TTM Technologies, Inc. Reports Fourth Quarter and Fiscal Year 2015 Results

 

  
TTM TECHNOLOGIES, INC. 
Selected Unaudited Financial Information 
(In thousands, except per share data) 
                
                
      Fourth Quarter Third Quarter Full Year 
       2015   2014   2015   2015   2014  
                
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS           
                
 Net sales  $  668,874  $  390,912  $  652,005  $  2,095,488  $  1,325,717  
 Cost of goods sold    560,604     322,437     562,887     1,785,351     1,131,028  
                
 Gross profit    108,270     68,475     89,118     310,137     194,689  
                
 Operating expenses:                   
    Selling and marketing       17,963         9,926         17,642         57,361         36,919    
    General and administrative       41,654         30,046         39,456         167,109         100,944    
    Amortization of definite-lived intangibles       6,683         1,935         6,421         18,888         8,387    
    Restructuring charges       5,429         (7 )       2,003         7,941         55    
    Impairment of long-lived assets       -          -          -          -          1,845    
    Gain on sale of asset       -          -          -          (2,504 )       -     
      Total operating expenses       71,729         41,900         65,522         248,795         148,150    
                               
  Operating income (loss)       36,541         26,575         23,596         61,342         46,539    
                               
  Interest expense       (20,208 )       (5,691 )       (21,002 )       (59,753 )       (23,830 )  
  Loss on extinguishment of debt       -          -          -          (802 )       (506 )  
  Other, net         3,925         1,620         3,998         8,189         88    
                               
  Income (loss) before income taxes       20,258         22,504         6,592         8,976         22,291    
  Income tax (provision) benefit        (10,601 )       (8,566 )       (8,730 )       (34,594 )       (7,598 )  
                               
  Net income (loss)   $   9,657     $   13,938     $   (2,138 )   $   (25,618 )   $   14,693    
                               
  Net income attributable to noncontrolling interest       (136 )       -          (99 )       (264 )       -     
  Net income (loss) attributable to stockholders   $   9,521     $   13,938     $   (2,237 )   $   (25,882 )   $   14,693    
                               
  Earnings (loss) per share attributable to stockholders:                      
    Basic     $   0.10     $   0.17     $   (0.02 )   $   (0.28 )   $   0.18    
    Diluted     $   0.09     $   0.17     $   (0.02 )   $   (0.28 )   $   0.18    
                               
  Weighted-average shares used in computing per share amounts:                      
    Basic         99,134         83,345         99,128         92,675         83,238    
    Diluted         126,329         84,205         99,128         92,675         83,941    
                               
                               
  Reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share for the quarter ended Q4 2015   
                               
  Net income attributable to stockholders   $   9,521                    
    Add back items: interest expense, net of tax       2,009                    
  Adjusted net income attributable to stockholders   $   11,530                    
  Weighted-average shares outstanding       99,134                    
  Dilutive effect of convertible debt       25,940                    
  Dilutive effect of performance-based stock units, restricted stock units and stock options       1,255                    
  Diluted shares       126,329                    
  Earnings per share attributable to stockholders:                      
    Basic     $   0.10                    
    Diluted     $   0.09                    
                               
                               
SELECTED BALANCE SHEET DATA                        
            December 28, 2015   December 29, 2014              
  Cash and cash equivalents, including restricted cash   $   262,630     $   279,042                
  Accounts and notes receivable, net       454,001         307,933                
  Inventories         268,923         145,187                
  Total current assets       1,022,520         798,123                
  Property, plant and equipment, net       1,103,067         754,718                
  Other non-current assets       545,717         48,448                
  Total assets       2,671,304         1,601,289                
                               
  Short-term debt, including current portion of long-term debt   $   157,375     $   128,045                
  Accounts payable       347,916         217,326                
  Total current liabilities       744,994         496,012                
  Debt, net of discount       1,044,582         374,642                
  Total long-term liabilities       1,099,641         389,813                
  Total equity       826,669         715,464                
  Total liabilities and equity       2,671,304         1,601,289                
                               
SUPPLEMENTAL DATA                      
            Fourth Quarter   Third Quarter   Full Year  
              2015       2014       2015       2015       2014    
  Gross margin     16.2 %     17.5 %     13.7 %     14.8 %     14.7 %  
  Operating margin     5.5 %     6.8 %     3.6 %     2.9 %     3.5 %  
                               
  End Market Breakdown:                      
            Fourth Quarter   Third Quarter          
              2015       2014       2015            
                               
    Aerospace/Defense     13 %     14 %     14 %          
    Automotive     18 %     3 %     17 %          
    Cellular Phone     18 %     35 %     16 %          
    Computing/Storage/Peripherals     12 %     10 %     12 %          
    Medical/Industrial/Instrumentation     13 %     8 %     14 %          
    Networking/Communications     23 %     27 %     25 %          
    Other       3 %     3 %     2 %          
                               
  Stock-based Compensation:                      
            Fourth Quarter   Third Quarter          
              2015       2014       2015            
    Amount included in:                      
      Cost of goods sold   $   327     $   197     $   322            
      Selling and marketing       301         263         294            
      General and administrative       2,007         1,287         2,056            
      Total stock-based compensation expense   $   2,635     $   1,747     $   2,672            
                               
                               
  Operating Segment Data:                      
            Fourth Quarter   Third Quarter          
     Net sales:      2015       2014       2015            
     PCB      $   611,045     $   372,465     $   604,771            
     E-M Solutions        61,021         19,073         49,658            
     Corporate        -          -          -             
       Total sales        672,066         391,538         654,429            
     Inter-segment sales        (3,192 )       (626 )       (2,424 )          
       Total net sales    $   668,874     $   390,912     $   652,005            
                               
     Operating segment income:                       
     PCB      $   66,320     $   37,236     $   52,191            
     E-M Solutions        2,612         744         (1,729 )          
     Corporate        (25,708 )       (9,470 )       (20,445 )          
       Total operating segment income        43,224         28,510         30,017            
     Amortization of definite-lived intangibles        (6,683 )       (1,935 )       (6,421 )          
       Total operating income        36,541         26,575         23,596            
     Total other expense        (16,283 )       (4,071 )       (17,004 )          
     Income before income taxes    $   20,258     $   22,504     $   6,592            
                               
RECONCILIATIONS 1                      
            Fourth Quarter   Third Quarter   Full Year  
              2015       2014       2015       2015       2014    
  Non-GAAP gross profit reconciliation 2 :                      
    GAAP gross profit   $   108,270     $   68,475     $   89,118     $   310,137     $   194,689    
    Add back item:                      
      Inventory markup and PP&E step up       598         -          8,214         16,220         -     
      Stock-based compensation       327         197         322         1,117         866    
    Non-GAAP gross profit   $   109,195     $   68,672     $   97,654     $   327,474     $   195,555    
    Non-GAAP gross margin     16.3 %     17.6 %     15.0 %     15.6 %     14.8 %  
                               
  Non-GAAP operating income reconciliation 3 :                      
    GAAP operating income (loss)   $   36,541     $   26,575     $   23,596     $   61,342     $   46,539    
    Add back items:                      
      Amortization of definite-lived intangibles       6,683         1,935         6,421         18,888         8,387    
      Stock-based compensation       2,635         1,747         2,672         9,661         7,800    
      Gain on sale of asset       -          -          -          (2,504 )       -     
      Acquisition-related costs       1,521         4,349         2,065         34,448         5,981    
      Inventory markup and PP&E step up       598         -          8,214         16,220         -     
      Impairments and restructuring charges       5,429         (7 )       2,003         7,941         1,900    
    Non-GAAP operating income   $   53,407     $   34,599     $   44,971     $   145,996     $   70,607    
    Non-GAAP operating margin     8.0 %     8.9 %     6.9 %     7.0 %     5.3 %  
                               
  Non-GAAP net income and EPS attributable to stockholders reconciliation 4 :                      
    GAAP net income (loss) attributable to stockholders   $   9,521     $   13,938     $   (2,237 )   $   (25,882 )   $   14,693    
    Add back items:                      
      Amortization of definite-lived intangibles       6,683         1,935         6,421         18,888         8,387    
      Stock-based compensation       2,635         1,747         2,672         9,661         7,800    
      Non-cash interest expense       4,893         2,585         4,819         15,626         10,165    
      Gain on sale of asset       -          -          -          (2,504 )       -     
      Acquisition-related costs       1,521         4,349         2,065         34,448         5,981    
      Inventory markup and PP&E step up       598         -          8,214         16,220         -     
      Impairments, restructuring and other charges       5,429         (7 )       2,003         8,743         2,406    
      Income taxes       247         (1,332 )       (122 )       5,869         (10,121 )  
    Non-GAAP net income attributable to stockholders   $   31,527     $   23,215     $   23,835     $   81,069     $   39,311    
    Non-GAAP earnings per diluted share attributable to stockholders   $   0.31     $   0.28     $   0.24     $   0.87     $   0.47    
                               
  Non-GAAP diluted number of shares 5 :                      
    Diluted shares       126,329         84,205         100,035         93,640         83,941    
    Dilutive effect of convertible debt       (25,940 )       -         -         -         -    
    Non-GAAP diluted number of shares       100,389         84,205         100,035         93,640         83,941    
                               
  Adjusted EBITDA reconciliation 6 :                      
    GAAP net income (loss)   $   9,657     $   13,938     $   (2,138 )   $   (25,618 )   $   14,693    
    Add back items:                      
      Income tax provision (benefit)       10,601         8,566         8,730         34,594         7,598    
      Interest expense       20,208         5,691         21,002         59,753         23,830    
      Amortization of definite-lived intangibles       6,683         1,935         6,421         18,888         8,387    
      Depreciation expense       39,105         24,318         40,091         133,508         95,349    
      Stock-based compensation       2,635         1,747         2,672         9,661         7,800    
      Gain on sale of asset       -          -          -          (2,504 )       -     
      Acquisition-related costs       1,521         4,349         2,065         34,448         5,981    
      Inventory markup       -          -          6,792         14,200         -     
      Impairments, restructuring and other charges       5,429         (7 )       2,003         8,743         2,406    
    Adjusted EBITDA   $   95,839     $   60,537     $   87,638     $   285,673     $   166,044    
    Adjusted EBITDA margin     14.3 %     15.5 %     13.4 %     13.6 %     12.5 %  
                               
  Free cash flow reconciliation:                      
    Operating cash flow       139,829         52,407         14,735         237,462         129,810    
    Add back items:                      
      Payment of accreted interest on convertible sr. notes       -          -          -          8,730         1,324    
      Payment of acquisition-related costs       1,522         2,123         6,610         36,210         2,123    
    Adjusted operating cash flow       141,351         54,530         21,345         282,402         133,257    
    Capital expenditures, net       (22,967 )       (26,262 )       (30,345 )       (99,718 )       (108,571 )  
    Free cash flow   $   118,384     $   28,268     $   (9,000 )   $   182,684     $   24,686    
                               
  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, inventory markup and PP&E step up.  
                               
  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:
Todd  Schull,  CFO
714-327-3000 

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