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TTM Technologies, Inc. Reports Second Quarter 2002 Results; Announces Production Realignment and Cost-Saving Restructuring
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REDMOND, Wash., Aug 1, 2002 /PRNewswire-FirstCall via COMTEX/ -- TTM Technologies, Inc. (Nasdaq: TTMI), a leading manufacturer of time- critical, technologically advanced printed circuit boards, today reported results for the second quarter ended July 1, 2002. The company also announced the realignment of production among its three facilities, an action expected to yield significant cost savings. Second-Quarter Results In the second quarter, revenue and profitability declined, year-over-year, due to continued weakness in the electronics industry. Net sales declined 24 percent to $23.3 million, compared to $30.7 million for the second quarter of 2001. For the second quarter of 2002, quick-turn business remained essentially flat at 44 percent of total revenues, compared to 45 percent for the second quarter of 2001. Gross profit declined 75 percent to $2.0 million, as gross margins declined to 8.4 percent in the second quarter of 2002, compared to 25.3 percent for the same period in 2001. As a result of lower volume and pricing, reduced absorption of fixed manufacturing overhead, and a $907,000 restructuring charge, the company reported an operating loss of $1.9 million in the second quarter of 2002, compared to operating income of $3.8 million for the second quarter of 2001. Prior-period results included a quarterly goodwill amortization charge of $900,000, which was eliminated with the adoption of Statement of Financial Accounting Standards No. 142 in the first quarter of 2002. For the second quarter of 2002, the net loss was $1.3 million, or $0.03 per diluted share, compared to net income of $2.2 million, or $0.06 per diluted share, for the same period in 2001. The net cash loss was $1.0 million, or $0.02 on a per share basis, compared to $3.4 million, or $0.09 per diluted share, for the same period in 2001. Adjusted for the restructuring charge, the net cash loss per share for the second quarter of 2002 was $0.01. Earnings before interest, taxes, depreciation and amortization (EBITDA) declined 86 percent to $1.0 million for the second quarter of 2002, compared to $7.4 million for the same period in 2001. "We continue to manage the business to meet market conditions," said Kent Alder, President and CEO of TTM Technologies. "With our production realignment and associated workforce reduction, we further lowered our cost structure." Production Realignment and Cost Savings The latest cost-cutting steps include the realignment of production among TTM's three facilities, located in Burlington and Redmond, Washington, and Santa Ana, California. As a result of the realignment, the Burlington facility will specialize in inner layer production. Outer layers, previously produced in Burlington, will be shifted to Redmond and Santa Ana. With the reduction of 130 employees, plus associated overhead and management support at the Burlington facility, TTM expects to generate quarterly cost savings in excess of $1.0 million. The company booked a pretax charge of $907,000, associated with the production realignment and headcount reduction. "While this realignment will provide additional operating and cost advantages, it will not reduce our long-term capacity or hurt our ability to respond to an industry upturn," said Alder. "If a substantial upsurge in demand necessitates an increase in outer layer capacity, we retain the option of reestablishing outer layer production at Burlington." Return on Invested Capital TTM's return on invested capital (ROIC), based on tax-affected EBITA, was 1.2 percent in the second quarter of 2002, excluding the restructuring charge, compared with 10.5 percent in the year-ago period. On a trailing 12-month basis, TTM generated an ROIC of 4.4 percent. At the quarter's end, TTM had net cash of $10.7 million, compared with net debt of $8.1 million at year-end 2001. Outlook For the third quarter of 2002, TTM anticipates revenues ranging from $20 to $23 million and cash earnings per share between a profit of $0.01 and a loss of $0.01. "Our increasingly efficient production capabilities, combined with our strong balance sheet, provide the strength we need to withstand the protracted downturn in the electronics industry," concluded Alder. "We have continued to invest in our time and technology strategy and remain well positioned to capture market share when the industry recovers." TTM Technologies, Inc. is a leading supplier of time-critical, technologically advanced printed circuit boards to original equipment manufacturers and electronic manufacturing services companies. 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. Conference Call/Webcast The company will conduct a conference call to discuss its second quarter performance and outlook today at 4:30 p.m. Eastern/1:30 p.m. Pacific time. The call will be simulcast, and available for replay until August 8, 2002, on the company's Web site at www.ttmtech.com . 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, including the recent significant slowdown in the technology sector and related excess capacity, the unpredictability of future revenues and expenses, potential fluctuations in revenues and operating results, and other "Risk Factors" set forth in the company's Form 10-K for 2001.
TTM TECHNOLOGIES, INC.
Selected Unaudited Financial Information
(In thousands, except per share data)
Second Quarter First Two Fiscal Quarters
2002 2001 2001 2002 2001 2001
Adjusted* Adjusted*
CONSOLIDATED
STATEMENTS
OF OPERATIONS
Net sales $23,287 $30,666 $30,666 $47,021 $76,668 $76,668
Cost of goods
sold 21,327 22,905 22,905 42,714 50,610 50,610
Gross profit 1,960 7,761 7,761 4,307 26,058 26,058
Operating expenses:
Sales and
marketing 1,591 1,907 1,907 3,246 4,371 4,371
General and
administrative 1,040 844 844 1,617 2,921 2,921
Amortization of
intangibles 301 1,202 301 601 2,404 601
Restructuring
charges 907 907 - -
Total operating
expenses 3,839 3,953 3,052 6,371 9,696 7,893
Operating income
(loss) (1,879) 3,808 4,709 (2,064) 16,362 18,165
Interest expense (275) (668) (668) (542) (1,532) (1,532)
Amortization of
debt issuance
costs (11) (10) (10) (21) (21) (21)
Interest income
and other, net 255 275 275 308 434 434
Income before
income taxes (1,910) 3,405 4,306 (2,319) 15,243 17,046
Income tax
benefit
(provision) 626 (1,227) (1,552) 757 (5,503) (6,152)
Net income
(loss) $(1,284) $2,178 $ 2,754 $(1,562) $9,740 $10,894
Earnings per
common share
(EPS):
Basic $(0.03) $0.06 $0.07 $(0.04) $0.26 $0.29
Diluted (0.03) 0.06 0.07 (0.04) 0.25 0.28
Cash
(diluted)** (0.02) 0.09 0.08 (0.02) 0.31 0.30
Weighted average
common shares:
Basic 39,831 37,441 37,441 39,217 37,397 37,397
Diluted 39,831 38,894 38,894 39,217 38,908 38,908
* Adjusted to show the pro-forma impact of eliminating goodwill
amortization and the related income tax effect during the first two
quarters of 2001
** Fully diluted EPS plus amortization of intangibles
SELECTED BALANCE SHEET DATA 07/01/02 12/31/01
Cash $39,419 $24,490
Accounts receivable, net 10,198 11,208
Inventories 3,256 3,126
Total current assets 57,390 43,971
Net PP&E 49,078 50,906
Other assets 95,390 98,199
Total assets 201,858 193,076
Current maturities of
long-term debt $5,062 $4,500
Other current liabilities 8,714 10,372
Long-term liabilities 23,625 28,125
Shareholders' equity 164,457 150,079
Total liabilities and
shareholders' equity 201,858 193,076
SUPPLEMENTAL DATA
Second Quarter First Two Fiscal Quarters
2002 2001 2001 2002 2001 2001
Adjusted* Adjusted*
EBITDA*** $1,031 $7,377 $7,377 $3,475 $23,248 $23,248
EBITA**** $(1,323) $5,285 $5,285 $(1,155) $19,200 $19,200
Gross margin 8.4% 25.3% 25.3% 9.2% 34.0% 34.0%
EBITDA margin 4.4 24.1 24.1 7.4 30.3 30.3
Operating margin (8.1) 12.4 15.4 (4.4) 21.3 23.7
Return on Invested
Capital
(after tax) -0.3% 10.5% 10.5%
End Market Breakdown:
Second Quarter
2002 2001
Networking/
communications 31.0% 35.9%
High-end computing 12.5 14.3
Industrial/Medical 28.4 27.3
Computer peripherals 20.0 11.8
Handheld 2.8 7.0
Other 5.3 3.7
*** EBITDA (earnings before interest, taxes, depreciation and
amortization) means earnings before interest expense
(including amortization of debt issuance costs), income taxes,
depreciation and amortization.
**** EBITA (earnings before interest, taxes and amortization) means
earnings before interest expense (including
amortization of debt issuance costs), income taxes and amortization.
SOURCE TTM Technologies, Inc.
CONTACT: Stacey Peterson, Chief Financial Officer of TTM Technologies, Inc., +1-714-241-0303 URL: http://www.ttmtech.com
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