Press Release

TTM Technologies, Inc. Reports Third Quarter 2016 Results
Strong Execution Drives Results Ahead of Guidance

COSTA MESA, Calif., Oct. 26, 2016 (GLOBE NEWSWIRE) -- TTM Technologies, Inc. (NASDAQ:TTMI), a leading global printed circuit board (“PCB”) manufacturer, today reported results for the third quarter 2016, which ended September 26, 2016. 

Third Quarter 2016 Highlights

  • Net sales were $641.7 million
  • GAAP net income attributable to stockholders was $25.6 million, or $0.23 per diluted share
  • Non-GAAP net income attributable to stockholders was $40.1 million, or $0.39 per diluted share
  • Adjusted EBITDA was $102.2 million

Third Quarter 2016 Financial Results
Net sales for the third quarter of 2016 were $641.7 million, compared to $652.0 million in the third quarter of 2015 and $601.8 million in the second quarter of 2016.

GAAP operating income for the third quarter of 2016 was $50.2 million, compared to $23.6 million in the third quarter of 2015 and $34.7 million in the second quarter of 2016. 

GAAP net income attributable to stockholders for the third quarter of 2016 was $25.6 million, or $0.23 per diluted share.  This compares to a GAAP net loss attributable to stockholders of $2.2 million, or $0.02 per share, in the third quarter of 2015 and GAAP net income of $18.5 million, or $0.17 per diluted share, in the second quarter of 2016.

On a non-GAAP basis, net income attributable to stockholders for the third quarter of 2016 was $40.1 million, or $0.39 per diluted share.  This compares to non-GAAP net income of $23.8 million, or $0.24 per diluted share, for the third quarter of 2015 and $28.4 million, or $0.28 per diluted share, in the second quarter of 2016.

Adjusted EBITDA for the third quarter of 2016 was $102.2 million, or 15.9 percent of net sales, compared to adjusted EBITDA of $87.6 million, or 13.4 percent of net sales, for the third quarter of 2015 and $90.2 million, or 15 percent of net sales, for the second quarter of 2016.

“Our third quarter revenues matched our expectations while profitability was better than forecast driving earnings to the highest level in years,” said Tom Edman, CEO of TTM.  “Strong operational execution drove non-GAAP earnings above the high end of our guidance.  Sequentially, a sharp acceleration in the cellular end market more than offset modest declines in the networking and communications end market, demonstrating the benefits of diversification.”

Business Outlook
For the fourth quarter of 2016, TTM estimates that revenue will be in the range of $650 million to $690 million, and non-GAAP net income will be in the range of $0.42 to $0.48 per diluted share.  Our fourth quarter will have 14 weeks compared to the normal 13 weeks as fiscal 2016 is a 53 week year.

To Access the Live Webcast/Conference Call
TTM will host a conference call and webcast to discuss third quarter 2016 results and fourth quarter 2016 outlook on Wednesday, October 26, 2016, 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 800-344-6698 or international 785-830-7979 (ID 9216628).  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 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.

TTM TECHNOLOGIES, INC.  
Selected Unaudited Financial Information  
(In thousands, except per share data)  
                         
                         
      Third Quarter   Second Quarter   First Three Quarters  
        2016       2015       2016       2016       2015    
                         
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS                      
                         
Net sales     $ 641,720     $ 652,005     $ 601,847     $ 1,826,825     $ 1,426,614    
Cost of goods sold     532,158       562,887       504,202       1,536,055       1,224,747    
                         
Gross profit     109,562       89,118       97,645       290,770       201,867    
                         
Operating expenses:                      
Selling and marketing     15,643       17,642       16,569       49,518       39,398    
General and administrative     35,641       39,456       37,931       109,721       125,455    
Amortization of definite-lived intangibles     5,949       6,421       5,949       17,845       12,205    
Restructuring charges     2,103       2,003       3,989       8,005       2,512    
Impairment of long-lived assets     -       -       -       3,346       -    
Gain on sale of assets     -       -       (1,472 )     (1,472 )     (2,504 )  
Total operating expenses     59,336       65,522       62,966       186,963       177,066    
                         
Operating income     50,226       23,596       34,679       103,807       24,801    
                         
Interest expense     (18,873 )     (21,002 )     (20,084 )     (60,741 )     (39,545 )  
Loss on extinguishment of debt     -       -       -       -       (802 )  
Other, net       3,930       3,998       3,191       8,330       4,264    
                         
Income (loss) before income taxes     35,283       6,592       17,786       51,396       (11,282 )  
Income tax (provision) benefit     (9,513 )     (8,730 )     979       (14,011 )     (23,993 )  
                         
Net income (loss)   $ 25,770     $ (2,138 )   $ 18,765     $ 37,385     $ (35,275 )  
                         
Net income attributable to noncontrolling interest     (188 )     (99 )     (217 )     (519 )     (128 )  
Net income (loss) attributable to stockholders   $ 25,582     $ (2,237 )   $ 18,548     $ 36,866     $ (35,403 )  
                         
Earnings (loss) per share attributable to stockholders:                      
Basic     $ 0.26     $ (0.02 )   $ 0.19     $ 0.37     $ (0.39 )  
Diluted     $ 0.23     $ (0.02 )   $ 0.17     $ 0.36     $ (0.39 )  
                         
Weighted-average shares used in computing per share amounts:                      
Basic       100,245       99,128       100,170       100,004       90,522    
Diluted       127,645       99,128       126,950       101,094       90,522    
                         
                         
Reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share:              
                         
Net income attributable to stockholders   $ 25,582         $ 18,548            
Add back items: interest expense, net of tax     3,321           3,285            
Adjusted net income attributable to stockholders   $ 28,903         $ 21,833            
Weighted-average shares outstanding     100,245           100,170            
Dilutive effect of convertible debt     25,940           25,940            
Dilutive effect of performance-based stock units, restricted stock units and stock options     1,460           840            
Diluted shares     127,645           126,950            
Earnings per share attributable to stockholders:                      
Basic     $ 0.26         $ 0.19            
Diluted     $ 0.23         $ 0.17            
                         
                         
SELECTED BALANCE SHEET DATA                       
      September 26, 2016   December 28, 2015              
Cash and cash equivalents, including restricted cash   $ 291,783     $ 262,630                
Accounts and notes receivable, net     449,335       454,001                
Inventories       281,169       268,923                
Total current assets     1,055,988       1,022,520                
Property, plant and equipment, net     1,026,213       1,103,067                
Other non-current assets     525,025       514,546                
Total assets     2,607,226       2,640,133                
                         
Short-term debt, including current portion of long-term debt   $ 146,473     $ 157,375                
Accounts payable     370,660       347,916                
Total current liabilities     746,867       744,994                
Debt, net of discount     935,377       1,013,411                
Total long-term liabilities     1,007,244       1,068,470                
Total equity     853,115       826,669                
Total liabilities and equity     2,607,226       2,640,133                
                         
SUPPLEMENTAL DATA                      
      Third Quarter   Second Quarter   First Three Quarters  
        2016       2015       2016       2016       2015    
Gross margin     17.1 %     13.7 %     16.2 %     15.9 %     14.2 %  
Operating margin     7.8 %     3.6 %     5.8 %     5.7 %     1.7 %  
                         
End Market Breakdown:                      
      Third Quarter   Second Quarter          
        2016       2015       2016            
                         
Aerospace/Defense     15 %     14 %     16 %          
Automotive     19 %     17 %     19 %          
Cellular Phone     17 %     16 %     10 %          
Computing/Storage/Peripherals     12 %     12 %     13 %          
Medical/Industrial/Instrumentation     14 %     14 %     16 %          
Networking/Communications     21 %     25 %     25 %          
Other       2 %     2 %     1 %          
                         
Stock-based Compensation:                      
      Third Quarter   Second Quarter          
        2016       2015       2016            
Amount included in:                      
Cost of goods sold   $ 412     $ 322     $ 429            
Selling and marketing   $ 268       294       271            
General and administrative     2,119       2,056       2,145            
Total stock-based compensation expense   $ 2,799     $ 2,672     $ 2,845            
                         
                         
Operating Segment Data:                      
      Third Quarter   Second Quarter          
Net sales:     2016       2015       2016            
PCB     $ 598,656     $ 604,771     $ 563,574            
E-M Solutions     46,246       49,658       40,427            
Corporate       -         -          -             
Total sales     644,902       654,429       604,001            
Inter-segment sales       (3,182 )       (2,424 )       (2,154 )          
Total net sales   $   641,720     $ 652,005     $   601,847            
                         
Operating segment income:                      
PCB     $ 75,501     $ 52,191     $ 64,970            
E-M Solutions     1,421       (1,729 )     (153 )          
Corporate       (20,747 )      (20,445 )       (24,189 )          
Total operating segment income     56,175       30,017       40,628            
Amortization of definite-lived intangibles       (5,949 )       (6,421 )       (5,949 )          
Total operating income     50,226       23,596       34,679            
Total other expense       (14,943 )       (17,004 )       (16,893 )          
Income before income taxes   $   35,283     $   6,592     $   17,786            
                         
RECONCILIATIONS1                      
      Third Quarter   Second Quarter   First Three Quarters  
        2016       2015       2016       2016       2015    
Non-GAAP gross profit reconciliation2:                      
GAAP gross profit   $ 109,562     $ 89,118     $ 97,645     $ 290,770     $ 201,867    
Add back item:                      
Inventory markup     -       8,214       -       -       15,622    
Stock-based compensation     412       322       429       1,161       790    
Non-GAAP gross profit   $ 109,974     $ 97,654     $ 98,074     $ 291,931     $ 218,279    
Non-GAAP gross margin     17.1 %     15.0 %     16.3 %     16.0 %     15.3 %  
                         
Non-GAAP operating income reconciliation3:                      
GAAP operating income   $ 50,226     $ 23,596     $ 34,679     $ 103,807     $ 24,801    
Add back items:                      
Amortization of definite-lived intangibles     5,949       6,421       5,949       17,845       12,205    
Stock-based compensation     2,799       2,672       2,845       7,890       7,026    
Gain on sale of assets     -       -       (1,472 )     (1,472 )     (2,504 )  
Acquisition-related costs     197       2,065       605       1,493       32,927    
Inventory markup     -       8,214       -       -       15,622    
Impairments and restructuring charges     2,103       2,003       3,989       11,351       2,512    
Non-GAAP operating income   $ 61,274     $ 44,971     $ 46,595     $ 140,914     $ 92,589    
Non-GAAP operating margin     9.5 %     6.9 %     7.7 %     7.7 %     6.5 %  
                         
Non-GAAP net income and EPS attributable to stockholders reconciliation4:                      
GAAP net income (loss) attributable to stockholders   $ 25,582     $ (2,237 )   $ 18,548     $ 36,866     $ (35,403 )  
Add back items:                      
Amortization of definite-lived intangibles     5,949       6,421       5,949       17,845       12,205    
Stock-based compensation     2,799       2,672       2,845       7,890       7,026    
Non-cash interest expense     4,721       4,819       5,608       16,483       10,733    
Gain on sale of assets     -       -       (1,472 )     (1,472 )     (2,504 )  
Acquisition-related costs     197       2,065       605       1,493       32,927    
Inventory markup     -       8,214       -       -       15,622    
Impairments, restructuring and other charges     2,103       2,003       3,989       11,351       3,314    
Income taxes     (1,208 )     (122 )     (7,649 )     (8,036 )     5,622    
Non-GAAP net income attributable to stockholders   $ 40,143     $ 23,835     $ 28,423     $ 82,420     $ 49,542    
Non-GAAP earnings per diluted share attributable to stockholders   $ 0.39     $ 0.24     $ 0.28     $ 0.82     $ 0.54    
                         
Non-GAAP diluted number of shares5:                      
Diluted shares     127,645       100,035       126,950       101,094       91,455    
Dilutive effect of convertible debt     (25,940 )     -       (25,940 )     -       -    
Non-GAAP diluted number of shares     101,705       100,035       101,010       101,094       91,455    
                         
Adjusted EBITDA reconciliation6:                      
GAAP net income (loss)   $ 25,770     $ (2,138 )   $ 18,765     $ 37,385     $ (35,275 )  
Add back items:                      
Income tax provision (benefit)     9,513       8,730       (979 )     14,011       23,993    
Interest expense     18,873       21,002       20,084       60,741       39,545    
Amortization of definite-lived intangibles     5,949       6,421       5,949       17,845       12,205    
Depreciation expense     37,006       40,091       40,457       117,690       94,403    
Stock-based compensation     2,799       2,672       2,845       7,890       7,026    
Gain on sale of assets     -       -       (1,472 )     (1,472 )     (2,504 )  
Acquisition-related costs     197       2,065       605       1,493       32,927    
Inventory markup     -       6,792       -       -       14,200    
Impairments, restructuring and other charges     2,103       2,003       3,989       11,351       3,314    
Adjusted EBITDA   $ 102,210     $ 87,638     $ 90,243     $ 266,934     $ 189,834    
Adjusted EBITDA margin     15.9 %     13.4 %     15.0 %     14.6 %     13.3 %  
                         
Free cash flow reconciliation:                      
Operating cash flow     102,737       14,735       80,057       200,686       97,632    
Add back items:                      
Payment of accreted interest on convertible sr. notes     -       -       -       -       8,731    
Payment of acquisition-related costs       11         6,610         691         3,026         34,688    
Adjusted operating cash flow     102,748       21,345       80,748       203,712       141,051    
Capital expenditures, net     (24,221 )     (30,413 )     (18,183 )     (62,520 )     (76,876 )  
Free cash flow   $ 78,527     $ (9,068 )   $ 62,565     $ 141,192     $ 64,175    
                         
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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