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Viasystems Announces First Quarter 2013 Results



  Viasystems Announces First Quarter 2013 Results

Business Wire

ST. LOUIS -- May 9, 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 first quarter ended March 31, 2013.

Highlights

  * Net sales were $272.9 million in the quarter ended March 31, 2013, a
    year-over-year increase of 4.1%, and sequentially flat with the
    immediately preceding quarter.
  * Giving pro forma effect to the May 2012 acquisition of DDi Corp., net
    sales for the quarter ended March 31, 2013, declined 17.5% year-over-year.
  * Operating income in the quarter ended March 31, 2013 was $2.6 million, or
    0.9% of net sales, and includes special charges for approximately
    $5 million of manufacturing inefficiencies and net start-up costs of the
    company’s Guangzhou, China facility following a September 2012 fire.
  * Adjusted EBITDA in the quarter ended March 31, 2013 was $29.5 million, or
    10.8% of net sales, compared with $33.1 million, or 12.6% of net sales, in
    the quarter ended March 31, 2012, and compared with $29.1 million, or
    10.6% of net sales, in the immediately preceding quarter. Adjusted EBITDA
    for the quarters ended March 31, 2013 and December 31, 2012 has not been
    adjusted to exclude net expenses of approximately $5 million and $7 - $9
    million, respectively, related to the Guangzhou fire.
  * U.S. GAAP loss per basic and diluted share was $(0.67) for the quarter
    ended March 31, 2013, on approximately 20 million average shares
    outstanding.
  * Adjusted EPS was a loss of $(0.39) for the quarter, excluding certain
    non-cash and special income and expense items. Adjusted EPS for the
    quarters ended March 31, 2012 and December 31, 2012, was $0.32 and
    $(0.40), respectively. Adjusted EPS for the quarters ended March 31, 2013
    and December 31, 2012 has not been adjusted to exclude net expenses of
    approximately $5 million and $7 - $9 million, respectively, related to the
    Guangzhou fire.

“While the resulting net sales and earnings for our first quarter of 2013 were
in line with our stated expectations,” noted Viasystems’ CEO David M.
Sindelar, “our Guangzhou, China operations struggled to recover from last
year’s fire as quickly as we had planned. The shortfall in earnings from the
Guangzhou operations was offset by reduced variable expenses such as travel
and incentive compensation in the quarter.”

“In terms of our end markets,” continued Mr. Sindelar, “the prolonged recovery
period for our Guangzhou factory capacity continued to be the most significant
contributing factor to the declines in pro forma year-over-year net sales to
our automotive, and computer and datacommunications customers. The primary
reason for the decline in our pro forma year-over-year net sales of industrial
& instrumentation products related to the decision by a significant wind
energy customer to replace our product with their internal manufacturing
resources. Sequentially, we did not see any significant changes in trends,
though we have kept close watch on potential impacts of the U.S. government’s
sequestration, as well as general market conditions domestically, in Europe
and in China.”

“Looking ahead,” continued Mr. Sindelar, “I continue to feel bullish about our
global capabilities and our ability to react to market conditions. With that
said, our primary areas of focus in the coming months will be i) getting the
Guangzhou order book refilled and ii) accelerating the qualification of new
opportunities for our Assembly segment to replace the vacated wind energy net
sales. At this point, we are expecting only modest sequential improvement for
our second quarter compared to our first quarter, but we continue to hear from
industry analysts and customers that the second half of 2013 should
strengthen.”

Financial Results

The company reported net sales of $272.9 million for the three months ended
March 31, 2013. The year-over-year increase of 4.1% was primarily the result
of the company’s acquisition of DDi Corp. on May 31, 2012. Sequentially, net
sales were flat in comparison to the fourth quarter of 2012. Giving pro forma
effect to the May 2012 acquisition of DDi Corp., net sales for the quarter
declined 17.5% year-over-year. The pro forma year-over-year decline was driven
in part by capacity limitations in the company’s Guangzhou, China facility as
it recovered from a September 2012 fire, in part by selling price reductions
related to reduced materials costs, and in part by reduced market demand. The
reduction in net sales was experienced in each of the company’s end markets,
with the exception of the military and aerospace end market.

Cost of goods sold (excluding items shown separately in the statement of
operations) as a percent of net sales was 80.3% for the quarter ended
March 31, 2013, compared to 80.5% in the corresponding quarter a year ago, and
compared to 79.9% in the immediately preceding quarter ended December 31,
2012. Sequential improvement in cost of goods sold in the company’s Guangzhou,
China facility were offset by i) seasonal inefficiencies related to the
extended new year holiday period in China and ii) product mix changes in the
company’s domestic operations.

Operating income was $2.6 million, or 0.9% of net sales, in the three months
ended March 31, 2013, compared with $5.2 million, or 2.0% of net sales, for
the first quarter of 2012, and compared with $1.0 million, or 0.4% of net
sales, for the three months ended December 31, 2012. Operating income in the
current period includes special charges of approximately $5 million related to
manufacturing inefficiencies and net start-up costs of the company’s
Guangzhou, China facility following the September 2012 fire.

Adjusted EBITDA, on a non-GAAP basis, was $29.5 million, or 10.8% of net
sales, for the three months ended March 31, 2013, compared with $33.1 million,
or 12.6% of net sales, for the first quarter of 2012, and compared with
$29.1 million, or 10.6% of net sales, for the three months ended December 31,
2012. A reconciliation of operating income to Adjusted EBITDA is provided at
the end of this news release. Adjusted EBITDA for the quarters ended March 31,
2013 and December 31, 2012 have not been adjusted to exclude net expenses of
approximately $5 million and approximately $7-$9 million, respectively,
related to the Guangzhou fire.

For the three months ended March 31, 2013, net loss was $(13.3) million, of
which $(13.5) million was attributable to common stockholders, and resulted in
$(0.67) of loss per basic and diluted share. Adjusted EPS, on a non-GAAP
basis, for the three months ended March 31, 2013 was a loss of $(0.39). 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 first quarter of 2013 were $241.0 million and $3.7 million,
respectively, compared with Printed Circuit Boards segment net sales and
operating income of $213.1 million and $7.0 million, respectively, for the
first quarter of 2012, and compared with Printed Circuit Boards segment net
sales and operating income of $236.8 million and $2.3 million, respectively,
for the quarter ended December 31, 2012. Sequential Printed Circuit Boards net
sales growth of 1.8%, compared to the immediately-preceding quarter ended
December 31, 2012, was primarily the result of growth in each of the company’s
automotive, industrial & instrumentation, and telecommunications end markets,
partially offset by a decline in net sales to computer and datacommunications
customers.

Net sales and operating loss in the company’s Assembly segment for the first
quarter of 2013 were $31.9 million and $(1.0) million, respectively, compared
with Assembly segment net sales and operating loss of $49.0 million and
$(0.8) million, respectively, for the first quarter of 2012 and compared with
Assembly segment net sales and operating loss of $36.8 million and
$(0.8) million, respectively, for the quarter ended December 31, 2012. The
sequential and year-over-year declines were each caused primarily by reduced
demand from the company’s industrial & instrumentation end market.

Pro Forma Information

The company’s net sales of $272.9 million for the quarter ended March 31, 2013
declined by approximately 17.5% compared to approximately $331.0 million pro
forma combined net sales of Viasystems and DDi for the three months ended
March 31, 2012, which included approximately $68.9 million of net sales by
DDi. Year-over-year pro forma declines in sales of printed circuit board
products to customers in the automotive, industrial & instrumentation, and
computer and datacommunications end markets were partially offset by an
increase in pro forma net sales to telecommunications customers.

Cash and Working Capital

Cash and cash equivalents at March 31, 2013 were $83.6 million, compared with
$74.8 million at December 31, 2012. Cash provided by operating activities
during the three months ended March 31, 2013 was $29.1 million. The company’s
cash cycle metric of 35.9 days at March 31, 2013 was in line with
expectations.

During the three months ended March 31, 2013, capital expenditures were
$20.3 million, compared to $22.4 million spent in the same quarter in the
prior year, and compared to $27.2 million spent during the
immediately-preceding fourth quarter of 2012. During the quarter ended
March 31, 2013, approximately $9.0 million of capital expenditures were
incurred in connection with relocation of facilities, replacement of
fire-damaged equipment and other special projects.

Financing activities during the quarter ended March 31, 2013 included
approximately $0.3 million to make scheduled mortgage payments. In connection
with the annual renewal of its credit facility in China, the company paid-down
and then re-established a $10 million loan during the quarter ended March 31,
2013. Cash, together with available and unused credit facilities at March 31,
2013, exceeded $187.8 million.

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, May 9, 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
46454261. 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 February 15, 2013, 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 14,400 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
                      March 31,              December 31,       March 31,
                      2013                   2012               2012
                                                                 
Net sales             $  272,940             $ 273,604          $ 262,089
Operating
expenses:
Cost of goods
sold, exclusive          219,058               218,588            211,057
of items shown
separately
Selling,
general and              27,693                29,105             21,492
administrative
Depreciation             21,958                22,188             17,006
Amortization             1,678                 1,678              388
Restructuring            –                     1,032              6,987       
and impairment
Operating                2,553                 1,013              5,159
income
Other expense
(income):
Interest                 11,199                11,403             7,352
expense, net
Amortization of
deferred                 725                   723                504
financing costs
Other, net               748                   339                224         
(Loss) income
before income            (10,119     )         (11,452    )       (2,921     )
taxes
Income taxes             3,163                 3,046              2,216       
Net (loss)            $  (13,282     )       $ (14,498    )     $ (5,137     )
income
                                                                 
Less:
Net income
attributable to          173                   70                 (495       )
noncontrolling
interest
Net (loss)
income
attributable to       $  (13,455     )       $ (14,568    )     $ (4,642     )
common
stockholders
                                                                 
Basic (loss)
earnings per          $  (0.67       )       $ (0.73      )     $ (0.23      )
share
Diluted (loss)
earnings per          $  (0.67       )       $ (0.73      )     $ (0.23      )
share
Basic weighted
average shares           19,994,820            19,994,820         19,984,414  
outstanding
Diluted
weighted                 19,994,820            19,994,820         19,984,414  
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)
 
                                  March 31,                   December 31,
                                  2013                        2012
ASSETS                            (unaudited)
Current assets:
Cash and cash                     $    83,609                 $    74,816
equivalents
Accounts receivable,                   179,255                     183,148
net
Inventories                            109,045                     111,029
Prepaid expenses and                   39,117                      38,838
other
Total current assets                   411,026                     407,831
Property, plant and                    425,849                     427,968
equipment, net
Goodwill and other                     267,936                     270,382
noncurrent assets
Total assets                      $    1,104,811              $    1,106,181
                                                               
LIABILITIES AND
STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of             $    12,250                 $    12,250
long-term debt
Accounts payable                       165,448                     161,890
Accrued and other                      90,491                      90,812
liabilities
Total current                          268,189                     264,952
liabilities
Long-term debt, less                   563,038                     563,446
current maturities
Other non-current                      51,431                      45,926
liabilities
Total liabilities                      882,658                     874,324
                                                               
Total stockholders’                    222,153                     231,857
equity
Total liabilities and             $    1,104,811              $    1,106,181
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)

(Unaudited)
 
                                                  Three Months Ended March 31,
                                                  2013             2012
                                                                    
Net cash provided by operating activities         $  29,130        $ 10,262   
                                                                    
Cash flows from investing activities:
Capital expenditures                                 (20,250 )       (22,366 )
Proceeds from disposals of property                  215             51
Acquisition of remaining interest in joint           –               (1,111  )
venture
Net cash used in investing activities                (20,035 )       (23,426 )
                                                                    
Cash flows from financing activities:
Repayments of borrowings under mortgages,
capital leases and credit facilities, net of         (302    )       –
borrowings
Financing and other fees                             –               (271    )
Net cash provided by (used in) financing             (302    )       (271    )
activities
                                                                    
Net change in cash and cash equivalents              8,793           (13,435 )
                                                                    
Beginning cash                                       74,816          71,281   
Ending cash                                       $  83,609        $ 57,846   
 
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                                                     
               March 31, 2013            December 31, 2012         March 31, 2012(a)  
Net
sales by                                                                      
segment
Printed
Circuit        $ 241.0     88  %         $ 236.8     87  %         $ 213.1     81  %
Boards
(a)
Assembly         31.9      12  %           36.8      13  %           49.0      19  %  
               $ 272.9     100 %         $ 273.6     100 %         $ 262.1     100 %  
 
(a) Excludes $68.9 net sales by DDi Corp. during the three months ended March 31,
2012.
 

 
                       Percentage of Pro                 PF^(b) Net Sales Change
                       Forma^(b) Net Sales
                       Three Months Ended                Sequential:     Year/Year:
                       Mar.      Dec.      Mar.          1Q13 vs         1Q13 vs
                       31,       31,       31,
                       2013      2012      2012          4Q12            1Q12
Pro forma^(b) net
sales by end
market
Automotive             29  %     28  %     32  %         3     %         (26   %)
Industrial &           25  %     26  %     26  %         (2    %)        (21   %)
Instrumentation
Computer and           18  %     18  %     18  %         (2    %)        (18   %)
Datacommunications
Telecommunications     16  %     16  %     14  %         (1    %)        (4    %)
Military and           12  %     12  %     10  %         0     %         0     %
Aerospace
                       100 %     100 %     100 %         0     %         (18   %)
 
(b) Includes the effects of $68.9 net sales by DDi Corp. during the three months
ended March 31, 2012.
 

                                                                        
                  1Q13         4Q12         3Q12         2Q12(c)         1Q12  
Working
capital
metrics
Days’ sales       59.1         60.2         59.0         58.8            63.4
outstanding
Inventory         8.0          7.9          8.8          8.0             7.5
turns
Days’
payables          68.0         66.7         66.1         70.0            79.7
outstanding
Cash cycle        35.9         39.3         33.7         33.8            32.0
(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
                                      March 31,     December 31,     March 31,
                                      2013          2012             2012
                                                                      
Operating income                      $   2.6       $    1.0         $   5.2
Add-back:
Depreciation and amortization             23.6           23.9            17.4
Non-cash stock compensation               3.2            2.7             2.5
expense
Costs relating to acquisitions            0.1            0.5             1.0
and equity registrations
Restructuring and impairment              –              1.0             7.0
Adjusted EBITDA                       $   29.5      $    29.1        $   33.1
                                                                          

 
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
                          March 31,          December 31,       March 31,
                          2013               2012               2012
                                                                 
Net loss attributable
to common                 $ (13,455    )     $ (14,568    )     $ (4,642     )
stockholders (GAAP)
                                                                 
Adjustments:
Non-cash stock              3,207              2,673              2,521
compensation expense
Amortization                2,403              2,401              892
Costs related to
acquisitions and            124                512                1,012
equity registrations
Restructuring and           –                  1,032              6,987
impairment
Non-cash interest           –                  –                  399
Special income tax          (29        )       –                  (683       )
items
Income tax effects of       (43        )       (32        )       –           
adjustments
                                                                 
Adjusted net (loss)
income attributable       $ (7,793     )     $ (7,982     )     $ 6,486       
to common
stockholders
                                                                 
Diluted weighted
average shares              19,994,820         19,994,820         20,172,532  
outstanding
                                                                 
Diluted loss per          $ (0.67      )     $ (0.73      )     $ (0.23      )
share (GAAP)
Adjusted EPS              $ (0.39      )     $ (0.40      )     $ 0.32        
                                                                              

Contact:

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