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 the 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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.

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 Company’s 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 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, 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 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 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.

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 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 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
September 30, 2011   June 30, 2011   September 30, 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 Company’s filings with the

Securities and Exchange Commission.
 
 
 
 
 
 
 

VIASYSTEMS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands)
 
 
  September 30, 2011   December 31, 2010
ASSETS (unaudited)
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 Company’s filings with the

Securities and Exchange Commission.
 
 
 
 
 
 
 

VIASYSTEMS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(Unaudited)
 
 
  Nine Months Ended   Nine Months Ended
September 30, 2011 September 30, 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 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
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
 
 
 
 
 
 
 

VIASYSTEMS GROUP, INC. AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

RECONCILIATION OF OPERATING INCOME

TO ADJUSTED EBITDA

(dollars in millions)

(Unaudited)
 
 
  Three Months Ended
September 30, 2011   June 30, 2011   September 30, 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
 
 
 
 
 
 
 

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
September 30, 2011   June 30, 2011   September 30, 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  
 
 
 

Copyright Business Wire 2010

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