Press Release

TTM Technologies, Inc. Reports Fiscal Third Quarter 2017 Results
Revenues and Operating Profits Exceed Expectations

COSTA MESA, Calif., Nov. 01, 2017 (GLOBE NEWSWIRE) -- TTM Technologies, Inc. (NASDAQ:TTMI), a leading global printed circuit board (“PCB”) manufacturer, today reported results for the third quarter of fiscal 2017, which ended October 2nd, 2017. 

Third Quarter 2017 Highlights

  • Net sales were $666.8 million
  • GAAP net income attributable to stockholders was $21.5 million, or $0.19 per diluted share
  • Non-GAAP net income attributable to stockholders was $33.4 million, or $0.32 per diluted share
  • Excluding a $7.4 million (non-cash) foreign exchange loss, non-GAAP earnings per diluted share were $0.38
  • Adjusted EBITDA was $85.7 million

Third Quarter 2017 Financial Results
Net sales for the third quarter of 2017 were $666.8 million, compared to $641.7 million in the third quarter of 2016 and $627.2 million in the second quarter of 2017.

GAAP operating income for the third quarter of 2017 was $44.1 million, compared to $50.2 million in the third quarter of 2016 and $45.1 million in the second quarter of 2017. 

GAAP net income attributable to stockholders for the third quarter of 2017 was $21.5 million, or $0.19 per diluted share.  This compares to a GAAP net income attributable to stockholders of $25.6 million, or $0.23 per diluted share, in the third quarter of 2016 and a GAAP net income of $20.6 million, or $0.18 per diluted share, in the second quarter of 2017. 

On a non-GAAP basis, net income attributable to stockholders for the third quarter of 2017 was $33.4 million, or $0.32 per diluted share. This compares to non-GAAP net income attributable to stockholders of $40.1 million, or $0.39 per diluted share, for the third quarter of 2016 and $33.3 million, or $0.31 per diluted share, in the second quarter of 2017.

Adjusted EBITDA for the third quarter of 2017 was $85.7 million, or 12.9 percent of net sales, compared to adjusted EBITDA of $102.2 million, or 15.9 percent of net sales, for the third quarter of 2016 and $85.5 million, or 13.6 percent of net sales, for the second quarter of 2017.

“TTM delivered the fourth consecutive quarter of year on year organic growth with revenues and operating performance that exceeded our expectations,” said Tom Edman, CEO of TTM.  “On a year over year basis, the fastest growth in the third quarter came from the computing, automotive and the aerospace and defense end markets.  Absent a foreign exchange loss due to the weakening U.S. dollar, non-GAAP EPS was above the high end of guidance.” 

Business Outlook
For the fourth quarter of 2017, TTM estimates that revenue will be in the range of $700 million to $750 million, and non-GAAP net income attributable to stockholders will be in the range of $0.49 to $0.55 per diluted share. 

To Access the Live Webcast/Conference Call
TTM will host a conference call and webcast to discuss third quarter 2017 results and fourth quarter 2017 outlook on Wednesday, November 1st, 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 877-830-2636 or international 785-424-1802 (ID 9611659).  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 attributable to stockholders 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 attributable to stockholders 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 attributable to stockholders per diluted share calculated and presented in accordance with GAAP.  Accordingly, a reconciliation of non-GAAP net income attributable to stockholders per diluted share to such measure calculated and presented in accordance with GAAP is not available without unreasonable effort and has not been provided.

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

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TTM TECHNOLOGIES, INC.  
Selected Unaudited Financial Information  
(In thousands, except per share data)  
                               
                               
            Third Quarter   Second Quarter   First Three Quarters  
              2017       2016       2017       2017       2016    
                               
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS                      
                               
  Net sales     $   666,814     $   641,720     $   627,182     $   1,919,243     $   1,826,825    
  Cost of goods sold       569,980         532,158         531,315         1,621,523         1,536,055    
                               
  Gross profit       96,834         109,562         95,867         297,720         290,770    
                               
  Operating expenses:                      
    Selling and marketing       16,269         15,643         15,851         48,775         49,518    
    General and administrative       30,018         35,641         29,885         90,725         109,721    
    Amortization of definite-lived intangibles       5,905         5,949         5,910         17,727         17,845    
    Restructuring charges       100         2,103         416         1,125         8,005    
    Impairment of long-lived assets       -          -          -          -          3,346    
    (Gain)/loss on sale of assets       452         -          (1,251 )       (2,348 )       (1,472 )  
      Total operating expenses       52,744         59,336         50,811         156,004         186,963    
                               
  Operating income       44,090         50,226         45,056         141,716         103,807    
                               
  Interest expense       (13,598 )       (18,873 )       (12,922 )       (40,116 )       (60,741 )  
  Loss on extinguishment of debt       (768 )       -          (1 )       (769 )       -     
  Other, net         (6,984 )       3,930         (5,824 )       (14,518 )       8,330    
                               
  Income before income taxes       22,740         35,283         26,309         86,313         51,396    
  Income tax provision       (1,205 )       (9,513 )       (5,558 )       (10,902 )       (14,011 )  
                               
  Net income (loss)   $   21,535     $   25,770     $   20,751     $   75,411     $   37,385    
                               
  Net income attributable to noncontrolling interest       (82 )       (188 )       (160 )       (408 )       (519 )  
  Net income (loss) attributable to stockholders   $   21,453     $   25,582     $   20,591     $   75,003     $   36,866    
                               
  Earnings (loss) per share attributable to stockholders:                      
    Basic     $   0.21     $   0.26     $   0.20     $   0.74     $   0.37    
    Diluted     $   0.19     $   0.23     $   0.18     $   0.65     $   0.36    
                               
  Weighted-average shares used in computing per share amounts:                      
    Basic         101,814         100,245         101,756         101,501         100,004    
    Diluted         131,596         127,645         133,224         131,914         101,094    
                               
                               
  Reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share:              
                               
  Net income attributable to stockholders   $   21,453     $   25,582     $   20,591     $   75,003        
    Add back items: interest expense, net of tax       3,469         3,321         3,432         10,296        
  Adjusted net income attributable to stockholders   $   24,922     $   28,903     $   24,023     $   85,299        
  Weighted-average shares outstanding       101,814         100,245         101,756         101,501        
  Dilutive effect of convertible debt       25,939         25,940         25,940         25,939        
  Dilutive effect of warrants       2,151             3,924         2,753        
  Dilutive effect of performance-based stock units, restricted stock units & stock options       1,692         1,460         1,604         1,721        
  Diluted shares       131,596         127,645         133,224         131,914        
  Earnings per share attributable to stockholders:                      
    Basic     $   0.21     $   0.26     $   0.20     $   0.74        
    Diluted     $   0.19     $   0.23     $   0.18     $   0.65        
                               
                               
SELECTED BALANCE SHEET DATA                       
            October 2, 2017   January 2, 2017              
  Cash and cash equivalents, including restricted cash   $   301,934     $   256,277                
  Accounts and notes receivable, net       475,056         432,788                
  Inventories         295,279         269,212                
  Total current assets       1,110,961         1,012,841                
  Property, plant and equipment, net       1,052,779         966,638                
  Other non-current assets       510,204         520,597                
  Total assets       2,673,944         2,500,076                
                               
  Short-term debt, including current portion of long-term debt   $   4,184     $   110,652                
  Accounts payable       422,549         371,610                
  Total current liabilities       672,783         689,065                
  Debt, net of discount       974,161         909,030                
  Total long-term liabilities       1,048,614         981,886                
  Total equity       952,547         829,125                
  Total liabilities and equity       2,673,944         2,500,076                
                               
SUPPLEMENTAL DATA                      
            Third Quarter   Second Quarter   First Three Quarters  
              2017       2016       2017       2017       2016    
  Gross margin     14.5 %     17.1 %     15.3 %     15.5 %     15.9 %  
  Operating margin     6.6 %     7.8 %     7.2 %     7.4 %     5.7 %  
                               
  End Market Breakdown:                      
            Third Quarter   Second Quarter          
              2017       2016       2017            
                               
    Aerospace/Defense     16 %     15 %     17 %          
    Automotive     20 %     19 %     20 %          
    Cellular Phone     17 %     17 %     13 %          
    Computing/Storage/Peripherals     14 %     12 %     14 %          
    Medical/Industrial/Instrumentation     14 %     14 %     15 %          
    Networking/Communications     17 %     21 %     20 %          
    Other       2 %     2 %     1 %          
                               
  Stock-based Compensation:                      
            Third Quarter   Second Quarter          
              2017       2016       2017            
    Amount included in:                      
      Cost of goods sold   $   606     $   412     $   639            
      Selling and marketing   $   369         268         386            
      General and administrative       3,703         2,119         3,975            
      Total stock-based compensation expense   $   4,678     $   2,799     $   5,000            
                               
                               
  Operating Segment Data:                      
            Third Quarter   Second Quarter          
     Net sales:      2017       2016       2017            
     PCB      $   609,742     $   598,656     $   576,566            
     E-M Solutions        60,620         46,246         52,898            
     Corporate        -          -          -             
       Total sales        670,362         644,902         629,464            
     Inter-segment sales        (3,548 )       (3,182 )       (2,282 )          
       Total net sales    $   666,814     $   641,720     $   627,182            
                               
     Operating segment income:                       
     PCB      $   70,443     $   75,501     $   69,435            
     E-M Solutions        2,870         1,421         2,689            
     Corporate        (23,318 )       (20,747 )       (21,158 )          
       Total operating segment income        49,995         56,175         50,966            
     Amortization of definite-lived intangibles        (5,905 )       (5,949 )       (5,910 )          
       Total operating income        44,090         50,226         45,056            
     Total other expense        (21,350 )       (14,943 )       (18,747 )          
     Income before income taxes    $   22,740     $   35,283     $   26,309            
                               
RECONCILIATIONS1                      
            Third Quarter   Second Quarter   First Three Quarters  
              2017       2016       2017       2017       2016    
  Non-GAAP gross profit reconciliation2:                      
    GAAP gross profit   $   96,834     $   109,562     $   95,867     $   297,720     $   290,770    
    Add back item:                      
      Stock-based compensation       606         412         639         1,639         1,161    
    Non-GAAP gross profit   $   97,440     $   109,974     $   96,506     $   299,359     $   291,931    
    Non-GAAP gross margin     14.6 %     17.1 %     15.4 %     15.6 %     16.0 %  
                               
  Non-GAAP operating income reconciliation3:                      
    GAAP operating income   $   44,090     $   50,226     $   45,056     $   141,716     $   103,807    
    Add back items:                      
      Amortization of definite-lived intangibles       5,905         5,949         5,910         17,727         17,845    
      Stock-based compensation       4,678         2,799         5,000         13,306         7,890    
      (Gain)/loss on sale of assets       452         -          (1,251 )       (2,348 )       (1,472 )  
      Impairments, restructuring, acquisition-related, and other charges       100         2,300         416         1,225         12,844    
    Non-GAAP operating income   $   55,225     $   61,274     $   55,131     $   171,626     $   140,914    
    Non-GAAP operating margin     8.3 %     9.5 %     8.8 %     8.9 %     7.7 %  
                               
  Non-GAAP net income and EPS attributable to stockholders reconciliation4:                      
    GAAP net income (loss) attributable to stockholders   $   21,453     $   25,582     $   20,591     $   75,003     $   36,866    
    Add back items:                      
      Amortization of definite-lived intangibles       5,905         5,949         5,910         17,727         17,845    
      Stock-based compensation       4,678         2,799         5,000         13,306         7,890    
      Non-cash interest expense       2,699         4,721         2,726         8,052         16,483    
      (Gain)/loss on sale of assets       452         -          (1,251 )       (2,348 )       (1,472 )  
      Loss on extinguishment of debt       768         -          1         769         -     
      Impairments, restructuring, acquisition-related, and other charges       100         2,300         416         1,225         12,844    
      Income taxes       (2,643 )       (1,208 )       (119 )       (7,855 )       (8,036 )  
    Non-GAAP net income attributable to stockholders   $   33,412     $   40,143     $   33,274     $   105,879     $   82,420    
    Non-GAAP earnings per diluted share attributable to stockholders   $   0.32     $   0.39     $   0.31     $   1.00     $   0.82    
                               
  Non-GAAP diluted number of shares5:                      
    Diluted shares       131,596         127,645         133,224         131,914         101,094    
    Dilutive effect of convertible debt       (25,939 )       (25,940 )       (25,940 )       (25,939 )       -    
    Non-GAAP diluted number of shares       105,657         101,705         107,284         105,975         101,094    
                               
  Adjusted EBITDA reconciliation6:                      
    GAAP net income (loss)   $   21,535     $   25,770     $   20,751     $   75,411     $   37,385    
    Add back items:                      
      Income tax provision (benefit)       1,205         9,513         5,558         10,902         14,011    
      Interest expense       13,598         18,873         12,922         40,116         60,741    
      Amortization of definite-lived intangibles       5,905         5,949         5,910         17,727         17,845    
      Depreciation expense       37,496         37,006         36,146         109,719         117,690    
      Stock-based compensation       4,678         2,799         5,000         13,306         7,890    
      (Gain)/loss on sale of assets       452         -          (1,251 )       (2,348 )       (1,472 )  
      Loss on extinguishment of debt       768         -          1         769         -     
      Impairments, restructuring, acquisition-related, and other charges       100         2,300         416         1,225         12,844    
    Adjusted EBITDA   $   85,737     $   102,210     $   85,453     $   266,827     $   266,934    
    Adjusted EBITDA margin     12.9 %     15.9 %     13.6 %     13.9 %     14.6 %  
                               
  Free cash flow reconciliation:                      
    Operating cash flow       71,366         102,737         59,114         180,064         200,686    
    Capital expenditures, net       (22,877 )       (25,552 )       (45,626 )       (91,881 )       (60,997 )  
    Free cash flow   $   48,489     $   77,185     $   13,488     $   88,183     $   139,689    
                               
  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 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.  
                               

 

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