TTM Technologies, Inc. Reports Third Quarter 2013 Results

TTM Technologies

COSTA MESA, Calif., Oct. 30, 2013 (GLOBE NEWSWIRE) -- TTM Technologies, Inc. (Nasdaq:TTMI), a major global printed circuit board (PCB) manufacturer, today reported results for the third quarter of 2013, which ended September 30, 2013.

Third Quarter 2013 Highlights

  • Net sales were $338.7 million
  • GAAP net loss attributable to stockholders was $7.7 million, or $0.09 per share
  • Non-GAAP net income attributable to stockholders was $11.6 million, or $0.14 per diluted share
  • A warranty claim of $6.0 million negatively impacted both revenue and profit and reduced EPS by $0.06 per diluted share

Third Quarter 2013 Financial Results

Net sales for the third quarter of 2013 were $338.7 million compared to $338.0 million in the second quarter of 2013 and $339.0 million in the third quarter of 2012.

GAAP operating loss for the third quarter of 2013 was $1.2 million compared to operating income of $28.3 million in the second quarter of 2013 and an operating loss of $202.7 million in the third quarter of 2012.

During the third quarter of 2013, the company recorded an additional charge of $6 million, or $0.06 per diluted share, for warranty claims associated with a specific product quality issue originally identified in the second quarter of 2013. The charge recorded in the third quarter includes the Company's best estimate of all remaining costs expected to be incurred related to this matter.

Also included in operating results for the third quarter of 2013, were charges of $14.1 million for severance and asset impairments resulting from the closure of TTM's facility in Suzhou, China (MAS). Excluding these charges, operating income would have been $13.0 million.

GAAP net loss attributable to stockholders for the third quarter of 2013 was $7.7 million, or $0.09 per share. This compares to GAAP net income attributable to stockholders of $13.1 million, or $0.16 per diluted share, in the second quarter of 2013 and a net loss of $208.3 million, or $2.54 per share, in the third quarter of 2012.

On a non-GAAP basis, net income attributable to stockholders for the third quarter of 2013 was $11.6 million, or $0.14 per diluted share. This compares to non-GAAP net income attributable to stockholders of $7.7 million, or $0.09 per diluted share, for the second quarter of 2013 and $17.3 million, or $0.21 per diluted share, for the third quarter of 2012.

Adjusted EBITDA for the third quarter of 2013 was $42.3 million, or 12.5 percent of net sales, compared to adjusted EBITDA of $39.1 million, or 11.6 percent of net sales, for the second quarter of 2013 and $44.5 million, or 13.1 percent of net sales, for the third quarter of 2012.

During the third quarter, the cash settlement was completed for the transaction in which TTM sold its controlling equity interest in the SYE plant and acquired the remaining equity interest in the DMC plant. TTM received $80 million net from this transaction.

"Our third quarter revenue and non-GAAP earnings were within our guidance range for the quarter," said Kent Alder, CEO of TTM. "We were pleased with the robust sequential increase in sales in our cellular phone and computing end markets which was driven by strong seasonal demand for our advanced technology PCBs used in smartphones and tablets."

"Offsetting some of the positive business trends we experienced during the quarter, were higher costs incurred relating to a warranty claim, which negatively impacted our operating results. As we enter the fourth quarter, we are focused on executing our revenue ramp and driving efficiencies to improve our bottom line results," concluded Mr. Alder.

Business Outlook

For the fourth quarter of 2013, TTM estimates that revenue will be in the range of $350 million to $370 million, and non-GAAP earnings attributable to stockholders in the range of $0.18 to $0.24 per diluted share.

To Access the Live Webcast/Conference Call

The Company will host a conference call and webcast to discuss the third quarter 2013 results and the fourth quarter 2013 outlook on Wednesday, October 30, 2013, at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time).

Telephone access is available by dialing domestic 1-877-941-9205 or international 1-480-629-9818. The conference call also will be webcast on TTM Technologies' website at www.ttmtech.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 Technologies' website at www.ttmtech.com.

About Our Non-GAAP Financial Measures

This release includes information about the Company's non-GAAP net income attributable to stockholders and non-GAAP earnings per share attributable to stockholders, which are non-GAAP financial measures. The Company presents non-GAAP financial information to enable investors to see the company through the eyes of management and to provide better insight into the Company's ongoing financial performance.

Management believes that the non-GAAP financial information – which add back amortization of intangibles, stock-based compensation expense, non-cash interest expense on debt, asset impairments, restructuring and other unusual or infrequent items (such as the gain realized on the SYE transaction) as well as the associated tax impact of these items – provides additional useful information to investors regarding the Company's ongoing financial condition and results of operations.

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. The Company 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.

Safe Harbor Statement

This release contains forward-looking statements that relate to future events or performance. These statements reflect the Company's current expectations, and the Company 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 company statements will not be realized. Furthermore, readers are cautioned that these statements involve risks and uncertainties, many of which are beyond the company'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, the company's dependence upon the electronics industry, contemplated significant capital expenditures and related financing requirements, the Company's dependence upon a small number of customers, the unpredictability of and potential fluctuation in future revenues and operating results and other "Risk Factors" set forth in the Company's most recent SEC filings.

About TTM

TTM Technologies, Inc. is a major global printed circuit board manufacturer, focusing on quick-turn and technologically advanced PCBs and the backplane and sub-system assembly business. TTM stands for time-to-market, representing how the Company'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.ttmtech.com.

- Tables Follow -

TTM TECHNOLOGIES, INC.
Selected Unaudited Financial Information
(In thousands, except per share data)
Third Quarter Second Quarter First Three Quarters
2013 2012 2013 2013 2012
CONSOLIDATED STATEMENTS OF OPERATIONS
Net sales $ 338,691 $ 339,011 $ 338,021 $ 1,002,104 $ 966,933
Cost of goods sold 290,252 286,695 289,564 854,478 803,448
Gross profit 48,439 52,316 48,457 147,626 163,485
Operating expenses:
Selling and marketing 8,865 8,735 9,559 27,614 26,365
General and administrative 24,293 23,735 26,141 76,992 69,323
Amortization of definite-lived intangibles 2,329 4,104 2,327 6,984 12,122
Restructuring charges 3,357 - - 3,357 -
Impairment of long-lived assets 10,782 18,082 - 10,782 18,082
Impairment of goodwill and definite-lived intangibles - 200,335 - - 200,335
Gain on sale of assets - - (17,917) (17,917) -
Total operating expenses 49,626 254,991 20,110 107,812 326,227
Operating income (loss) (1,187) (202,675) 28,347 39,814 (162,742)
Interest expense (5,848) (6,429) (5,923) (18,049) (19,226)
Loss on extinguishment of debt - (5,527) - - (5,527)
Other, net 2,692 1,117 633 4,326 2,516
Income (loss) before income taxes (4,343) (213,514) 23,057 26,091 (184,979)
Income tax (provision) benefit (3,365) 850 (9,345) (13,494) (7,802)
Net income (loss) (7,708) (212,664) 13,712 12,597 (192,781)
Net (income) loss attributable to noncontrolling interest - 4,322 (575) (2,016) 4,444
Net income (loss) attributable to stockholders $ (7,708) $ (208,342) $ 13,137 $ 10,581 $ (188,337)
Earnings (loss) per share attributable to stockholders:
Basic $ (0.09) $ (2.54) $ 0.16 $ 0.13 $ (2.30)
Diluted $ (0.09) $ (2.54) $ 0.16 $ 0.13 $ (2.30)
Weighted average common shares:
Basic 82,630 81,929 82,595 82,458 81,752
Diluted 82,630 81,929 82,975 83,025 81,752
SELECTED BALANCE SHEET DATA
September 30, 2013 December 31, 2012
Cash and cash equivalents $ 270,534 $ 285,433
Accounts and notes receivable, net 267,313 301,509
Inventories 145,109 146,012
Total current assets 718,955 765,612
Property, plant and equipment, net 806,906 833,678
Other non-current assets 67,603 77,672
Total assets $ 1,593,464 $ 1,676,962
Short-term debt, including current portion long-term debt $ 96,204 $ 30,004
Accounts payable 216,250 186,745
Total current liabilities 452,141 369,880
Debt, net of discount 436,485 527,541
Total long-term liabilities 476,498 554,252
Noncontrolling interest - 98,883
Total stockholders' equity 664,825 752,830
Total liabilities and stockholders' equity $ 1,593,464 $ 1,676,962
SUPPLEMENTAL DATA
Third Quarter Second Quarter First Three Quarters
2013 2012 2013 2013 2012
Gross margin 14.3% 15.4% 14.3% 14.7% 16.9%
Operating margin (0.4) (59.8) 8.4 4.0 (16.8)
End Market Breakdown1:
Third Quarter Second Quarter
2013 2012 2013
Aerospace/Defense 16% 16% 16%
Cellular Phone 21 18 17
Computing/Storage/Peripherals 19 21 16
Medical/Industrial/Instrumentation 9 9 8
Networking/Communications 30 29 38
Other 5 7 5
Stock-based Compensation:
Third Quarter Second Quarter
2013 2012 2013
Amount included in:
Cost of goods sold $ 252 $ 253 $ 254
Selling and marketing 304 115 335
General and administrative 1,275 2,089 1,994
Total stock-based compensation expense $ 1,831 $ 2,457 $ 2,583
Operating Segment Data:
Third Quarter Second Quarter
Net sales: 2013 2012 2013
Asia Pacific $ 206,460 $ 215,746 $ 209,631
North America 132,608 123,861 129,669
Total sales 339,068 339,607 339,300
Inter-segment sales (377) (596) (1,279)
Total net sales $ 338,691 $ 339,011 $ 338,021
Operating segment income:
Asia Pacific $ (7,313) $ (206,806) $ 23,642
North America 8,455 8,235 7,032
Total operating segment income (loss) 1,142 (198,571) 30,674
Amortization of definite-lived intangibles (2,329) (4,104) (2,327)
Total operating income (loss) (1,187) (202,675) 28,347
Total other expense (3,156) (10,839) (5,290)
Income (loss) before income taxes $ (4,343) $ (213,514) $ 23,057
RECONCILIATIONS2
Third Quarter Second Quarter First Three Quarters
2013 2012 2013 2013 2012
Non-GAAP gross profit reconciliation3:
GAAP gross profit $ 48,439 $ 52,316 $ 48,457 $ 147,626 $ 163,485
Add back item:
Amortization of definite-lived intangibles - - - - 47
Stock-based compensation 252 253 254 809 829
Non-GAAP gross profit $ 48,691 $ 52,569 $ 48,711 $ 148,435 $ 164,361
Non-GAAP gross margin 14.4% 15.5% 14.4% 14.8% 17.0%
Non-GAAP operating income reconciliation4:
GAAP operating income (loss) $ (1,187) $ (202,675) $ 28,347 $ 39,814 $ (162,742)
Add back items:
Amortization of definite-lived intangibles 2,329 4,104 2,327 6,984 12,169
Stock-based compensation 1,831 2,457 2,583 6,744 7,445
Gain on sale of assets - - (17,917) (17,917) -
Impairments and restructuring charges 14,139 218,417 - 14,139 218,417
Non-GAAP operating income $ 17,112 $ 22,303 $ 15,340 $ 49,764 $ 75,289
Non-GAAP operating margin 5.1% 6.6% 4.5% 5.0% 7.8%
Non-GAAP net income and EPS attributable to stockholders reconciliation5:
GAAP net income (loss) attributable to stockholders $ (7,708) $ (208,342) $ 13,137 $ 10,581 $ (188,337)
Add back items:
Amortization of definite-lived intangibles 2,329 4,104 2,327 6,984 12,169
Stock-based compensation 1,831 2,457 2,583 6,744 7,445
Non-cash interest expense 2,134 1,977 2,094 6,283 5,877
Gain on sale of assets - - (17,917) (17,917) -
Impairments, restructuring and other charges 14,139 223,944 - 14,139 223,944
Income taxes6 (1,080) (6,799) 5,480 2,320 (10,652)
Non-GAAP net income attributable to stockholders $ 11,645 $ 17,341 $ 7,704 $ 29,134 $ 50,446
Non-GAAP earnings per diluted share attributable to stockholders $ 0.14 $ 0.21 $ 0.09 $ 0.35 $ 0.61
Adjusted EBITDA reconciliation7:
GAAP net income (loss) $ (7,708) $ (212,664) $ 13,712 $ 12,597 $ (192,781)
Add back items:
Income tax provision (benefit) 3,365 (850) 9,345 13,494 7,802
Interest expense 5,848 6,429 5,923 18,049 19,226
Amortization of definite-lived intangibles 2,329 4,104 2,327 6,984 12,169
Depreciation expense 22,527 21,046 23,118 68,782 60,324
Stock-based compensation 1,831 2,457 2,583 6,744 7,445
Gain on sale of assets - - (17,917) (17,917) -
Impairments, restructuring and other charges 14,139 223,944 - 14,139 223,944
Adjusted EBITDA $ 42,331 $ 44,466 $ 39,091 $ 122,872 $ 138,129
Adjusted EBITDA margin 12.5% 13.1% 11.6% 12.3% 14.3%
1 Certain reclassifications of prior year end market percentages have been made to conform to the current year presentation. Beginning in the first quarter of 2013, we reclassified substrate PCBs, which were included in the Other end market, into the end markets that the substrate PCBs are sold into - predominantly Cellular Phone.
2 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 statements of operations.
3 Non-GAAP gross profit and gross margin measures exclude amortization of intangibles and stock-based compensation expense.
4 Non-GAAP operating income and operating margin measures exclude amortization of intangibles, stock-based compensation expense, gain on sale of assets, and restructuring and impairment charges.
5 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, and restructuring and impairment 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.
6 Previously, the adjustment reported represented the tax effect of other non-GAAP adjustments. We have changed the definition such that the amount now represents the adjustment necessary to remove the effect of discrete tax items as well as the tax effect of the other non-GAAP adjustments shown in the table. All prior periods have been changed to conform to this methodology.
7 Adjusted EBITDA is defined as earnings before interest expense, income taxes, depreciation, amortization of intangibles, stock-based compensation expense, gain on sale of assets, restructuring and impairment 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.

CONTACT: Todd Schull, CFO 714-327-3000

Source:TTM Technologies