TTM Technologies, Inc. Reports Fiscal Second Quarter 2017 Results

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COSTA MESA, Calif., Aug. 02, 2017 (GLOBE NEWSWIRE) -- TTM Technologies, Inc. (NASDAQ:TTMI), a leading global printed circuit board (“PCB”) manufacturer, today reported results for the second quarter of fiscal 2017, which ended July 2nd, 2017.

Second Quarter 2017 Highlights

Net sales were $627.2 million
GAAP net income attributable to stockholders was $20.6 million, or $0.18 per diluted share
Non-GAAP net income attributable to stockholders was $33.3 million, or $0.31 per diluted share
Excluding a $6.5 million foreign exchange loss, non-GAAP earnings per diluted share would have been $0.36
Adjusted EBITDA was $85.5 million

Second Quarter 2017 Financial Results
Net sales for the second quarter of 2017 were $627.2 million, compared to $601.8 million in the second quarter of 2016 and $625.2 million in the first quarter of 2017.

GAAP operating income for the second quarter of 2017 was $45.1 million, compared to $34.7 million in the second quarter of 2016 and $52.6 million in the first quarter of 2017.

GAAP net income attributable to stockholders for the second quarter of 2017 was $20.6 million, or $0.18 per diluted share. This compares to a GAAP net income attributable to stockholders of $18.5 million, or $0.17 per diluted share, in the second quarter of 2016 and a GAAP net income of $33 million, or $0.28 per diluted share, in the first quarter of 2017.

On a non-GAAP basis, net income attributable to stockholders for the second quarter of 2017 was $33.3 million, or $0.31 per diluted share. This compares to non-GAAP net income attributable to stockholders of $28.4 million, or $0.28 per diluted share, for the second quarter of 2016 and $39.2 million, or $0.37 per diluted share, in the first quarter of 2017.

Adjusted EBITDA for the second quarter of 2017 was $85.5 million, or 13.6 percent of net sales, compared to adjusted EBITDA of $90.2 million, or 15.0 percent of net sales, for the second quarter of 2016 and $95.6 million, or 15.3 percent of net sales, for the first quarter of 2017.

“TTM delivered the third consecutive quarter of year on year organic growth at 4 percent and our operating performance was in line with our expectations” said Tom Edman, CEO of TTM. “On a year over year basis, most end markets grew, with the fastest growth coming from the cellular, computing, automotive and the aerospace and defense end markets. Absent a foreign exchange loss due to the weakening dollar, operating results were towards the high end of guidance.”

Business Outlook
For the third quarter of 2017, TTM estimates that revenue will be in the range of $625 million to $675 million, and non-GAAP net income attributable to stockholders will be in the range of $0.29 to $0.35 per diluted share. “Our third quarter is being impacted by a slower start in the normal seasonal ramp of cellular products. We expect this ramp to accelerate in the coming quarters” concluded Tom Edman.

To Access the Live Webcast/Conference Call
TTM will host a conference call and webcast to discuss second quarter 2017 results and third quarter 2017 outlook on Wednesday, August 2nd, 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 877-397-0272 or international 719-325-2322 (ID 5738422). 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.

- Tables Follow -

TTM TECHNOLOGIES, INC.
Selected Unaudited Financial Information
(In thousands, except per share data)


				Second Quarter						First Quarter			First Two Quarters
					2017			2016			2017			2017			2016

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

	Net sales			$	627,182		$	601,847		$	625,247		$	1,252,429		$	1,185,105
	Cost of goods sold				531,315			504,202			520,228			1,051,543			1,003,897

	Gross profit				95,867			97,645			105,019			200,886			181,208

	Operating expenses:
		Selling and marketing			15,851			16,569			16,655			32,506			33,875
		General and administrative			29,885			37,931			30,822			60,707			74,080
		Amortization of definite-lived intangibles			5,910			5,949			5,912			11,822			11,896
		Restructuring charges			416			3,989			609			1,025			5,902
		Impairment of long-lived assets			-			-			-			-			3,346
		Gain on sale of assets			(1,251	)		(1,472	)		(1,549	)		(2,800	)		(1,472	)
			Total operating expenses		50,811			62,966			52,449			103,260			127,627

	Operating income				45,056			34,679			52,570			97,626			53,581

	Interest expense				(12,922	)		(20,084	)		(13,596	)		(26,518	)		(41,868	)
	Other, net				(5,825	)		3,191			(1,710	)		(7,535	)		4,400

	Income before income taxes				26,309			17,786			37,264			63,573			16,113
	Income tax provision				(5,558	)		979			(4,139	)		(9,697	)		(4,498	)

	Net income (loss)			$	20,751		$	18,765		$	33,125		$	53,876		$	11,615

	Net income attributable to noncontrolling interest				(160	)		(217	)		(166	)		(326	)		(331	)
	Net income (loss) attributable to stockholders			$	20,591		$	18,548		$	32,959		$	53,550		$	11,284

	Earnings (loss) per share attributable to stockholders:
		Basic		$	0.20		$	0.19		$	0.33		$	0.53		$	0.11
		Diluted		$	0.18		$	0.17		$	0.28		$	0.46		$	0.11

	Weighted-average shares used in computing per share amounts:
		Basic			101,756			100,170			100,932			101,344			99,883
		Diluted			133,224			126,950			130,922			132,073			100,789


	Reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share:

	Net income attributable to stockholders			$	20,591		$	18,548		$	32,959		$	53,550
		Add back items: interest expense, net of tax			3,432			3,285			3,394			6,826
	Adjusted net income attributable to stockholders			$	24,023		$	21,833		$	36,353		$	60,376
	Weighted-average shares outstanding				101,756			100,170			100,932			101,344
	Dilutive effect of convertible debt				25,940			25,940			25,940			25,940
	Dilutive effect of warrants				3,924			-			2,183			3,054
	Dilutive effect of performance-based stock units, restricted stock units & stock options				1,604			840			1,867			1,735
	Diluted shares				133,224			126,950			130,922			132,073
	Earnings per share attributable to stockholders:
		Basic		$	0.20		$	0.19		$	0.33		$	0.53
		Diluted		$	0.18		$	0.17		$	0.28		$	0.46


SELECTED BALANCE SHEET DATA
				July 3, 2017			January 2, 2017
	Cash and cash equivalents, including restricted cash			$	246,947		$	256,277
	Accounts and notes receivable, net				452,796			432,596
	Inventories				282,485			269,212
	Total current assets				1,025,261			1,012,841
	Property, plant and equipment, net				1,034,385			966,638
	Other non-current assets				512,304			520,597
	Total assets				2,571,950			2,500,076

	Short-term debt, including current portion of long-term debt			$	110,669		$	110,652
	Accounts payable				365,254			355,774
	Total current liabilities				722,675			689,065
	Debt, net of discount				863,847			909,030
	Total long-term liabilities				938,684			981,886
	Total equity				910,591			829,125
	Total liabilities and equity				2,571,950			2,500,076

SUPPLEMENTAL DATA
				Second Quarter						First Quarter			First Two Quarters
					2017			2016			2017			2017			2016
	Gross margin				15.3	%		16.2	%		16.8	%		16.0	%		15.3	%
	Operating margin				7.2	%		5.8	%		8.4	%		7.8	%		4.5	%

	End Market Breakdown:
				Second Quarter						First Quarter
					2017			2016			2017

		Aerospace/Defense			17	%		16	%		15	%
		Automotive			20	%		19	%		20	%
		Cellular Phone			13	%		10	%		14	%
		Computing/Storage/Peripherals			14	%		13	%		15	%
		Medical/Industrial/Instrumentation			15	%		16	%		15	%
		Networking/Communications			20	%		25	%		20	%
		Other			1	%		1	%		1	%

	Stock-based Compensation:
				Second Quarter						First Quarter
					2017			2016			2017
		Amount included in:
			Cost of goods sold	$	639		$	429		$	394
			Selling and marketing	$	386			271			253
			General and administrative		3,975			2,145			2,981
			Total stock-based compensation expense	$	5,000		$	2,845		$	3,628


	Operating Segment Data:
				Second Quarter						First Quarter
		Net sales:			2017			2016			2017
		PCB		$	576,566		$	563,574		$	586,695
		E-M Solutions			52,898			40,427			41,669
		Corporate			-			-			-
			Total sales		629,464			604,001			628,364
		Inter-segment sales			(2,282	)		(2,154	)		(3,117	)
			Total net sales	$	627,182		$	601,847		$	625,247

		Operating segment income:
		PCB		$	69,435		$	64,970		$	82,256
		E-M Solutions			2,689			(153	)		(1,642	)
		Corporate			(21,158	)		(24,189	)		(22,132	)
			Total operating segment income		50,966			40,628			58,482
		Amortization of definite-lived intangibles			(5,910	)		(5,949	)		(5,912	)
			Total operating income		45,056			34,679			52,570
		Total other expense			(18,747	)		(16,893	)		(15,306	)
		Income before income taxes		$	26,309		$	17,786		$	37,264

RECONCILIATIONS¹
				Second Quarter						First Quarter			First Two Quarters
					2017			2016			2017			2017			2016
	Non-GAAP gross profit reconciliation²:
		GAAP gross profit		$	95,867		$	97,645		$	105,019		$	200,886		$	181,208
		Add back item:
			Stock-based compensation		639			429			394			1,033			749
		Non-GAAP gross profit		$	96,506		$	98,074		$	105,413		$	201,919		$	181,957
		Non-GAAP gross margin			15.4	%		16.3	%		16.9	%		16.1	%		15.4	%

	Non-GAAP operating income reconciliation³:
		GAAP operating income		$	45,056		$	34,679		$	52,570		$	97,626		$	53,581
		Add back items:
			Amortization of definite-lived intangibles		5,910			5,949			5,912			11,822			11,896
			Stock-based compensation		5,000			2,845			3,628			8,628			5,091
			Gain on sale of assets		(1,251	)		(1,472	)		(1,549	)		(2,800	)		(1,472	)
			Impairments, restructuring, acquisition-related, and other charges		417			4,594			709			1,126			10,544
		Non-GAAP operating income		$	55,132		$	46,595		$	61,270		$	116,402		$	79,640
		Non-GAAP operating margin			8.8	%		7.7	%		9.8	%		9.3	%		6.7	%

	Non-GAAP net income and EPS attributable to stockholders reconciliation⁴:
		GAAP net income (loss) attributable to stockholders		$	20,591		$	18,548		$	32,959		$	53,550		$	11,284
		Add back items:
			Amortization of definite-lived intangibles		5,910			5,949			5,912			11,822			11,896
			Stock-based compensation		5,000			2,845			3,628			8,628			5,091
			Non-cash interest expense		2,726			5,608			2,627			5,353			11,762
			Gain on sale of assets		(1,251	)		(1,472	)		(1,549	)		(2,800	)		(1,472	)
			Impairments, restructuring, acquisition-related, and other charges		417			4,594			709			1,126			10,544
			Income taxes		(119	)		(7,649	)		(5,093	)		(5,212	)		(6,828	)
		Non-GAAP net income attributable to stockholders		$	33,274		$	28,423		$	39,193		$	72,467		$	42,277
		Non-GAAP earnings per diluted share attributable to stockholders		$	0.31		$	0.28		$	0.37		$	0.68		$	0.42

	Non-GAAP diluted number of shares⁵:
		Diluted shares			133,224			126,950			130,922			132,073			126,730
		Dilutive effect of convertible debt			(25,940	)		(25,940	)		(25,940	)		(25,940	)		(25,940	)
		Non-GAAP diluted number of shares			107,284			101,010			104,982			106,133			100,790

	Adjusted EBITDA reconciliation⁶:
		GAAP net income (loss)		$	20,751		$	18,765		$	33,125		$	53,876		$	11,615
		Add back items:
			Income tax provision (benefit)		5,558			(979	)		4,139			9,697			4,498
			Interest expense		12,922			20,084			13,596			26,518			41,868
			Amortization of definite-lived intangibles		5,910			5,949			5,912			11,822			11,896
			Depreciation expense		36,146			40,457			36,077			72,223			80,684
			Stock-based compensation		5,000			2,845			3,628			8,628			5,091
			Gain on sale of assets		(1,251	)		(1,472	)		(1,549	)		(2,800	)		(1,472	)
			Impairments, restructuring, acquisition-related, and other charges		417			4,594			709			1,126			10,544
		Adjusted EBITDA		$	85,453		$	90,243		$	95,637		$	181,090		$	164,724
		Adjusted EBITDA margin			13.6	%		15.0	%		15.3	%		14.5	%		13.9	%

	Free cash flow reconciliation:
		Operating cash flow			59,114			80,057			49,584			108,698			97,949
		Add back items:
			Payment of acquisition-related costs		-			691			153			153			3,015
		Adjusted operating cash flow			59,114			80,748			49,737			108,851			100,964
		Capital expenditures, net			(45,626	)		(15,329	)		(23,378	)		(69,004	)		(35,445	)
		Free cash flow		$	13,488		$	65,419		$	26,359		$	39,847		$	65,519

	¹This 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.

	²Non-GAAP gross profit and gross margin measures exclude stock-based compensation expense.

	³Non-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.

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