TTM Technologies, Inc. Reports Fiscal Third Quarter 2023 Results

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SANTA ANA, Calif., Nov. 01, 2023 (GLOBE NEWSWIRE) -- TTM Technologies, Inc. (NASDAQ: TTMI), a leading global manufacturer of technology solutions including mission systems, radio frequency (“RF”) components and RF microwave/microelectronic assemblies, and printed circuit boards (“PCB”), today reported results for the third quarter fiscal 2023, which ended on October 2, 2023.  

Third Quarter 2023 Highlights

  • Net sales were $572.6 million
  • GAAP net loss of $37.1 million, or ($0.36) per diluted share, inclusive of a goodwill impairment charge of $44.1 million
  • Non-GAAP net income was $44.9 million, or $0.43 per diluted share
  • Cash flow from operations was $58.9 million
  • Repurchased 1 million shares of common stock for $14.6 million at an average price of $14.33 per share

Third Quarter 2023 GAAP Financial Results

Net sales for the third quarter of 2023 were $572.6 million, compared to $671.1 million in the third quarter of 2022.

GAAP operating loss for the third quarter of 2023 was $10.2 million, inclusive of a $44.1 million goodwill impairment charge related to the RF&S Components segment. This compares to GAAP operating income of $49.8 million in the third quarter of 2022.

GAAP net loss for the third quarter of 2023 was $37.1 million, or ($0.36) per diluted share, compared to GAAP net income of $43.5 million, or $0.42 per diluted share in the third quarter of 2022.

Third Quarter 2023 Non-GAAP Financial Results
        
On a non-GAAP basis, net income for the third quarter of 2023 was $44.9 million, or $0.43 per diluted share. This compares to non-GAAP net income of $57.9 million, or $0.56 per diluted share, for the third quarter of 2022.

Adjusted EBITDA in the third quarter of 2023 was $84.1 million, or 14.7% of sales compared to adjusted EBITDA of $102.5 million, or 15.3% of sales for the third quarter of 2022.

“Our Non-GAAP EPS was well above the guided range as a result of improved execution, particularly in our North America region and strength in our Data Center Computing end market,” said Tom Edman, CEO of TTM. “In addition, cash flow from operations was a healthy 10.3% of revenue enabling us to repurchase stock while maintaining a solid balance sheet with a net leverage ratio of 1.5x,” concluded Mr. Edman.

Business Outlook

For the fourth quarter of 2023, TTM estimates that revenues will be in the range of $550 million to $590 million, and non-GAAP net income will be in the range of $0.34 to $0.40 per diluted share.

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 a comparable 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 a comparable measure calculated and presented in accordance with GAAP has not been provided because the Company is unable to provide such reconciliation without unreasonable effort. For the same reasons, TTM is unable to address the probable significance of the information.

Live Webcast/Conference Call
TTM will host a conference call and webcast to discuss third quarter 2023 results and the fourth quarter 2023 outlook on Wednesday, November 1st, 2023, at 10:00 a.m. Eastern Time (7:00 a.m. Pacific Time). The conference call will include forward-looking statements.

Access to the conference call is available by clicking on the registration link TTM Technologies, Inc. third quarter fiscal year 2023 conference call. Registering participants will receive dial in information and a unique PIN to join the call. Participants can register at any time up to the start of the conference call. The conference call will also be simulcast on the company’s website, and can be accessed by clicking on the link TTM Technologies, Inc. third quarter fiscal year 2023 webcast. The webcast will remain accessible for one week following the live event.

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 TTM Technologies, Inc. third quarter fiscal year 2023 webcast.

About TTM
TTM Technologies, Inc. is a leading global manufacturer of technology solutions including mission systems, RF components/RF microwave/microelectronic assemblies, quick-turn and technologically advanced PCBs. 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
The preliminary financial results included in this press release represent the most current information available to management. The company’s actual results when disclosed in its Form 10-Q may differ from these preliminary results as a result of the completion of the company’s financial closing procedures, final adjustments, completion of the review by the company’s independent registered accounting firm, and other developments that may arise between now and the disclosure of the final results. 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, the impact of COVID-19, 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
To supplement our consolidated condensed financial statements presented on a GAAP basis, 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 reconciliations below 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.

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

TTM TECHNOLOGIES, INC.

Selected Unaudited Financial Information

(In thousands, except per share data)

                         
                         
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS   Third Quarter   First Three Quarters
              2023       2022       2023       2022  
                         
                         
                         
  Net sales     $ 572,582     $ 671,080     $ 1,663,528     $ 1,877,890  
  Cost of goods sold     459,312       542,513       1,365,628       1,541,327  
                         
  Gross profit         113,270       128,567       297,900       336,563  
                         
  Operating expenses:                
    Selling and marketing     18,763       19,824       58,245       55,653  
    General and administrative     38,916       40,743       111,829       121,863  
    Research and development     6,173       7,322       19,682       18,110  
    Amortization of definite-lived intangibles     11,429       10,273       37,245       26,822  
    Restructuring charges     4,091       627       19,061       1,267  
    Impairment of goodwill     44,100       -       44,100       -  
      Total operating expenses     123,472       78,789       290,162       223,715  
                         
  Operating (loss) income         (10,202 )     49,778       7,738       112,848  
                         
  Interest expense     (10,101 )     (10,939 )     (34,751 )     (33,011 )
  Loss on extinguishment of debt         -       -       (1,154 )     -  
  Gain on sale of subsidiary         -       -       1,270       -  
  Other, net       3,044       10,324       9,310       19,932  
                         
  (Loss) income before income taxes         (17,259 )     49,163       (17,587 )     99,769  
  Income tax provision         (19,807 )     (5,635 )     (18,469 )     (11,203 )
                         
  Net (loss) income       $ (37,066 )   $ 43,528     $ (36,056 )   $ 88,566  
                         
  (Loss) earnings per share:                    
    Basic     $ (0.36 )   $ 0.43     $ (0.35 )   $ 0.87  
    Diluted     (0.36 )     0.42       (0.35 )     0.85  
                         
  Weighted-average shares used in computing per share amounts:                
    Basic       103,510       102,196       102,873       102,016  
    Diluted     103,510       103,720       102,873       103,738  
                         
  Reconciliation of the denominator used to calculate basic earnings per share and diluted earnings per share:            
  Weighted-average shares outstanding     103,510       102,196       102,873       102,016  
  Dilutive effect of warrants     -       -       -       2  
  Dilutive effect of performance-based stock units, restricted stock units & stock options     -       1,524       -       1,720  
  Diluted shares     103,510       103,720       102,873       103,738  
                         

SELECTED BALANCE SHEET DATA   October 2, 2023   January 2, 2023  
  Cash and cash equivalents, including restricted cash   $ 408,331   $ 402,749  
  Accounts and notes receivable, net   390,902   473,225  
  Receivable from sale of SH E-MS property   6,554   69,240  
  Contract assets   304,279   335,788  
  Inventories   206,176   170,639  
  Total current assets   1,353,236   1,493,056  
  Property, plant and equipment, net   808,371   724,204  
  Operating lease right of use asset   89,290   18,862  
  Other non-current assets   1,015,605   1,087,482  
  Total assets   3,266,502   3,323,604  
                   
  Short-term debt, including current portion of long-term debt   $ 2,625   $ 50,000  
  Accounts payable   336,070   361,788  
  Total current liabilities   688,286   761,325  
  Debt, net of discount   864,824   879,407  
  Total long-term liabilities   1,077,102   1,026,700  
  Total equity   1,501,114   1,535,579  
  Total liabilities and equity   3,266,502   3,323,604  
                   

SUPPLEMENTAL DATA Third Quarter   First Three Quarters
          2023       2022     2023   2022  
  Gross margin   19.8 %     19.2 %   17.9 %   17.9 %
  Operating margin   (1.8 )%     7.4 %   0.5 %   6.0 %
                     
  End Market Breakdown:              
        Third Quarter        
          2023       2022          
    Aerospace and Defense   45 %     38 %        
    Automotive   15 %     15 %        
    Data Center Computing   17 %     14 %        
    Medical/Industrial/Instrumentation   16 %     19 %        
    Networking   7 %     14 %        
                     
  Stock-based Compensation:              
        Third Quarter        
    Amount included in:   2023       2022          
      Cost of goods sold $ 2,212     $ 1,699          
      Selling and marketing   888       762          
      General and administrative   2,958       2,685          
      Research and development   309       324          
      Total stock-based compensation expense $ 6,367     $ 5,470          
                     
  Operating Segment Data:              
        Third Quarter        
    Net sales:   2023       2022          
    PCB* $ 563,676     $ 657,175          
    RF&S Components   8,906       13,905          
      Total net sales $ 572,582     $ 671,080          
                     
    Operating segment income:              
    PCB* $ 82,868     $ 89,868          
    RF&S Components   (41,441 )     5,984          
    Corporate & Other*   (37,865 )     (34,417 )        
      Total operating segment income   3,562       61,435          
    Amortization of definite-lived intangibles   (13,764 )     (11,657 )        
      Total operating (loss) income   (10,202 )     49,778          
      Total other expense   (7,057 )     (615 )        
    (Loss) income before income taxes  $ (17,259 )   $ 49,163          
    * Amended for Telephonics integration              
                     

RECONCILIATIONS1   Third Quarter   First Three Quarters
              2023       2022       2023       2022  
                         
  Non-GAAP gross profit reconciliation2:                
    GAAP gross profit      $ 113,270     $ 128,567     $ 297,900     $ 336,563  
    Add back item:                
      Amortization of definite-lived intangibles     2,335       1,384       10,566       4,151  
      Accelerated depreciation associated with plant closures     725       19       3,374       124  
      Stock-based compensation     2,212       1,699       5,371       4,147  
      Unrealized loss (gain) on commodity hedge       770       385       (491 )     4,192  
      Purchase accounting related inventory markup     -       248       327       248  
    Non-GAAP gross profit      $ 119,312     $ 132,302     $ 317,047     $ 349,425  
    Non-GAAP gross margin     20.8 %     19.7 %     19.1 %     18.6 %
                         
  Non-GAAP operating income reconciliation3:                
    GAAP operating (loss) income      $ (10,202 )   $ 49,778     $ 7,738     $ 112,848  
    Add back items:                
      Amortization of definite-lived intangibles     13,764       11,657       47,811       30,973  
      Accelerated depreciation associated with plant closures     725       19       3,374       124  
      Stock-based compensation     6,367       5,470       16,728       14,131  
      Loss (gain) on sale of assets       111       -       (104 )     -  
      Unrealized loss (gain) on commodity hedge       770       385       (491 )     4,192  
      Purchase accounting related inventory markup     -       248       327       248  
      Impairment, restructuring, acquisition-related and other charges     46,356       655       61,948       12,805  
    Non-GAAP operating income      $ 57,891     $ 68,212     $ 137,331     $ 175,321  
    Non-GAAP operating margin     10.1 %     10.2 %     8.3 %     9.3 %
                         
  Non-GAAP net income and EPS reconciliation4:                
    GAAP net (loss) income      $ (37,066 )   $ 43,528     $ (36,056 )   $ 88,566  
    Add back items:                
      Amortization of definite-lived intangibles     13,764       11,657       47,811       30,973  
      Accelerated depreciation associated with plant closures     725       19       3,374       124  
      Stock-based compensation     6,367       5,470       16,728       14,131  
      Non-cash interest expense     502       540       1,726       1,609  
      Loss (gain) on sale of assets       111       -       (104 )     (827 )
      Change in fair value of warrant liabilities     -       -       -       (99 )
      Loss on extinguishment of debt       -       -       1,154       -  
      Gain on sale of subsidiary       -       -       (1,270 )     -  
      Unrealized loss (gain) on commodity hedge       770       385       (491 )     4,192  
      Purchase accounting related inventory markup     -       248       327       248  
      Impairment, restructuring, acquisition-related and other charges     46,356       655       61,948       12,805  
      Income taxes5     13,353       (4,586 )     1,427       (13,236 )
    Non-GAAP net income      $ 44,882     $ 57,916     $ 96,574     $ 138,486  
    Non-GAAP earnings per diluted share   $ 0.43     $ 0.56     $ 0.92     $ 1.33  
                         
  Non-GAAP diluted number of shares:                
    GAAP diluted number of shares     103,510       103,720       102,873       103,738  
    Dilutive effect of performance-based stock units, restricted stock units & stock options   1,419       -       1,809       -  
    Non-GAAP diluted number of shares     104,929       103,720       104,682       103,738  
                         
  Adjusted EBITDA reconciliation6:                
    GAAP net (loss) income      $ (37,066 )   $ 43,528     $ (36,056 )   $ 88,566  
    Add back items:                
      Income tax provision       19,807       5,635       18,469       11,203  
      Interest expense     10,101       10,939       34,751       33,011  
      Amortization of definite-lived intangibles     13,764       11,657       47,811       30,973  
      Depreciation expense     23,870       24,017       74,060       67,306  
      Stock-based compensation     6,367       5,470       16,728       14,131  
      Loss (gain) on sale of assets       111       -       (104 )     (827 )
      Change in fair value of warrant liabilities     -       -       -       (99 )
      Loss on extinguishment of debt       -       -       1,154       -  
      Gain on sale of subsidiary       -       -       (1,270 )     -  
      Unrealized loss (gain) on commodity hedge       770       385       (491 )     4,192  
      Purchase accounting related inventory markup     -       248       327       248  
      Impairment, restructuring, acquisition-related and other charges     46,356       655       61,948       12,805  
    Adjusted EBITDA   $ 84,080     $ 102,534     $ 217,327     $ 261,509  
    Adjusted EBITDA margin     14.7 %     15.3 %     13.1 %     13.9 %
                         
  Free cash flow reconciliation:                
    Operating cash flow   $ 58,852     $ 80,006     $ 139,814     $ 195,314  
    Capital expenditures, net     (33,659 )     (26,281 )     (113,783 )     (76,095 )
    Free cash flow   $ 25,193     $ 53,725     $ 26,031     $ 119,219  
                         

  1 This information provides a reconciliation of non-GAAP gross profit, non-GAAP operating income, non-GAAP net income, non-GAAP EPS, 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, accelerated depreciation associated with plant closures, stock-based compensation expense, unrealized loss (gain) on commodity hedge, and purchase accounting related inventory markup.  
                           
  3 Non-GAAP operating income and operating margin measures exclude amortization of intangibles, accelerated depreciation associated with plant closures, stock-based compensation expense, loss (gain) on sale of assets, unrealized loss (gain) on commodity hedge, purchase accounting related inventory markup, impairment of goodwill, restructuring, acquisition-related costs, and other charges.  
                           
  4 This information provides non-GAAP net income and non-GAAP EPS, which are non-GAAP financial measures. Management believes that both measures -- which add back amortization of intangibles, accelerated depreciation associated with plant closures, stock-based compensation expense, non-cash interest expense on debt (before consideration of capitalized interest), loss (gain) on sale of assets, change in fair value of warrant liabilities, loss on extinguishment of debt, gain on sale of subsidiary, unrealized loss (gain) on commodity hedge, purchase accounting related inventory markup, impairment of goodwill, restructuring, acquisition-related costs, 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 Adjusted EBITDA is defined as earnings before income taxes, interest expense, amortization of intangibles, depreciation, stock-based compensation expense, loss (gain) on sale of assets, change in fair value of warrant liabilities, loss on extinguishment of debt, gain on sale of subsidiary, unrealized loss (gain) on commodity hedge, purchase accounting related inventory markup, impairment of goodwill, restructuring, acquisition-related costs, 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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Source: TTM Technologies, Inc.

Released November 1, 2023