TTM Technologies, Inc. Reports Fiscal Third Quarter 2017 Results

Revenues and Operating Profits Exceed Expectations


COSTA MESA, Calif., Nov. 01, 2017 (GLOBE NEWSWIRE) -- TTM Technologies, Inc. (NASDAQ:TTMI), a leading global printed circuit board (“PCB”) manufacturer, today reported results for the third quarter of fiscal 2017, which ended October 2nd, 2017. 

Third Quarter 2017 Highlights

  • Net sales were $666.8 million
  • GAAP net income attributable to stockholders was $21.5 million, or $0.19 per diluted share
  • Non-GAAP net income attributable to stockholders was $33.4 million, or $0.32 per diluted share
  • Excluding a $7.4 million (non-cash) foreign exchange loss, non-GAAP earnings per diluted share were $0.38
  • Adjusted EBITDA was $85.7 million

Third Quarter 2017 Financial Results
Net sales for the third quarter of 2017 were $666.8 million, compared to $641.7 million in the third quarter of 2016 and $627.2 million in the second quarter of 2017.

GAAP operating income for the third quarter of 2017 was $44.1 million, compared to $50.2 million in the third quarter of 2016 and $45.1 million in the second quarter of 2017. 

GAAP net income attributable to stockholders for the third quarter of 2017 was $21.5 million, or $0.19 per diluted share.  This compares to a GAAP net income attributable to stockholders of $25.6 million, or $0.23 per diluted share, in the third quarter of 2016 and a GAAP net income of $20.6 million, or $0.18 per diluted share, in the second quarter of 2017. 

On a non-GAAP basis, net income attributable to stockholders for the third quarter of 2017 was $33.4 million, or $0.32 per diluted share. This compares to non-GAAP net income attributable to stockholders of $40.1 million, or $0.39 per diluted share, for the third quarter of 2016 and $33.3 million, or $0.31 per diluted share, in the second quarter of 2017.

Adjusted EBITDA for the third quarter of 2017 was $85.7 million, or 12.9 percent of net sales, compared to adjusted EBITDA of $102.2 million, or 15.9 percent of net sales, for the third quarter of 2016 and $85.5 million, or 13.6 percent of net sales, for the second quarter of 2017.

“TTM delivered the fourth consecutive quarter of year on year organic growth with revenues and operating performance that exceeded our expectations,” said Tom Edman, CEO of TTM.  “On a year over year basis, the fastest growth in the third quarter came from the computing, automotive and the aerospace and defense end markets.  Absent a foreign exchange loss due to the weakening U.S. dollar, non-GAAP EPS was above the high end of guidance.” 

Business Outlook
For the fourth quarter of 2017, TTM estimates that revenue will be in the range of $700 million to $750 million, and non-GAAP net income attributable to stockholders will be in the range of $0.49 to $0.55 per diluted share. 

To Access the Live Webcast/Conference Call
TTM will host a conference call and webcast to discuss third quarter 2017 results and fourth quarter 2017 outlook on Wednesday, November 1st, 2017, at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time).  The conference call will include forward-looking statements.

Telephone access is available by dialing domestic 877-830-2636 or international 785-424-1802 (ID 9611659).  The conference call also will be webcast on TTM’s website at www.ttm.com.

To Access a Replay of the Webcast
The replay of the webcast will remain accessible for one week following the live event on TTM’s website at www.ttm.com.

About TTM
TTM Technologies, Inc. is a leading global printed circuit board manufacturer, focusing on quick-turn and volume production of technologically advanced PCBs, backplane assemblies and electro-mechanical solutions. TTM stands for time-to-market, representing how TTM's time-critical, one-stop manufacturing services enable customers to shorten the time required to develop new products and bring them to market. Additional information can be found at www.ttm.com.

Forward-Looking Statements
This release contains forward-looking statements that relate to future events or performance. TTM cautions you that such statements are simply predictions and actual events or results may differ materially. These statements reflect TTM's current expectations, and TTM does not undertake to update or revise these forward looking statements, even if experience or future changes make it clear that any projected results expressed or implied in this or other TTM statements will not be realized. Further, these statements involve risks and uncertainties, many of which are beyond TTM's control, which could cause actual results to differ materially from the forward-looking statements. These risks and uncertainties include, but are not limited to, general market and economic conditions, including interest rates, currency exchange rates and consumer spending, demand for TTM's products, market pressures on prices of TTM's products, warranty claims, changes in product mix, contemplated significant capital expenditures and related financing requirements, TTM's dependence upon a small number of customers and other factors set forth in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's public reports filed with the SEC.

About Our Non-GAAP Financial Measures
This release includes information about TTM’s adjusted EBITDA, non-GAAP net income and non-GAAP earnings per share, all of which are non-GAAP financial measures. TTM presents non-GAAP financial information to enable investors to see TTM through the eyes of management and to provide better insight into TTM’s ongoing financial performance. 

A material limitation associated with the use of the above non-GAAP financial measures is that they have no standardized measurement prescribed by GAAP and may not be comparable to similar non-GAAP financial measures used by other companies.  TTM compensates for these limitations by providing full disclosure of each non-GAAP financial measure and reconciliation to the most directly comparable GAAP financial measure.  However, the non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.

With respect to the Company’s outlook for non-GAAP net income attributable to stockholders per diluted share, we are unable to predict with reasonable certainty or without unreasonable effort certain items that may affect such measure calculated and presented in accordance with GAAP. Our expected non-GAAP net income attributable to stockholders per diluted share excludes primarily the future impact of restructuring actions, impairment charges, unusual gains and losses, and tax adjustments. These reconciling items are highly variable and difficult to predict due to various factors outside of management’s control and could have a material impact on our future period net income attributable to stockholders per diluted share calculated and presented in accordance with GAAP.  Accordingly, a reconciliation of non-GAAP net income attributable to stockholders per diluted share to such measure calculated and presented in accordance with GAAP is not available without unreasonable effort and has not been provided.

Contact:
Sameer Desai,
Senior Director, Corporate
Development & Investor Relations
Sameer.desai@ttmtech.com
714-327-3050

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TTM TECHNOLOGIES, INC. 
Selected Unaudited Financial Information 
(In thousands, except per share data) 
                
                
      Third Quarter Second Quarter First Three Quarters 
       2017   2016   2017   2017   2016  
                
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS           
                
 Net sales  $  666,814  $  641,720  $  627,182  $  1,919,243  $  1,826,825  
 Cost of goods sold    569,980     532,158     531,315     1,621,523     1,536,055  
                
 Gross profit    96,834     109,562     95,867     297,720     290,770  
                
 Operating expenses:           
  Selling and marketing    16,269     15,643     15,851     48,775     49,518  
  General and administrative    30,018     35,641     29,885     90,725     109,721  
  Amortization of definite-lived intangibles    5,905     5,949     5,910     17,727     17,845  
  Restructuring charges    100     2,103     416     1,125     8,005  
  Impairment of long-lived assets    -      -      -      -      3,346  
  (Gain)/loss on sale of assets    452     -      (1,251)    (2,348)    (1,472) 
   Total operating expenses    52,744     59,336     50,811     156,004     186,963  
                
 Operating income    44,090     50,226     45,056     141,716     103,807  
                
 Interest expense    (13,598)    (18,873)    (12,922)    (40,116)    (60,741) 
 Loss on extinguishment of debt    (768)    -      (1)    (769)    -   
 Other, net     (6,984)    3,930     (5,824)    (14,518)    8,330  
                
 Income before income taxes    22,740     35,283     26,309     86,313     51,396  
 Income tax provision    (1,205)    (9,513)    (5,558)    (10,902)    (14,011) 
                
 Net income (loss) $  21,535  $  25,770  $  20,751  $  75,411  $  37,385  
                
 Net income attributable to noncontrolling interest    (82)    (188)    (160)    (408)    (519) 
 Net income (loss) attributable to stockholders $  21,453  $  25,582  $  20,591  $  75,003  $  36,866  
                
 Earnings (loss) per share attributable to stockholders:           
  Basic  $  0.21  $  0.26  $  0.20  $  0.74  $  0.37  
  Diluted  $  0.19  $  0.23  $  0.18  $  0.65  $  0.36  
                
 Weighted-average shares used in computing per share amounts:           
  Basic     101,814     100,245     101,756     101,501     100,004  
  Diluted     131,596     127,645     133,224     131,914     101,094  
                
                
 Reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share:       
                
 Net income attributable to stockholders $  21,453  $  25,582  $  20,591  $  75,003    
  Add back items: interest expense, net of tax    3,469     3,321     3,432     10,296    
 Adjusted net income attributable to stockholders $  24,922  $  28,903  $  24,023  $  85,299    
 Weighted-average shares outstanding    101,814     100,245     101,756     101,501    
 Dilutive effect of convertible debt    25,939     25,940     25,940     25,939    
 Dilutive effect of warrants    2,151       3,924     2,753    
 Dilutive effect of performance-based stock units, restricted stock units & stock options    1,692     1,460     1,604     1,721    
 Diluted shares    131,596     127,645     133,224     131,914    
 Earnings per share attributable to stockholders:           
  Basic  $  0.21  $  0.26  $  0.20  $  0.74    
  Diluted  $  0.19  $  0.23  $  0.18  $  0.65    
                
                
SELECTED BALANCE SHEET DATA            
      October 2, 2017 January 2, 2017       
 Cash and cash equivalents, including restricted cash $  301,934  $  256,277        
 Accounts and notes receivable, net    475,056     432,788        
 Inventories     295,279     269,212        
 Total current assets    1,110,961     1,012,841        
 Property, plant and equipment, net    1,052,779     966,638        
 Other non-current assets    510,204     520,597        
 Total assets    2,673,944     2,500,076        
                
 Short-term debt, including current portion of long-term debt $  4,184  $  110,652        
 Accounts payable    422,549     371,610        
 Total current liabilities    672,783     689,065        
 Debt, net of discount    974,161     909,030        
 Total long-term liabilities    1,048,614     981,886        
 Total equity    952,547     829,125        
 Total liabilities and equity    2,673,944     2,500,076        
                
SUPPLEMENTAL DATA           
      Third Quarter Second Quarter First Three Quarters 
       2017   2016   2017   2017   2016  
 Gross margin  14.5%  17.1%  15.3%  15.5%  15.9% 
 Operating margin  6.6%  7.8%  7.2%  7.4%  5.7% 
                
 End Market Breakdown:           
      Third Quarter Second Quarter     
       2017   2016   2017      
                
  Aerospace/Defense  16%  15%  17%     
  Automotive  20%  19%  20%     
  Cellular Phone  17%  17%  13%     
  Computing/Storage/Peripherals  14%  12%  14%     
  Medical/Industrial/Instrumentation  14%  14%  15%     
  Networking/Communications  17%  21%  20%     
  Other   2%  2%  1%     
                
 Stock-based Compensation:           
      Third Quarter Second Quarter     
       2017   2016   2017      
  Amount included in:           
   Cost of goods sold $  606  $  412  $  639      
   Selling and marketing $  369     268     386      
   General and administrative    3,703     2,119     3,975      
   Total stock-based compensation expense $  4,678  $  2,799  $  5,000      
                
                
 Operating Segment Data:           
      Third Quarter Second Quarter     
   Net sales:   2017   2016   2017      
   PCB   $  609,742  $  598,656  $  576,566      
   E-M Solutions     60,620     46,246     52,898      
   Corporate     -       -       -        
    Total sales     670,362     644,902     629,464      
   Inter-segment sales     (3,548)    (3,182)    (2,282)     
    Total net sales  $  666,814   $  641,720   $  627,182       
                
   Operating segment income:            
   PCB   $  70,443  $  75,501  $  69,435      
   E-M Solutions     2,870     1,421     2,689      
   Corporate     (23,318)    (20,747)    (21,158)     
    Total operating segment income     49,995     56,175     50,966      
   Amortization of definite-lived intangibles     (5,905)    (5,949)    (5,910)     
    Total operating income     44,090     50,226     45,056      
   Total other expense     (21,350)    (14,943)    (18,747)     
   Income before income taxes  $  22,740   $  35,283   $  26,309       
                
RECONCILIATIONS1           
      Third Quarter Second Quarter First Three Quarters 
       2017   2016   2017   2017   2016  
 Non-GAAP gross profit reconciliation2:           
  GAAP gross profit $  96,834  $  109,562  $  95,867  $  297,720  $  290,770  
  Add back item:           
   Stock-based compensation    606     412     639     1,639     1,161  
  Non-GAAP gross profit $  97,440  $  109,974  $  96,506  $  299,359  $  291,931  
  Non-GAAP gross margin  14.6%  17.1%  15.4%  15.6%  16.0% 
                
 Non-GAAP operating income reconciliation3:           
  GAAP operating income $  44,090  $  50,226  $  45,056  $  141,716  $  103,807  
  Add back items:           
   Amortization of definite-lived intangibles    5,905     5,949     5,910     17,727     17,845  
   Stock-based compensation    4,678     2,799     5,000     13,306     7,890  
   (Gain)/loss on sale of assets    452     -      (1,251)    (2,348)    (1,472) 
   Impairments, restructuring, acquisition-related, and other charges    100     2,300     416     1,225     12,844  
  Non-GAAP operating income $  55,225  $  61,274  $  55,131  $  171,626  $  140,914  
  Non-GAAP operating margin  8.3%  9.5%  8.8%  8.9%  7.7% 
                
 Non-GAAP net income and EPS attributable to stockholders reconciliation4:           
  GAAP net income (loss) attributable to stockholders $  21,453  $  25,582  $  20,591  $  75,003  $  36,866  
  Add back items:           
   Amortization of definite-lived intangibles    5,905     5,949     5,910     17,727     17,845  
   Stock-based compensation    4,678     2,799     5,000     13,306     7,890  
   Non-cash interest expense    2,699     4,721     2,726     8,052     16,483  
   (Gain)/loss on sale of assets    452     -      (1,251)    (2,348)    (1,472) 
   Loss on extinguishment of debt    768     -      1     769     -   
   Impairments, restructuring, acquisition-related, and other charges    100     2,300     416     1,225     12,844  
   Income taxes    (2,643)    (1,208)    (119)    (7,855)    (8,036) 
  Non-GAAP net income attributable to stockholders $  33,412  $  40,143  $  33,274  $  105,879  $  82,420  
  Non-GAAP earnings per diluted share attributable to stockholders $  0.32  $  0.39  $  0.31  $  1.00  $  0.82  
                
 Non-GAAP diluted number of shares5:           
  Diluted shares    131,596     127,645     133,224     131,914     101,094  
  Dilutive effect of convertible debt    (25,939)    (25,940)    (25,940)    (25,939)    -  
  Non-GAAP diluted number of shares    105,657     101,705     107,284     105,975     101,094  
                
 Adjusted EBITDA reconciliation6:           
  GAAP net income (loss) $  21,535  $  25,770  $  20,751  $  75,411  $  37,385  
  Add back items:           
   Income tax provision (benefit)    1,205     9,513     5,558     10,902     14,011  
   Interest expense    13,598     18,873     12,922     40,116     60,741  
   Amortization of definite-lived intangibles    5,905     5,949     5,910     17,727     17,845  
   Depreciation expense    37,496     37,006     36,146     109,719     117,690  
   Stock-based compensation    4,678     2,799     5,000     13,306     7,890  
   (Gain)/loss on sale of assets    452     -      (1,251)    (2,348)    (1,472) 
   Loss on extinguishment of debt    768     -      1     769     -   
   Impairments, restructuring, acquisition-related, and other charges    100     2,300     416     1,225     12,844  
  Adjusted EBITDA $  85,737  $  102,210  $  85,453  $  266,827  $  266,934  
  Adjusted EBITDA margin  12.9%  15.9%  13.6%  13.9%  14.6% 
                
 Free cash flow reconciliation:           
  Operating cash flow    71,366     102,737     59,114     180,064     200,686  
  Capital expenditures, net    (22,877)    (25,552)    (45,626)    (91,881)    (60,997) 
  Free cash flow $  48,489  $  77,185  $  13,488  $  88,183  $  139,689  
                
 1 This information provides a reconciliation of non-GAAP gross profit, non-GAAP operating income, non-GAAP net income attributable to stockholders, non-GAAP EPS attributable to stockholders, and adjusted EBITDA to the financial information in our consolidated condensed statements of operations. 
                
 2 Non-GAAP gross profit and gross margin measures exclude stock-based compensation expense. 
                
 3 Non-GAAP operating income and operating margin measures exclude amortization of intangibles, stock-based compensation expense, gain on sale of assets, acquisition-related costs, asset impairments, restructuring and other charges. 
                
 4 This information provides non-GAAP net income attributable to stockholders and non-GAAP EPS attributable to stockholders, which are non-GAAP financial measures. Management believes that both measures -- which add back amortization of intangibles, stock-based compensation expense, non-cash interest expense on debt (before consideration of capitalized interest), gain on sale of assets, acquisition-related costs, asset impairments, restructuring and other charges as well as the associated tax impact of these charges and discrete tax items -- provide additional useful information to investors regarding the Company's ongoing financial condition and results of operations. 
                
 5 Non-GAAP diluted number of shares used in computing non-GAAP earnings per share attributable to stockholders excludes the dilutive effect of convertible debt. 
                
 6 Adjusted EBITDA is defined as earnings before interest expense, income taxes, depreciation, amortization of intangibles, stock-based compensation expense, gain on sale of assets, acquisition-related costs, asset impairments, restructuring and other charges. We present adjusted EBITDA to enhance the understanding of our operating results, and it is a key measure we use to evaluate our operations.  In addition, we provide our adjusted EBITDA because we believe that investors and securities analysts will find adjusted EBITDA to be a useful measure for evaluating our operating performance and comparing our operating performance with that of similar companies that have different capital structures and for evaluating our ability to meet our future debt service, capital expenditures, and working capital requirements.  However, adjusted EBITDA should not be considered as an alternative to cash flows from operating activities as a measure of liquidity or as an alternative to net income as a measure of operating results in accordance with accounting principles generally accepted in the United States of America.