, LLC, Research Division
Matthew Sheerin - Stifel, Nicolaus & Co., Inc., Research Division
Previous Statements by VIAS
» Viasystems Group's CEO Discusses Q2 2011 Results - Earnings Call Transcript
» Viasystems Group's CEO Discusses Q1 2011 Results - Earnings Call Transcript
» Viasystems Group CEO Discusses Q4 2010 Results - Earnings Call Transcript
Good day, ladies and gentlemen, and thank you for standing by. And welcome to the Viasystems Group's Third Quarter 2011 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to introduce Kelly Wetzler. Ms. Wetzler, you may begin.
Thank you, Huey. I'd like to welcome everyone to the Viasystems investor conference call for the third quarter of 2011. If you need a copy of today's earnings press release, you'll find it at viasystems.com. We have also prepared some slides, which you will find on our website. Our presenters today are Viasystems' Chief Executive Officer, Dave Sindelar; and our Chief Financial Officer, Gerry Sax.
In the course of our discussion, we are likely to make forward-looking statements. I wish to remind you that any forward-looking information we provide is given in reliance upon the Safe Harbor provision of the Securities Litigation Reform Act of 1995. The comments we will make today are management's best judgment based on information currently available.
Our actual results could differ materially from any forward-looking statements that we might make. The company does not intend to update this information to reflect developments after today and disclaims any legal obligation to do so. Please review today's press release and recent SEC filings for a more complete discussion of factors that could have an impact on the company's actual results.
Some of our discussion today will include non-GAAP measures, in particular adjusted EBITDA and adjusted earnings per share. These non-GAAP measures are reconciled with our GAAP results in today's press release and in our slide presentation. Management believes these measures are useful for analytical purposes and to assist in comparing results over time and across companies. But I remind you that adjusted EBITDA and adjusted EPS exclude certain material items and are not a replacement for the reported results under Generally Accepted Accounting Principles.
I'll turn the call over now to the CEO, Dave Sindelar.
David M Sindelar
Good evening, everyone, and thanks for joining our call. I will begin by referring you to Slide 4 in our presentation material. A strong backlog at the beginning of our third quarter, combined with the selling price increases negotiated during the prior quarter, has helped us achieve another record high level of sales. More importantly, we're able to offset the labor material cost inflation experienced in the first half through these price increases, enabling the rebound in our gross margin.
Our consolidated third quarter sales of $278.8 million grew 7.5% year-over-year and also improved 3% sequentially. Our PCB segment sales increased 7.4% compared to the third quarter of 2010 and by 4.3% compared to the second quarter of 2011. Our Assembly segment sales improved 7.9% year-over-year while declining 2.1% from a record high second quarter 2011 sales levels.
Total sales outpaced total bookings for the third quarter as we caught up on the accumulated backlog of orders that had built up over several previous quarters. Our overall book-to-bill ratio of 9.93:1 as total orders fell about 2% compared to the same quarter last year.
In the third quarter, we achieved a 250 basis point sequential improvement in our gross profit as a percent of net sales, resulting in gross margins of 21.4%. The PCB selling price increases, which we talked about during our last couple of calls, finally became effective for a full quarter to offset a large part of labor and material cost inflation we suffered earlier in the year. Sales volumes were offset a bit from the prior quarter by a mix of products sold -- but the mix of products sold improved.
Our adjusted EBITDA was $40.3 million for the quarter or 14.5% of net sales. Our adjusted EPS was $0.50 per share for the quarter. Gerry will provide more color or commentary on adjusted EBITDA and adjusted EPS in a few minutes.
From an operational standpoint, our third quarter was comparatively uneventful. You may recall that most of our efforts to battle cost inflation and to pass on related selling prices -- price increases were undertaken in the first half of the year. The good news is that the inflationary effect on costs have abated for the time being, and virtually all of our selling prices took effect in the second and third quarters.
Our one significant project currently in process is relocation of our factory in Juarez, Mexico. During the quarter, we began modifications of newly leased, larger facility in Juarez. Approximately $1.7 million of our third quarter CapEx related to the leasehold improvements were spent on this new site.
Turning to Slide 5. I want to review our revenue performance by end market. And in particular, I want to highlight the significant double-digit growth rates we achieved in both automotive and the computer/datacom markets, both year-over-year and sequentially.
In the automotive market, as we discussed on previous calls, demand has exceeded our capacity for several quarters as we built backlog leading up to our third quarter. Some of the new capacity that we launched last year was brought online in China early in July and allowed us to catch up on the backlog and to achieve a record $113.5 million of sales to the automotive customers in the quarter. This was 13% more than our previous record quarter, which was the second quarter of 2011 and was 25% of our third quarter of last year. Automotive sales made up 41% of our third quarter total sales volume.