DDi Corp. Investor Presentation. March 2010

Transcription

1 DDi Corp. Investor Presentation March 2010

2 Safe Harbor & Non-GAAP Financial Measures This presentation may contain information about future expectations, plans and prospects that may constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of Actual results or developments may differ materially from those projected or implied in the forward-looking statements. More information about the risks and challenges faced by DDi Corp. is contained in the Securities and Exchange Commission filings made by DDi Corp. DDi Corp. specifically disclaims any obligation to update or revise any forward-looking statements whether as a result of new information, future developments or otherwise. This presentation includes non-gaap financial measures* as defined in Regulation G of the Securities Exchange Act of Management believes that these non-gaap financial measures are important to understanding the Company s business because they reflect financial performance that is unencumbered by debt service, non-cash charges and non-recurring or unusual items. These adjusted financial measures are commonly used in the Company s industry. However, these non-gaap measures should not be considered as alternatives to cash flow from operating activities, as a measure of liquidity or as alternatives to net income as a measure of operating results in accordance with generally accepted accounting principles. The Company has provided a reconciliation non-gaap measures to GAAP financial information in the Schedule of Non-GAAP reconciliations available by visiting DDI's web site at ww.ddiglobal.com/investor. *Includes adjusted EBITDA, adjusted Gross Profit, adjusted Operating Income, and adjusted SG&A 2

3 DDi Overview North American leader for Printed Circuit Board ( PCB ) engineering and manufacturing services Coretec acquisition completed on December 31, 2009 Customer base of ~1,400 OEM s and contract manufacturers 7 PCB high mix/low-mid volume (HMLV) facilities Net Sales By Market Segment 2009 Revenues $158 million Net Sales By Region 3

4 DDi Corporate History Corporate Developments & Acquisitions Details, Inc. founded in Anaheim, CA Dynamic Details, Inc. (DDi) Formed Acquired Automata (Virginia) Acquired Olympic Circuits (Toronto) DDi reorganization: debt converted to equity Reorganization completed Disposed of noncore Assembly Business Acquired Sovereign Circuits (Ohio) Acquired Coretec, Inc. (Toronto, Cleveland, Denver) Installed CO2/Yag Laser (0.006 Via) Technology Leadership Pioneered Stacked Micro Vias (SMV TM ) technology Filed Next Generation SMV TM patent Filed FLAT- WRAP TM technology patent FLAT-WRAP TM offered in Anaheim and Virginia DDi Recorded patent for Next Gen Stacked Micro Via & launched product 4

5 ($ in millions) Global PCB Market Overview The global PCB market is in excess of $45 billion 2009 Global PCB Market 50 $49.8 $44.1 $46.9 $ Source: N.T. Information, Jan Source: N.T. Information, Jan 2010

6 North American PCB Market Drivers DDi is a leader in the highly fragmented $3.2 Billion Americas PCB market 6 Americas PCB market is driven by continued demand from the Computer/Semi, Military/Aero, Industrial and Communications industry segments DDi is positioned to capture this demand Computer 26% Comm. 11% Source: N.T. Information, Jan 2009 Americas PCB Market Consumer Electronic 3% Industrial / Instrument 24% Other 3% Military / Aerospace 33% Only 5 firms produce >$100 million in sales with North American facilities Rationalization among smaller PCB manufacturers has created $350mm in excess capacity Continued industry rationalization likely Estimated total market growth rate of 5% in 2010 Capacity reduced by approx $350M Fragmented Americas Market TTM DDI Samina SCI Endicott Viasystems ~ Total ~ 350 PCB firms Source: N.T. Information, July 2009 Sales >$100M $20M to $100M $10M to $20M <$10M

7 DDi Provides Interconnect Solutions DDi maintains key relationships throughout PCB supply chain Semiconductor Manufacturers Semiconductors drive PCB requirements Changing technology demands greater processing capabilities I/C drive towards smaller form factor, higher capabilities and speeds enable OEM product capabilities and PCB demands Original Equipment Manufacturers Industry reacting to rapid changes in technology Trends in electronics towards smaller, more capable devices Product life cycles shortening Contract Manufacturers Key relationships with large number of leading manufacturers Core focus on PCB compliments EMS customers Increasing technology capabilities required from PCB suppliers 7

8 Management Team Name Title Experience Prior Companies Mikel Williams CEO 30 CMG, LambdaNet, GTS, Price Waterhouse Michael Dodson CFO 25 Electro Scientific, Novellus, SpeedFam-IPEC, etelecare, Ernst & Young Jerry Barnes SVP Sales 30 TTM, Cosmotronics, Winonic, Toppan Elec. Michael Mathews SVP Operations 27 Sanmina-SCI/Hadco, Raytheon Rajesh Kumar VP, CTO 27 Allied Signal/Honeywell/Litronic Industries, KCA Diceon Jimmy Fang VP, Asia-Pacific 19 WUS Printed Circuits, Parlex, Polyclad Peter Wetselaar VP, Marketing 30 Coretec, ITL Circuits, Universal Instruments 8

9 DDi s Foundation For Growth History Realigned DDi around core PCB competency Strengthened management team Strong capital structure Technology Leader History of technology leadership, product and process innovation Key position with leading semi-conductor players Industry leading operational performance Leader in quick-turn capabilities to support OEM product development Strengthened leading position in North American PCB market with acquisition of Coretec Industry Tailwinds Improving market demand environment DDi is the last major, upscale, independent player in a consolidating market Well-positioned to build upon leading position in global PCB market 9

10 DDi Technology Leadership Delivering in-connected solutions in cutting edge technologies: Microvia Stacked MicroVia (SMV ) Deep MicroVia (DpMV ) Deep Stacked MicroVia (DpSMV ) Deep BlindVia (DpBV ) Solid Copper Through Via (ThermalVia ) FLAT-WRAP Technology Thermal Management with Stablcor NextGen-SMV Technology 10

11 DDi Technical Capabilities SMV DpMV DpSMV DpBV *ThermalVia FLAT-WRAP NextGen-SMV *HDI-Link *Sub-Link 11 * Patent Pending 4 Mil Bit vs. Human Hair

12 Coretec Acquisition Strengthens leadership position in North American PCB market Pro forma 2009 revenues of $220 million Increases demonstrated capacity to approximately $300 million Leverages complementary strategy and operational focus Adds design service offering Enhances offshore sourcing activities Increases access to South East Asian suppliers Acquired three manufacturing facilities in Toronto, Ohio and Colorado Extends scale and technical capabilities in Canada Increases presence in military/aerospace market Deepens flex and rigid-flex product capabilities Expected to yield annual operating cost savings of approximately $8.0 million Personnel, operations and facility integration efforts underway Elimination of duplicative operating expenses 12

13 Manufacturing Locations & Qualifications 7 Operating Facilities, net of Toronto integration All ISO 9001:2000 and AS9100 Registered 1 Central Service Center Distributed Sales Resources Milpitas, CA High Tech Proto & Pre-Production ISO 9001: ,000 sq ft AS 9100B MIL-PRF MIL-PRF (in process) Anaheim, CA High Tech Proto 76,000 mfg sq ft & Corp offices ISO 9001:2008 AS 9100B MIL-PRF MIL-PRF Denver, CO Mil/Aero/HDC 28,000 sq ft MIL-PRF MIL-PRF AS 9100B Nadcap Cleveland, OH Mil/Aero/Rigid Flex, Flex and Rigid 40,000 sq ft MIL-PRF MIL-PRF MIL-PRF AS 9100B Nadcap Richardson, TX Central Pre-Cam, DFM Data Center N. Jackson, OH Mil/Aero/HDC 77,000 sq ft MIL-PRF MIL-PRF MIL-PRF AS 9100B Nadcap Toronto, Canada McNicoll Standard Tech Proto 41,000 sq ft ISO 9001:2008 AS 9100B ISO Sterling, VA High Tech Proto & Pre-Production 101,000 sq ft ISO MIL-PRF MIL-PRF AS 9100B Nadcap Toronto, Canada Sheppard High Tech Proto, QTA and mid volume production 93,000 sq ft MIL-PRF MIL-PRF AS9100B ISO

14 14 North American Market Coverage

15 15 Asia & Europe Market Coverage

16 Growth Strategy Revenue Drivers Service and grow existing customer base Expand presence in existing market segments Extend into new vertical markets Extend into new high-growth markets Pursue opportunistic acquisitions Profit Drivers Leverage fixed costs over increased production levels Increase Gross Margin through improved asset utilization Continue to rationalize expense structure and control expense Realize benefits of Coretec acquisition 16

17 Financial Highlights Delivered two sequential quarters of revenue growth which is expected to continue into 2010 Adjusted net income profitable for 11 consecutives quarters, including all quarters in 2009 which proved a very challenging economic environment Strong balance sheet with $19.4 million in cash after Coretec acquisition Demonstrated solid cash flow generation capabilities representing 26 consecutive quarters of positive Adjusted EBITDA Attractive longer-term revenue and profitability drivers 17

18 Annual Net Sales 2 18 (1) 2009 Pro forma DDi and Coretec combined operations (2) Based on YTD Feb 2010 annualized bookings

19 Quarterly Income Statement ($ in millions) Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q4-09 Revenue $ 47.4 $ 51.2 $ 49.3 $ 43.0 $ 39.3 $ 37.2 $ 39.3 $ 42.2 Gross Profit $ 9.7 $ 10.4 $ 10.2 $ 8.4 $ 7.3 $ 6.7 $ 6.6 $ 8.7 Gross Margin 20.6% 20.3% 20.8% 19.6% 18.5% 18.0% 16.8% 20.5% Net Income/(Loss) 1 $ 1.6 $ 2.2 $ 2.2 $ 2.4 $ 1.1 $ 1.0 $ 0.7 $ 0.9 EBITDA 1 $ 6.0 $ 7.4 $ 7.1 $ 5.5 $ 3.6 $ 3.6 $ 3.0 $ 4.1 EBITDA Margin 12.7% 14.4% 14.3% 12.9% 9.2% 9.6% 7.7% 9.7% 1 Adjusted to exclude non-cash compenstation, restructuring, and other non-operating gains/losses See sec.gov for official financial reporting. 19

20 Strong Financial Position Balance Sheet Highlights (as of 12/31) DDi DDi Coretec Consol Cash A/R DSO Inventory PP&E Debt Net Cash / (Debt) (12.3) 5.2 Debt / EBITDA 1 0.1x 0.1x 1 Adjusted to exclude non-cash equity compenstation, restructuring, and other non-operating gains/losses 20

21 Longer-term Financial Model Demonstrated Production Capacity $300.0 mm 1 3 year growth rate 10% Annual OPEX Leverage 1 2 points EBITDA Margin 1 12 to 15% (1) Adjusted to exclude non-cash equity compensation 21

22 Operating Margin Expansion Roadmap 5% 2% 10% 3% 2009 Manufacturing Leverage Operating Expense Leverage Long-term Goal 22

23 Investment Highlights

24 Investment Highlights History of delivering market-leading, quick-turn PCB engineering and manufacturing solutions Solid track record of operating performance and cash flow generation Highly leverageable business model with demonstrated capacity for revenue and profitable growth Well-positioned in consolidating and rationalizing world-wide PCB market Coretec acquisition significantly strengthens market leading position in North America interconnect industry Strong and experienced management team 24

25 Appendix

26 Reconciliation of Non-GAAP Financial Measures Reconciliation of Non-GAAP Financial Measures ($ in millions) Q1-08 Q2-08 Q3-08 Q Q1-09 Q2-09 Q3-09 Q Operating Income/(Loss) Reconciliation: Operating Income/(Loss) $ $ $ $ (37.602) $ (31.928) $ $ $ $ $ Non-cash compensation Loss on sale of assembly business Restructuring and other related charges (0.001) (0.001) Goodwill impairment Adjusted Operating Income/(Loss) $ $ $ $ $ $ $ $ $ $ Net Income/(Loss) Reconciliation: Net Income $ $ $ $ (37.251) $ (33.439) $ $ $ $ $ Non-cash compensation Loss on sale of assembly business Restructuring and other related charges (0.001) (0.001) Goodwill impairment Income from discontinued operations Series B Perferred Stock Adjusted Net Income/(Loss) $ $ $ $ $ $ $ $ $ $ EBITDA Reconciliation: Net Income $ $ $ $ (37.251) $ (33.439) $ $ $ $ $ Interest (0.048) (0.275) (0.191) Tax (0.077) (0.183) Depreciation Amortization EBITDA $ $ $ $ (34.082) $ (15.834) $ $ $ $ $ Non-cash compensation Loss on sale of assembly business Restructuring and other related charges (0.001) (0.001) Goodwill impairment Income from discontinued operations Series B Perferred Stock Adjusted EBITDA $ $ $ $ $ $ $ $ $ $