DDi Corporation, a leading provider of time-critical, technologically advanced electronic interconnect design, engineering and manufacturing services, today reported financial results for the second quarter ended June 30, 2010.

Second Quarter 2010 Highlights:

• Net sales of $68.4 million increased 6% sequentially and 30% over pro-forma second quarter 2009 revenues, which include Coretec net sales;
• Gross margin expanded 77 basis points sequentially to 22.4%;
• Adjusted EBITDA grew to $9.8 million, a 16% sequential increase;
• Net income increased 58% sequentially to $6.0 million, or 29 cents per share;
• 2010 bookings for new NextGen-SMV® technology surpassed $1 million; and
• Declared first quarterly dividend of $0.06 per share.

Mikel Williams, President and Chief Executive Officer of DDi Corporation, stated, "We are extremely pleased to achieve another quarter of strong operating and financial performance. Through the ongoing execution of our business strategy, we have continued to build upon our financial position having delivered four consecutive quarters of increasing sales, expanding margins and controlled operating expenses. Our solid performance has been driven by robust customer demand for our products and services coupled with strong operational execution of our business plan. Highlighting our continued focus on developing leading electronic interconnect solutions, during the second quarter we continued to introduce cutting-edge capabilities that underpin DDi's position in the market place. As an example, we passed the $1 million mark in customer orders in 2010 for our new and disruptive NextGen-SMV® technology, and we look forward to further extending this enabling technology to our customers going forward."

Williams continued, "Importantly, with second quarter bookings of approximately $69.7 million and indications of continued solid demand in the marketplace, we are optimistic about our prospects for the second half of 2010. Based upon our performance to-date, we are increasing our 2010 estimate for net sales growth, and now expect net sales growth of 20% to 25% over 2009 pro-forma net sales of $220 million."

Second Quarter Results

Net sales for the second quarter of 2010 were $68.4 million, an 84% increase over the prior year quarter and a 5.7% increase sequentially. The sequential increase reflects continued strength in the end-market, particularly within the company's commercial segment, as well as continued progress in targeted vertical markets, such as the military/aerospace sector.

Gross margin for the second quarter of 2010 increased 443 basis points year-over-year to 22.4% of net sales from 18.0% of net sales in the prior year period. Sequentially, gross margin increased 77 basis points from 21.6% of net sales. The sequential and year-over-year improvement in gross margin was primarily driven by improved operational efficiencies derived from the net sales increase and operating expense controls. This was partially offset by a decline in gross margin for the company's Toronto based facilities, resulting from the facilities' ongoing integration and consolidation efforts.

Operating income in the second quarter of 2010 was $6.8 million, or 9.9% of net sales, compared to operating income of $0.8 million, or 2.2% of net sales, in the prior year period. Operating income in the first quarter of 2010 was $4.9 million, or 7.5% of net sales.

Adjusted EBITDA for the second quarter of 2010 was $9.8 million, or 14.3% of net sales, compared to $3.6 million, or 9.6% of net sales, in the prior year period. Adjusted EBITDA for the first quarter of 2010 was $8.4 million, or 13.0% of net sales. Reconciliations of this non-GAAP measure are provided after the GAAP condensed consolidated financial statements below and exclude non-recurring costs associated with the Coretec acquisition, including facility closure, severance and professional fees.