TTM Technologies, Inc. Reports Fiscal Fourth Quarter and Fiscal 2017 Results

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)
              
              
     Fourth Quarter Third Quarter Full Year
     2017 2016 2017 2017 2016
              
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS          
              
Net sales
 $739,349  $706,534  $666,814  $2,658,592  $2,533,359 
Cost of goods sold  607,488   573,689   569,980   2,229,011   2,109,744 
              
Gross profit  131,861   132,845   96,834   429,581   423,615 
              
Operating expenses:          
Selling and marketing  17,081   16,848   16,269   65,856   66,366 
General and administrative  37,764    38,998       30,018       128,489       148,719  
Amortization of definite-lived intangibles     5,907       6,407       5,905       23,634       24,252  
Restructuring charges     65       946       100       1,190       8,951  
Impairment of long-lived assets     -       -       -       -       3,346  
(Gain)/loss on sale of assets     -       -       452       (2,348 )     (1,472 )
Total operating expenses     60,817       63,199       52,744       216,821       250,162  
                           
Operating income     71,044       69,646       44,090       212,760       173,453  
                           
Interest expense     (13,782 )     (15,267 )     (13,598 )     (53,898 )     (76,008 )
Loss on extinguishment of debt     -       (47,767 )     (768 )     (769 )     (47,767 )
Other, net
    (3,617 )     8,994       (6,984 )     (18,135 )     17,324  
                           
Income before income taxes     53,645       15,606       22,740       139,958       67,002  
Income tax provision     (4,329 )     (17,416 )     (1,205 )     (15,231 )     (31,427 )
                           
Net income (loss)   $ 49,316     $ (1,810 )   $ 21,535     $ 124,727     $ 35,575  
                           
Net income attributable to noncontrolling interest     (105 )     (195 )     (82 )     (513 )     (714 )
Net income (loss) attributable to stockholders   $ 49,211     $ (2,005 )   $ 21,453     $ 124,214     $ 34,861  
                           
Earnings (loss) per share attributable to stockholders:                    
Basic
  $ 0.48     $ (0.02 )   $ 0.21     $ 1.22     $ 0.35  
Diluted
  $ 0.40     $ (0.02 )   $ 0.19     $ 1.04     $ 0.34  
                           
Weighted-average shares used in computing per share amounts:                    
Basic
    101,817       100,365       101,814       101,580       100,099  
Diluted
    133,170       100,365       131,596       132,476       101,482  
                           
                           
Reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share:            
                           
Net income attributable to stockholders   $ 49,211         $ 21,453     $ 124,214      
Add back items: interest expense, net of tax     3,508           3,469       13,803      
Adjusted net income attributable to stockholders   $ 52,719         $ 24,922     $ 138,017      
Weighted-average shares outstanding     101,817           101,814       101,580      
Dilutive effect of convertible debt     25,939           25,939       25,940      
Dilutive effect of warrants     2,938           2,151       2,799      
Dilutive effect of performance-based stock units, restricted stock units & stock options     2,476           1,692       2,157      
Diluted shares     133,170           131,596       132,476      
Earnings per share attributable to stockholders:                    
Basic
  $ 0.48         $ 0.21     $ 1.22      
Diluted
  $ 0.40         $ 0.19     $ 1.04      
                           
                           
SELECTED BALANCE SHEET DATA                      
          January 1, 2018   January 2, 2017            
Cash and cash equivalents, including restricted cash   $ 409,326     $ 256,277              
Accounts and notes receivable, net     483,903       432,788              
Inventories
    294,588       269,212              
Total current assets     1,221,307       1,012,841              
Property, plant and equipment, net     1,056,845       966,638              
Other non-current assets     503,730       520,597              
Total assets     2,781,882       2,500,076              
                           
Short-term debt, including current portion of long-term debt   $ 4,578     $ 110,652              
Accounts payable     438,990       371,610              
Total current liabilities     720,356       689,065              
Debt, net of discount     975,479       909,030              
Total long-term liabilities     1,050,146       981,886              
Total equity     1,011,380       829,125              
Total liabilities and equity     2,781,882       2,500,076              
                           
SUPPLEMENTAL DATA                    
          Fourth Quarter   Third Quarter   Full Year
          2017   2016   2017   2017   2016
Gross margin     17.8 %     18.8 %     14.5 %     16.2 %     16.7 %
Operating margin     9.6 %     9.9 %     6.6 %     8.0 %     6.8 %
                           
End Market Breakdown:                    
          Fourth Quarter   Third Quarter        
          2017   2016   2017        
                           
Aerospace/Defense     15 %     14 %     16 %        
Automotive     18 %     19 %     20 %        
Cellular Phone     27 %     19 %     17 %        
Computing/Storage/Peripherals     10 %     12 %     14 %        
Medical/Industrial/Instrumentation     12 %     13 %     14 %        
Networking/Communications     17 %     21 %     17 %        
Other
    1 %     2 %     2 %        
                           
Stock-based Compensation:                    
          Fourth Quarter   Third Quarter        
          2017
  2016
  2017
       
Amount included in:                    
Cost of goods sold   $ 613     $ 469     $ 606          
Selling and marketing   $ 450       305       369          
General and administrative     3,921       2,426       3,703          
Total stock-based compensation expense   $ 4,984     $ 3,200     $ 4,678          
                           
                           
Operating Segment Data:                    
          Fourth Quarter   Third Quarter        
Net sales:   2017
  2016
  2017
       
PCB
  $ 688,572     $ 654,379     $ 609,742          
E-M Solutions     54,899       55,332       60,620          
Corporate       -          -          -           
Total sales     743,471       709,711       670,362          
Inter-segment sales       (4,122 )       (3,177 )       (3,548 )        
Total net sales   $   739,349     $   706,534     $   666,814          
                           
Operating segment income:                    
PCB
  $ 100,352     $ 95,208     $ 70,443          
E-M Solutions     2,799       3,029       2,870          
Corporate       (26,200 )       (22,184 )       (23,318 )        
Total operating segment income     76,951       76,053       49,995          
Amortization of definite-lived intangibles       (5,907 )       (6,407 )       (5,905 )        
Total operating income     71,044       69,646       44,090          
Total other expense       (17,399 )       (54,040 )       (21,350 )        
Income before income taxes   $   53,645     $   15,606     $   22,740          
                           
RECONCILIATIONS 1                    
          Fourth Quarter   Third Quarter   Full Year
          2017
  2016
  2017
  2017
  2016
Non-GAAP gross profit reconciliation 2 :                    
GAAP gross profit   $ 131,861     $ 132,845     $ 96,834     $ 429,581     $ 423,615  
Add back item:                    
Stock-based compensation     613       469       606       2,252       1,630  
Non-GAAP gross profit   $ 132,474     $ 133,314     $ 97,440     $ 431,833     $ 425,245  
Non-GAAP gross margin     17.9 %     18.9 %     14.6 %     16.2 %     16.8 %
                           
Non-GAAP operating income reconciliation 3 :                    
GAAP operating income   $ 71,044     $ 69,646     $ 44,090     $ 212,760     $ 173,453  
Add back items:                    
Amortization of definite-lived intangibles     5,907       6,407       5,905       23,634       24,252  
Stock-based compensation     4,984       3,200       4,678       18,290       11,090  
(Gain)/loss on sale of assets     -       -       452       (2,348 )     (1,472 )
Impairments, restructuring, acquisition-related, and other charges     2,331       1,725       100       3,556       14,569  
Non-GAAP operating income   $ 84,266     $ 80,978     $ 55,225     $ 255,892     $ 221,892  
Non-GAAP operating margin     11.4 %     11.5 %     8.3 %     9.6 %     8.8 %
                           
Non-GAAP net income and EPS attributable to stockholders reconciliation 4 :                    
GAAP net income (loss) attributable to stockholders   $ 49,211     $ (2,005 )   $ 21,453     $ 124,214     $ 34,861  
Add back items:                    
Amortization of definite-lived intangibles     5,907       6,407       5,905       23,634       24,252  
Stock-based compensation     4,984       3,200       4,678       18,290       11,090  
Non-cash interest expense     3,017       2,697       2,699       11,069       19,180  
(Gain)/loss on sale of assets     -       -       452       (2,348 )     (1,472 )
Loss on extinguishment of debt     -       47,767       768       769       47,767  
Impairments, restructuring, acquisition-related, and other charges     2,331       1,725       100       3,556       14,569  
Income taxes 5     (4,204 )     49       (2,643 )     (12,059 )     (7,987 )
Non-GAAP net income attributable to stockholders   $ 61,246     $ 59,840     $ 33,412     $ 167,125     $ 142,260  
Non-GAAP earnings per diluted share attributable to stockholders   $ 0.57     $ 0.58     $ 0.32     $ 1.57     $ 1.40  
                           
Non-GAAP diluted number of shares 6 :                    
Diluted shares     133,170       102,563       131,596       132,476       101,482  
Dilutive effect of convertible debt     (25,939 )     -       (25,939 )     (25,940 )     -  
Non-GAAP diluted number of shares     107,231       102,563       105,657       106,536       101,482  
                           
Adjusted EBITDA reconciliation 7 :                    
GAAP net income (loss)   $ 49,316     $ (1,810 )   $ 21,535     $ 124,727     $ 35,575  
Add back items:                    
Income tax provision (benefit)     4,329       17,416       1,205       15,231       31,427  
Interest expense     13,782       15,267       13,598       53,898       76,008  
Amortization of definite-lived intangibles     5,907       6,407       5,905       23,634       24,252  
Depreciation expense     41,090       38,539       37,496       150,809       156,229  
Stock-based compensation     4,984       3,200       4,678       18,290       11,090  
(Gain)/loss on sale of assets     -       -       452       (2,348 )     (1,472 )
Loss on extinguishment of debt     -       47,767       768       769       47,767  
Impairments, restructuring, acquisition-related, and other charges     2,331       1,725       100       3,556       14,569  
Adjusted EBITDA   $ 121,739     $ 128,511     $ 85,737     $ 388,566     $ 395,445  
Adjusted EBITDA margin     16.5 %     18.2 %     12.9 %     14.6 %     15.6 %
                           
Free cash flow reconciliation:                    
Operating cash flow     152,691       97,650       71,366       332,755       298,336  
Capital expenditures, net     (32,209 )     (20,501 )     (22,877 )     (124,090 )     (81,498 )
Free cash flow   $ 120,482     $ 77,149     $ 48,489     $ 208,665     $ 216,838  
                           
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 Income tax adjustments reflect the difference between income taxes based on a non-GAAP tax rate and a forecasted annual GAAP tax rate.
                           
6 Non-GAAP diluted number of shares used in computing non-GAAP earnings per share attributable to stockholders excludes the dilutive effect of convertible debt.
                           
7 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.
                           

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