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TTM Technologies, Inc. Reports Fiscal Third Quarter 2017 Results

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

- Tables Follow -



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.

Source:TTM Technologies