TTM Technologies, Inc. Reports Fourth Quarter and Full Year 2007 Results
SANTA ANA, Calif.--(BUSINESS WIRE)--
TTM Technologies, Inc. (Nasdaq: TTMI), North America's largest printed circuit board (PCB) manufacturer, today reported results for the fourth quarter of 2007, ended December 31, 2007.
Financial & Operational Highlights
-- TTM reported strong results for the fourth quarter, with
sequential improvement in all financial metrics.
-- Fiscal year 2007 net sales improved 81% over 2006 net sales.
-- Fourth quarter 2007 gross margin of 20.7% increased 150 basis
points over third quarter gross margins.
-- Fourth quarter 2007 net income improved 44% over third quarter
2007 net income.
-- The Company continued to pay down debt associated with the
Printed Circuit Group (PCG) acquisition, ahead of schedule.
TTM paid down $24 million in debt during the fourth quarter,
reducing the debt balance to $85 million.
Fourth Quarter 2007 Financial Results
Commenting on the Company's results, Kent Alder, President and CEO of TTM, noted, "We delivered a solid performance in the fourth quarter, fueled by strong demand for our high tech manufacturing services, as well as from our Aerospace/Defense customers. Against a backdrop of challenging macroeconomic conditions, fourth quarter revenue, gross and operating margins and earnings per share all grew significantly over the third quarter. This is a testament to our improving operating efficiencies and clearly validates our ability to execute." Alder added, "Our growth strategy is working, and we will continue to strengthen our capabilities and enhance our leadership position in the industry."
Fourth quarter net sales of $167.5 million improved sequentially over third quarter net sales of $163.1 million, primarily due to continued strength in the PCB market.
Fourth quarter gross margin of 20.7 percent increased over third quarter gross margin of 19.2 percent.
Selling and marketing expense for the fourth quarter was $7.6 million, representing 4.5 percent of sales. This compares to third quarter selling and marketing expense of $7.1 million, representing 4.4 percent of sales. The increase in selling and marketing expense was largely due to higher commissions on higher revenue.
General and administrative expense, including amortization of intangibles, for the fourth quarter was $9.5 million, representing 5.7 percent of sales. This compares to third quarter general and administrative expense, including amortization of intangibles, of $9.0 million, representing 5.5 percent of sales. The increase in general and administrative expense was primarily due to higher compensation expense, including a larger bonus accrual due to better fourth quarter performance.
TTM posted operating income of $17.6 million for the fourth quarter, an increase of almost 16 percent over third quarter operating income of $15.2 million.
Fourth quarter net income of $11.8 million, or $0.28 per diluted share, increased 44% over third quarter net income of $8.2 million, or $0.19 per diluted share. Fourth quarter earnings per share was affected by a reduction in income tax expense arising from a decrease in the valuation allowance on the Company's state deferred income tax asset. Strong consistent earnings performance from California makes it more likely that the Company will utilize its deferred tax asset. This reduction in valuation allowance of approximately $2.7 million added $0.06 to diluted earnings per share, increasing our earnings from a solid $0.22 to $0.28 in the fourth quarter.
EBITDA (earnings before interest, taxes, depreciation and amortization) for the fourth quarter was $24.4 million, or 14.5 percent of sales, compared with third quarter EBITDA of $22.2 million, or 13.6 percent of sales. (A reconciliation of this non-GAAP measure is provided after the GAAP financial statements accompanying this press release.)
Fourth Quarter Segment Information - PCB Manufacturing and Backplane Assembly
TTM Technologies reports two operating segments, which are PCB Manufacturing and Backplane Assembly.
For the PCB Manufacturing segment, fourth quarter net sales (before excluding inter-company sales) were $147.5 million, compared with $140.5 million in the third quarter. Fourth quarter operating segment income (before amortization of intangibles) was $17.1 million, compared with $13.9 million in the third quarter.
For the Backplane Assembly segment, fourth quarter net sales (before excluding inter-company sales) were $27.9 million, compared with $30.7 million in the third quarter. Fourth quarter operating segment income (before amortization of intangibles) was $1.5 million, compared with $2.3 million in the third quarter.
"PCB manufacturing continued its strong contribution to the quarter's results, attributable to our Aerospace/Defense customers as well as strong demand for our high tech manufacturing services," said Alder. "Net sales in our Backplane Assembly segment were down for the quarter due to a deferral of certain orders from the fourth quarter to the first quarter of fiscal 2008." Alder continued, "We have shipped some of the deferred orders in January, and we expect a stronger revenue contribution from the Backplane Assembly segment in the first quarter of 2008."
Balance Sheet
Cash and short-term investments at the end of the fourth quarter totaled $18.7 million, compared with $27.3 million at the end of the third quarter. This decrease in cash is attributable to debt reduction.
In the fourth quarter of 2007, TTM continued to pay down debt associated with the PCG acquisition significantly ahead of schedule. During the quarter, the Company reduced debt by $24 million, reducing the debt balance to $85 million at the end of the year.
Full Year 2007 Financial Results
Net sales for 2007 were $669.5 million. This compares to 2006 net sales of $369.3 million, which included two months of operations from the PCG acquisition. Net income decreased to $34.7 million, or $0.81 per diluted share, in 2007, compared to $35.0 million, or $0.83 per diluted share, in 2006. The decline in net income was due to softer market conditions in 2007 as well as significantly higher interest expense due to the debt issued to finance the PCG acquisition. Net interest expense was $10.4 million higher and amortization of intangibles was $2.3 million higher in 2007 compared to 2006.
First Quarter Fiscal Year 2008 Forecast
For the first quarter of 2008, TTM estimates revenues in a range of $168 million to $176 million and earnings in a range of $0.20 to $0.25 per diluted share.
"Although current macroeconomic conditions are challenging, our market conditions remain stable, and we expect continued strength in the Aerospace / Defense market, high tech, and quick turn," said Alder. "We saw sequential improvement in our financial results in the fourth quarter, and we are confident in our ability to execute in the first quarter of 2008 as end demand trends remain relatively firm."
To Access the Live Web Cast/Conference Call
The company will host a conference call to discuss the fourth quarter results and first quarter 2008 outlook on February 7, 2008, at 4:30 p.m. Eastern Standard Time (1:30 p.m. Pacific Standard Time).
To listen to the live web cast, log on to the TTM Technologies website at http://www.ttmtech.com. To access the live conference call, dial 303-262-2142 or 800-240-4186.
To Access a Replay of the Web Cast
A digital replay will be available on TTM Technologies' website at http://www.ttmtech.com and will remain accessible for one week following the live event.
A telephone replay also will be available beginning two hours after the conclusion of the conference call until February 12, 2008. You may access the telephone replay by dialing 303-590-3000 or 800-405-2236 and entering confirmation code 11106357#.
Safe Harbor Statement
This release contains forward-looking statements that relate to future events or performance. These statements reflect the company's current expectations, and the company 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 company statements will not be realized. Furthermore, readers are cautioned that these statements involve risks and uncertainties, many of which are beyond the company's control, which could cause actual results to differ materially from the forward-looking statements. These risks and uncertainties include, but are not limited to, the company's dependence upon the electronics industry, the company's dependence upon a small number of customers, general economic conditions and specific conditions in the markets TTM addresses, the unpredictability of and potential fluctuation in future revenues and operating results, increased competition from low-cost foreign manufacturers and other "Risk Factors" set forth in the company's most recent SEC filings.
About TTM
TTM Technologies, Inc. is North America's largest printed circuit board manufacturer, focusing on quick-turn and technologically advanced PCBs and the backplane and sub-system assembly business. TTM stands for time-to-market, representing how the company'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.ttmtech.com.
TTM TECHNOLOGIES, INC.
Selected Unaudited Financial Information
(In thousands, except per share data)
------------------- --------- -------------------
Fourth Quarter Third Full Year
Quarter
------------------- --------- -------------------
2007 2006 2007 2007 2006
--------- --------- --------- --------- ---------
CONSOLIDATED
STATEMENTS OF
OPERATIONS
Net sales $167,466 $144,180 $163,079 $669,458 $369,316
Cost of goods sold 132,809 116,681 131,834 539,289 276,168
--------- --------- --------- --------- ---------
Gross profit 34,657 27,499 31,245 130,169 93,148
--------- --------- --------- --------- ---------
Operating
expenses:
Selling and
marketing 7,623 6,331 7,101 29,835 16,473
General and
administrative 8,445 8,587 7,951 32,628 19,656
Amortization of
intangibles 1,036 885 1,019 4,126 1,786
Restructuring
charges - 199 - - 199
--------- --------- --------- --------- ---------
Total operating
expenses 17,104 16,002 16,071 66,589 38,114
--------- --------- --------- --------- ---------
Operating income 17,553 11,497 15,174 63,580 55,034
Interest expense (2,734) (3,253) (2,628) (13,828) (3,394)
Interest income
and other, net 200 998 321 1,516 4,462
--------- --------- --------- --------- ---------
Income before
income taxes 15,019 9,242 12,867 51,268 56,102
Income tax
provision (3,186) (4,093) (4,666) (16,585) (21,063)
--------- --------- --------- --------- ---------
Net income $ 11,833 $ 5,149 $ 8,201 $ 34,683 $ 35,039
========= ========= ========= ========= =========
Earnings per
common share:
Basic $ 0.28 $ 0.12 $ 0.19 $ 0.82 $ 0.84
Diluted $ 0.28 $ 0.12 $ 0.19 $ 0.81 $ 0.83
Weighted average
common shares:
Basic 42,360 42,012 42,260 42,242 41,740
Diluted 42,756 42,389 42,625 42,568 42,295
SELECTED BALANCE
SHEET DATA
-------------------
December December
31, 2007 31, 2006
--------- ---------
Cash and short-
term investments $ 18,681 $ 70,656
Accounts
receivable, net 118,581 125,435
Inventories, net 65,675 67,020
Total current
assets 219,936 271,748
Net property,
plant and
equipment 123,646 150,837
Other assets 155,216 151,113
Total assets 498,798 573,698
Current portion
long-term
liabilities $ 40,000 $ 60,705
Accounts Payable 53,632 49,276
Total current
liabilities 121,097 144,343
Long-term
liabilities 49,106 142,040
Stockholders'
equity 328,595 287,315
Total liabilities
and stockholders'
equity 498,798 573,698
SUPPLEMENTAL DATA
------------------- --------- -------------------
Fourth Quarter Third Full Year
Quarter
------------------- --------- -------------------
2007 2006 2007 2007 2006
--------- --------- --------- --------- ---------
EBITDA $ 24,356 $ 18,455 $ 22,174 $ 92,111 $ 73,577
EBITA $ 18,819 $ 13,409 $ 16,543 $ 69,339 $ 61,399
Gross margin 20.7 % 19.1 % 19.2 % 19.4 % 25.2 %
EBITDA margin 14.5 12.8 13.6 13.8 19.9
Operating margin 10.5 8.0 9.3 9.5 14.9
End Market
Breakdown:
------------------- ---------
Fourth Quarter Third
Quarter
------------------- ---------
2007 2006 2007
--------- --------- ---------
Networking /
Communications 40 % 43 % 40 %
Aerospace /
Defense 33 22 32
Computing /
Storage /
Peripherals 13 22 13
Medical /
Industrial /
Instrumentation
/ Other 14 13 15
Stock-based
Compensation:
------------------- ---------
Fourth Quarter Third
Quarter
------------------- ---------
2007 2006 2007
--------- --------- ---------
Amount included
in:
Cost of goods
sold $ 250 $ 154 $ 258
Selling and
marketing 22 42 55
General and
administrative 622 318 609
--------- --------- ---------
Total stock-
based
compensation
expense $ 894 $ 514 $ 922
========= ========= =========
Operating Segment
Data:
--------- --------- ---------
Fourth Third Full Year
Quarter Quarter
--------- --------- ---------
Net sales: 2007 2007 2007
--------- --------- ---------
PCB
Manufacturing 147,524 140,514 578,840
Backplane
Assembly 27,837 30,679 124,337
--------- --------- ---------
Total Sales 175,361 171,193 703,177
Inter-Company
Sales (7,895) (8,114) (33,719)
--------- --------- ---------
Total Net Sales $167,466 $163,079 $669,458
--------- --------- ---------
Operating
Segment Income:
PCB
Manufacturing 17,055 13,899 59,340
Backplane
Assembly 1,534 2,294 8,366
--------- --------- ---------
Total Op
Segment Income 18,589 16,193 67,706
Amortization of
Intangibles (1,036) (1,019) (4,126)
--------- --------- ---------
Total Op Income 17,553 15,174 63,580
Total Other
Income
(Expense) (2,534) (2,307) (12,312)
--------- --------- ---------
Income Before
Income Taxes $ 15,019 $ 12,867 $ 51,268
========= ========= =========
RECONCILIATIONS(a)
------------------- --------- -------------------
Fourth Quarter Third Full Year
Quarter
------------------- --------- -------------------
2007 2006 2007 2007 2006
--------- --------- --------- --------- ---------
EBITA/EBITDA
reconciliation:
Net income $ 11,833 $ 5,149 $ 8,201 $ 34,683 $ 35,039
Add back items:
Income taxes 3,186 4,093 4,666 16,585 21,063
Interest expense 2,734 3,253 2,628 13,828 3,394
Amortization of
intangibles 1,066 914 1,048 4,243 1,903
--------- --------- --------- --------- ---------
EBITA 18,819 13,409 16,543 69,339 61,399
Depreciation
expense 5,537 5,046 5,631 22,772 12,178
--------- --------- --------- --------- ---------
EBITDA $ 24,356 $ 18,455 $ 22,174 $ 92,111 $ 73,577
========= ========= ========= ========= =========
(a) This information provides a reconciliation of EBITA/EBITDA to the
financial information in our consolidated statements of operations.
"EBITDA" means earnings before interest expense, income taxes,
depreciation and amortization. "EBITA" means earnings before interest
expense, income taxes and amortization. We present EBITDA / EBITA to
enhance the understanding of our operating results. EBITDA / EBITA is
a key measure we use to evaluate our operations. In addition, we
provide our EBITDA / EBITA because we believe that investors and
securities analysts will find EBITDA / EBITA 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, EBITDA / EBITA 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.
Source: TTM Technologies, Inc.
Released February 7, 2008