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Viasystems Announces Second Quarter 2013 Results

  Viasystems Announces Second Quarter 2013 Results

Business Wire

ST. LOUIS -- August 6, 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 second quarter ended June30, 2013.

Highlights

  *Net sales were $285.6million in the quarter ended June30, 2013, a
    year-over-year decrease of 3.8%, and a sequential increase over the
    immediately preceding quarter of 4.6%.
  *Giving pro forma effect to the May 2012 acquisition of DDi Corp., net
    sales for the quarter ended June30, 2013, declined 16.2% year-over-year.
  *Operating income in the quarter ended June30, 2013, was $4.5million, or
    1.6% of net sales.
  *Adjusted EBITDA in the quarter ended June30, 2013, was $30.7million, or
    10.8% of net sales, compared with $44.7million, or 15.0% of net sales, in
    the quarter ended June30, 2012, and compared with $29.5million, or 10.8%
    of net sales, in the immediately preceding quarter.
  *U.S. GAAP loss per basic and diluted share was $(0.52) for the quarter
    ended June30, 2013, on approximately 20million average shares
    outstanding.
  *Adjusted EPS was a loss of $(0.28) for the quarter, excluding certain
    non-cash and special income and expense items. Adjusted EPS for the
    quarters ended June30, 2012, and March31, 2013, was $0.75 and $(0.39),
    respectively.

“While consolidated net sales for our second quarter were in line with
analysts’ expectations, our earnings came in slightly below,” noted
Viasystems’ Chief Executive Officer, David M. Sindelar. “However, I believe we
gained momentum in the quarter and still expect to see sales and earnings
improvements in the second half of the year. In particular, we have been
awarded significant new projects in most of our end markets. These new project
awards are a subset of a solid book-to-bill ratio in the second quarter. The
new projects are also expected to complement our continued recovery from the
setbacks we suffered in both our PCB and Assembly segments last year.”

“Like all manufacturers with a significant presence in China, we continue to
face the challenges of increasing employment costs, and several provinces in
China increased wages during the second quarter,” commented Sindelar. “In
addition, we incurred costs for the new project ramp ups as well as increased
priority shipping caused by capacity limitations related to last year’s site
closure and factory fire in China. We expect the adverse cost effects of
project ramp ups and priority shipping to decline following improved
efficiencies in our manufacturing processes.”

“While the outlook for the global economy remains lackluster, most of our
near-term challenges are within our control and our entire team is focused on
execution to improve the bottom line,” observed Sindelar.

Financial Results

The company reported net sales of $285.6million for the three months ended
June30, 2013. The year-over-year decrease of 3.8% was primarily the result of
reduced demand in the automotive, industrial & instrumentation and
computer/datacom end markets, partially offset by the sales attributable to
the company’s acquisition of DDi on May31, 2012. Giving pro forma effect to
the acquisition of DDi, net sales for the quarter declined 16.2%
year-over-year. The pro forma year-over-year decline was driven primarily by
reduced demand across all of the company’s end markets. The company attributes
this to the effects of i)softening global economic conditions, ii)reduced
manufacturing capacity due to the involuntary closure of the company’s
Huizhou, China printed circuit board factory that served primarily automotive
customers, iii) inefficiencies and reduced manufacturing capacity levels
related to the Guangzhou Fire and iv)reduced sales orders due to price
competitiveness. Sequentially, net sales increased 4.6% in comparison to the
first quarter of 2013. The sequential sales increase was driven by improved
demand in the industrial & instrumentation, automotive and telecommunication
end markets and increased capacity at the company’s Guangzhou factory as it
recovered from the fire.

Cost of goods sold (excluding items shown separately in the income statement)
as a percent of net sales was 81.4% for the quarter ended June30, 2013,
compared to 79.3% in the corresponding quarter a year ago, and compared to
80.3% in the immediately preceding quarter ended March31, 2013. The primary
contributors to the sequential increase were i)the higher level of Assembly
sales as a percentage of total net sales, ii)increased costs of employment in
China, and iii)increased freight costs.

Operating income was $4.5million, or 1.6% of net sales, in the three months
ended June30, 2013, compared with $8.7million, or 2.9% of net sales, for the
second quarter of 2012, and compared with $2.6million, or 0.9% of net sales,
for the three months ended March31, 2013.

Adjusted EBITDA, on a non-GAAP basis, was $30.7million, or 10.8% of net
sales, for the three months ended June30, 2013, compared with $44.7million,
or 15.0% of net sales, for the second quarter of 2012, and compared with
$29.5million, or 10.8% of net sales, for the three months ended March31,
2013. A reconciliation of operating income to Adjusted EBITDA is provided at
the end of this news release.

For the three months ended June30, 2013, net loss was $(10.3)million, of
which $(10.4)million was attributable to common stockholders, and resulted in
$(0.52) of loss per basic and diluted share. Adjusted EPS, on a non-GAAP
basis, for the three months ended June30, 2013, was a loss of $(0.28). 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 second quarter of 2013 were $240.7million and $4.7million,
respectively, compared with Printed Circuit Boards segment net sales and
operating income of $240.4million and $15.1million, respectively, for the
second quarter of 2012, and compared with Printed Circuit Boards segment net
sales and operating income of $241.0million and $3.7million, respectively,
for the quarter ended March31, 2013. Solid demand for PCBs used in the
company’s automotive, telecom and military/aerospace end markets was offset by
soft demand in the company’s computer/datacom and industrial & instrumentation
end markets during the quarter ended June30, 2013.

Net sales and operating loss in the company’s Assembly segment for the second
quarter of 2013 were $44.9million and $(0.1)million, respectively, compared
with Assembly segment net sales and operating income of $56.5million and
$1.6million, respectively, for the second quarter of 2012 and compared with
Assembly segment net sales and operating loss of $31.9million and
$(1.0)million, respectively, for the quarter ended March31, 2013. Compared
to the second quarter of 2012, Assembly segment net sales decreased in the
industrial & instrumentation end market, but increased or was flat in all of
our other end markets. Compared to the immediately preceding three months
ended March31, 2013, increased Assembly segment net sales to customers in our
industrial & instrumentation and telecommunication end markets were
responsible for the segment’s sequential improvement.

Pro Forma Information

The company’s net sales of $285.6million for the quarter ended June30, 2013
declined by approximately 16.2% compared to approximately $341.0million pro
forma combined net sales of Viasystems and DDi for the three months ended
June30, 2012, which included approximately $44.1million 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 June30, 2013 were $73.9million, compared with
$74.8million at December31, 2012. Cash provided by operating activities
during the six months ended June30, 2013, was $40.4million. The company’s
cash cycle metric of 34.7 days at June30, 2013 was in line with expectations.
During six months ended June30, 2013, the company used a net of approximately
$22.3million cash for interest payments and used a net of approximately
$3.9million cash for payment of income taxes.

During the six months ended June30, 2013, the company used a net
$39.2million of cash for investing activities. In particular, capital
expenditures during the six months ended June30, 2013, were $39.5million.
During the six months ended June30, 2013, approximately $16.5million of
capital expenditures were incurred in connection with capacity expansion,
relocation of facilities, replacement of fire-damaged equipment and other
special projects.

During the six months ended June30, 2013, financing activities used a net
$2.2million of cash, including approximately $1.6million of cash used to
make scheduled debt payments and $0.6million cash used for withholding taxes
related to net share settlements of vested stock compensation.

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 Adjusted 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
3:30p.m. Eastern Time today, August6, 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
23478079. 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, 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 15,300 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
                          June 30,           March 31,          June 30,
                                           2013             2012
                          2013
                                                                
Net sales                 $ 285,553          $ 272,940          $ 296,861
Operating expenses:
Cost of goods sold,
exclusive of items          232,448            219,058            235,556
shown separately
Selling, general and        25,001             27,693             31,228
administrative
Depreciation                21,878             21,958             18,579
Amortization                1,678              1,678              802
Restructuring and          –                –                1,958      
impairment
Operating income            4,548              2,553              8,738
Other expense
(income):
Interest expense, net       11,259             11,199             12,144
Amortization of
deferred financing          724                725                766
costs
Loss on early
extinguishment of           –                  –                  24,234
debt
Other, net                 941              748              (710       )
Loss before income          (8,376     )       (10,119    )       (27,696    )
taxes
Income taxes               1,892            3,163            5,342      
Net loss                  $ (10,268    )     $ (13,282    )     $ (33,038    )
                                                                
Less:
Net income
attributable to            101              173              271        
noncontrolling
interest
Net loss attributable
to common                 $ (10,369    )     $ (13,455    )     $ (33,309    )
stockholders
                                                                
Basic loss per share      $ (0.52      )     $ (0.67      )     $ (1.67      )
Diluted loss per          $ (0.52      )     $ (0.67      )     $ (1.67      )
share
Basic weighted
average shares             20,010,029       19,994,820       19,990,628 
outstanding
Diluted weighted
average shares             20,010,029       19,994,820       19,990,628 
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)
                                                               
                                               June 30,        December 31,
                                               2013            2012
ASSETS                                         (unaudited)
Current assets:
Cash and cash equivalents                      $ 73,870        $  74,816
Accounts receivable, net                         186,869          183,148
Inventories                                      114,371          111,029
Prepaid expenses and other                      37,563          38,838
Total current assets                             412,673          407,831
Property, plant and equipment, net               422,818          427,968
Goodwill and other noncurrent assets            265,537         270,382
Total assets                                   $ 1,101,028     $  1,106,181
                                                               
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt           $ 11,356        $  12,250
Accounts payable                                 176,696          161,890
Accrued and other liabilities                   84,288          90,812
Total current liabilities                        272,340          264,952
Long-term debt, less current maturities          562,566          563,446
Other non-current liabilities                   51,700          45,926
Total liabilities                               886,606         874,324
                                                               
Total stockholders’ equity                      214,422         231,857
Total liabilities and stockholders’ equity     $ 1,101,028     $  1,106,181
                                                                  

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)
                                                  
                                                  Six Months Ended

                                                  June 30,
                                                  2013          2012
                                                                 
Net cash provided by operating activities         $ 40,430       $ 32,152   
                                                                  
Cash flows from investing activities:
Capital expenditures                                (39,496 )       (52,490  )
Proceeds from disposals of property                 297             102
Acquisition of DDi, net of cash acquired            –               (253,464 )
Acquisition of remaining interest in Huizhou,      –             (10,106  )
China facility
Net cash used in investing activities              (39,199 )      (315,958 )
                                                                  
Cash flows from financing activities:
Repayment of Senior Subordinated Convertible        (895    )       –
Notes Due 2013
Repayments of borrowings under mortgages,
capital leases and credit facilities, net of        (670    )       (82      )
borrowings
Withholding taxes related to stock awards           (612    )       –
Proceeds from 7.875% Senior Secured Notes           –               550,000
Repayment of 12.0% Senior Secured Notes             –               (236,295 )
Financing and other fees                           –             (16,006  )
Net cash (used in) provided by financing           (2,177  )      297,617  
activities
                                                                  
Net change in cash and cash equivalents             (946    )       13,811
                                                                  
Beginning cash                                     74,816        71,281   
Ending cash                                       $ 73,870       $ 85,092   
                                                                  

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
                June 30, 2013        March 31, 2013      June 30, 2012(a)
Net sales
by                                                                
segment
Printed
Circuit         $  240.7     84  %     $ 241.0     88  %     $ 240.4     81  %
Boards
(a)
Assembly          44.9    16  %      31.9    12  %      56.5    19  %
                $  285.6   100 %     $ 272.9   100 %     $ 296.9   100 %
                                                                         
(a)Excludes $44.1 net sales by DDi Corp. during the three months ended
June30, 2012 prior to its acquisition.
                                                                         

                      Percentage of Net Sales   Net Sales Change
                        Three Months Ended          Sequential:   Year/Year:
                        June   March   June     2Q13 vs         2Q13 vs
                        30,      31,       30,
                                           2012                     2Q12 PF
                        2013     2013      PF       1Q13            (b)
                                           (b)
Net sales by end
market
Automotive              30%      29%       30%      8%              (18)%
Industrial &            26%      25%       29%      11%             (23)%
Instrumentation
Telecommunications      17%      16%       17%      9%              (5)%
Computer and            16%      18%       15%      (9)%            (20)%
Datacommunications
Military and            11%      12%       9%       (2)%            (1)%
Aerospace
                        100%     100%      100%     5%              (16)%
                                                                    
(b)Includes the effects of $44.1 net sales by DDi Corp. during the three
months ended June30, 2012 prior to its acquisition.
                                                                    

                                                        
                               2Q13     1Q13     4Q12     3Q12     2Q12(c)
Working capital metrics
Days’ sales outstanding        58.9     59.1     60.2     59.0     58.8
Inventory turns                8.1      8.0      7.9      8.8      8.0
Days’ payables outstanding     68.5     68.0     66.7     66.1     70.0
Cash cycle (days)              34.7     35.9     39.3     33.7     33.8
                                                                   
(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
                                           June 30,   March 31,   June 30,
                                           2013         2013          2012
                                                                      
Operating income                           $  4.5       $   2.6       $  8.7
Add-back:
Depreciation and amortization                 23.6          23.6         19.4
Non-cash stock compensation expense           2.6           3.2          2.7
Restructuring and impairment                  –             –            2.0
Costs relating to acquisitions and           –            0.1         11.9
equity registrations
Adjusted EBITDA                            $  30.7      $   29.5      $  44.7
                                                                         

                  
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
                      June 30,         March 31,        June 30,
                      2013               2013               2012
                                                                           
Net loss
attributable to
common                $ (10,369    )    $ (13,455    )    $ (33,309    )
stockholders
(GAAP)
                                                                           
Adjustments:
Non-cash stock
compensation            2,597              3,207              2,669
expense
Amortization            2,403              2,403              1,568
Loss on early
extinguishment          –                  –                  24,234
of debt
Restructuring           –                  –                  1,958
and impairment
Costs related
to acquisitions         31                 124                11,925       (a)
and equity
registrations
Transition              –                  –                  4,169        (b)
period interest
Non-cash                –                  –                  266
interest
Special income          (183       )       (29        )       1,716
taxes
Income tax
effects of             (39        )      (43        )      (44        ) 
adjustments
                                                                           
Adjusted net
(loss) income
attributable to       $ (5,560     )     $ (7,793     )     $ 15,152      
common
stockholders
                                                                           
Diluted
weighted               20,010,029       19,994,820       20,252,446  
average shares
outstanding
                                                                           
Diluted loss
per share             $ (0.52      )     $ (0.67      )     $ (1.67      ) 
(GAAP)
Adjusted EPS          $ (0.28      )     $ (0.39      )     $ 0.75        
                                                                           
(a)Includes i)approximately $7,978 fees and expenses related to the
acquisition of DDi, plus ii)$3,947 representing the fair value write-up of
inventories purchased in connection with the DDi acquisition.
                                                                           
(b)Represents i)approximately $2,200 cash interest expense on the 12.0% 2015
Notes incurred during the "call period" between the April30, 2012 issuance
date of the 7.875% 2019 Notes and the May30, 2012 final termination date of
the 12.0% 2015 Notes, plus ii)approximately $1,969 cash interest expense on
the 7.875% 2019 Notes between the April30, 2012 issuance of the 2019 Notes
and the May31, 2012 acquisition date of DDi.

Contact:

Viasystems Group, Inc.
Kelly Wetzler, 314-746-2217
SVP Corporate Development
kelly.wetzler@viasystems.com
or
Sapphire Investor Relations, LLC
Erica Mannion, 415-471-2700
Investor Relations
emannion@sapphireir.com
 
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