News Column

Viasystems Announces Second Quarter 2014 Results

August 8, 2014



ENP Newswire - 08 August 2014

Release date- 06082014 - ST. LOUIS - 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 June 30, 2014.

Highlights

Net sales were $300.9 million in the quarter ended June 30, 2014, a year-over-year increase of 5.4%, and a sequential increase over the immediately preceding quarter of 1.7%, resulting from increased PCB sales of 9.0% year-over-year and 3.6% sequentially.

Operating income in the quarter ended June 30, 2014, was $9.6 million, or 3.2% of net sales.

Adjusted EBITDA in the quarter ended June 30, 2014, was $35.2 million, or 11.7% of net sales, compared with$30.7 million, or 10.8% of net sales, in the quarter ended June 30, 2013, and compared with $31.0 million, or 10.5% of net sales, in the immediately preceding quarter.

U.S. GAAP loss per basic and diluted share was $(0.19) for the quarter ended June 30, 2014, on approximately 20 million average shares outstanding.

Adjusted EPS was $0.00 for the quarter ended June 30, 2014, excluding certain non-cash and special income and expense items. Adjusted EPS for the quarters ended June 30, 2013, and March 31, 2014, were losses of $(0.28) and $(0.26), respectively.

Second quarter results in our Printed Circuit Boards segment reflect improvement in most of our end markets, both sequentially and year-over-year,' noted Viasystems' CEO David M. Sindelar. However, we are still facing inconsistent customer project demand for our electro-mechanical solutions product offerings, which is included in our Assembly segment.'

The automotive end market demand continues to drive our growth,' continued Mr. Sindelar, but sequential and year-over-year our improvements also received notable contributions from both our telecommunications and our military and aerospace end markets.'

Looking forward,' continued Mr. Sindelar, I expect continued modest sequential growth, with an overall sales level similar to what we achieved in our third quarter last year.'

Financial Results

The company reported net sales of $300.9 million for the three months ended June 30, 2014. The year-over-year increase of 5.4% and sequential increase of 1.7% were primarily the result of solid demand from customers in the automotive, telecommunications and military and aerospace end markets, partially offset by weaker demand from customers in the industrial & instrumentation, and computer and datacommunications end markets. The company attributes the sequential improvement in part to increases in the company's printed circuit board capacity as well as seasonal and customer-specific demand drivers.

Cost of goods sold (excluding items shown separately in the statement of operations) as a percent of net sales was 80.5% for the quarter ended June 30, 2014, compared to 81.4% in the corresponding quarter a year ago, and compared to 81.0% in the immediately preceding quarter ended March 31, 2014. The primary contributors to the sequential improvement were increased production volume, improved product mix and reduced incentive compensation expense.

Operating income was $9.6 million, or 3.2% of net sales, in the three months ended June 30, 2014, compared with $4.5 million, or 1.6% of net sales, for the second quarter of 2013, and compared with $5.5 million, or 1.9% of net sales, for the three months ended March 31, 2014.

Adjusted EBITDA, on a non-GAAP basis, was $35.2 million, or 11.7% of net sales, for the three months ended June 30, 2014, compared with $30.7 million, or 10.8% of net sales, for the second quarter of 2013, and compared with $31.0 million, or 10.5% of net sales, for the three months ended March 31, 2014. A reconciliation of operating income to Adjusted EBITDA is provided at the end of this news release.

For the three months ended June 30, 2014, net loss was $(3.6) million, of which $(3.9) million was attributable to common stockholders, and resulted in $(0.19) of loss per basic and diluted share. Adjusted EPS, on a non-GAAP basis, for the three months ended June 30, 2014, was $0.00. 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 2014 were$262.3 million and $12.8 million, respectively, compared with Printed Circuit Boards segment net sales and operating income of$240.7 million and $4.7 million, respectively, for the second quarter of 2013, and compared with Printed Circuit Boards segment net sales and operating income of $253.3 million and $9.4 million, respectively, for the quarter ended March 31, 2014. Sequentially, demand improved in each of the automotive, telecommunications, and military and aerospace end market, partially offset by demand decline in the computer and datacommunications end market.

Net sales and operating loss in the company's Assembly segment for the second quarter of 2014 were $38.6 million and $(3.1) million, respectively, compared with Assembly segment net sales and operating loss of $44.9 million and $(0.1) million, respectively, for the second quarter of 2013 and compared with Assembly segment net sales and operating loss of $42.6 million and $(3.9) million, respectively, for the quarter ended March 31, 2014.

Sequentially, reduced demand in the industrial & instrumentation, computer and datacommunications, and military and aerospace end markets were partially offset by increased demand in the automotive and telecommunications end markets.

Cash and Working Capital

Cash and cash equivalents at June 30, 2014 were $76.5 million, compared with $54.7 million at December 31, 2013. Cash used by operating activities during the six months ended June 30, 2014, was $(13.3) million.

The company's cash cycle metric of 48.6 days at June 30, 2014 was longer than the company's typical metric primarily as a result of i) an increasing mix of sales to customers with longer payment terms and ii) increased inventories purchased and manufactured to support higher demand from automotive and telecommunications customers. During the six months ended June 30, 2014, the company used approximately $24.4 million cash for interest payments and used a net of approximately $7.9 million cash for payment of income taxes.

During the six months ended June 30, 2014, the company used a net of approximately $23.5 million cash for investing activities. Capital expenditures during the six months ended June 30, 2014, were $27.7 million, of which $12.7 million were incurred during the most recent quarter.

During the six months ended June 30, 2014, approximately $4.9 million of capital expenditures were incurred in connection with capacity expansion and other special projects, of which approximately $1.7 million was incurred during the most recent quarter. In May 2014, the company received an interim insurance settlement payment which included approximately $2.0 million related to property and equipment damaged in a 2012 fire in its Guangzhou, China printed circuit board factory.

During the six months ended June 30, 2014, financing activities provided a net of approximately $58.6 million cash, including approximately $62.5 million cash provided by net borrowings, approximately $(3.3) million cash used to pay financing fees, and approximately $(0.6) million 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.

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 14, 2014, 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 14,800 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

Contact:

Kelly Wetzler

Viasystems Group, Inc.

Tel: 314-746-2217

Email: kelly.wetzler@viasystems.com


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Source: ENP Newswire


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