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TTM Technologies, Inc. Reports Fiscal First Quarter 2020 Results

SANTA ANA, Calif. , April 29, 2020 (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 first quarter of fiscal 2020, which ended on March 30, 2020.  On April 19th, TTM completed the  previously announced sale of its Mobility business unit.  The operating results and related assets and liabilities of the Mobility business under US GAAP are presented as discontinued operations for all periods. To facilitate the comparison of TTM’s results to prior periods and to previously issued guidance, non-GAAP financial information is also provided below which includes the results of the Mobility business unit. 

First Quarter 2020 Highlights

  • GAAP net sales were $497.6 million
  • Non-GAAP net sales were $610.8 million
  • GAAP net loss of $3.2 million, or ($0.03) per diluted share
  • Non-GAAP net income was $19.6 million, or $0.18 per diluted share, inclusive of $1.9 million in foreign exchange gains
  • Cash flow from operations of $27.9 million
  • Announced restructuring of Electro-Mechanical Solutions (E-MS) Business unit

First Quarter 2020 GAAP Financial Results
Net sales for the first quarter of 2020 were $497.6 million, compared to $536.4 million in the first quarter of 2019 and $535.7 million in the fourth quarter of 2019.

GAAP operating income for the first quarter of 2020 was $16.2 million, compared to $30.1 million in the first quarter of 2019 and $29.4 million in the fourth quarter of 2019. 

GAAP net loss for the first quarter of 2020 was $3.2 million, or ($0.03) per diluted share.  This compares to net income of $6.2 million, or $0.06 per diluted share in the first quarter of 2019, and net income of $7.3 million, or $0.07 per diluted share, in the fourth quarter of 2019.    

First Quarter 2020 Non-GAAP Financial Results
Net sales for the first quarter of 2020 were $610.8 million, compared to $620.2 million in the first quarter of 2019 and $719.3 million in the fourth quarter of 2019.
                                                                                                                                            
On a non-GAAP basis, net income for the first quarter of 2020 was $19.6 million, or $0.18 per diluted share. This compares to non-GAAP net income of $16.4 million, or $0.16 per diluted share, for the first quarter of 2019 and $43.9 million, or $0.41 per diluted share, in the fourth quarter of 2019.

Adjusted EBITDA for the first quarter of 2020 was $82.1 million, or 13.4 percent of net sales, compared to adjusted EBITDA of $78.5 million, or 12.7 percent of net sales, for the first quarter of 2019 and $111.3 million, or 15.5 percent of net sales, for the fourth quarter of 2019.

“As we start the second quarter, all of our manufacturing facilities remain operational and we are particularly proud of our urgent production of printed circuit boards used for critical medical needs.  I want to recognize all of our employees for their tremendous efforts in support of our customers during these challenging times,” said Tom Edman, CEO of TTM.  “TTM’s first priority remains the health and safety of our employees and we have taken proactive measures against the spread of COVID-19 in all of our facilities.  We have implemented enhanced cleaning, social distancing practices, temperature checks, and masks among other measures.” 

“Regarding our financial results for the first quarter, TTM delivered revenue above the midpoint and earnings above the previously guided range despite a government mandated shutdown of our manufacturing plants in China as a result of COVID-19.  The year over year growth we experienced in the aerospace and defense, cellular and computing end markets partially offset weakness in our automotive and networking and communications end markets.”   

Business Outlook
Looking ahead, we believe that COVID-19 may cause end demand weakness, supply chain disruptions, as well as inefficiencies with our own production.  Taking this into consideration, TTM estimates that revenue for the second quarter of 2020 will be in the range of $520 million to $560 million, and non-GAAP net income will be in the range of $0.11 to $0.17 per diluted share, which includes the financial impact of the Mobility business unit until it was sold on April 17th.  

Live Webcast/Conference Call
TTM will host a conference call and webcast to discuss first quarter 2020 results and the second quarter 2020 outlook on Wednesday, April 29, 2020, 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 800-309-1256 or international 720-543-0314 (ID 557290).  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, 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
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 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 is not available without unreasonable effort and has not been provided.

Contacts:

Sameer Desai
Senior Director, Corporate Development
TTM Technologies, Inc. 
+1 714 327 3050
sameer.desai@ttmtech.com

- Tables Follow -

TTM TECHNOLOGIES, INC.
Selected Unaudited Financial Information
(In thousands, except per share data)
                   
                   
        First Quarter   Fourth Quarter  
        2020
  2019*   2019*  
                   
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS              
                   
Net sales     $ 497,646     $ 536,445     $ 535,715    
Cost of goods sold     416,304       437,619       435,470    
                   
Gross profit     81,342       98,826       100,245    
                   
Operating expenses:              
Selling and marketing     16,169       17,560       17,560    
General and administrative     34,339       29,850       37,192    
Research and development     4,762       4,716       4,368    
Amortization of definite-lived intangibles     9,562       16,152       9,531    
Restructuring charges     328       432       2,204    
Total operating expenses     65,160       68,710       70,855    
                   
Operating income     16,182       30,116       29,390    
                   
Interest expense     (19,781 )     (21,135 )     (19,975 )  
Other, net       2,502       (357 )     (1,742 )  
                   
(Loss) income from continuing operations before income taxes     (1,097 )     8,624       7,673    
Income tax provision     (2,123 )     (2,386 )     (394 )  
                   
Net (loss) income from continuing operations     (3,220 )     6,238       7,279    
Income (loss) from discontinued operations, net of income taxes     2,046       (9,490 )     17,980    
Net (loss) income   $ (1,174 )   $ (3,252 )   $ 25,259    
                   
* Reclassified Research and development expenses as a separate line item from General and administrative expenses      
                   
(Loss) earnings per share:              
Basic (loss) earnings per share from continuing operations   $ (0.03 )   $ 0.06     $ 0.07    
Basic earnings (loss) per share from discontinued operations     0.02       (0.09 )     0.17    
Basic (loss) earnings per share   $ (0.01 )   $ (0.03 )   $ 0.24    
                   
Diluted (loss) earnings per share from continuing operations   $ (0.03 )   $ 0.06     $ 0.07    
Diluted earnings (loss) per share from discontinued operations     0.02       (0.09 )     0.17    
Diluted (loss) earnings per share   $ (0.01 )   $ (0.03 )   $ 0.24    
                   
                   
Weighted-average shares used in computing per share amounts:              
Basic       105,686       104,315       105,502    
Diluted     105,686       105,614       107,135    
                   
                   
Reconciliation of the denominator used to calculate basic earnings per share and diluted earnings per share:      
                   
Weighted-average shares outstanding         104,315       105,502    
Dilutive effect of convertible debt         -       -    
Dilutive effect of warrants         -       -    
Dilutive effect of performance-based stock units, restricted stock units & stock options         1,299       1,633    
Diluted shares         105,614       107,135    
(Loss) earnings per share:              
Basic earnings per share from continuing operations       $ 0.06     $ 0.07    
Basic (loss) earnings per share from discontinued operations         (0.09 )     0.17    
Basic (loss) earnings per share       $ (0.03 )   $ 0.24    
                   
Diluted earnings per share from continuing operations       $ 0.06     $ 0.07    
Diluted (loss) earnings per share from discontinued operations         (0.09 )     0.17    
Diluted (loss) earnings per share       $ (0.03 )   $ 0.24    
                   
SELECTED BALANCE SHEET DATA              
        March 30, 2020   December 30, 2019    
Cash and cash equivalents, including restricted cash   $ 361,992     $ 379,818        
Accounts and notes receivable, net     458,639       503,598        
Contract assets     256,482       254,600        
Inventories     120,949       113,753        
Current assets held for sale     522,974       67,572        
Total current assets     1,751,787       1,342,684        
Property, plant and equipment, net     666,611       678,201        
Operating lease right of use asset     21,724       22,173        
Non-current assets held for sale     -       425,597        
Other non-current assets     1,083,996       1,092,278        
Total assets     3,524,118       3,560,933        
                   
Short-term debt, including current portion of long-term debt   $ 249,975     $ 249,975        
Accounts payable     309,580       329,866        
Current liabilities held for sale     170,735       185,391        
Total current liabilities     904,363       946,666        
Debt, net of discount     1,229,372       1,225,962        
Non-current liabilities held for sale     -       1,530        
Total long-term liabilities     1,342,555       1,335,230        
Total equity     1,277,200       1,279,037        
Total liabilities and equity     3,524,118       3,560,933        
                   
                   
SUPPLEMENTAL DATA              
        First Quarter   Fourth Quarter  
          2020       2019       2019    
Gross margin     16.3 %     18.4 %     18.7 %  
Operating margin     3.3 %     5.6 %     5.5 %  
                   
End Market Breakdown, including Mobility:              
        First Quarter   Fourth Quarter  
          2020       2019       2019    
                   
Aerospace/Defense     30 %     27 %     26 %  
Automotive     12 %     17 %     14 %  
Cellular Phone     11 %     7 %     16 %  
Computing/Storage/Peripherals     14 %     13 %     14 %  
Medical/Industrial/Instrumentation     16 %     15 %     13 %  
Networking/Communications     14 %     18 %     15 %  
Other       3 %     3 %     2 %  
                   
                   
Stock-based Compensation, including Mobility:              
        First Quarter   Fourth Quarter  
          2020       2019       2019    
Amount included in:              
Cost of goods sold   $ 854     $ 705     $ 942    
Selling and marketing     469       466       518    
General and administrative     3,512       2,755       3,166    
Total stock-based compensation expense   $ 4,835     $ 3,926     $ 4,626    
                   
                   
Operating Segment Data:              
        First Quarter   Fourth Quarter  
Net sales:     2020       2019       2019    
PCB     $ 467,430     $ 485,067     $ 488,390    
E-M Solutions     30,216       51,378       47,325    
Total net sales   $ 497,646     $ 536,445     $ 535,715    
                   
Operating segment income:              
PCB     $ 61,626     $ 70,494     $ 72,736    
E-M Solutions     (4,329 )     1,179       1,841    
Corporate     (30,170 )     (24,226 )     (34,373 )  
Total operating segment income     27,127       47,447       40,204    
Amortization of definite-lived intangibles     (10,945 )     (17,331 )     (10,814 )  
Total operating income     16,182       30,116       29,390    
Total other expense     (17,279 )     (21,492 )     (21,717 )  
(Loss) income from continuing operations before income taxes       $ (1,097 )   $ 8,624     $ 7,673    
                   
RECONCILIATIONS1              
        GAAP
March 30, 2020
  Mobility balances
March 30, 20202
  Combined
March 30, 2020
 
Cash and cash equivalents, including restricted cash   $ 361,992     $ 68,445     $ 430,437    
Accounts and notes receivable, net     458,639       6       458,645    
Contract assets     256,482       30,181       286,663    
Inventories     120,949       8,643       129,592    
Current assets held for sale     522,974       (522,974 )     -    
Total current assets     1,751,787       (411,721 )     1,340,066    
Property, plant and equipment, net     666,611       330,312       996,923    
Operating lease right of use asset     21,724       1,593       23,317    
Non-current assets held for sale     -       -       -    
Other non-current assets     1,083,996       79,816       1,163,812    
Total assets     3,524,118       -       3,524,118    
                   
Short-term debt, including current portion of long-term debt   $ 249,975     $ -     $ 249,975    
Accounts payable     309,580       144,715       454,295    
Current liabilities held for sale     170,735       (170,735 )     -    
Total current liabilities     904,363       (1,243 )     903,120    
Debt, net of discount     1,229,372       -       1,229,372    
Non-current liabilities held for sale     -       -       -    
Total long-term liabilities     1,342,555       1,243       1,343,798    
Total equity     1,277,200       -       1,277,200    
Total liabilities and equity     3,524,118       -       3,524,118    
                   
        GAAP
December 30, 2019
  Mobility balances
December 30, 20192
  Combined
December 30, 2019
 
Cash and cash equivalents, including restricted cash   $ 379,818     $ 20,336     $ 400,154    
Accounts and notes receivable, net     503,598       66       503,664    
Contract assets     254,600       33,635       288,235    
Inventories     113,753       8,266       122,019    
Current assets held for sale     67,572       (67,572 )     -    
Total current assets     1,342,684       -       1,342,684    
Property, plant and equipment, net     678,201       344,728       1,022,929    
Operating lease right of use asset     22,173       1,983       24,156    
Non-current assets held for sale     425,597       (425,597 )     -    
Other non-current assets     1,092,278       78,886       1,171,164    
Total assets     3,560,933       -       3,560,933    
                   
Short-term debt, including current portion of long-term debt   $ 249,975     $ -     $ 249,975    
Accounts payable     329,866       153,700       483,566    
Current liabilities held for sale     185,391       (185,391 )     -    
Total current liabilities     946,666       -       946,666    
Debt, net of discount     1,225,962       -       1,225,962    
Non-current liabilities held for sale     1,530       (1,530 )     -    
Total long-term liabilities     1,335,230       -       1,335,230    
Total equity     1,279,037       -       1,279,037    
Total liabilities and equity     3,560,933       -       3,560,933    
                   
                   
        First Quarter   Fourth Quarter  
          2020       2019       2019    
Non-GAAP revenue reconciliation3:              
GAAP revenue   $ 497,646     $ 536,445     $ 535,715    
Revenue from discontinued operations     113,174       83,755       183,538    
Non-GAAP revenue   $ 610,820     $ 620,200     $ 719,253    
                   
Non-GAAP gross profit reconciliation4:              
GAAP gross profit   $ 81,342     $ 98,826     $ 100,245    
Gross profit from discontinued operations     4,749       (10,141 )     24,304    
Add back item:              
Amortization of definite-lived intangibles     1,383       1,179       1,283    
Stock-based compensation     854       705       942    
Non-GAAP gross profit   $ 88,328     $ 90,569     $ 126,774    
Non-GAAP gross margin     14.5 %     14.6 %     17.6 %  
                   
Non-GAAP operating income reconciliation5:              
GAAP operating income   $ 16,182     $ 30,116     $ 29,390    
Operating income (loss) from discontinued operations     1,441       (12,626 )     20,036    
Add back items:              
Amortization of definite-lived intangibles     11,620       18,005       11,489    
Stock-based compensation     4,835       3,926       4,626    
(Gain) on sale of assets     -       -       (66 )  
Restructuring, acquisition-related, and other charges     1,596       1,103       6,856    
Non-GAAP operating income   $ 35,674     $ 40,524     $ 72,331    
Non-GAAP operating margin     5.8 %     6.5 %     10.1 %  
                   
Non-GAAP net income and EPS reconciliation6:              
GAAP net (loss) income   $ (3,220 )   $ 6,238     $ 7,279    
Net income (loss) from discontinued operations     2,046       (9,490 )     17,980    
Add back items:              
Amortization of definite-lived intangibles     11,620       18,005       11,489    
Stock-based compensation     4,835       3,926       4,626    
Non-cash interest expense     3,553       3,868       3,501    
(Gain) on sale of assets     (233 )     (3,071 )     (186 )  
Restructuring, acquisition-related, and other charges     1,596       1,103       6,856    
Income taxes7     (593 )     (4,150 )     (7,623 )  
Non-GAAP net income   $ 19,604     $ 16,429     $ 43,922    
Non-GAAP earnings per diluted share   $ 0.18     $ 0.16     $ 0.41    
                   
Non-GAAP diluted number of shares8:              
Diluted shares     107,378       105,614       107,135    
Dilutive effect of convertible debt     -       -       -    
Non-GAAP diluted number of shares     107,378       105,614       107,135    
                   
Adjusted EBITDA reconciliation9:              
GAAP net (loss) income   $ (3,220 )   $ 6,238     $ 7,279    
Net income (loss) from discontinued operations     2,046       (9,490 )     17,980    
Add back items:              
Income tax provision (benefit)     2,865       (1,476 )     1,140    
Interest expense     20,004       21,688       20,107    
Amortization of definite-lived intangibles     11,620       18,005       11,489    
Depreciation expense     42,632       41,602       42,018    
Stock-based compensation     4,835       3,926       4,626    
(Gain) on sale of assets     (233 )     (3,071 )     (186 )  
Restructuring, acquisition-related, and other charges     1,596       1,103       6,856    
Adjusted EBITDA   $ 82,145     $ 78,525     $ 111,309    
Adjusted EBITDA margin     13.4 %     12.7 %     15.5 %  
                   
Free cash flow reconciliation, including Mobility:              
Operating cash flow     27,913       36,924       130,148    
Capital expenditures, net     (32,451 )     (28,446 )     (46,982 )  
Free cash flow   $ (4,538 )   $ 8,478     $ 83,166    
                   
1 This information provides a reconciliation of non-GAAP balance sheet data to the financial information in our consolidated condensed balance sheets and non-GAAP revenue, 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 Excludes the estimated gain on sale of Mobility.
                   
3 Non-GAAP revenue includes revenue from discontinued operations.
                   
4 Non-GAAP gross profit and gross margin measures include discontinued operations and exclude amortization of intangibles and stock-based compensation expense.
                   
5 Non-GAAP operating income and operating margin measures include discontinued operations and exclude amortization of intangibles, stock-based compensation expense, gain on sale of assets, acquisition-related costs, restructuring and other charges.
                   
6 This information provides non-GAAP net income and non-GAAP EPS, which are non-GAAP financial measures. Management believes that both measures -- which include discontinued operations and 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, 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.
                   
7 Income tax adjustments reflect the difference between income taxes based on a non-GAAP tax rate and a forecasted annual GAAP tax rate.
                   
8 Non-GAAP diluted number of shares used in computing non-GAAP earnings per share excludes the dilutive effect of convertible debt.
                   
9 Adjusted EBITDA is defined as earnings, including discontinued operations, before interest expense, income taxes, depreciation, amortization of intangibles, stock-based compensation expense, gain on sale of assets, acquisition-related costs, 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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Source: TTM Technologies