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TTM Technologies, Inc. Reports Fiscal First Quarter 2018 Results

COSTA MESA, Calif., May 02, 2018 (GLOBE NEWSWIRE) -- TTM Technologies, Inc. (NASDAQ:TTMI), a leading global printed circuit board (“PCB”) manufacturer, today reported results for the first quarter of fiscal 2018, which ended April 2nd, 2018.  The financial results provided below for the first quarter do not include any contribution from the acquisition of Anaren, Inc. (“Anaren”), which was completed on April 18th, 2018.

First Quarter 2018 Highlights

First Quarter 2018 Financial Results
Net sales for the first quarter of 2018 were $663.6 million, compared to $625.2 million in the first quarter of 2017 and $739.3 million in the fourth quarter of 2017.

GAAP operating income for the first quarter of 2018 was $30.0 million, compared to $52.6 million in the first quarter of 2017 and $71.0 million in the fourth quarter of 2017. 

GAAP net income for the first quarter of 2018 was $10.1 million, or $0.09 per diluted share.  This compares to $33.0 million, or $0.28 per diluted share, in the first quarter of 2017 and $49.2 million, or $0.40 per diluted share, in the fourth quarter of 2017. 

On a non-GAAP basis, net income for the first quarter of 2018 was $28.0 million, or $0.26 per diluted share. This compares to non-GAAP net income of $39.2 million, or $0.37 per diluted share, for the first quarter of 2017 and $61.2 million, or $0.57 per diluted share, in the fourth quarter of 2017.

Adjusted EBITDA for the first quarter of 2018 was $83.2 million, or 12.5 percent of net sales, compared to adjusted EBITDA of $95.6 million, or 15.3 percent of net sales, for the first quarter of 2017 and $121.7 million, or 16.5 percent of net sales, for the fourth quarter of 2017.

“As anticipated, we faced seasonal challenges in our consumer related cellular and computing markets in the first quarter resulting in expected short term pressure on margins,” said Tom Edman, CEO of TTM.  “We were pleased to see solid growth from the aerospace and defense and automotive end markets that more than offset weakness in our computing and networking markets.  We also closed the acquisition of Anaren in the second quarter, which we expect will further increase our exposure to the growing aerospace and defense end market and strengthen our ability to deliver value added solutions to our customers across all of the markets we serve.”

Business Outlook
For the second quarter of 2018, including the expected contribution from Anaren post acquisition, TTM estimates that revenue will be in the range of $700 million to $750 million, and non-GAAP net income will be in the range of $0.34 to $0.40 per diluted share.

To Access the Live Webcast/Conference Call
TTM will host a conference call and webcast to discuss first quarter 2018 results and second quarter 2018 outlook on Wednesday, May 2nd, 2018, 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 800-289-0438 or international 323-794-2423 (ID 2803345).  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 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 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 per diluted share calculated and presented in accordance with GAAP.  Accordingly, a reconciliation of non-GAAP net income per diluted share to such measure calculated and presented in accordance with GAAP is not available without unreasonable effort and has not been provided.

- Tables Follow -

  
  
TTM TECHNOLOGIES, INC. 
Selected Unaudited Financial Information 
(In thousands, except per share data) 
        
        
  First Quarter Fourth Quarter 
   2018   2017   2017  
        
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS       
        
Net sales $  663,582  $  625,247  $  739,349  
Cost of goods sold    574,904     520,228     607,488  
              
Gross profit    88,678     105,019     131,861  
              
Operating expenses:             
Selling and marketing    17,628     16,655     17,081  
General and administrative    34,127     30,822     37,764  
Amortization of definite-lived intangibles    5,861     5,912     5,907  
Restructuring charges    1,061     609     65  
(Gain)/loss on sale of assets    -      (1,549)    -   
Total operating expenses    58,677     52,449     60,817  
              
Operating income    30,001     52,570     71,044  
              
Interest expense    (13,747)    (13,596)    (13,782) 
Other, net    (1,107)    (1,710)    (3,617) 
              
Income before income taxes    15,147     37,264     53,645  
Income tax provision    (5,050)    (4,139)    (4,329) 
              
Net income $  10,097  $  33,125  $  49,316  
              
Net income attributable to noncontrolling interest    -      (166)    (105) 
Net income attributable to stockholders $  10,097  $  32,959  $  49,211  
              
Earnings per share attributable to stockholders:             
Basic $  0.10  $  0.33  $  0.48  
Diluted $  0.09  $  0.28  $  0.40  
              
Weighted-average shares used in computing per share amounts:             
Basic    102,508     100,932     101,817  
Diluted    107,517     130,922     133,170  
              
              
Reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share:   
              
Net income attributable to stockholders     $  32,959  $  49,211  
Add back items: interest expense, net of tax        3,394     3,508  
Adjusted net income attributable to stockholders     $  36,353  $  52,719  
Weighted-average shares outstanding        100,932     101,817  
Dilutive effect of convertible debt        25,940     25,939  
Dilutive effect of warrants        2,183     2,938  
Dilutive effect of performance-based stock units, restricted stock units & stock options        1,867     2,476  
Diluted shares        130,922     133,170  
Earnings per share attributable to stockholders:             
Basic     $  0.33  $  0.48  
Diluted     $  0.28  $  0.40  
              
              
SELECTED BALANCE SHEET DATA              
  April 2, 2018 January 1, 2018     
Cash and cash equivalents, including restricted cash $352,576  $409,326      
Accounts and notes receivable, net  504,914   483,903      
Contract assets  275,022   -      
Inventories  82,116   294,588      
Total current assets  1,247,594   1,221,307      
Property, plant and equipment, net  1,039,751   1,056,845      
Other non-current assets  499,004   503,730      
Total assets  2,786,349   2,781,882      
              
Short-term debt, including current portion of long-term debt $4,616  $4,578      
Accounts payable  487,818   497,455      
Total current liabilities    677,528     720,356      
Debt, net of discount    977,413     975,479      
Total long-term liabilities    1,054,491     1,050,146      
Total equity    1,054,330     1,011,380      
Total liabilities and equity    2,786,349     2,781,882      
              
SUPPLEMENTAL DATA             
  First Quarter Fourth Quarter 
   2018   2017   2017  
Gross margin  13.4%  16.8%  17.8% 
Operating margin  4.5%  8.4%  9.6% 
        
End Market Breakdown:       
  First Quarter Fourth Quarter 
   2018   2017   2017  
        
Aerospace/Defense  18%  15%  15% 
Automotive  20%  20%  18% 
Cellular Phone  15%  14%  27% 
Computing/Storage/Peripherals  12%  15%  10% 
Medical/Industrial/Instrumentation  15%  15%  12% 
Networking/Communications  16%  20%  17% 
Other  4%  1%  1% 
              
Stock-based Compensation:             
  First Quarter Fourth Quarter 
   2018   2017   2017  
Amount included in:       
Cost of goods sold $  529  $  394  $  613  
Selling and marketing    374     253     450  
General and administrative    2,719     2,981     3,921  
Total stock-based compensation expense $  3,622  $  3,628  $  4,984  
              
              
Operating Segment Data:             
  First Quarter Fourth Quarter 
 Net sales:   2018   2017   2017  
 PCB  $  619,329  $  586,695  $  688,572  
 E-M Solutions     47,151     41,669     54,899  
 Corporate     -      -      -   
 Total sales     666,480     628,364     743,471  
 Inter-segment sales     (2,898)    (3,117)    (4,122) 
 Total net sales  $  663,582  $  625,247  $  739,349  
              
 Operating segment income:              
 PCB  $  63,464  $  82,256  $  100,352  
 E-M Solutions     40     (1,642)    2,799  
 Corporate     (27,642)    (22,132)    (26,200) 
 Total operating segment income     35,862     58,482     76,951  
 Amortization of definite-lived intangibles     (5,861)    (5,912)    (5,907) 
 Total operating income     30,001     52,570     71,044  
 Total other expense     (14,854)    (15,306)    (17,399) 
 Income before income taxes  $  15,147  $  37,264  $  53,645  
        
RECONCILIATIONS1       
  First Quarter Fourth Quarter 
   2018   2017   2017  
Non-GAAP gross profit reconciliation2:       
GAAP gross profit $  88,678  $  105,019  $  131,861  
Add back item:             
Stock-based compensation    529     394     613  
Non-GAAP gross profit $  89,207  $  105,413  $  132,474  
Non-GAAP gross margin  13.4%  16.9%  17.9% 
              
Non-GAAP operating income reconciliation3:             
GAAP operating income $  30,001  $  52,570  $  71,044  
Add back items:             
Amortization of definite-lived intangibles    5,861     5,912     5,907  
Stock-based compensation    3,622     3,628     4,984  
(Gain)/loss on sale of assets    -      (1,549)    -   
Impairments, restructuring, acquisition-related, and other charges    5,034     709     2,331  
Non-GAAP operating income $  44,518  $  61,270  $  84,266  
Non-GAAP operating margin  6.7%  9.8%  11.4% 
              
Non-GAAP net income and EPS attributable to stockholders reconciliation4:             
GAAP net income attributable to stockholders $  10,097  $  32,959  $  49,211  
Add back items:             
Amortization of definite-lived intangibles    5,861     5,912     5,907  
Stock-based compensation    3,622     3,628     4,984  
Non-cash interest expense    3,054     2,627     3,017  
(Gain)/loss on sale of assets    -      (1,549)    -   
Impairments, restructuring, acquisition-related, and other charges    5,263     709     2,331  
Income taxes5    108     (5,093)    (4,204) 
Non-GAAP net income attributable to stockholders $  28,005  $  39,193  $  61,246  
Non-GAAP earnings per diluted share attributable to stockholders $  0.26  $  0.37  $  0.57  
              
Non-GAAP diluted number of shares6:             
Diluted shares    107,517     130,922     133,170  
Dilutive effect of convertible debt    -     (25,940)    (25,939) 
Non-GAAP diluted number of shares    107,517     104,982     107,231  
              
Adjusted EBITDA reconciliation7:             
GAAP net income $  10,097  $  33,125  $  49,316  
Add back items:             
Income tax provision (benefit)    5,050     4,139     4,329  
Interest expense    13,747     13,596     13,782  
Amortization of definite-lived intangibles    5,861     5,912     5,907  
Depreciation expense    39,775     36,077     41,090  
Stock-based compensation    3,622     3,628     4,984  
(Gain)/loss on sale of assets    -      (1,549)    -   
Impairments, restructuring, acquisition-related, and other charges    5,034     709     2,331  
Adjusted EBITDA $  83,186  $  95,637  $  121,739  
Adjusted EBITDA margin  12.5%  15.3%  16.5% 
              
Free cash flow reconciliation:             
Operating cash flow    (14,261)    49,584     152,691  
Capital expenditures, net    (42,139)    (23,378)    (32,209) 
Free cash flow $  (56,400) $  26,206  $  120,482  
              
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. 
        

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

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