DDi Corp. (NASDAQ:DDIC), a leading provider of time-critical,
technologically advanced electronic interconnect design,
engineering and manufacturing services, today reported financial
results for the first quarter ended March 31, 2011.
First Quarter 2011 Highlights:
- Bookings increased 18% sequentially
to $72 million, a 1.09 book-to-bill ratio
- Net sales of $66.5 million increased
3% over the prior year period and 1% sequentially
- Net income of $5.0 million, or $0.24
per fully diluted share, versus $3.8 million, or $0.19 per fully
diluted share, in the prior year quarter
- Paid dividend of $0.10 per share of
common stock on March 30, 2011
Mikel Williams, President and Chief Executive Officer of DDi
Corp., stated, “We are pleased to report record bookings of $72
million in the first quarter, which are indicative of an improved
business environment. Our net sales growth trailed our order growth
due to a slow start in shipments during the quarter stemming from
lower fourth quarter bookings. That said, we were pleased to
deliver a solid first quarter with net sales of $66.5 million, a
slight year-over-year and sequential increase.”
Mr. Williams continued, “As evidenced by our positive first
quarter results and the increase in our quarterly order flow,
macro-economic conditions improved slightly in the first quarter.
In particular, we noted stronger demand in the computer and
instrumentation/medical segments. We must also acknowledge the
situation in Japan, and its potential impact on the broader PCB
marketplace and on DDi. While we have not yet experienced any
significant impact on customer demand, either positive or negative,
we are cognizant of its potential effect on the global electronics
supply chain and our customer base.”
Mr. Williams concluded, “Given our solid first quarter results
and our positive momentum headed into the second quarter, we are
cautiously optimistic about our prospects in 2011. While the
strength of the economic recovery is uncertain and we continue to
monitor the situation in Japan, we believe our business strategy,
improving operational performance and sound financial condition
serve as a solid start to 2011.”
First Quarter Results
Net sales for the first quarter of 2011 were $66.5 million, a
2.8% increase over the prior year quarter and a 1.1% increase
sequentially. The year-over-year and sequential increases reflect
stronger end market customer demand, particularly across the
computer and instrumentation/medical sectors.
Gross margin for the first quarter of 2011 was 21.3% of net
sales, a 33 basis point decrease from 21.6% of net sales in the
prior year period. Sequentially, gross margin decreased 85 basis
points from 22.1% of net sales. The sequential decrease in gross
margin was primarily attributable to the impact of lower fourth
quarter 2010 bookings which resulted in lower loading levels early
in the quarter and consequentially, reduced operating efficiencies.
In addition, first quarter 2011 gross margin was slightly pressured
by rising material costs which have been driven by record prices
for certain commodities.
Operating income in the first quarter of 2011 was $5.4 million
compared to operating income of $4.9 million in the prior year
period and operating income of $5.1 million in the fourth quarter
of 2010.
Adjusted EBITDA for the first quarter of 2011 was $8.0 million
compared to $8.4 million in the prior year period and $8.4 million
in the fourth quarter of 2010. Reconciliations of this non-GAAP
measure, which exclude non-recurring costs associated with the
Coretec acquisition, including facility closure, severance and
professional fees are provided after the GAAP condensed
consolidated financial statements below.
Net income in the first quarter of 2011 was $5.0 million, or
$0.24 per share, compared to net income of $3.8 million, or $0.19
per share, in the prior year period. Net income in the fourth
quarter of 2010 was $4.4 million, or $0.21 per share.
First Quarter Balance Sheet and Liquidity
As of March 31, 2011, DDi had total cash and cash equivalents of
$22.0 million and total debt of $11.2 million. Net working capital
as of March 31, 2011 was $54.2 million. The $6.3 million decrease
in cash and cash equivalents from the prior quarter end was
primarily due to working capital uses of $9.1 million, cash
dividends of $2.0 million and capital expenditures of $2.4
million.
Quarterly Dividend
The Company paid a dividend of $0.10 per share of common stock
on March 30, 2011. The first quarter of 2011 was the fourth
consecutive quarter in which the Company paid a dividend.
Conference Call and Webcast
A conference call with simultaneous webcast to discuss first
quarter 2011 financial results will be held today at 5:00 p.m.
Eastern / 2:00 p.m. Pacific. Participants may access the call by
dialing (877) 941-4775 (domestic) or (480) 629-9761
(international). In addition, the call is being webcast and can be
accessed at the Company’s web site: www.ddiglobal.com/investor.
Participants should access the website at least 15 minutes early to
register and download any necessary audio software. A telephone
replay of the conference call will be available through May 10,
2011 by dialing (877) 870-5176 (domestic) or (858) 384-5517
(international) and entering the conference ID 4432528. An online
replay of the webcast will be available at
www.ddiglobal.com/investor under “Financial Calendar.” For more
information, visit www.ddiglobal.com.
About DDi
DDi is a leading provider of time-critical, technologically
advanced electronic interconnect design, engineering and
manufacturing services. Headquartered in Anaheim, California, DDi
and its subsidiaries offer services to leading electronics OEMs and
contract manufacturers worldwide from its facilities across North
America and with manufacturing partners in Asia.
Non-GAAP Financial Measures
This release includes 'adjusted EBITDA', a non-GAAP financial
measure as defined in Regulation G of the Securities Exchange Act
of 1934. Management believes that the disclosure of non-GAAP
financial measures, when presented in conjunction with the
corresponding GAAP measures, provide useful information to the
Company, investors and other users of the financial statements and
other financial information in identifying and understanding
operating performance for a given level of net sales and business
trends. Management believes that adjusted EBITDA is an important
factor of the Company's business because it reflects financial
performance that is unencumbered by debt service and other
non-cash, non-recurring or unusual items. This financial measure is
commonly used in the Company's industry. However, adjusted EBITDA
should not be considered as an alternative to cash flow from
operating activities, as a measure of liquidity or as an
alternative to net income as a measure of operating results in
accordance with generally accepted accounting principles. The
Company's definition of adjusted EBITDA may differ from definitions
of such financial measure used by other companies. The Company has
provided a reconciliation of adjusted EBITDA to GAAP financial
information in the attached Schedule of Non-GAAP
reconciliations.
"Safe Harbor" Statement under the Private Securities
Litigation Reform Act of 1995
Except for historical information contained in this release,
statements in this release may constitute forward-looking
statements regarding the Company's assumptions, projections,
expectations, targets, intentions or beliefs about future events.
Words or phrases such as "anticipates," "believes," "estimates,"
\"expects," "intends," "plans," "predicts," "projects," "targets,"
"will likely result," "will continue," "may," "could" or similar
expressions identify forward-looking statements. Forward-looking
statements involve risks and uncertainties, which could cause
actual results or outcomes to differ materially from those
expressed. The Company cautions that while it makes such statements
in good faith and it believes such statements are based on
reasonable assumptions, including without limitation, management's
examination of historical operating trends, data contained in
records, and other data available from third parties, it cannot
assure you that the Company's projections will be achieved. In
addition to other factors and matters discussed from time to time
in the Company's filings with the U.S. Securities and Exchange
Commission, or the SEC, some important factors that could cause
actual results or outcomes for DDi or its subsidiaries to differ
materially from those discussed in forward-looking statements
include changes in general economic conditions in the markets in
which it may compete and fluctuations in demand in the electronics
industry; the Company's ability to sustain historical margins;
increased competition; increased costs; loss or retirement of key
members of management; currency exchange rate fluctuations;
integration of acquired operations; international operations;
compliance with environmental regulations; potential impacts of
natural disasters on the electronics industry and the Company’s
supply chain; increases in the Company's cost of borrowings or
unavailability of additional debt or equity capital on terms
considered reasonable by management; and adverse state, federal or
foreign legislation or regulation or adverse determinations by
regulators. Any forward-looking statement speaks only as of the
date on which such statement is made, and, except as required by
law, the Company undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after
the date on which such statement is made or to reflect the
occurrence of unanticipated events. New factors emerge from time to
time, and it is not possible for management to predict all such
factors.
DDi Corp.
Condensed Consolidated Statements of
Income
(In thousands, except per share
amounts)
(Unaudited)
Qtr. Ended Qtr. Ended Qtr. Ended
Mar. 31, 2011 Mar. 31, 2010 Dec. 31, 2010
Net sales $ 66,459 $ 64,665 $ 65,749 Cost of goods
sold 52,307 50,679 51,189
Gross profit 14,152 13,986 14,560 Gross profit % 21.3 % 21.6
% 22.1 % Operating expenses: Sales and marketing 4,638 4,507
4,241 General and administrative 3,959 4,423 4,225 Amortization of
intangible assets 190 190 190 Restructuring and other related
charges ─ ─ 800 Operating income
5,365 4,866 5,104 Interest and other expense, net 296
658 658 Income before
income taxes 5,069 4,208 4,446 Income tax expense 64
409 6
Net income
$ 5,005 $ 3,799 $
4,440 Net income per share: Basic $ 0.25 $
0.19 $ 0.22 Diluted $ 0.24 $ 0.19 $ 0.21 Dividends declared per
share: $ 0.10 ─ $ 0.10 Weighted-average shares used in per share
computations: Basic 20,226 19,824 20,072 Diluted 21,190 19,971
21,101
DDi Corp.
Condensed Consolidated Balance
Sheets
(In thousands)
(Unaudited)
Mar. 31, 2011 Dec. 31, 2010 Assets
Current assets: Cash and cash equivalents $ 22,046 $ 28,347
Accounts receivable, net 43,964 40,821 Inventories 23,846 20,970
Prepaid expenses and other 2,594 1,889
Total current assets 92,450 92,027 Property, plant and equipment,
net 43,277 42,605 Intangible assets, net 424 614 Goodwill 3,664
3,664 Other assets 1,023 954
Total
assets $ 140,838 $ 139,864
Liabilities and Stockholders' Equity
Current liabilities: Accounts payable $ 24,785 $ 25,137
Accrued expenses and other current liabilities 11,826 14,113
Current portion of long term debt 1,626 1,751
Total current liabilities 38,237 41,001 Long term debt 9,539
9,704 Other long-term liabilities 474 527
Total liabilities 48,250 51,232
Stockholders' equity: Common stock, additional
paid-in-capital, and treasury stock 227,399 228,881 Accumulated
other comprehensive income 1,496 1,063 Accumulated deficit
(136,307 ) (141,312 ) Total stockholders' equity
92,588 88,632
Total liabilities and
stockholders' equity $ 140,838 $
139,864
DDi Corp.
Schedule of Non-GAAP
Reconciliations
(In thousands)
(Unaudited)
Qtr. Ended Qtr. Ended Qtr. Ended
Mar. 31, 2011 Mar. 31, 2010 Dec. 31, 2010
Adjusted EBITDA: GAAP net income $ 5,005 $ 3,799 $ 4,440 Add
back: Interest and other expense, net 296 658 658 Income tax
expense 64 409 6 Depreciation 2,139 2,200 2,039 Amortization of
intangible assets 190 190 190 Non-cash compensation 269 348 268
Non-recurring Coretec acquisition costs ─ 800 ─ Toronto site
integration ─ ─ 800
Adjusted EBITDA $
7,963 $ 8,404 $ 8,401
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