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TTM Technologies, Inc. Reports Second Quarter 2016 Results
Strong Execution Drives Non-GAAP EPS Well Ahead of Guidance

COSTA MESA, Calif., July 27, 2016 (GLOBE NEWSWIRE) -- TTM Technologies, Inc. (Nasdaq:TTMI), a major global printed circuit board (“PCB”) manufacturer, today reported results for the second quarter 2016, which ended June 27, 2016.  Our results include the contribution from the Viasystems Group, Inc. ("Viasystems") acquisition, which was completed on May 31, 2015.

Second Quarter 2016 Highlights

  • Net sales were $601.8 million
  • GAAP net income attributable to stockholders was $18.5 million, or $0.17 per diluted share
  • Non-GAAP net income attributable to stockholders was $28.4 million, or $0.28 per diluted share
  • Adjusted EBITDA was $90.2 million
  • Debt repayment of $30 million

Second Quarter 2016 Financial Results
Net sales for the second quarter of 2016 were $601.8 million, compared to $445.4 million in the second quarter of 2015 and $583.3 million in the first quarter of 2016.

GAAP operating income for the second quarter of 2016 was $34.7 million, compared to an operating loss of $7.1 million in the second quarter of 2015 and operating income of $18.9 million in the first quarter of 2016. 

GAAP net income attributable to stockholders for the second quarter of 2016 was $18.5 million, or $0.17 per diluted share.  This compares to a GAAP net loss attributable to stockholders of $36.6 million, or $0.41 per share, in the second quarter of 2015 and a GAAP net loss of $7.3 million, or $0.07 per  share, in the first quarter of 2016.

On a non-GAAP basis, net income attributable to stockholders for the second quarter of 2016 was $28.4 million, or $0.28 per diluted share.  This compares to non-GAAP net income of $14.9 million, or $0.17 per diluted share, for the second quarter of 2015 and $13.9 million, or $0.14 per diluted share, in the first quarter of 2016.

Adjusted EBITDA for the second quarter of 2016 was $90.2 million, or 15 percent of net sales, compared to adjusted EBITDA of $59.7 million, or 13.4 percent of net sales, for the second quarter of 2015 and $74.5 million, or 12.8 percent of net sales, for the first quarter of 2016.

“Our second quarter results reflect continued year on year improvements in revenue and earnings as sales to our customer base in diversified end markets have dampened historical volatility,” said Tom Edman, CEO of TTM.  “Strong operational execution across all of our business units drove non-GAAP earnings well above the high end of our guidance.  A rebound in the cellular and communications end markets more than offset modest declines in the automotive and computing end markets, and our aerospace and defense end market hit a quarterly record in revenues.”

Business Outlook
For the third quarter of 2016, TTM estimates that revenue will be in the range of $620 million to $660 million, and non-GAAP net income will be in the range of $0.29 to $0.35 per diluted share. 

To Access the Live Webcast/Conference Call
TTM will host a conference call and webcast to discuss second quarter 2016 results and third quarter 2016 outlook on Wednesday, July 27, 2016, at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time).  The conference call may include forward-looking statements.

Telephone access is available by dialing domestic 888-417-8516 or international 719-325-2491 (ID 7624574).  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 major global printed circuit board manufacturer, focusing on quick-turn and 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, the successful integration of Viasystems, 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
              2016       2015       2016       2016       2015  
                             
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS                    
                             
  Net sales     $ 601,847     $ 445,445     $ 583,258     $ 1,185,105     $ 774,609  
  Cost of goods sold     504,202       384,255       499,695       1,003,897       661,860  
                             
  Gross profit     97,645       61,190       83,563       181,208       112,749  
                             
  Operating expenses:                    
    Selling and marketing     16,569       12,301       17,306       33,875       21,756  
    General and administrative     37,931       52,009       36,149       74,080       85,999  
    Amortization of definite-lived intangibles     5,949       3,910       5,947       11,896       5,784  
    Restructuring charges     3,989       30       1,913       5,902       509  
    Impairment of long-lived assets     -       -       3,346       3,346       -  
    Gain on sale of assets     (1,472 )     -       -       (1,472 )     (2,504 )
      Total operating expenses     62,966       68,250       64,661       127,627       111,544  
                             
  Operating income (loss)     34,679       (7,060 )     18,902       53,581       1,205  
                             
  Interest expense     (20,084 )     (12,778 )     (21,784 )     (41,868 )     (18,543 )
  Loss on extinguishment of debt     -       (802 )     -       -       (802 )
  Other, net       3,191       681       1,209       4,400       266  
                             
  Income (loss) before income taxes     17,786       (19,959 )     (1,673 )     16,113       (17,874 )
  Income tax (provision) benefit     979       (16,624 )     (5,477 )     (4,498 )     (15,263 )
                             
  Net income (loss)   $ 18,765     $ (36,583 )   $ (7,150 )   $ 11,615     $ (33,137 )
                             
  Net income attributable to noncontrolling interest     (217 )     (29 )     (114 )     (331 )     (29 )
  Net income (loss) attributable to stockholders   $ 18,548     $ (36,612 )   $ (7,264 )   $ 11,284     $ (33,166 )
                             
  Earnings (loss) per share attributable to stockholders:                    
    Basic     $ 0.19     $ (0.41 )   $ (0.07 )   $ 0.11     $ (0.38 )
    Diluted     $ 0.17     $ (0.41 )   $ (0.07 )   $ 0.11     $ (0.38 )
                             
  Weighted-average shares used in computing per share amounts:                    
    Basic       100,170       88,834       99,596       99,883       86,218  
    Diluted       126,950       88,834       99,596       100,789       86,218  
                             
                             
  Reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share:
                             
  Net income attributable to stockholders   $ 18,548                  
    Add back items: interest expense, net of tax     3,285                  
  Adjusted net income attributable to stockholders   $ 21,833                  
  Weighted-average shares outstanding     100,170                  
  Dilutive effect of convertible debt     25,940                  
  Dilutive effect of performance-based stock units, restricted stock units and stock options     840                  
  Diluted shares     126,950                  
  Earnings per share attributable to stockholders:                    
    Basic     $ 0.19                  
    Diluted     $ 0.17                  
                             
                             
SELECTED BALANCE SHEET DATA                     
            June 27, 2016   December 28, 2015            
  Cash and cash equivalents, including restricted cash   $ 216,151     $ 262,630              
  Accounts and notes receivable, net     424,038       454,001              
  Inventories       270,790       268,923              
  Total current assets     941,975       1,022,520              
  Property, plant and equipment, net     1,047,187       1,103,067              
  Other non-current assets     532,625       514,546              
  Total assets     2,521,787       2,640,133              
                             
  Short-term debt, including current portion of long-term debt   $ 80,358     $ 157,375              
  Accounts payable     334,283       347,916              
  Total current liabilities     622,489       744,994              
  Debt, net of discount     997,207       1,013,411              
  Total long-term liabilities     1,069,574       1,068,470              
  Total equity     829,724       826,669              
  Total liabilities and equity     2,521,787       2,640,133              
                             
SUPPLEMENTAL DATA                    
            Second Quarter   First Quarter   First Two Quarters
              2016       2015       2016       2016       2015  
  Gross margin     16.2 %     13.7 %     14.3 %     15.3 %     14.6 %
  Operating margin     5.8 %     (1.6 )%     3.2 %     4.5 %     0.2 %
                             
  End Market Breakdown:                    
            Second Quarter   First Quarter        
              2016       2015       2016          
                             
    Aerospace/Defense     16 %     15 %     15 %        
    Automotive     19 %     7 %     21 %        
    Cellular Phone     10 %     24 %     9 %        
    Computing/Storage/Peripherals     13 %     11 %     13 %        
    Medical/Industrial/Instrumentation     16 %     12 %     16 %        
    Networking/Communications     25 %     26 %     24 %        
    Other       1 %     5 %     2 %        
                             
  Stock-based Compensation:                    
            Second Quarter   First Quarter        
              2016       2015       2016          
    Amount included in:                    
      Cost of goods sold   $ 429     $ 243     $ 320          
      Selling and marketing     271       269       210          
      General and administrative     2,145       1,802       1,716          
      Total stock-based compensation expense   $ 2,845     $ 2,314     $ 2,246          
                             
                             
  Operating Segment Data:                    
            Second Quarter   First Quarter        
    Net sales:     2016       2015       2016          
    PCB     $ 563,574     $ 417,901     $ 529,945          
    E-M Solutions     40,427       28,514       56,478          
    Corporate     -       -       -          
      Total sales     604,001       446,415       586,423          
    Inter-segment sales     (2,154 )     (970 )     (3,165 )        
      Total net sales   $ 601,847     $ 445,445     $ 583,258          
                             
    Operating segment income:                    
    PCB     $ 64,970     $ 30,456     $ 49,367          
    E-M Solutions     (153 )     (110 )     387          
    Corporate     (24,189 )     (33,496 )     (24,905 )        
      Total operating segment income     40,628       (3,150 )     24,849          
    Amortization of definite-lived intangibles     (5,949 )     (3,910 )     (5,947 )        
      Total operating income     34,679       (7,060 )     18,902          
    Total other expense     (16,893 )     (12,899 )     (20,575 )        
    Income before income taxes   $ 17,786     $ (19,959 )   $ (1,673 )        
                             
RECONCILIATIONS1                    
            Second Quarter   First Quarter   First Two Quarters
              2016       2015       2016       2016       2015  
  Non-GAAP gross profit reconciliation2:                    
    GAAP gross profit   $ 97,645     $ 61,190     $ 83,563     $ 181,208     $ 112,749  
    Add back item:                    
      Inventory markup     -       7,408       -       -       7,408  
      Stock-based compensation     429       243       320       749       468  
    Non-GAAP gross profit   $ 98,074     $ 68,841     $ 83,883     $ 181,957     $ 120,625  
    Non-GAAP gross margin     16.3 %     15.5 %     14.4 %     15.4 %     15.6 %
                             
  Non-GAAP operating income reconciliation3:                    
    GAAP operating income (loss)   $ 34,679     $ (7,060 )   $ 18,902     $ 53,581     $ 1,205  
    Add back items:                    
      Amortization of definite-lived intangibles     5,949       3,910       5,947       11,896       5,784  
      Stock-based compensation     2,845       2,314       2,246       5,091       4,354  
      Gain on sale of assets     (1,472 )     -       -       (1,472 )     (2,504 )
      Acquisition-related costs     605       22,627       691       1,296       30,862  
      Inventory markup     -       7,408       -       -       7,408  
      Impairments and restructuring charges     3,989       30       5,259       9,248       509  
    Non-GAAP operating income   $ 46,595     $ 29,229     $ 33,045     $ 79,640     $ 47,618  
    Non-GAAP operating margin     7.7 %     6.6 %     5.7 %     6.7 %     6.1 %
                             
  Non-GAAP net income and EPS attributable to stockholders reconciliation4:                    
    GAAP net income (loss) attributable to stockholders   $ 18,548     $ (36,612 )   $ (7,264 )   $ 11,284     $ (33,166 )
    Add back items:                    
      Amortization of definite-lived intangibles     5,949       3,910       5,947       11,896       5,784  
      Stock-based compensation     2,845       2,314       2,246       5,091       4,354  
      Non-cash interest expense     5,608       3,289       6,154       11,762       5,914  
      Gain on sale of assets     (1,472 )     -       -       (1,472 )     (2,504 )
      Acquisition-related costs     605       22,627       691       1,296       30,862  
      Inventory markup     -       7,408       -       -       7,408  
      Impairments, restructuring and other charges     3,989       832       5,259       9,248       1,311  
      Income taxes     (7,649 )     11,110       821       (6,828 )     5,744  
    Non-GAAP net income attributable to stockholders   $ 28,423     $ 14,878     $ 13,854     $ 42,277     $ 25,707  
    Non-GAAP earnings per diluted share attributable to stockholders   $ 0.28     $ 0.17     $ 0.14     $ 0.42     $ 0.29  
                             
  Non-GAAP diluted number of shares5:                    
    Diluted shares     126,950       89,864       99,596       126,730       87,164  
    Dilutive effect of convertible debt     (25,940 )     -       -       (25,940 )     -  
    Non-GAAP diluted number of shares     101,010       89,864       99,596       100,790       87,164  
                             
  Adjusted EBITDA reconciliation6:                    
    GAAP net income (loss)   $ 18,765     $ (36,583 )   $ (7,150 )   $ 11,615     $ (33,137 )
    Add back items:                    
      Income tax provision (benefit)     (979 )     16,624       5,477       4,498       15,263  
      Interest expense     20,084       12,778       21,784       41,868       18,543  
      Amortization of definite-lived intangibles     5,949       3,910       5,947       11,896       5,784  
      Depreciation expense     40,457       29,776       40,227       80,684       54,312  
      Stock-based compensation     2,845       2,314       2,246       5,091       4,354  
      Gain on sale of assets     (1,472 )     -       -       (1,472 )     (2,504 )
      Acquisition-related costs     605       22,627       691       1,296       30,862  
      Inventory markup     -       7,408       -       -       7,408  
      Impairments, restructuring and other charges     3,989       832       5,259       9,248       1,311  
    Adjusted EBITDA   $ 90,243     $ 59,686     $ 74,481     $ 164,724     $ 102,196  
    Adjusted EBITDA margin     15.0 %     13.4 %     12.8 %     13.9 %     13.2 %
                             
  Free cash flow reconciliation:                    
    Operating cash flow     80,057       15,543       17,892       97,949       82,897  
    Add back items:                    
      Payment of accreted interest on convertible sr. notes     -       8,731       -       -       8,731  
      Payment of acquisition-related costs       691         23,358         2,324         3,015         28,078  
    Adjusted operating cash flow     80,748       47,632       20,216       100,964       119,706  
    Capital expenditures, net     (18,183 )     (23,687 )     (20,116 )     (38,299 )     (46,463 )
    Free cash flow   $ 62,565     $ 23,945     $ 100     $ 62,665     $ 73,243  
                             
  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, and inventory markup.
                             
  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:
Sameer Desai,
Senior Director, Corporate
Development & Investor Relations
sameer.desai@ttmtech.com
714-327-3050

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