Viasystems Announces Third Quarter 2013 Results

  Viasystems Announces Third Quarter 2013 Results

Business Wire

ST. LOUIS -- November 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 third quarter ended September30, 2013.

Highlights

  *Net sales were $309.2million in the quarter ended September30, 2013, a
    sequential increase over the immediately preceding quarter of 8.3%, and a
    year-over-year decrease of 5.6%.
  *Operating income in the quarter ended September30, 2013, was
    $6.4million, or 2.1% of net sales.
  *Adjusted EBITDA in the quarter ended September30, 2013, was
    $32.9million, or 10.6% of net sales, compared with $41.2million, or
    12.6% of net sales, in the quarter ended September30, 2012, and compared
    with $30.7million, or 10.8% of net sales, in the immediately preceding
    quarter.
  *U.S. GAAP loss per basic and diluted share was $(0.45) for the quarter
    ended September30, 2013, on approximately 20million average shares
    outstanding.
  *Adjusted EPS was a loss of $(0.19) for the quarter, excluding certain
    non-cash and special income and expense items. Adjusted EPS for the
    quarters ended September30, 2012, and June30, 2013, were $0.27 and
    $(0.28), respectively.

“I am encouraged by our achievement of the sequential sales growth we targeted
for the quarter,” commented David M. Sindelar, Chief Executive Officer of
Viasystems. “Each of our end markets showed signs of improvement, with the
exception of our military and aerospace end market, which has been affected by
the U.S. government budget issues.”

“Order intake in the first nine months of 2013 exceeded sales by almost 5%,”
continued Sindelar. “Further, orders received in the third quarter were
consistent with orders received during the prior quarter, exceeding our third
quarter sales by about 2%. Subject to normal yearend holiday slowdowns, I
expect our fourth quarter sales level to be consistent with our most recent
result.”

”While we have expended substantial resources to regain our targeted sales run
rate and are pleased with the results so far, our primary focus in the near
term must now turn to improving our cost profile, concluded Sindelar.

Financial Results

The company reported net sales of $309.2million for the three months ended
September30, 2013. The year-over-year decrease of 5.6% was primarily the
result of reduced demand for electro-mechanical solutions products from the
company’s industrial & instrumentation end market, and for printed circuit
board products from the company’s computer and datacommunications end market
and its military and aerospace end market. The company attributes this to the
effects of i)softening global economic conditions, ii)reduced manufacturing
capacity due to the relocation of the company’s printed circuit board factory
in Anaheim, California, iii)loss of business related to a September 2012 fire
in one of the company’s printed circuit board factories in China, and
iv)reduced sales volume and dollars due to price competition. Sequentially,
net sales increased 8.3% in comparison to the second quarter of 2013. The
sequential sales increase was driven by improved demand in all markets except
the company’s military and aerospace end market.

Cost of goods sold (excluding items shown separately in the income statement)
as a percent of net sales was 82.1% for the quarter ended September30, 2013,
compared to 80.0% in the corresponding quarter a year ago, and compared to
81.4% in the immediately preceding quarter ended June30, 2013. The primary
contributors to the sequential increase were i)the higher level of Assembly
segment sales as a percentage of total net sales, ii)increased costs of
employment in China, iii)increased out-bound, expedited freight costs, and
iv)manufacturing inefficiencies associated with relocating the company’s
Anaheim, California printed circuit board factory.

Operating income was $6.4million, or 2.1% of net sales, in the three months
ended September30, 2013, compared with $4.4million, or 1.3% of net sales,
for the third quarter of 2012, and compared with $4.5million, or 1.6% of net
sales, for the three months ended June30, 2013.

Adjusted EBITDA, on a non-GAAP basis, was $32.9million, or 10.6% of net
sales, for the three months ended September30, 2013, compared with
$41.2million, or 12.6% of net sales, for the third quarter of 2012, and
compared with $30.7million, or 10.8% of net sales, for the three months ended
June30, 2013. A reconciliation of operating income to Adjusted EBITDA is
provided at the end of this news release.

For the three months ended September30, 2013, net loss was $(9.0)million, of
which $(9.2)million was attributable to common stockholders, and resulted in
$(0.45) of loss per basic and diluted share. Adjusted EPS, on a non-GAAP
basis, for the three months ended September30, 2013, was a loss of $(0.19). 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 2013 were $256.8million and $5.7million,
respectively, compared with Printed Circuit Boards segment net sales and
operating income of $269.5million and $3.0million, respectively, for the
third quarter of 2012, and compared with Printed Circuit Boards segment net
sales and operating income of $240.7million and $4.7million, respectively,
for the quarter ended June30, 2013. Sequentially, stronger demand for PCBs
used in the company’s automotive, telecommunications, computer and
datacommunications, and industrial & instrumentation end markets was partly
offset by soft demand in the company’s military and aerospace end market
during the quarter ended September30, 2013.

Net sales and operating income in the company’s Assembly segment for the third
quarter of 2013 were $52.4million and $0.8million, respectively, compared
with Assembly segment net sales and operating income of $57.9million and
$1.6million, respectively, for the third quarter of 2012 and compared with
Assembly segment net sales and operating loss of $44.9million and
$(0.1)million, respectively, for the quarter ended June30, 2013. Both
year-over-year and sequentially, Assembly segment net sales decreased in the
industrial & instrumentation end market, but increased in each of the
company’s other end markets.

Cash and Working Capital

Cash and cash equivalents at September30, 2013 were $61.7million, compared
with $74.8million at December31, 2012. Cash provided by operating activities
during the nine months ended September30, 2013, was $54.3million. The
company’s cash cycle metric of 36.0 days at September30, 2013 was in line
with expectations. During the nine months ended September30, 2013, the
company used a net of approximately $22.8million cash for interest payments
and used a net of approximately $5.5million cash for payment of income taxes.

During the nine months ended September30, 2013, the company used a net
$64.6million of cash for investing activities. In particular, capital
expenditures during the nine months ended September30, 2013, were
$65.2million. During the nine months ended September30, 2013, approximately
$29.6million of capital expenditures were incurred in connection with
capacity expansion, relocation of facilities, replacement of fire-damaged
equipment and other special projects.

During the nine months ended September30, 2013, financing activities used a
net $2.8million of cash, including approximately a net $1.9million cash used
to pay scheduled debt payments, $0.3million cash used to make an optional
mortgage debt prepayment and $0.7million 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
11:00 a.m. Eastern Time today, November6, 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
88670832. 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 15,400 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
                    September 30,        June 30,             September 30,
                                        2013                2012
                    2013
                                                              
Net sales           $  309,172           $  285,553           $  327,352
Operating
expenses:
Cost of goods
sold, exclusive        253,737              232,448              261,953
of items shown
separately
Selling, general
and                    25,192               25,001               27,635
administrative
Depreciation           21,857               21,878               22,246
Amortization           1,680                1,678                1,679
Restructuring         347                -                  9,480       
and impairment
Operating income       6,359                4,548                4,359
Other expense
(income):
Interest               11,159               11,259               11,257
expense, net
Amortization of
deferred               725                  724                  730
financing costs
Other, net            975                941                (272        )
Loss before            (6,500      )        (8,376      )        (7,356      )
income taxes
Income taxes          2,532              1,892              2,189       
Net loss            $  (9,032      )     $  (10,268     )     $  (9,545      )
                                                              
Less:
Net income
attributable to       121                101                243         
noncontrolling
interest
Net loss
attributable to     $  (9,153      )     $  (10,369     )     $  (9,788      )
common
stockholders
                                                              
Basic loss per      $  (0.45       )     $  (0.52       )     $  (0.49       )
share
Diluted loss per    $  (0.45       )     $  (0.52       )     $  (0.49       )
share
Basic weighted
average shares        20,171,083         20,010,029         19,994,820  
outstanding
Diluted weighted
average shares        20,171,083         20,010,029         19,994,820  
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)
                                                             
                                  September 30,              December 31,
                                  2013                       2012
ASSETS                            (unaudited)
Current assets:
Cash and cash equivalents         $      61,671              $    74,816
Accounts receivable, net                 204,646                  183,148
Inventories                              120,655                  111,029
Prepaid expenses and other              43,590                  38,838
Total current assets                     430,562                  407,831
Property, plant and                      426,480                  427,968
equipment, net
Goodwill and other                      263,196                 270,382
noncurrent assets
Total assets                      $      1,120,238           $    1,106,181
                                                             
LIABILITIES AND
STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of             $      11,385              $    12,250
long-term debt
Accounts payable                         187,177                  161,890
Accrued and other                       99,757                  90,812
liabilities
Total current liabilities                298,319                  264,952
Long-term debt, less                     562,030                  563,446
current maturities
Other non-current                       52,474                  45,926
liabilities
Total liabilities                       912,823                 874,324
                                                             
Total stockholders’ equity              207,415                 231,857
Total liabilities and             $      1,120,238           $    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)
                                       
                                       Nine Months Ended

                                       September 30,
                                       2013                 2012
                                                            
Net cash provided by operating         $   54,289           $   70,687     
activities
                                                             
Cash flows from investing
activities:
Capital expenditures                       (65,179   )           (81,497    )
Proceeds from disposals of                 550                   390
property
Acquisition of DDi, net of cash            –                     (253,464   )
acquired
Acquisition of remaining interest         –                   (10,106    )
in Huizhou, China facility
Net cash used in investing                (64,629   )          (344,677   )
activities
                                                             
Cash flows from financing
activities:
Repayment of Senior Subordinated           (895      )           –
Convertible Notes Due 2013
Repayments of borrowings under
mortgages and credit facilities,           (1,247    )           (396       )
net of borrowings
Withholding taxes related to stock         (663      )           –
awards
Proceeds from 7.875% Senior                –                     550,000
Secured Notes
Repayment of 12.0% Senior Secured          –                     (236,295   )
Notes
Financing and other fees                  –                   (16,213    )
Net cash (used in) provided by            (2,805    )          297,096    
financing activities
                                                             
Net change in cash and cash                (13,145   )           23,106
equivalents
                                                             
Beginning cash                            74,816              71,281     
Ending cash                            $   61,671           $   94,387     
                                                             
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, 2013  June 30, 2013  September 30, 2012
Net sales by segment
Printed Circuit        $   256.8  83   %    $ 240.7 84  %   $   269.5  82   %
Boards
Assembly                  52.4   17   %     44.9  16  %      57.9   18   %
                       $   309.2  100  %    $ 285.6 100 %   $   327.4  100  %
                                                                       

                                                   
                     Percentage of Net Sales          Net Sales Change
                     Three Months Ended               Sequential:  Year/Year:
                     September  June    September   3Q13 vs       3Q13 vs
                     30,         30,      30,
                     2013        2013     2012        2Q13          3Q12
Net sales by end
market
Automotive           31     %    30   %   28     %    12     %      3      %
Industrial &         25     %    26   %   29     %    4      %      (17    )%
Instrumentation
Telecommunications   18     %    17   %   15     %    16     %      11     %
Computer and         16     %    16   %   18     %    10     %      (15    )%
Datacommunications
Military and         10     %    11   %   10     %    (3     )%     (4     )%
Aerospace
                     100    %    100  %   100    %    8      %      (6     )%
                                                                    
                                                                    
                     3Q13        2Q13     1Q13        4Q12          3Q12
Working capital
metrics
Days’ sales          59.6        58.9     59.1        60.2          59.0
outstanding
Inventory turns      8.4         8.1      8.0         7.9           8.8
Days’ payables       66.4        68.5     68.0        66.7          66.1
outstanding
Cash cycle (days)    36.0        34.7     35.9        39.3          33.7
                                                                    

                                    
VIASYSTEMS GROUP, INC. AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

RECONCILIATION OF OPERATING INCOME

TO ADJUSTED EBITDA

(dollars in millions)

(Unaudited)
                                      
                                      Three Months Ended
                                      September 30,  June 30,  September 30,
                                      2013            2013       2012
                                                                 
Operating income                      $     6.4       $  4.5     $     4.4
Add-back:
Depreciation and amortization               23.6         23.6          23.9
Non-cash stock compensation expense         2.4          2.6           2.7
Restructuring and impairment                0.3          –             10.0
Costs relating to acquisitions and         0.2         –            0.2
equity registrations
Adjusted EBITDA                       $     32.9      $  30.7    $     41.2
                                                                 

                            
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,   June 30,        September 30,
                              2013             2013             2012
                                                                
Net loss attributable to      $ (9,153     )   $ (10,369    )   $ (9,788     )
common stockholders (GAAP)
                                                                
Adjustments:
Non-cash stock compensation     2,430            2,597            2,700
expense
Amortization                    2,405            2,403            2,409
Restructuring and               347              –                9,970
impairment
Costs related to
acquisitions and equity         193              31               225
registrations
Special income taxes            (113       )     (183       )     –
Income tax effects of          80             (39        )    43         
adjustments
                                                                
Adjusted net (loss) income
attributable to common        $ (3,811     )   $ (5,560     )   $ 5,559      
stockholders
                                                                
Diluted weighted average       20,171,083     20,010,029     20,233,612 
shares outstanding
                                                                
Diluted loss per share        $ (0.45      )   $ (0.52      )   $ (0.49      )
(GAAP)
Adjusted EPS                  $ (0.19      )   $ (0.28      )   $ 0.27       

Contact:

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