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 fourth quarter and full year ended December 31,
2011.
Fourth Quarter 2011 Highlights:
- Net income of $6.7 million, or $0.32
per fully diluted share
- Net sales and bookings of $64.5
million and $63.1 million, respectively
- Gross margin of 22.9%, up 190 basis
points sequentially from 21.0%
- Adjusted EBITDA of $9.6 million, or
14.9% of net sales
- Increased cash to $31.2
million
- Paid dividend of $0.10 per share of
common stock on December 30, 2011
- Declared a 20% increase in quarterly
dividend to $0.12 per share of common stock for the first quarter
of 2012
- Announced plans to relocate Anaheim
facility and corporate headquarters
- Solid bookings mark the start of
2012
Mikel Williams, President and Chief Executive Officer of DDi
Corp., stated, “I am very pleased with our performance during the
fourth quarter and our strong finish to 2011. In the fourth
quarter, we improved net income to $0.32 per share, increased our
EBITDA more than 10% sequentially and year-over-year, and grew our
cash to $31.2 million, while paying a quarterly dividend of $0.10
per share and significantly investing into our business. As we
expected, our fourth quarter’s net sales and bookings were softer
than that of prior quarters, reflecting market conditions and the
holiday season’s impact. However, our continued focus on delivering
differentiated products and services, coupled with disciplined
operational execution, allowed us to improve our operating
performance and expand our margins. Our ability to consistently
deliver strong financial performance and strengthen our financial
position enabled us to declare our second dividend increase since
we initiated a quarterly dividend two years ago.
“Looking ahead to 2012, I am pleased to report bookings have
picked up considerably since the start of the year. Although it is
much too early to predict 2012 performance, we are very well
positioned to deliver improved top and bottom line results should
this trend continue.”
Mr. Williams added, “In addition to our solid financial and
operational execution, we continue to drive our technical
capabilities by launching an enhanced RF and Microwave product as
well as adding to our consistently growing patent portfolio.
“Building upon our commitment to drive increased operational
efficiencies, we look forward to relocating our Anaheim
manufacturing facility into a single building less than one
half-mile away from our existing facility. Once completed, the new
facility will greatly improve our manufacturing footprint and allow
for enhanced operating performance and facility security. We are
busy planning the move and we expect this will commence during the
second and third quarters of this year,” Williams concluded.
Fourth Quarter 2011 Results
Net sales for the fourth quarter of 2011 were $64.5 million, a
decrease of 2.5% sequentially, and a decrease of 1.8% from the
fourth quarter of 2010. Sequentially, the net sales decrease was
due in part to the holiday season impact on activity levels.
Year-over-year, the net sales decrease reflects softer market
demand conditions.
Gross profit margin for the fourth quarter was 22.9%, a
sequential increase of 190 basis points from 21.0% in the prior
quarter and an increase of 80 basis points from 22.1% in the fourth
quarter of 2010. The sequential and the year-over-year increases in
gross margin reflect the Company’s continued focus on operational
performance and cost management.
Operating income in the fourth quarter of 2011 was $7.0 million,
or 10.9% of net sales, compared to $5.2 million, or 7.9% of net
sales, in the third quarter of 2011 and $5.1 million, or 7.8% of
net sales, in the fourth quarter of 2010.
Adjusted EBITDA for the fourth quarter of 2011 was $9.6 million,
or 14.9% of net sales, representing an increase from $8.7 million,
or 13.1% of net sales, in the third quarter of 2011 and $8.4
million, or 12.8% of net sales, in the fourth quarter of 2010.
Reconciliations of this non-GAAP measure are provided after the
GAAP unaudited condensed consolidated financial statements
below.
Net income and fully diluted earnings per share in the fourth
quarter of 2011 were $6.7 million and $0.32, respectively, up from
$5.2 million and $0.25 respectively, in the third quarter of 2011,
and $4.4 million and $0.21 respectively, in the fourth quarter of
2010.
Fourth Quarter Balance Sheet and Liquidity
As of December 31, 2011, DDi sequentially increased its cash and
cash equivalents by $2.7 million to $31.2 million, after a cash
dividend payment of $2.0 million and capital expenditures of $6.1
million.
First Quarter 2012 Dividend
The 2011 fourth quarter dividend of $0.10 per share of common
stock was paid on December 30, 2011 to shareholders of record as of
December 15, 2011. The Company also declared an increased first
quarter 2012 dividend of $0.12 per share, payable on March 30, 2012
to shareholders of record on March 15, 2012. This marks the eighth
consecutive quarterly dividend and reflects the Company’s continued
focus on returning value to its shareholders.
Anaheim Building Purchase
On February 13, 2012, the Company completed the purchase of an
existing approximately 96,000 square foot building in Anaheim,
California, for $7.5 million, into which it plans to relocate its
corporate headquarters and Anaheim manufacturing operations during
2012.
Conference Call and Webcast
A conference call with simultaneous webcast to discuss fourth
quarter and full year 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) 941-2068 (domestic) or (480) 629-9712
(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 February
29, 2012 by dialing (877) 870-5176 (domestic) or (858) 384-5517
(international) and entering the conference ID 4507038. 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. Unaudited Condensed
Consolidated Statements of Income (In thousands, except per
share amounts)
Qtr. Ended Qtr. Ended
Qtr. Ended Dec. 31, 2011 Dec. 31, 2010 Sep.
30, 2011 Net sales $ 64,534 $ 65,749 $ 66,175
Cost of goods sold 49,777 51,189
52,267 Gross profit 14,757 14,560 13,908 22.9 % 22.1
% 21.0 % Operating expenses: Sales and marketing 3,985 4,241
4,142 General and administrative 3,771 4,225 3,968 Amortization of
intangible assets 44 190 190 Restructuring and other related
charges (51 ) 800 392
Total operating expenses 7,749 9,456
8,692 Operating income 7,008 5,104 5,216
Interest and other expense, net 207 658
110 Income before income taxes 6,801
4,446 5,106 Income tax expense (benefit) 64
6 (46 ) Net income $ 6,737 $
4,440 $ 5,152 Net income per share: Basic
$0.33 $0.22 $0.25 Diluted $0.32 $0.21 $0.25 Dividends declared per
share: $0.22 $0.10 $0.10 Weighted-average shares used in per share
computations: Basic 20,412 20,072 20,317 Diluted 20,895 21,101
20,845
DDi Corp. Unaudited Condensed
Consolidated Statements of Income (In thousands, except per
share amounts)
Year Ended
% of Net Year Ended % of Net Dec. 31,
2011 Sales Dec. 31, 2010 Sales Net
sales $ 263,392 $ 267,784 Cost of goods sold 206,132
208,385 Gross profit 57,260 21.7 % 59,399 22.2 %
Operating expenses: Sales and marketing 17,049 6.5 % 17,372
6.5 % General and administrative 15,544 5.9 % 16,688 6.2 %
Amortization of intangible assets 614 0.2 % 760 0.3 % Restructuring
and other related charges 964 0.4 % 1,138 0.4 %
Total operating expenses 34,171 13.0 % 35,958
13.4 % Operating income 23,089 8.8 % 23,441 8.8 %
Interest and other expense, net 1,062 0.4 % 1,910 0.7
% Income before income taxes 22,027 8.4 % 21,531 8.0 %
Income tax expense 182 0.1 % 796 0.3 %
Net income $ 21,845 8.3 % $ 20,735 7.7 % Net income per
share: Basic $1.08 $1.04 Diluted $1.04 $1.01 Dividends declared per
share: $0.52 $0.22 Weighted-average shares used in per share
computations: Basic 20,315 19,920 Diluted 20,984 20,573
DDi Corp. Unaudited Condensed Consolidated Balance
Sheets (In thousands)
Dec. 31, 2011
Dec. 31, 2010 Assets Current assets: Cash and
cash equivalents $ 31,181 $ 28,347 Accounts receivable, net 39,747
40,821 Inventories 23,611 20,970 Prepaid expenses and other
2,054 1,889 Total current assets 96,593 92,027
Property, plant and equipment, net 46,904 42,605 Intangible assets,
net
―
614 Goodwill 3,664 3,664 Other assets 808 954
Total assets $ 147,969 $ 139,864
Liabilities and Stockholders' Equity Current
liabilities: Accounts payable $ 21,739 $ 25,137 Accrued
expenses and other current liabilities 12,662 14,113 Dividend
payable 2,460
―
Current portion of long term debt 1,076 1,751
Total current liabilities 37,937 41,001 Long term debt 8,589
9,704 Other long-term liabilities 568 527
Total liabilities 47,094 51,232
Stockholders' equity: Common stock, additional
paid-in-capital, and treasury stock 219,816 228,881 Accumulated
other comprehensive income 526 1,063 Accumulated deficit
(119,467 ) (141,312 ) Total stockholders' equity
100,875 88,632 Total liabilities and
stockholders' equity $ 147,969 $ 139,864
DDi Corp. Unaudited Schedule of Non-GAAP
Reconciliations (In thousands)
Qtr. Ended Qtr. Ended Qtr. Ended Dec. 31,
2011 Dec. 31, 2010 Sep. 30, 2011 Adjusted EBITDA:
Net income $ 6,737 $ 4,440 $ 5,152 Add back: Interest and other
expense, net 207 658 110 Income tax expense 64 6 (46 ) Depreciation
2,390 2,039 2,541 Amortization of intangible assets 44 190 190
Non-cash compensation 229 268 355 Restructuring and other related
charges (51 ) 800 392 Adjusted EBITDA $
9,620 $ 8,401 $ 8,694
Year Ended
Year Ended Dec. 31, 2011 Dec. 31, 2010
Adjusted EBITDA: Net income $ 21,845 $ 20,735 Add back: Interest
and other expense, net 1,062 1,910 Income tax expense 182 796
Depreciation 9,411 8,539 Amortization of intangible assets 614 760
Non-cash compensation 1,159 1,309 Non-recurring Coretec acquisition
costs
―
851 Restructuring and other related charges 964
1,138
Adjusted EBITDA
$ 35,237 $ 36,038
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