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TTM Technologies, Inc. Reports Second Quarter 2016 Results

COSTA MESA, Calif., July 27, 2016 (GLOBE NEWSWIRE) -- TTM Technologies, Inc. (Nasdaq:TTMI), a major global printed circuit board (“PCB”) manufacturer, today reported results for the second quarter 2016, which ended June 27, 2016. Our results include the contribution from the Viasystems Group, Inc. ("Viasystems") acquisition, which was completed on May 31, 2015.

Second Quarter 2016 Highlights

  • Net sales were $601.8 million
  • GAAP net income attributable to stockholders was $18.5 million, or $0.17 per diluted share
  • Non-GAAP net income attributable to stockholders was $28.4 million, or $0.28 per diluted share
  • Adjusted EBITDA was $90.2 million
  • Debt repayment of $30 million

Second Quarter 2016 Financial Results
Net sales for the second quarter of 2016 were $601.8 million, compared to $445.4 million in the second quarter of 2015 and $583.3 million in the first quarter of 2016.

GAAP operating income for the second quarter of 2016 was $34.7 million, compared to an operating loss of $7.1 million in the second quarter of 2015 and operating income of $18.9 million in the first quarter of 2016.

GAAP net income attributable to stockholders for the second quarter of 2016 was $18.5 million, or $0.17 per diluted share. This compares to a GAAP net loss attributable to stockholders of $36.6 million, or $0.41 per share, in the second quarter of 2015 and a GAAP net loss of $7.3 million, or $0.07 per share, in the first quarter of 2016.

On a non-GAAP basis, net income attributable to stockholders for the second quarter of 2016 was $28.4 million, or $0.28 per diluted share. This compares to non-GAAP net income of $14.9 million, or $0.17 per diluted share, for the second quarter of 2015 and $13.9 million, or $0.14 per diluted share, in the first quarter of 2016.

Adjusted EBITDA for the second quarter of 2016 was $90.2 million, or 15 percent of net sales, compared to adjusted EBITDA of $59.7 million, or 13.4 percent of net sales, for the second quarter of 2015 and $74.5 million, or 12.8 percent of net sales, for the first quarter of 2016.

“Our second quarter results reflect continued year on year improvements in revenue and earnings as sales to our customer base in diversified end markets have dampened historical volatility,” said Tom Edman, CEO of TTM. “Strong operational execution across all of our business units drove non-GAAP earnings well above the high end of our guidance. A rebound in the cellular and communications end markets more than offset modest declines in the automotive and computing end markets, and our aerospace and defense end market hit a quarterly record in revenues.”

Business Outlook
For the third quarter of 2016, TTM estimates that revenue will be in the range of $620 million to $660 million, and non-GAAP net income will be in the range of $0.29 to $0.35 per diluted share.

To Access the Live Webcast/Conference Call
TTM will host a conference call and webcast to discuss second quarter 2016 results and third quarter 2016 outlook on Wednesday, July 27, 2016, at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time). The conference call may include forward-looking statements.

Telephone access is available by dialing domestic 888-417-8516 or international 719-325-2491 (ID 7624574). 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 major global printed circuit board manufacturer, focusing on quick-turn and 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, the successful integration of Viasystems, 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.

- Tables Follow -

TTM TECHNOLOGIES, INC.
Selected Unaudited Financial Information
(In thousands, except per share data)
Second Quarter First Quarter First Two Quarters
2016 2015 2016 2016 2015
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
Net sales $601,847 $445,445 $583,258 $1,185,105 $774,609
Cost of goods sold 504,202 384,255 499,695 1,003,897 661,860
Gross profit 97,645 61,190 83,563 181,208 112,749
Operating expenses:
Selling and marketing 16,569 12,301 17,306 33,875 21,756
General and administrative 37,931 52,009 36,149 74,080 85,999
Amortization of definite-lived intangibles 5,949 3,910 5,947 11,896 5,784
Restructuring charges 3,989 30 1,913 5,902 509
Impairment of long-lived assets - - 3,346 3,346 -
Gain on sale of assets (1,472) - - (1,472) (2,504)
Total operating expenses 62,966 68,250 64,661 127,627 111,544
Operating income (loss) 34,679 (7,060) 18,902 53,581 1,205
Interest expense (20,084) (12,778) (21,784) (41,868) (18,543)
Loss on extinguishment of debt - (802) - - (802)
Other, net 3,191 681 1,209 4,400 266
Income (loss) before income taxes 17,786 (19,959) (1,673) 16,113 (17,874)
Income tax (provision) benefit 979 (16,624) (5,477) (4,498) (15,263)
Net income (loss) $18,765 $(36,583) $(7,150) $11,615 $(33,137)
Net income attributable to noncontrolling interest (217) (29) (114) (331) (29)
Net income (loss) attributable to stockholders $18,548 $(36,612) $(7,264) $11,284 $(33,166)
Earnings (loss) per share attributable to stockholders:
Basic $0.19 $(0.41) $(0.07) $0.11 $(0.38)
Diluted $0.17 $(0.41) $(0.07) $0.11 $(0.38)
Weighted-average shares used in computing per share amounts:
Basic 100,170 88,834 99,596 99,883 86,218
Diluted 126,950 88,834 99,596 100,789 86,218
Reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share:
Net income attributable to stockholders $18,548
Add back items: interest expense, net of tax 3,285
Adjusted net income attributable to stockholders $21,833
Weighted-average shares outstanding 100,170
Dilutive effect of convertible debt 25,940
Dilutive effect of performance-based stock units, restricted stock units and stock options 840
Diluted shares 126,950
Earnings per share attributable to stockholders:
Basic $0.19
Diluted $0.17
SELECTED BALANCE SHEET DATA
June 27, 2016 December 28, 2015
Cash and cash equivalents, including restricted cash $216,151 $262,630
Accounts and notes receivable, net 424,038 454,001
Inventories 270,790 268,923
Total current assets 941,975 1,022,520
Property, plant and equipment, net 1,047,187 1,103,067
Other non-current assets 532,625 514,546
Total assets 2,521,787 2,640,133
Short-term debt, including current portion of long-term debt $80,358 $157,375
Accounts payable 334,283 347,916
Total current liabilities 622,489 744,994
Debt, net of discount 997,207 1,013,411
Total long-term liabilities 1,069,574 1,068,470
Total equity 829,724 826,669
Total liabilities and equity 2,521,787 2,640,133
SUPPLEMENTAL DATA
Second Quarter First Quarter First Two Quarters
2016 2015 2016 2016 2015
Gross margin 16.2% 13.7% 14.3% 15.3% 14.6%
Operating margin 5.8% (1.6)% 3.2% 4.5% 0.2%
End Market Breakdown:
Second Quarter First Quarter
2016 2015 2016
Aerospace/Defense 16% 15% 15%
Automotive 19% 7% 21%
Cellular Phone 10% 24% 9%
Computing/Storage/Peripherals 13% 11% 13%
Medical/Industrial/Instrumentation 16% 12% 16%
Networking/Communications 25% 26% 24%
Other 1% 5% 2%
Stock-based Compensation:
Second Quarter First Quarter
2016 2015 2016
Amount included in:
Cost of goods sold $429 $243 $320
Selling and marketing 271 269 210
General and administrative 2,145 1,802 1,716
Total stock-based compensation expense $2,845 $2,314 $2,246
Operating Segment Data:
Second Quarter First Quarter
Net sales: 2016 2015 2016
PCB $563,574 $417,901 $529,945
E-M Solutions 40,427 28,514 56,478
Corporate - - -
Total sales 604,001 446,415 586,423
Inter-segment sales (2,154) (970) (3,165)
Total net sales $601,847 $445,445 $583,258
Operating segment income:
PCB $64,970 $30,456 $49,367
E-M Solutions (153) (110) 387
Corporate (24,189) (33,496) (24,905)
Total operating segment income 40,628 (3,150) 24,849
Amortization of definite-lived intangibles (5,949) (3,910) (5,947)
Total operating income 34,679 (7,060) 18,902
Total other expense (16,893) (12,899) (20,575)
Income before income taxes $17,786 $(19,959) $(1,673)
RECONCILIATIONS1
Second Quarter First Quarter First Two Quarters
2016 2015 2016 2016 2015
Non-GAAP gross profit reconciliation2:
GAAP gross profit $97,645 $61,190 $83,563 $181,208 $112,749
Add back item:
Inventory markup - 7,408 - - 7,408
Stock-based compensation 429 243 320 749 468
Non-GAAP gross profit $98,074 $68,841 $83,883 $181,957 $120,625
Non-GAAP gross margin 16.3% 15.5% 14.4% 15.4% 15.6%
Non-GAAP operating income reconciliation3:
GAAP operating income (loss) $34,679 $(7,060) $18,902 $53,581 $1,205
Add back items:
Amortization of definite-lived intangibles 5,949 3,910 5,947 11,896 5,784
Stock-based compensation 2,845 2,314 2,246 5,091 4,354
Gain on sale of assets (1,472) - - (1,472) (2,504)
Acquisition-related costs 605 22,627 691 1,296 30,862
Inventory markup - 7,408 - - 7,408
Impairments and restructuring charges 3,989 30 5,259 9,248 509
Non-GAAP operating income $46,595 $29,229 $33,045 $79,640 $47,618
Non-GAAP operating margin 7.7% 6.6% 5.7% 6.7% 6.1%
Non-GAAP net income and EPS attributable to stockholders reconciliation4:
GAAP net income (loss) attributable to stockholders $18,548 $(36,612) $(7,264) $11,284 $(33,166)
Add back items:
Amortization of definite-lived intangibles 5,949 3,910 5,947 11,896 5,784
Stock-based compensation 2,845 2,314 2,246 5,091 4,354
Non-cash interest expense 5,608 3,289 6,154 11,762 5,914
Gain on sale of assets (1,472) - - (1,472) (2,504)
Acquisition-related costs 605 22,627 691 1,296 30,862
Inventory markup - 7,408 - - 7,408
Impairments, restructuring and other charges 3,989 832 5,259 9,248 1,311
Income taxes (7,649) 11,110 821 (6,828) 5,744
Non-GAAP net income attributable to stockholders $28,423 $14,878 $13,854 $42,277 $25,707
Non-GAAP earnings per diluted share attributable to stockholders $0.28 $0.17 $0.14 $0.42 $0.29
Non-GAAP diluted number of shares5:
Diluted shares 126,950 89,864 99,596 126,730 87,164
Dilutive effect of convertible debt (25,940) - - (25,940) -
Non-GAAP diluted number of shares 101,010 89,864 99,596 100,790 87,164
Adjusted EBITDA reconciliation6:
GAAP net income (loss) $18,765 $(36,583) $(7,150) $11,615 $(33,137)
Add back items:
Income tax provision (benefit) (979) 16,624 5,477 4,498 15,263
Interest expense 20,084 12,778 21,784 41,868 18,543
Amortization of definite-lived intangibles 5,949 3,910 5,947 11,896 5,784
Depreciation expense 40,457 29,776 40,227 80,684 54,312
Stock-based compensation 2,845 2,314 2,246 5,091 4,354
Gain on sale of assets (1,472) - - (1,472) (2,504)
Acquisition-related costs 605 22,627 691 1,296 30,862
Inventory markup - 7,408 - - 7,408
Impairments, restructuring and other charges 3,989 832 5,259 9,248 1,311
Adjusted EBITDA $90,243 $59,686 $74,481 $164,724 $102,196
Adjusted EBITDA margin 15.0% 13.4% 12.8% 13.9% 13.2%
Free cash flow reconciliation:
Operating cash flow 80,057 15,543 17,892 97,949 82,897
Add back items:
Payment of accreted interest on convertible sr. notes - 8,731 - - 8,731
Payment of acquisition-related costs 691 23,358 2,324 3,015 28,078
Adjusted operating cash flow 80,748 47,632 20,216 100,964 119,706
Capital expenditures, net (18,183) (23,687) (20,116) (38,299) (46,463)
Free cash flow $62,565 $23,945 $100 $62,665 $73,243
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, and inventory markup.
3 Non-GAAP operating income and operating margin measures exclude amortization of intangibles, stock-based compensation expense, gain on sale of assets, inventory markup, 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, inventory markup, 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, inventory markup, 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.


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

Source:TTM Technologies

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