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TTM Technologies, Inc. Reports Fiscal Second Quarter 2022 Results

SANTA ANA, Calif., Aug. 03, 2022 (GLOBE NEWSWIRE) -- TTM Technologies, Inc. (NASDAQ: TTMI), a leading global manufacturer of technology solutions including engineered systems, radio frequency (“RF”) components and RF microwave/microelectronic assemblies, and printed circuit boards (“PCB”), today reported results for the second quarter fiscal 2022, which ended on July 4, 2022.  

Second Quarter 2022 Highlights

  • Net sales were $625.6 million
  • GAAP net income of $27.8 million, or $0.27 per diluted share
  • Non-GAAP net income was $55.3 million, or $0.54 per diluted share
  • Operating cash flow of $79.3 million; free cash flow of $52.9 million.
  • Completed the acquisition of Telephonics on June 27th, 2022
  • Broke ground on manufacturing plant in Malaysia
  • Completed $100 million stock buy-back program

Second Quarter 2022 GAAP Financial Results

Net sales for the second quarter of 2022 were $625.6 million, compared to $567.4 million in the second quarter of 2021.

GAAP operating income for the second quarter of 2022 was $37.2 million. This compares to GAAP operating income of $40.9 million in the second quarter of 2021.

GAAP net income for the second quarter of 2022 was $27.8 million, or $0.27 per diluted share, compared to GAAP net income of $28.3 million, or $0.26 per diluted share in the second quarter of 2021.     

As the Telephonics acquisition closed near the end of second quarter, its contributions to the results for the quarter were immaterial.

Second Quarter 2022 Non-GAAP Financial Results        
On a non-GAAP basis, net income for the second quarter of 2022 was $55.3 million, or $0.54 per diluted share. This compares to non-GAAP net income of $40.0 million, or $0.36 per diluted share, for the second quarter of 2021.

Adjusted EBITDA in the second quarter of 2022 was $96.9 million compared to adjusted EBITDA of $75.6 million for the second quarter of 2021.

“In the second quarter, TTM delivered robust growth in revenues and non-GAAP earnings, both well above the high end of the guided range,” said Tom Edman, CEO of TTM.   “We saw a significant improvement in both operating margins and cash flow in the quarter. The outperformance was driven by strength in our commercial end markets, improved product mix, and productivity improvements in North America.”

“We also took a major step to advance our strategy of differentiation with the closing of the acquisition of Telephonics Corporation,” continued Mr. Edman. “This provides TTM with engineered system-level solutions for the Aerospace and Defense end market and expands our capabilities and service offerings while moving TTM further up the value chain. Post this transaction, which was entirely funded from balance sheet cash, our net leverage stands at a healthy 2.2x. Going forward, the Aerospace and Defense end market will represent approximately 40% of our revenues, providing growth and stability and reduced sensitivity to business cycles across the TTM portfolio. Finally, we broke ground on a new manufacturing facility in Malaysia which enables TTM to offer our customers a regional alternative for high volume, high layer count PCBs to meet their supply chain resiliency requirements.”

Business Outlook
TTM estimates that revenue for the third quarter of 2022 will be in the range of $655 million to $695 million, and non-GAAP net income will be in the range of $0.41 to $0.47 per diluted share. This guidance includes a full quarter of revenue and profit from the acquisition of Telephonics that closed at the end of our second quarter.

Live Webcast/Conference Call
TTM will host a conference call and webcast to discuss second quarter 2022 results and the third quarter 2022 outlook on Wednesday, August 3rd, 2022 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 888-220-8451 or international 323-794-2588 (ID 1990598). 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 manufacturer of technology solutions including engineered systems, RF components and RF microwave/microelectronic assemblies, and 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-K 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
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.

- Tables Follow -

TTM TECHNOLOGIES, INC.
Selected Unaudited Financial Information
(In thousands, except per share data)
                               
                               
  Second Quarter
  First Two Quarters
  2022   2021   2022   2021
                               
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS                              
                               
Net sales $ 625,550     $ 567,383     $ 1,206,810     $ 1,093,815  
Cost of goods sold   508,477       467,473       998,814       912,305  
                               
Gross profit   117,073       99,910       207,996       181,510  
                               
Operating expenses:                              
Selling and marketing   17,557       14,605       35,829       30,887  
General and administrative   48,350       30,634       81,120       58,929  
Research and development   5,233       4,182       10,788       8,652  
Amortization of definite-lived intangibles   8,275       9,042       16,549       18,563  
Restructuring charges   456       559       640       3,791  
Total operating expenses   79,871       59,022       144,926       120,822  
                               
Operating income   37,202       40,888       63,070       60,688  
                               
Interest expense   (10,711 )     (11,079 )     (22,072 )     (22,468 )
Loss on extinguishment of debt   -       -       -       (15,217 )
Other, net   7,638       306       9,608       2,813  
                               
Income before income taxes   34,129       30,115       50,606       25,816  
Income tax provision   (6,337 )     (1,854 )     (5,568 )     (747 )
                               
Net income $ 27,792     $ 28,261     $ 45,038     $ 25,069  
                               
                               
Earnings per share:                              
Basic $ 0.27     $ 0.26     $ 0.44     $ 0.23  
Diluted   0.27       0.26       0.43       0.23  
                               
                               
                               
Weighted-average shares used in computing per share amounts:                              
Basic   101,270       107,148       101,941       106,987  
Diluted   103,221       109,795       103,762       109,250  
                               
                               
Reconciliation of the denominator used to calculate basic earnings per share and diluted earnings per share:                              
                               
Weighted-average shares outstanding   101,270       107,148       101,941       106,987  
Dilutive effect of warrants   -       802       3       401  
Dilutive effect of performance-based stock units, restricted stock units & stock options   1,951       1,845       1,818       1,862  
Diluted shares   103,221       109,795       103,762       109,250  
                               
SELECTED BALANCE SHEET DATA                              
  July 4, 2022
  January 3, 2022
               
Cash and cash equivalents, including restricted cash $ 266,546     $ 537,678                  
Accounts and notes receivable, net   474,829       386,347                  
Contract assets   376,367       324,862                  
Inventories   209,960       127,612                  
Total current assets   1,380,883       1,407,413                  
Property, plant and equipment, net   748,439       665,755                  
Operating lease right of use asset   22,618       20,802                  
Other non-current assets   1,062,711       931,577                  
Total assets   3,214,651       3,025,547                  
                               
Accounts payable $ 425,135     $ 361,484                  
Total current liabilities   722,309       558,148                  
Debt, net of discount   928,605       927,818                  
Total long-term liabilities   1,018,262       1,011,982                  
Total equity   1,474,080       1,455,417                  
Total liabilities and equity   3,214,651       3,025,547                  
                               
SUPPLEMENTAL DATA                              
  Second Quarter
  First Two Quarters
  2022   2021   2022   2021
Gross margin   18.7 %     17.6 %     17.2 %     16.6 %
Operating margin   5.9 %     7.2 %     5.2 %     5.5 %
                               
End Market Breakdown:                              
  Second Quarter
               
  2022   2021                
                               
Aerospace/Defense   30 %     33 %                
Automotive   18 %     18 %                
Data Center Computing   17 %     14 %                
Medical/Industrial/Instrumentation   21 %     19 %                
Networking/Communications   14 %     15 %                
Other   0 %     1 %                
                               
Stock-based Compensation:                              
                               
  Second Quarter
               
  2022   2021                
Amount included in:                              
Cost of goods sold $ 1,172     $ 861                  
Selling and marketing   620       442                  
General and administrative   2,396       2,015                  
Research and development   239       32                  
Total stock-based compensation expense $ 4,427     $ 3,350                  
                               
                               
Operating Segment Data:                              
  Second Quarter
               
Net sales: 2022   2021                
PCB $ 609,429     $ 553,480                  
RF&S Components   16,121       13,903                  
Total net sales $ 625,550     $ 567,383                  
                               
Operating segment income:                              
PCB $ 91,908     $ 73,055                  
RF&S Components   6,678       4,730                  
Corporate & Other1   (51,726 )     (26,472 )                
Total operating segment income   46,860       51,313                  
Amortization of definite-lived intangibles   (9,658 )     (10,425 )                
Total operating income   37,202       40,888                  
Total other expense   (3,073 )     (10,773 )                
Income before income taxes $ 34,129     $ 30,115                  
                               
RECONCILIATIONS2                              
                               
  Second Quarter
  First Two Quarters
  2022   2021   2022   2021
Non-GAAP gross profit reconciliation3:                              
GAAP gross profit $ 117,073     $ 99,910     $ 207,996     $ 181,510  
Add back item:                              
Amortization of definite-lived intangibles   1,383       1,383       2,767       2,767  
Accelerated depreciation   105       -       105       -  
Stock-based compensation   1,172       861       2,448       2,026  
Unrealized loss (gain) on commodity hedge   5,210       (99 )     3,807       (99 )
Restructuring and other charges   -       -       -       254  
Non-GAAP gross profit $ 124,943     $ 102,055     $ 217,123     $ 186,458  
Non-GAAP gross margin   20.0 %     18.0 %     18.0 %     17.0 %
                               
Non-GAAP operating income reconciliation4:   57,329                          
GAAP operating income $ 37,202     $ 40,888     $ 63,070     $ 60,688  
Add back items:                              
Amortization of definite-lived intangibles   9,658       10,425       19,316       21,330  
Accelerated depreciation   105       -       105       -  
Stock-based compensation   4,427       3,350       8,661       7,559  
Gain on sale of assets   -       (11 )     -       (421 )
Unrealized loss (gain) on commodity hedge   5,210       (99 )     3,807       (99 )
Restructuring, acquisition-related and other charges   11,012       566       12,150       3,851  
Non-GAAP operating income $ 67,614     $ 55,119     $ 107,109     $ 92,908  
Non-GAAP operating margin   10.8 %     9.7 %     8.9 %     8.5 %
                               
Non-GAAP net income and EPS reconciliation5:                              
GAAP net income $ 27,792     $ 28,261     $ 45,038     $ 25,069  
Add back items:                              
Amortization of definite-lived intangibles   9,658       10,425       19,316       21,330  
Accelerated depreciation   105       -       105       -  
Stock-based compensation   4,427       3,350       8,661       7,559  
Non-cash interest expense   537       536       1,069       1,073  
Gain on sale of assets   -       (11 )     (827 )     (991 )
Change in fair value of warrant liabilities   -       (1,027 )     (99 )     (1,199 )
Loss on extinguishment of debt   -       -       -       15,217  
Unrealized loss (gain) on commodity hedge   5,210       (99 )     3,807       (99 )
Restructuring, acquisition-related and other charges   11,012       566       12,150       3,851  
Income taxes6   (3,424 )     (1,958 )     (8,650 )     (6,509 )
Non-GAAP net income $ 55,317     $ 40,043     $ 80,570     $ 65,301  
Non-GAAP earnings per diluted share $ 0.54     $ 0.36     $ 0.78     $ 0.60  
                               
Adjusted EBITDA reconciliation7:                              
GAAP net income $ 27,792     $ 28,261     $ 45,038     $ 25,069  
Add back items:                              
Income tax provision   6,337       1,854       5,568       747  
Interest expense   10,711       11,079       22,072       22,468  
Amortization of definite-lived intangibles   9,658       10,425       19,316       21,330  
Depreciation expense   21,789       21,241       43,289       42,717  
Stock-based compensation   4,427       3,350       8,661       7,559  
Gain on sale of assets   -       (11 )     (827 )     (991 )
Change in fair value of warrant liabilities   -       (1,027 )     (99 )     (1,199 )
Loss on extinguishment of debt   -       -       -       15,217  
Unrealized loss (gain) on commodity hedge   5,210       (99 )     3,807       (99 )
Restructuring, acquisition-related and other charges   11,012       566       12,150       3,851  
Adjusted EBITDA $ 96,936     $ 75,639     $ 158,975     $ 136,669  
Adjusted EBITDA margin   15.5 %     13.3 %     13.2 %     12.5 %
                               
Free cash flow reconciliation:                              
Operating cash flow $ 79,317     $ 56,909     $ 115,308     $ 98,054  
Capital expenditures, net   (26,394 )     (22,727 )     (49,814 )     (43,693 )
Free cash flow $ 52,923     $ 34,182     $ 65,494     $ 54,361  
                               


1 Other represents the Shanghai E-MS and Shenzhen plant results.
 
2 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.
 
3 Non-GAAP gross profit and gross margin measures exclude amortization of intangibles, accelerated depreciation, stock-based compensation expense, unrealized loss (gain) on commodity hedge, restructuring and other charges.
 
4 Non-GAAP operating income and operating margin measures exclude amortization of intangibles, accelerated depreciation, stock-based compensation expense, gain on sale of assets, unrealized loss (gain) on commodity hedge, restructuring, acquisition-related costs, and other charges.
 
5 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, stock-based compensation expense, non-cash interest expense on debt (before consideration of capitalized interest), gain on sale of assets, change in fair value of warrant liabilities, loss on extinguishment of debt, unrealized loss (gain) on commodity hedge, 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.
 
6 Income tax adjustments reflect the difference between income taxes based on a non-GAAP tax rate and a forecasted annual GAAP tax rate.
 
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, change in fair value of warrant liabilities, loss on extinguishment of debt, unrealized loss (gain) on commodity hedge, 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