Press Release

TTM Technologies, Inc. Reports Fiscal Third Quarter 2018 Results

COSTA MESA, Calif., Oct. 30, 2018 (GLOBE NEWSWIRE) -- TTM Technologies, Inc. (NASDAQ:TTMI), a leading global printed circuit board (“PCB”) and radio frequency (“RF”) components manufacturer, today reported results for the third quarter of fiscal 2018, which ended October 1, 2018.  The financial results provided below for the third quarter include a full quarter contribution from the acquisition of Anaren, Inc. (“Anaren”), which was completed on April 18, 2018.

Third Quarter 2018 Highlights

  • Net sales were $755.8 million
  • GAAP net income was $27.0 million, or $0.22 per diluted share
  • Non-GAAP net income was $55.1 million, or $0.50 per diluted share
  • Cash flow from operations of $80.0 million

Third Quarter 2018 Financial Results
Net sales for the third quarter of 2018 were $755.8 million, compared to $666.8 million in the third quarter of 2017 and $716.9 million in the second quarter of 2018.

GAAP operating income for the third quarter of 2018 was $54.6 million, compared to $44.1 million in the third quarter of 2017 and $31.7 million in the second quarter of 2018. 

GAAP net income for the third quarter of 2018 was $27.0 million, or $0.22 per diluted share.  This compares to $21.5 million, or $0.19 per diluted share, in the third quarter of 2017 and $84.0 million, or $0.65 per diluted share, in the second quarter of 2018.
                                                                                                                                            
On a non-GAAP basis, net income for the third quarter of 2018 was $55.1 million, or $0.50 per diluted share. This compares to non-GAAP net income of $33.4 million, or $0.32 per diluted share, for the third quarter of 2017 and $52.3 million, or $0.48 per diluted share, in the second quarter of 2018.

Adjusted EBITDA for the third quarter of 2018 was $122.3 million, or 16.2 percent of net sales, compared to adjusted EBITDA of $85.7 million, or 12.9 percent of net sales, for the third quarter of 2017 and $115.9 million, or 16.2 percent of net sales, for the second quarter of 2018.

“TTM delivered record revenues and earnings for a third quarter,” said Tom Edman, CEO of TTM.  “We were pleased to see solid year over year growth from the aerospace and defense, cellular, computing and medical/industrial/instrumentation end markets that more than offset weakness in our automotive end market.  Following record third quarter revenues in the cellular end market, we’re anticipating weaker sales and profits in the fourth quarter.”

Business Outlook
For the fourth quarter of 2018 TTM estimates that revenue will be in the range of $720 million to $760 million, and non-GAAP net income will be in the range of $0.44 to $0.50 per diluted share.

To Access the Live Webcast/Conference Call
TTM will host a conference call and webcast to discuss third quarter 2018 results and fourth quarter 2018 outlook on Tuesday, October 30, 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 800-667-5617 or international 334-323-0509 (ID 9367022).  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 as well as a global designer and manufacturer of RF and microwave components and assemblies. 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)  
                               
                               
            Third Quarter   Second Quarter   First Three Quarters  
              2018       2017       2018       2018       2017    
                               
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS                      
                               
  Net sales     $   755,837     $   666,814     $   716,887     $   2,136,306     $   1,919,243    
  Cost of goods sold       626,253         569,980         600,747         1,801,904         1,621,523    
                               
  Gross profit       129,584         96,834         116,140         334,402         297,720    
                               
  Operating expenses:                      
    Selling and marketing       18,533         16,269         18,619         54,780         48,775    
    General and administrative       39,974         30,018         45,721         119,822         90,725    
    Amortization of definite-lived intangibles       16,609         5,905         19,489         41,959         17,727    
    Restructuring charges       (82 )       100         577         1,556         1,125    
    (Gain)/loss on sale of assets       -          452         -          -          (2,348 )  
      Total operating expenses       75,034         52,744         84,406         218,117         156,004    
                               
  Operating income       54,550         44,090         31,734         116,285         141,716    
                               
  Interest expense       (22,225 )       (13,598 )       (20,453 )       (56,425 )       (40,116 )  
  Loss on extinguishment of debt       -          (768 )       -          -          (769 )  
  Other, net         2,213         (6,984 )       6,178         7,284         (14,518 )  
                               
  Income before income taxes       34,538         22,740         17,459         67,144         86,313    
  Income tax (provision) / benefit       (7,537 )       (1,205 )       66,545         53,958         (10,902 )  
                               
  Net income   $   27,001     $   21,535     $   84,004     $   121,102     $   75,411    
                               
  Net income attributable to noncontrolling interest       -          (82 )       -          -          (408 )  
  Net income attributable to stockholders   $   27,001     $   21,453     $   84,004     $   121,102     $   75,003    
                               
  Earnings per share attributable to stockholders:                      
    Basic     $   0.26     $   0.21     $   0.81     $   1.17     $   0.74    
    Diluted     $   0.22     $   0.19     $   0.65     $   0.98     $   0.65    
                               
  Weighted-average shares used in computing per share amounts:                      
    Basic         103,676         101,814         103,553         103,246         101,501    
    Diluted         136,435         131,596         134,721         134,871         131,914    
                               
                               
  Reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share:              
                               
  Net income attributable to stockholders   $   27,001     $   21,453     $   84,004     $   121,102     $   75,003    
    Add back items: interest expense, net of tax       3,628         3,469         3,587         10,763         10,296    
  Adjusted net income attributable to stockholders   $   30,629     $   24,922     $   87,591     $   131,865     $   85,299    
  Weighted-average shares outstanding       103,676         101,814         103,553         103,246         101,501    
  Dilutive effect of convertible debt       25,938         25,939         25,938         25,939         25,939    
  Dilutive effect of warrants       5,226         2,151         3,854         4,086         2,753    
  Dilutive effect of performance-based stock units, restricted stock units & stock options       1,595         1,692         1,376         1,600         1,721    
  Diluted shares       136,435         131,596         134,721         134,871         131,914    
  Earnings per share attributable to stockholders:                      
    Basic     $   0.26     $   0.21     $   0.81     $   1.17     $   0.74    
    Diluted     $   0.22     $   0.19     $   0.65     $   0.98     $   0.65    
                               
                               
SELECTED BALANCE SHEET DATA                       
            October 1, 2018   January 1, 2018              
  Cash and cash equivalents, including restricted cash   $   207,952     $   409,326                
  Accounts and notes receivable, net       569,215         483,903                
  Contract assets       296,836         -                 
  Inventories         122,232         294,588                
  Total current assets       1,233,008         1,221,307                
  Property, plant and equipment, net       1,059,246         1,056,845                
  Other non-current assets       1,196,972         503,730                
  Total assets       3,489,226         2,781,882                
                               
  Short-term debt, including current portion of long-term debt   $   40,000     $   4,578                
  Accounts payable       451,645         497,455                
  Total current liabilities       695,276         720,356                
  Debt, net of discount       1,518,315         975,479                
  Total long-term liabilities       1,619,039         1,050,146                
  Total equity       1,174,911         1,011,380                
  Total liabilities and equity       3,489,226         2,781,882                
                               
SUPPLEMENTAL DATA                      
            Third Quarter   Second Quarter   First Three Quarters  
              2018       2017       2018       2018       2017    
  Gross margin     17.1 %     14.5 %     16.2 %     15.7 %     15.5 %  
  Operating margin     7.2 %     6.6 %     4.4 %     5.4 %     7.4 %  
                               
  End Market Breakdown:                      
            Third Quarter   Second Quarter          
              2018       2017       2018            
                               
    Aerospace/Defense     23 %     16 %     24 %          
    Automotive     15 %     20 %     19 %          
    Cellular Phone     17 %     17 %     8 %          
    Computing/Storage/Peripherals     14 %     14 %     15 %          
    Medical/Industrial/Instrumentation     13 %     14 %     14 %          
    Networking/Communications     17 %     17 %     17 %          
    Other       1 %     2 %     3 %          
                               
  Stock-based Compensation:                      
            Third Quarter   Second Quarter          
              2018       2017       2018            
    Amount included in:                      
      Cost of goods sold   $   774     $   606     $   829            
      Selling and marketing       520         369         545            
      General and administrative       4,165         3,703         4,493            
      Total stock-based compensation expense   $   5,459     $   4,678     $   5,867            
                               
                               
  Operating Segment Data:                      
            Third Quarter   Second Quarter          
     Net sales:      2018       2017       2018            
     PCB      $   698,983     $   609,742     $   657,601            
     E-M Solutions        59,481         60,620         61,842            
     Corporate        -          -          -             
       Total sales        758,464         670,362         719,443            
     Inter-segment sales        (2,627 )       (3,548 )       (2,556 )          
       Total net sales    $    755,837     $    666,814     $    716,887            
                               
     Operating segment income:                       
     PCB      $   98,039     $   70,443     $   80,964            
     E-M Solutions        2,205         2,870         2,496            
     Corporate        (26,920 )       (23,318 )       (32,237 )          
       Total operating segment income        73,324         49,995         51,223            
     Amortization of definite-lived intangibles        (18,774 )       (5,905 )       (19,489 )          
       Total operating income        54,550         44,090         31,734            
     Total other expense        (20,012 )       (21,350 )       (14,275 )          
     Income before income taxes    $    34,538     $    22,740     $    17,459            
                               
RECONCILIATIONS1                      
            Third Quarter   Second Quarter   First Three Quarters  
              2018       2017       2018       2018       2017    
  Non-GAAP gross profit reconciliation2:                      
    GAAP gross profit   $   129,584     $   96,834     $   116,140     $   334,402     $   297,720    
    Add back item:                      
      Inventory markup       -          -          4,900         4,900         -     
      Amortization of definite-lived intangibles       2,165         -          -          2,165         -     
      Stock-based compensation       774         606         829         2,132         1,639    
    Non-GAAP gross profit   $   132,523     $   97,440     $   121,869     $   343,599     $   299,359    
    Non-GAAP gross margin     17.5 %     14.6 %     17.0 %     16.1 %     15.6 %  
                               
  Non-GAAP operating income reconciliation3:                      
    GAAP operating income   $   54,550     $   44,090     $   31,734     $   116,285     $   141,716    
    Add back items:                      
      Amortization of definite-lived intangibles       18,774         5,905         19,489         44,124         17,727    
      Stock-based compensation       5,459         4,678         5,867         14,948         13,306    
      (Gain)/loss on sale of assets       -          452         -          -          (2,348 )  
      Inventory markup       -          -          4,900         4,900         -     
      Impairments, restructuring, acquisition-related, and other charges       230         100         7,429         12,693         1,225    
    Non-GAAP operating income   $   79,013     $   55,225     $   69,419     $   192,950     $   171,626    
    Non-GAAP operating margin     10.5 %     8.3 %     9.7 %     9.0 %     8.9 %  
                               
  Non-GAAP net income and EPS attributable to stockholders reconciliation4:                      
    GAAP net income attributable to stockholders   $   27,001     $   21,453     $   84,004     $   121,102     $   75,003    
    Add back items:                      
      Amortization of definite-lived intangibles       18,774         5,905         19,489         44,124         17,727    
      Stock-based compensation       5,459         4,678         5,867         14,948         13,306    
      Non-cash interest expense       3,992         2,699         3,353         10,399         8,052    
      (Gain)/loss on sale of assets       -          452         -          -          (2,348 )  
      Inventory markup       -          -          4,900         4,900         -     
      Loss on extinguishment of debt       -          768         -          -          769    
      Impairments, restructuring, acquisition-related, and other charges       230         100         7,742         13,235         1,225    
      Income taxes5       (337 )       (2,643 )       (73,073 )       (73,302 )       (7,855 )  
    Non-GAAP net income attributable to stockholders   $   55,119     $   33,412     $   52,282     $   135,406     $   105,879    
    Non-GAAP earnings per diluted share attributable to stockholders   $   0.50     $   0.32     $   0.48     $   1.24     $   1.00    
                               
  Non-GAAP diluted number of shares6:                      
    Diluted shares       136,435         131,596         134,721         134,871         131,914    
    Dilutive effect of convertible debt       (25,938 )       (25,939 )       (25,938 )       (25,939 )       (25,939 )  
    Non-GAAP diluted number of shares       110,497         105,657         108,783         108,932         105,975    
                               
  Adjusted EBITDA reconciliation7:                      
    GAAP net income   $   27,001     $   21,535     $   84,004     $   121,102     $   75,411    
    Add back items:                      
      Income tax provision (benefit)       7,537         1,205         (66,545 )       (53,958 )       10,902    
      Interest expense       22,225         13,598         20,453         56,425         40,116    
      Amortization of definite-lived intangibles       18,774         5,905         19,489         44,124         17,727    
      Depreciation expense       41,092         37,496         40,298         121,165         109,719    
      Stock-based compensation       5,459         4,678         5,867         14,948         13,306    
      (Gain)/loss on sale of assets       -          452         -          -          (2,348 )  
      Inventory markup       -          -          4,900         4,900         -     
      Loss on extinguishment of debt       -          768         -          -          769    
      Impairments, restructuring, acquisition-related, and other charges       230         100         7,429         12,693         1,225    
    Adjusted EBITDA   $   122,318     $   85,737     $   115,895     $   321,399     $   266,827    
    Adjusted EBITDA margin     16.2 %     12.9 %     16.2 %     15.0 %     13.9 %  
                               
  Free cash flow reconciliation:                      
    Operating cash flow       79,992         71,366         55,639         121,370         180,064    
    Capital expenditures, net       (35,038 )       (22,877 )       (38,948 )       (116,125 )       (91,881 )  
    Free cash flow   $   44,954     $   48,489     $   16,691     $   5,245     $   88,183    
                               
  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 amortization of intangibles, 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 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, 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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