TTM Technologies, Inc. Reports Fourth Quarter and Fiscal Year 2016 Results

Broad Based Growth Drives Results Ahead of Guidance Delivering Record Revenues

COSTA MESA, Calif., Feb. 08, 2017 (GLOBE NEWSWIRE) -- TTM Technologies, Inc. (NASDAQ:TTMI), a leading global printed circuit board (“PCB”) manufacturer, today reported results for the fourth quarter of fiscal 2016, which ended January 2nd, 2017. 

Fourth Quarter 2016 Highlights

  • Net sales were $706.5 million
  • GAAP net loss attributable to stockholders was $2.0 million, or $0.02 per share, which included a pre-tax charge of $47.8 million for debt extinguishment
  • Non-GAAP net income attributable to stockholders was $59.8 million, or $0.58 per diluted share
  • Adjusted EBITDA was $128.5 million

Fourth Quarter 2016 Financial Results
Net sales for the fourth quarter of 2016 were $706.5 million, compared to $668.9 million in the fourth quarter of 2015 and $641.7 million in the third quarter of 2016.

GAAP operating income for the fourth quarter of 2016 was $69.6 million, compared to $36.5 million in the fourth quarter of 2015 and $50.2 million in the third quarter of 2016. 

GAAP net loss attributable to stockholders for the fourth quarter of 2016 was $2.0 million, or $0.02 per share.  This compares to a GAAP net income attributable to stockholders of $9.5 million, or $0.09 per diluted share, in the fourth quarter of 2015 and $25.6 million, or $0.23 per diluted share, in the third quarter of 2016.  The fourth quarter GAAP net loss includes a pre-tax charge of $47.8 million due to the early extinguishment of debt.

On a non-GAAP basis, net income attributable to stockholders for the fourth quarter of 2016 was $59.8 million, or $0.58 per diluted share.  This compares to non-GAAP net income attributable to stockholders of $31.5 million, or $0.31 per diluted share, for the fourth quarter of 2015 and $40.1 million, or $0.39 per diluted share, in the third quarter of 2016.

Adjusted EBITDA for the fourth quarter of 2016 was $128.5 million, or 18.2 percent of net sales, compared to adjusted EBITDA of $95.8 million, or 14.3 percent of net sales, for the fourth quarter of 2015 and $102.2 million, or 15.9 percent of net sales, for the third quarter of 2016.

“Our fourth quarter revenues exceeded the high end of our guidance and our profitability was better than our forecast,” said Tom Edman, CEO of TTM.  “On a year over year basis, most end markets grew, with the fastest growth coming from the cellular and automotive end markets.  This drove substantial operating income leverage in the business resulting in the highest non-GAAP EPS in the history of the company.”

Full Year 2016 Financial Results
Net sales for fiscal year 2016 increased to $2.5 billion from $2.1 billion in fiscal year 2015.

GAAP operating income for fiscal year 2016 was $173.5 million, an increase from GAAP operating income of $61.3 million in fiscal year 2015.

GAAP net income attributable to stockholders for fiscal year 2016 was $34.9 million, or $0.34 per diluted share, compared to GAAP net loss attributable to stockholders of $25.9 million, or $0.28 per share, for fiscal year 2015. 

On a non-GAAP basis, net income attributable to stockholders for fiscal year 2016 was $142.3 million, or $1.40 per diluted share. This compares to fiscal year 2015 non-GAAP net income attributable to stockholders of $81.1 million, or $0.87 per diluted share.

Adjusted EBITDA for fiscal year 2016 was $395.4 million, or 15.6 percent of net sales, compared to $285.7 million, or 13.6 percent of net sales, for fiscal year 2015.  

"2016 was the year that validated TTM’s strategy of diversification, differentiation and discipline.  We saw solid growth in the automotive and aerospace and defense end markets that partially offset the declines in the cellular and networking and communications end markets.  Due to disciplined execution of synergies and cost controls, we generated $217 million in free cash flow and repaid approximately $218 million of our debt, allowing us to achieve a net debt to EBITDA ratio of less than 2.0 well ahead of our original timeline," continued Edman.  “I would like to thank our employees for their tremendous efforts to achieve these results for the year 2016 as we created a new “One TTM” resulting from the combination of Viasystems and TTM Technologies.”

“In 2017, we are looking forward to year on year growth in many of our end markets driven by megatrends such as growing automotive electronic content, increased aerospace and defense procurement, and upgrades in cellular phones.”

Business Outlook
For the first quarter of 2017, TTM estimates that revenue will be in the range of $595 million to $635 million, and non-GAAP net income attributable to stockholders will be in the range of $0.25 to $0.31 per diluted share.

To Access the Live Webcast/Conference Call
TTM will host a conference call and webcast to discuss fourth quarter 2016 results and first quarter 2017 outlook on Wednesday, February 8th, 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 888-278-8459 or international 913-312-1495 (ID 6391150).  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.

- Tables Follow -

 
TTM TECHNOLOGIES, INC.
Selected Unaudited Financial Information
(In thousands, except per share data)
                             
                             
            Fourth Quarter   Third Quarter   Full Year
              2016       2015       2016       2016       2015  
                             
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS                    
                             
  Net sales     $   706,534     $   668,874     $   641,720     $   2,533,359     $   2,095,488  
  Cost of goods sold       573,689         560,604         532,158         2,109,744         1,785,351  
                             
  Gross profit       132,845         108,270         109,562         423,615         310,137  
                             
  Operating expenses:                    
    Selling and marketing       16,848         17,963         15,643         66,366         57,361  
    General and administrative       38,998         41,654         35,641         148,719         167,109  
    Amortization of definite-lived intangibles       6,407         6,683         5,949         24,252         18,888  
    Restructuring charges       946         5,429         2,103         8,951         7,941  
    Impairment of long-lived assets       -          -          -          3,346         -   
    Gain on sale of assets       -          -          -          (1,472 )       (2,504 )
      Total operating expenses       63,199         71,729         59,336         250,162         248,795  
                             
  Operating income       69,646         36,541         50,226         173,453         61,342  
                             
  Interest expense       (15,267 )       (20,208 )       (18,873 )       (76,008 )       (59,753 )
  Loss on extinguishment of debt       (47,767 )       -          -          (47,767 )       (802 )
  Other, net         8,994         3,925         3,930         17,324         8,189  
                             
  Income before income taxes       15,606         20,258         35,283         67,002         8,976  
  Income tax provision       (17,416 )       (10,601 )       (9,513 )       (31,427 )       (34,594 )
                             
  Net income (loss)   $   (1,810 )   $   9,657     $   25,770     $   35,575     $   (25,618 )
                             
  Net income attributable to noncontrolling interest       (195 )       (136 )       (188 )       (714 )       (264 )
  Net income (loss) attributable to stockholders   $   (2,005 )   $   9,521     $   25,582     $   34,861     $   (25,882 )
                             
  Earnings (loss) per share attributable to stockholders:                    
    Basic     $   (0.02 )   $   0.10     $   0.26     $   0.35     $   (0.28 )
    Diluted     $   (0.02 )   $   0.09     $   0.23     $   0.34     $   (0.28 )
                             
  Weighted-average shares used in computing per share amounts:                    
    Basic         100,365         99,134         100,245         100,099         92,675  
    Diluted         100,365         126,329         127,645         101,482         92,675  
                             
                             
  Reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share:            
                             
  Net income attributable to stockholders       $   9,521     $   25,582          
    Add back items: interest expense, net of tax           2,009         3,321          
  Adjusted net income attributable to stockholders       $   11,530     $   28,903          
  Weighted-average shares outstanding           99,134         100,245          
  Dilutive effect of convertible debt           25,940         25,940          
  Dilutive effect of performance-based stock units, restricted stock units and stock options           1,255         1,460          
  Diluted shares           126,329         127,645          
  Earnings per share attributable to stockholders:                    
    Basic         $   0.10     $   0.26          
    Diluted         $   0.09     $   0.23          
                             
                             
SELECTED BALANCE SHEET DATA                     
            January 2, 2017   December 28, 2015            
  Cash and cash equivalents, including restricted cash   $   256,277     $   262,630              
  Accounts and notes receivable, net       432,596         454,001              
  Inventories         269,212         268,923              
  Total current assets       1,012,841         1,022,520              
  Property, plant and equipment, net       966,638         1,103,067              
  Other non-current assets       520,597         514,546              
  Total assets       2,500,076         2,640,133              
                             
  Short-term debt, including current portion of long-term debt   $   110,652     $   157,375              
  Accounts payable       355,774         347,916              
  Total current liabilities       689,065         744,994              
  Debt, net of discount       909,030         1,013,411              
  Total long-term liabilities       981,886         1,068,470              
  Total equity       829,125         826,669              
  Total liabilities and equity       2,500,076         2,640,133              
                             
SUPPLEMENTAL DATA                    
            Fourth Quarter   Third Quarter   Full Year
              2016       2015       2016       2016       2015  
  Gross margin     18.8 %     16.2 %     17.1 %     16.7 %     14.8 %
  Operating margin     9.9 %     5.5 %     7.8 %     6.8 %     2.9 %
                             
  End Market Breakdown:                    
            Fourth Quarter   Third Quarter        
              2016       2015       2016          
                             
    Aerospace/Defense     14 %     13 %     15 %        
    Automotive     19 %     18 %     19 %        
    Cellular Phone     19 %     18 %     17 %        
    Computing/Storage/Peripherals     12 %     12 %     12 %        
    Medical/Industrial/Instrumentation     13 %     13 %     14 %        
    Networking/Communications     21 %     23 %     21 %        
    Other       2 %     3 %     2 %        
                             
  Stock-based Compensation:                    
            Fourth Quarter   Third Quarter        
              2016       2015       2016          
    Amount included in:                    
      Cost of goods sold   $   469     $   327     $   412          
      Selling and marketing   $   305         301         268          
      General and administrative       2,426         2,007         2,119          
      Total stock-based compensation expense   $   3,200     $   2,635     $   2,799          
                             
                             
  Operating Segment Data:                    
            Fourth Quarter   Third Quarter        
     Net sales:      2016       2015       2016          
     PCB      $   654,379     $   611,045     $   598,656          
     E-M Solutions        55,332         61,021         46,246          
     Corporate        -          -          -           
       Total sales        709,711         672,066         644,902          
     Inter-segment sales        (3,177 )       (3,192 )       (3,182 )        
       Total net sales    $   706,534     $   668,874     $   641,720          
                             
     Operating segment income:                     
     PCB      $   95,208     $   66,320     $   75,501          
     E-M Solutions        3,029         2,612         1,421          
     Corporate        (22,184 )       (25,708 )       (20,747 )        
       Total operating segment income        76,053         43,224         56,175          
     Amortization of definite-lived intangibles        (6,407 )       (6,683 )       (5,949 )        
       Total operating income        69,646         36,541         50,226          
     Total other expense        (54,040 )       (16,283 )       (14,943 )        
     Income before income taxes    $   15,606     $   20,258     $   35,283          
                             
RECONCILIATIONS1                    
            Fourth Quarter   Third Quarter   Full Year
              2016       2015       2016       2016       2015  
  Non-GAAP gross profit reconciliation2:                    
    GAAP gross profit   $   132,845     $   108,270     $   109,562     $   423,615     $   310,137  
    Add back item:                    
      Inventory markup       -          598         -          -          16,220  
      Stock-based compensation       469         327         412         1,630         1,117  
    Non-GAAP gross profit   $   133,314     $   109,195     $   109,974     $   425,245     $   327,474  
    Non-GAAP gross margin     18.9 %     16.3 %     17.1 %     16.8 %     15.6 %
                             
  Non-GAAP operating income reconciliation3:                    
    GAAP operating income   $   69,646     $   36,541     $   50,226     $   173,453     $   61,342  
    Add back items:                    
      Amortization of definite-lived intangibles       6,407         6,683         5,949         24,252         18,888  
      Stock-based compensation       3,200         2,635         2,799         11,090         9,661  
      Gain on sale of assets       -          -          -          (1,472 )       (2,504 )
      Acquisition-related costs       195         1,521         197         1,688         34,448  
      Inventory markup       -          598         -          -          16,220  
      Impairments, restructuring, and other charges       1,530         5,429         2,103         12,881         7,941  
    Non-GAAP operating income   $   80,978     $   53,407     $   61,274     $   221,892     $   145,996  
    Non-GAAP operating margin     11.5 %     8.0 %     9.5 %     8.8 %     7.0 %
                             
  Non-GAAP net income and EPS attributable to stockholders reconciliation4:                    
    GAAP net income (loss) attributable to stockholders   $   (2,005 )   $   9,521     $   25,582     $   34,861     $   (25,882 )
    Add back items:                    
      Amortization of definite-lived intangibles       6,407         6,683         5,949         24,252         18,888  
      Stock-based compensation       3,200         2,635         2,799         11,090         9,661  
      Non-cash interest expense       2,697         4,893         4,721         19,180         15,626  
      Gain on sale of assets       -          -          -          (1,472 )       (2,504 )
      Acquisition-related costs       195         1,521         197         1,688         34,448  
      Inventory markup       -          598         -          -          16,220  
      Loss on extinguishment of debt       47,767         -          -          47,767         802  
      Impairments, restructuring and other charges       1,530         5,429         2,103         12,881         7,941  
      Income taxes       49         247         (1,208 )       (7,987 )       5,869  
    Non-GAAP net income attributable to stockholders   $   59,840     $   31,527     $   40,143     $   142,260     $   81,069  
    Non-GAAP earnings per diluted share attributable to stockholders   $   0.58     $   0.31     $   0.39     $   1.40     $   0.87  
                             
  Non-GAAP diluted number of shares5:                    
    Diluted shares       102,563         126,329         127,645         101,482         93,640  
    Dilutive effect of convertible debt       -         (25,940 )       (25,940 )       -         -  
    Non-GAAP diluted number of shares       102,563         100,389         101,705         101,482         93,640  
                             
  Adjusted EBITDA reconciliation6:                    
    GAAP net income (loss)   $   (1,810 )   $   9,657     $   25,770     $   35,575     $   (25,618 )
    Add back items:                    
      Income tax provision (benefit)       17,416         10,601         9,513         31,427         34,594  
      Interest expense       15,267         20,208         18,873         76,008         59,753  
      Amortization of definite-lived intangibles       6,407         6,683         5,949         24,252         18,888  
      Depreciation expense       38,539         39,105         37,006         156,229         133,508  
      Stock-based compensation       3,200         2,635         2,799         11,090         9,661  
      Gain on sale of assets       -          -          -          (1,472 )       (2,504 )
      Acquisition-related costs       195         1,521         197         1,688         34,448  
      Inventory markup       -          -          -          -          14,200  
      Loss on extinguishment of debt       47,767         -          -          47,767         802  
      Impairments, restructuring and other charges       1,530         5,429         2,103         12,881         7,941  
    Adjusted EBITDA   $   128,511     $   95,839     $   102,210     $   395,445     $   285,673  
    Adjusted EBITDA margin     18.2 %     14.3 %     15.9 %     15.6 %     13.6 %
                             
  Free cash flow reconciliation:                    
    Operating cash flow       97,650         139,829         102,737         298,336         237,462  
    Add back items:                    
      Payment of accreted interest on convertible sr. notes       -          -          -          -          8,730  
      Payment of acquisition-related costs       869         1,522         11         3,895         36,210  
    Adjusted operating cash flow       98,519         141,351         102,748         302,231         282,402  
    Capital expenditures, net       (22,619 )       (22,967 )       (24,221 )       (85,139 )       (99,718 )
    Free cash flow   $   75,900     $   118,384     $   78,527     $   217,092     $   182,684  
                             
  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

Primary Logo

Source: TTM Technologies