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TTM Technologies, Inc. Reports Third Quarter 2016 Results

COSTA MESA, Calif., Oct. 26, 2016 (GLOBE NEWSWIRE) -- TTM Technologies, Inc. (NASDAQ:TTMI), a leading global printed circuit board (“PCB”) manufacturer, today reported results for the third quarter 2016, which ended September 26, 2016.

Third Quarter 2016 Highlights

  • Net sales were $641.7 million
  • GAAP net income attributable to stockholders was $25.6 million, or $0.23 per diluted share
  • Non-GAAP net income attributable to stockholders was $40.1 million, or $0.39 per diluted share
  • Adjusted EBITDA was $102.2 million

Third Quarter 2016 Financial Results
Net sales for the third quarter of 2016 were $641.7 million, compared to $652.0 million in the third quarter of 2015 and $601.8 million in the second quarter of 2016.

GAAP operating income for the third quarter of 2016 was $50.2 million, compared to $23.6 million in the third quarter of 2015 and $34.7 million in the second quarter of 2016.

GAAP net income attributable to stockholders for the third quarter of 2016 was $25.6 million, or $0.23 per diluted share. This compares to a GAAP net loss attributable to stockholders of $2.2 million, or $0.02 per share, in the third quarter of 2015 and GAAP net income of $18.5 million, or $0.17 per diluted share, in the second quarter of 2016.

On a non-GAAP basis, net income attributable to stockholders for the third quarter of 2016 was $40.1 million, or $0.39 per diluted share. This compares to non-GAAP net income of $23.8 million, or $0.24 per diluted share, for the third quarter of 2015 and $28.4 million, or $0.28 per diluted share, in the second quarter of 2016.

Adjusted EBITDA for the third quarter of 2016 was $102.2 million, or 15.9 percent of net sales, compared to adjusted EBITDA of $87.6 million, or 13.4 percent of net sales, for the third quarter of 2015 and $90.2 million, or 15 percent of net sales, for the second quarter of 2016.

“Our third quarter revenues matched our expectations while profitability was better than forecast driving earnings to the highest level in years,” said Tom Edman, CEO of TTM. “Strong operational execution drove non-GAAP earnings above the high end of our guidance. Sequentially, a sharp acceleration in the cellular end market more than offset modest declines in the networking and communications end market, demonstrating the benefits of diversification.”

Business Outlook
For the fourth quarter of 2016, TTM estimates that revenue will be in the range of $650 million to $690 million, and non-GAAP net income will be in the range of $0.42 to $0.48 per diluted share. Our fourth quarter will have 14 weeks compared to the normal 13 weeks as fiscal 2016 is a 53 week year.

To Access the Live Webcast/Conference Call
TTM will host a conference call and webcast to discuss third quarter 2016 results and fourth quarter 2016 outlook on Wednesday, October 26, 2016, 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 800-344-6698 or international 785-830-7979 (ID 9216628). 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 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.

TTM TECHNOLOGIES, INC.
Selected Unaudited Financial Information
(In thousands, except per share data)
Third Quarter Second Quarter First Three Quarters
2016 2015 2016 2016 2015
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
Net sales $641,720 $652,005 $601,847 $1,826,825 $1,426,614
Cost of goods sold 532,158 562,887 504,202 1,536,055 1,224,747
Gross profit 109,562 89,118 97,645 290,770 201,867
Operating expenses:
Selling and marketing 15,643 17,642 16,569 49,518 39,398
General and administrative 35,641 39,456 37,931 109,721 125,455
Amortization of definite-lived intangibles 5,949 6,421 5,949 17,845 12,205
Restructuring charges 2,103 2,003 3,989 8,005 2,512
Impairment of long-lived assets - - - 3,346 -
Gain on sale of assets - - (1,472) (1,472) (2,504)
Total operating expenses 59,336 65,522 62,966 186,963 177,066
Operating income 50,226 23,596 34,679 103,807 24,801
Interest expense (18,873) (21,002) (20,084) (60,741) (39,545)
Loss on extinguishment of debt - - - - (802)
Other, net 3,930 3,998 3,191 8,330 4,264
Income (loss) before income taxes 35,283 6,592 17,786 51,396 (11,282)
Income tax (provision) benefit (9,513) (8,730) 979 (14,011) (23,993)
Net income (loss) $25,770 $(2,138) $18,765 $37,385 $(35,275)
Net income attributable to noncontrolling interest (188) (99) (217) (519) (128)
Net income (loss) attributable to stockholders $25,582 $(2,237) $18,548 $36,866 $(35,403)
Earnings (loss) per share attributable to stockholders:
Basic $0.26 $(0.02) $0.19 $0.37 $(0.39)
Diluted $0.23 $(0.02) $0.17 $0.36 $(0.39)
Weighted-average shares used in computing per share amounts:
Basic 100,245 99,128 100,170 100,004 90,522
Diluted 127,645 99,128 126,950 101,094 90,522
Reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share:
Net income attributable to stockholders $25,582 $18,548
Add back items: interest expense, net of tax 3,321 3,285
Adjusted net income attributable to stockholders $28,903 $21,833
Weighted-average shares outstanding 100,245 100,170
Dilutive effect of convertible debt 25,940 25,940
Dilutive effect of performance-based stock units, restricted stock units and stock options 1,460 840
Diluted shares 127,645 126,950
Earnings per share attributable to stockholders:
Basic $0.26 $0.19
Diluted $0.23 $0.17
SELECTED BALANCE SHEET DATA
September 26, 2016 December 28, 2015
Cash and cash equivalents, including restricted cash $291,783 $262,630
Accounts and notes receivable, net 449,335 454,001
Inventories 281,169 268,923
Total current assets 1,055,988 1,022,520
Property, plant and equipment, net 1,026,213 1,103,067
Other non-current assets 525,025 514,546
Total assets 2,607,226 2,640,133
Short-term debt, including current portion of long-term debt $146,473 $157,375
Accounts payable 370,660 347,916
Total current liabilities 746,867 744,994
Debt, net of discount 935,377 1,013,411
Total long-term liabilities 1,007,244 1,068,470
Total equity 853,115 826,669
Total liabilities and equity 2,607,226 2,640,133
SUPPLEMENTAL DATA
Third Quarter Second Quarter First Three Quarters
2016 2015 2016 2016 2015
Gross margin 17.1% 13.7% 16.2% 15.9% 14.2%
Operating margin 7.8% 3.6% 5.8% 5.7% 1.7%
End Market Breakdown:
Third Quarter Second Quarter
2016 2015 2016
Aerospace/Defense 15% 14% 16%
Automotive 19% 17% 19%
Cellular Phone 17% 16% 10%
Computing/Storage/Peripherals 12% 12% 13%
Medical/Industrial/Instrumentation 14% 14% 16%
Networking/Communications 21% 25% 25%
Other 2% 2% 1%
Stock-based Compensation:
Third Quarter Second Quarter
2016 2015 2016
Amount included in:
Cost of goods sold $412 $322 $429
Selling and marketing $268 294 271
General and administrative 2,119 2,056 2,145
Total stock-based compensation expense $2,799 $2,672 $2,845
Operating Segment Data:
Third Quarter Second Quarter
Net sales: 2016 2015 2016
PCB $598,656 $604,771 $563,574
E-M Solutions 46,246 49,658 40,427
Corporate - - -
Total sales 644,902 654,429 604,001
Inter-segment sales (3,182) (2,424) (2,154)
Total net sales $ 641,720 $652,005 $ 601,847
Operating segment income:
PCB $75,501 $52,191 $64,970
E-M Solutions 1,421 (1,729) (153)
Corporate (20,747) (20,445) (24,189)
Total operating segment income 56,175 30,017 40,628
Amortization of definite-lived intangibles (5,949) (6,421) (5,949)
Total operating income 50,226 23,596 34,679
Total other expense (14,943) (17,004) (16,893)
Income before income taxes $ 35,283 $ 6,592 $ 17,786
RECONCILIATIONS1
Third Quarter Second Quarter First Three Quarters
2016 2015 2016 2016 2015
Non-GAAP gross profit reconciliation2:
GAAP gross profit $109,562 $89,118 $97,645 $290,770 $201,867
Add back item:
Inventory markup - 8,214 - - 15,622
Stock-based compensation 412 322 429 1,161 790
Non-GAAP gross profit $109,974 $97,654 $98,074 $291,931 $218,279
Non-GAAP gross margin 17.1% 15.0% 16.3% 16.0% 15.3%
Non-GAAP operating income reconciliation3:
GAAP operating income $50,226 $23,596 $34,679 $103,807 $24,801
Add back items:
Amortization of definite-lived intangibles 5,949 6,421 5,949 17,845 12,205
Stock-based compensation 2,799 2,672 2,845 7,890 7,026
Gain on sale of assets - - (1,472) (1,472) (2,504)
Acquisition-related costs 197 2,065 605 1,493 32,927
Inventory markup - 8,214 - - 15,622
Impairments and restructuring charges 2,103 2,003 3,989 11,351 2,512
Non-GAAP operating income $61,274 $44,971 $46,595 $140,914 $92,589
Non-GAAP operating margin 9.5% 6.9% 7.7% 7.7% 6.5%
Non-GAAP net income and EPS attributable to stockholders reconciliation4:
GAAP net income (loss) attributable to stockholders $25,582 $(2,237) $18,548 $36,866 $(35,403)
Add back items:
Amortization of definite-lived intangibles 5,949 6,421 5,949 17,845 12,205
Stock-based compensation 2,799 2,672 2,845 7,890 7,026
Non-cash interest expense 4,721 4,819 5,608 16,483 10,733
Gain on sale of assets - - (1,472) (1,472) (2,504)
Acquisition-related costs 197 2,065 605 1,493 32,927
Inventory markup - 8,214 - - 15,622
Impairments, restructuring and other charges 2,103 2,003 3,989 11,351 3,314
Income taxes (1,208) (122) (7,649) (8,036) 5,622
Non-GAAP net income attributable to stockholders $40,143 $23,835 $28,423 $82,420 $49,542
Non-GAAP earnings per diluted share attributable to stockholders $0.39 $0.24 $0.28 $0.82 $0.54
Non-GAAP diluted number of shares5:
Diluted shares 127,645 100,035 126,950 101,094 91,455
Dilutive effect of convertible debt (25,940) - (25,940) - -
Non-GAAP diluted number of shares 101,705 100,035 101,010 101,094 91,455
Adjusted EBITDA reconciliation6:
GAAP net income (loss) $25,770 $(2,138) $18,765 $37,385 $(35,275)
Add back items:
Income tax provision (benefit) 9,513 8,730 (979) 14,011 23,993
Interest expense 18,873 21,002 20,084 60,741 39,545
Amortization of definite-lived intangibles 5,949 6,421 5,949 17,845 12,205
Depreciation expense 37,006 40,091 40,457 117,690 94,403
Stock-based compensation 2,799 2,672 2,845 7,890 7,026
Gain on sale of assets - - (1,472) (1,472) (2,504)
Acquisition-related costs 197 2,065 605 1,493 32,927
Inventory markup - 6,792 - - 14,200
Impairments, restructuring and other charges 2,103 2,003 3,989 11,351 3,314
Adjusted EBITDA $102,210 $87,638 $90,243 $266,934 $189,834
Adjusted EBITDA margin 15.9% 13.4% 15.0% 14.6% 13.3%
Free cash flow reconciliation:
Operating cash flow 102,737 14,735 80,057 200,686 97,632
Add back items:
Payment of accreted interest on convertible sr. notes - - - - 8,731
Payment of acquisition-related costs 11 6,610 691 3,026 34,688
Adjusted operating cash flow 102,748 21,345 80,748 203,712 141,051
Capital expenditures, net (24,221) (30,413) (18,183) (62,520) (76,876)
Free cash flow $78,527 $(9,068) $62,565 $141,192 $64,175
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