Viasystems Announces Fourth Quarter 2012 Results

  Viasystems Announces Fourth Quarter 2012 Results

Business Wire

ST. LOUIS -- February 15, 2013

Viasystems Group, Inc. (NASDAQ:VIAS), a leading provider of complex
multi-layer printed circuit boards and electro-mechanical solutions, today
announced results for the fourth quarter ended December31, 2012.

Highlights

  *Net sales were $273.6million in the quarter ended December31, 2012, a
    year-over-year increase of 1.7%, and a sequential decrease over the
    immediately preceding quarter of 16.4%.
  *Giving pro forma effect to the May 2012 acquisition of DDi Corp., net
    sales for the quarter ended December31,2012, declined 18.0%
    year-over-year.
  *Operating income in the quarter ended December31, 2012 was $1.0million,
    or 0.4% of net sales, and includes special charges for i)approximately
    $7-to-$9million of net costs related to manufacturing inefficiencies
    related to the previously announced Guangzhou fire incident (“Guangzhou
    Fire”), ii)$1.0million of restructuring costs reported in connection
    with the previously announced workforce reductions and plant closures and
    iii)$0.5million of costs incurred in connection with mergers,
    acquisitions and related integration activities. Excluding the effects of
    the special charges, operating income would have been $9.5-to-$11.5
    million.
  *Adjusted EBITDA in the quarter ended December31, 2012 was $29.1million,
    or 10.6% of net sales, compared with $44.1million, or 16.4% of net sales,
    in the quarter ended December31, 2011, and compared with $41.2million,
    or 12.6% of net sales, in the immediately preceding quarter. Adjusted
    EBITDA for the quarter ended December31, 2012 has not been adjusted to
    exclude net expenses of approximately $7-to-$9 million for the Guangzhou
    Fire.
  *U.S. GAAP loss per basic and diluted share was $(0.73) for the quarter
    ended December 31, 2012, on approximately 20million average shares
    outstanding.
  *Adjusted EPS was a loss of $(0.40) for the quarter, excluding certain
    non-cash and special income and expense items. Adjusted EPS for the
    quarters ended December31, 2011 and September30, 2012, was $0.97 and
    $0.27, respectively. Adjusted EPS for the quarter ended December31, 2012
    has not been adjusted to exclude net expenses of approximately $7-to-$9
    million for the Guangzhou Fire.

“As previously announced, our reported net sales of $273.6million for the
quarter were down sequentially and year-over-year due to seasonal decline in
demand combined with the impact of the fire in our Guangzhou, China factory
and an expected pull back in demand for our wind energy products,” stated
Viasystems’ CEO David M. Sindelar. “Each of our end markets was down with the
exception of our military and aerospace end market which was up slightly.”

“I am pleased with the response of our team in handling the reported fire in
our Guangzhou factory late in the third quarter and minimizing the negative
impacts,” continued Mr. Sindelar. “While we incurred net costs of
approximately $7-to-$9 million, the affected operations in that factory have
been restored as of January 2013.”

“We have completed the integration of the operations of our most recent
acquisition,” continued Mr. Sindelar. “I am happy with the achievement our
team made to streamline the combined cost environment and to achieve the
expected synergies.”

“As I look forward,” commented Sindelar, “I expect first quarter consolidated
net sales to be similar to our fourth quarter result, as we will experience
the seasonal declines associated with the Chinese new year holiday and will be
in the process of ramping production in our Guangzhou facility now that it has
resumed full operations during the first quarter. In addition, we will
continue to be impacted by the continued decline in wind energy products that
will impact all of 2013.”

Financial Results

The company reported net sales of $273.6million for the three months ended
December31, 2012. The year-over-year increase of 1.7% was primarily the
result of the company’s acquisition of DDI on May31, 2012. Sequentially, net
sales declined 16.4% in comparison to the third quarter of 2012. Giving pro
forma effect to the May 2012 acquisition of DDi Corp., net sales for the
quarter declined 18.0% year-over-year. The sequential and pro forma
year-over-year decline was driven primarily by reduced demand across all of
the company’s end markets except the military and aerospace end market on a
sequential basis. The company attributes this 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, iii)the inefficiencies and reduced capacity levels related to the
Guangzhou Fire, and iv)certain customers’ adverse reaction to the company’s
selling price increases implemented in the second half of 2011.

Cost of goods sold (excluding items shown separately in the income statement)
as a percent of net sales was 79.9% for the quarter ended December31, 2012,
compared to 76.5% in the corresponding quarter a year ago, and compared to
80.0% in the immediately preceding quarter ended September30, 2012. Included
in cost of goods sold for the three months ended December31, 2012 was
approximately $7-to-$9million of net costs for the Guangzhou Fire.

Operating income was $1.0million, or 0.4% of net sales, in the three months
ended December31, 2012, compared with $23.1million, or 8.6% of net sales,
for the fourth quarter of 2011, and compared with $4.4million, or 1.3% of net
sales, for the three months ended September30, 2012. Included in operating
costs during the three months ended December31, 2012 were i)approximately
$7-to-$9million of net costs related to the Guangzhou Fire; ii)$1.0million
of restructuring costs related to a)the previously announced closures of two
factories in China, b)the integration of the business acquired from DDi
Corp., and c)a reduction of workforce to streamline continuing operating
costs in China; and iii)$0.5million of travel and other expenses related to
acquisitions. Excluding such costs, operating income for the quarter ended
December31, 2012 would have been approximately $9.5-to-$11.5million.

Adjusted EBITDA, on a non-GAAP basis, was $29.1million, or 10.6% of net
sales, for the three months ended December31, 2012, compared with
$44.1million, or 16.4% of net sales, for the fourth quarter of 2011, and
compared with $41.2million, or 12.6% of net sales, for the three months ended
September30, 2012. A reconciliation of operating income to Adjusted EBITDA is
provided at the end of this news release.

For the three months ended December31, 2012, net loss was $(14.5)million, of
which $(14.6)million was attributable to common stockholders, and resulted in
$(0.73) of loss per basic and diluted share. Adjusted EPS, on a non-GAAP
basis, for the three months ended December31, 2012 was a loss of $(0.40). 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 fourth quarter of 2012 were $236.8million and $2.3million,
respectively, compared with Printed Circuit Boards segment net sales and
operating income of $224.0million and $22.3million, respectively, for the
fourth quarter of 2011, and compared with Printed Circuit Boards segment net
sales and operating income of $269.5million and $3.0million, respectively,
for the quarter ended September30, 2012. Included in the reported expenses of
the Printed Circuit Boards segment in the quarter ended December31, 2012 are
i)approximately $7-to-$9million of net costs related to the Guangzhou Fire
and ii)approximately $0.8 million restructuring costs. Excluding such costs,
operating income in the Printed Circuit Boards segment for the quarter ended
December31, 2012 would have been approximately $10.1-to-$12.1million.

Net sales and operating loss in the company’s Assembly segment for the fourth
quarter of 2012 were $36.8million and $(0.8)million, respectively, compared
with Assembly segment net sales and operating income of $45.0million and
$1.6million, respectively, for the fourth quarter of 2011 and compared with
Assembly segment net sales and operating income of $57.9million and
$1.6million, respectively, for the quarter ended September30, 2012. Compared
to the fourth quarter of 2011, Assembly segment net sales decreased in the
industrial and instrumentation, automotive, and computer and
datacommunications end markets, but increased in the telecommunications end
market. Compared to the immediately preceding three months ended September30,
2012, decreased Assembly segment net sales to customers in all of our end
markets except computer and datacommunications were responsible for the
segment’s sequential decline.

Pro Forma Information

The company’s net sales of $273.6million for the quarter ended December31,
2012 declined by approximately 18.0% compared to approximately $333.6million
pro forma combined net sales of Viasystems and DDi for the three months ended
December31, 2011, which included approximately $64.5million of net sales by
DDi. Year-over-year, pro forma net sales decreased in all end markets.

Cash and Working Capital

Cash and cash equivalents at December31, 2012 were $74.8million, compared
with $71.3million at December31, 2011. Cash provided by operating activities
during the twelve months ended December31, 2012 was $78.1million, of which
$7.4million was provided during the fourth quarter. The company’s cash cycle
metric of 39.3 days at December31, 2012 was in line with expectations.

During the twelve months ended December31, 2012, the company used net
$371.0million of cash for investing activities, of which $26.3million was
spent during the fourth quarter. In particular, capital expenditures during
the twelve months ended December31, 2012 were $108.7 million, of which
$27.2million was spent during the fourth quarter, including approximately
$3.9million spent at locations acquired from DDi. During the quarter ended
December31,2012, approximately $16.9million of capital expenditures were
incurred in connection with capacity expansion, relocation of facilities,
replacement of fire-damaged equipment and other special projects.

During the twelve months ended December31, 2012, financing activities
provided a net $296.5million of cash proceeds for the company. Financing
activities during the quarter ended December31, 2012 used approximately
$0.6million cash to make scheduled mortgage payments and distributions to our
noncontrolling joint venture partner in the Huiyang, China plant.

During 2012, the company has used a net of approximately $46.3million cash
for interest payments, of which $22.2million was paid during the fourth
quarter, and has used a net of approximately $14.8million cash for payment of
income taxes, of which $3.5million was paid during the three months ended
December31, 2012.

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 the company’s 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. The company’s
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 costs associated with acquisitions
and equity registrations, restructuring and impairment 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
11:00 a.m. Eastern Time today, February15, 2013. 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
96578165. 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; the ability of
Viasystems to successfully integrate DDi’s operations, product lines and
technology and to realize additional opportunities for growth; 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 February15, 2012, Item 1A. Risk
Factors,” in the Quarterly Report on Form 10-Q filed by Viasystems with the
SEC on November8, 2012 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 and
busbars. Viasystems’ approximately 14,100 employees around the world serve
over 1,000 customers in the automotive, industrial & instrumentation, computer
and datacommunications, telecommunications, 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
                      December 31,         September 30,    December 31,
                      2012                   2012               2011
                                                                
Net sales             $  273,604             $ 327,352          $ 269,045
Operating
expenses:
Cost of goods
sold, exclusive          218,588               261,953            205,691
of items shown
separately
Selling,
general and              29,105                27,635             21,646
administrative
Depreciation             22,188                22,246             17,238
Amortization             1,678                 1,679              416
Restructuring           1,032               9,480            946        
and impairment
Operating                1,013                 4,359              23,108
income
Other expense
(income):
Interest                 11,403                11,257             7,238
expense, net
Amortization of
deferred                 723                   730                504
financing costs
Other, net              339                 (272       )      (58        )
(Loss) income
before income            (11,452     )         (7,356     )       15,424
taxes
Income taxes            3,046               2,189            (129       )
Net (loss)            $  (14,498     )       $ (9,545     )     $ 15,553     
income
                                                                
Less:
Net income
attributable to         70                  243              570        
noncontrolling
interest
Net (loss)
income
attributable to       $  (14,568     )       $ (9,788     )     $ 14,983     
common
stockholders
                                                                
Basic (loss)
earnings per          $  (0.73       )       $ (0.49      )     $ 0.75       
share
Diluted (loss)
earnings per          $  (0.73       )       $ (0.49      )     $ 0.74       
share
Basic weighted
average shares          19,994,820          19,994,820       19,982,961 
outstanding
Diluted
weighted                19,994,820          19,994,820       20,136,282 
average shares
outstanding

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)

                                December 31,              December 31,
                                  2012                        2011
ASSETS                            (unaudited)
Current assets:
Cash and cash                     $    74,816                 $     71,281
equivalents
Accounts receivable,                   183,148                      196,065
net
Inventories                            111,029                      116,457
Prepaid expenses and                  38,838                      34,280
other
Total current assets                   407,831                      418,083
Property, plant and                    427,968                      307,290
equipment, net
Goodwill and other                    270,382                     113,876
noncurrent assets
Total assets                      $    1,106,181              $     839,249
                                                              
LIABILITIES AND
STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of             $    12,250                 $     10,054
long-term debt
Accounts payable                       161,890                      195,908
Accrued and other                     90,812                      75,388
liabilities
Total current                          264,952                      281,350
liabilities
Long-term debt, less                   563,446                      216,716
current maturities
Other non-current                     45,926                      48,111
liabilities
Total liabilities                     874,324                     546,177
                                                              
Total stockholders’                   231,857                     293,072
equity
Total liabilities and             $    1,106,181              $     839,249
stockholders’ equity

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)

                                               Year Ended December 31,
                                                 2012           2011
                                                 (unaudited)
                                                                 
Net cash provided by operating activities        $ 78,089        $ 71,411   
                                                                  
Cash flows from investing activities:
Acquisition of DDi, net of cash acquired           (253,464 )       –
Capital expenditures                               (108,721 )       (101,664 )
Acquisition of remaining interest in joint         (10,106  )       –
venture
Proceeds from disposals of property               1,272          568      
Net cash used in investing activities             (371,019 )      (101,096 )
                                                                  
Cash flows from financing activities:
Proceeds from 7.875% Senior Secured Notes          550,000          –
Repayment of 12.0% Senior Secured Notes            (236,295 )       –
Financing and other fees                           (16,186  )       –
Repayments of borrowings under mortgages,
capital leases and credit facilities, net of       (787     )       (260     )
borrowings
Distributions to noncontrolling interest           (267     )       (2,391   )
Proceeds from exercise of stock options           –              18       
Net cash provided by (used in) financing          296,465        (2,633   )
activities
                                                                  
Net change in cash and cash equivalents            3,535            (32,318  )
                                                                  
Beginning cash                                    71,281         103,599  
Ending cash                                      $ 74,816        $ 71,281   

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
                December 31, 2012   September 30, 2012   December 31,
                                                             2011^(a)
Net sales                                                         
by segment
Printed
Circuit         $ 236.8     87  %     $  269.5     82  %     $ 224.0     83  %
Boards^(a)
Assembly         36.8    13  %       57.9    18  %      45.0    17  %
                $ 273.6   100 %     $  327.4   100 %     $ 269.0   100 %

^(a)Excludes $64.5 net sales by DDi Corp. during the three months ended
December31, 2011.



                     Percentage of Pro           PF^(b) Net Sales Change
                       Forma^(b) Net Sales
                       Three Months Ended            Sequential:   Year/Year:
                       Dec.    Sept.   Dec.      4Q12 vs         4Q12 vs
                       31,       30,       31,
                       2012      2012      2011      3Q12            4Q11
Pro forma^(b) net
sales by end
market
Automotive             28  %     28  %     33  %     (17    %)       (30   %)
Industrial &           26  %     29  %     25  %     (27    %)       (16   %)
Instrumentation
Computer and           18  %     18  %     18  %     (13    %)       (17   %)
Datacommunications
Telecommunications     16  %     15  %     15  %     (11    %)       (8    %)
Military and           12  %     10  %     9   %     1      %        (3    %)
Aerospace
                       100 %     100 %     100 %     (16    %)       (18   %)

^(b)Includes the effects of $64.5 net sales by DDi Corp. during the three
months ended December31, 2011.


                                                      
                 4Q12       3Q12       2Q12^(c)       1Q12       4Q11 
Working
capital
metrics
Days’ sales       60.2         59.0         58.8             63.4         65.6
outstanding
Inventory         7.9          8.8          8.0              7.5          7.1
turns
Days’
payables          66.7         66.1         70.0             79.7         85.8
outstanding
Cash cycle        39.3         33.7         33.8             32.0         30.8
(days)
                                                                               
^(c)Adjusted for the effects of working capital acquired from DDi Corp.
                                                                               


VIASYSTEMS GROUP, INC. AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

RECONCILIATION OF OPERATING INCOME

TO ADJUSTED EBITDA

(dollars in millions)

(Unaudited)

                             Three Months Ended
                               December 31,   September 30,   December 31,
                               2012             2012              2011
                                                                  
Operating income               $    1.0         $     4.4         $    23.1
Add-back:
Depreciation and                    23.9              23.9             17.7
amortization
Non-cash stock                      2.7               2.7              1.9
compensation expense
Restructuring and                   1.0               10.0             0.9
impairment
Costs relating to
acquisitions and equity            0.5              0.2             0.5
registrations
Adjusted EBITDA                $    29.1        $     41.2        $    44.1



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
                          December 31,     September 30,    December 31,
                          2012               2012               2011
                                                                
Net (loss) income
attributable to           $ (14,568    )     $ (9,788     )     $ 14,983
common stockholders
(GAAP)
                                                                
Adjustments:
Non-cash stock              2,673              2,700              1,943
compensation expense
Amortization                2,401              2,409              920
Restructuring and           1,032              9,970              946
impairment
Costs related to
acquisitions and            512                225                445
equity registrations
Non-cash interest           –                  –                  399
Income tax effects of      (32        )      43               (103       )
adjustments
                                                                
Adjusted net (loss)
income attributable       $ (7,982     )     $ 5,559           $ 19,533     
to common
stockholders
                                                                
Diluted weighted
average shares             19,994,820       20,233,612       20,136,282 
outstanding
                                                                
Diluted (loss)
earnings per share        $ (0.73      )     $ (0.49      )     $ 0.74       
(GAAP)
Adjusted EPS              $ (0.40      )     $ 0.27            $ 0.97       
                                                                             

Contact:

Viasystems Group, Inc.
Kelly Wetzler, 314-746-2217
 
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