EXHIBIT 99.1
Published on November 1, 2006
EXHIBIT 99.1
Contact: | Steve Richards | |||
Chief Financial Officer | ||||
714/241-0303 |
TTM TECHNOLOGIES, INC. REPORTS STRONG THIRD QUARTER 2006 RESULTS,
COMPLETES ACQUISITION OF TYCO PRINTED CIRCUIT GROUP
COMPLETES ACQUISITION OF TYCO PRINTED CIRCUIT GROUP
SANTA ANA, CA November 1, 2006 TTM Technologies, Inc. (Nasdaq: TTMI), a leading
manufacturer of time-critical and technologically advanced printed circuit boards, today reported
results for the third quarter of 2006.
Third Quarter Results
Third quarter 2006 net sales increased $14.8 million, or 24.2 percent, to $75.8 million from
the third quarter of 2005 and decreased $0.9 million, or 1.2 percent, from the second quarter of
2006.
For the third quarter of 2006, quick-turn business represented 17 percent of net sales compared to
20 percent for the second quarter of 2006 and 21 percent for the third quarter of 2005. The
sequential decrease resulted from strength in our higher-volume business and rather flat conditions
in the quick-turn market during the third quarter.
Gross margins were 29.7 percent for the third quarter of 2006, compared with 30.0 percent
during the second quarter of 2006 and 23.2 percent for the third quarter of 2005. Gross margins
were stable, sequentially, due to improved PCB pricing and the companys ability to pass through
rising raw material costs.
Selling and marketing expense was $3.3 million in the third quarter of 2006, a decrease of $125,000
over the second quarter of 2006 and an increase of $279,000 from the year-ago period. As a
percentage of sales, selling and marketing expense was 4.4 percent in the third quarter of 2006,
compared to 4.5 percent in the second quarter of 2006 and 5.0 percent in the third quarter of 2005.
General and administrative expense, including amortization of intangibles, was $4.1 million in the
third quarter of 2006, an increase of $158,000 over the second quarter of 2006 and a decrease of
$1.0 million from the year-ago period. The third quarter of 2005 included a $2.0 million expense
accrual related to an agreement in principle to resolve a customer dispute concerning goods shipped
in 2002 and 2003. The year-over-year decrease was offset somewhat by higher incentive compensation,
stock-based compensation and labor-related expenses in the third quarter of 2006. As a percentage
of sales, G&A expense was 5.4 percent in the third quarter of 2006, compared to 5.2 percent in the
second quarter of 2006 and 8.5 percent in the third quarter of 2005.
TTM posted operating income of $15.0 million for the third quarter of 2006, compared to $15.6
million for the second quarter of 2006 and $5.9 million for the third quarter of 2005.
Net income for the third quarter of 2006 was $10.5 million, or $0.25 per diluted share, compared
with $10.6 million, or $0.25 per diluted share, for the second quarter of 2006, and $4.1 million,
or $0.10 per diluted share, for the third quarter of 2005.
EBITDA (earnings before interest, taxes, depreciation and amortization) was $19.0 million in
the third quarter of 2006 compared with $19.4 million in the second quarter of 2006 and $9.1
million in the third quarter of 2005.
In the third quarter of 2006, TTM generated cash flow from operations of $11.7 million, enabling it
to fund net capital expenditures of $3.0 million, while expanding its cash and short-term
investments to a total of $110.3 million, an increase of $9.0 million during the quarter.
We continue to be pleased with our ability to execute our strategy and generate superior financial
results, said Kent Alder, President and CEO of TTM Technologies. Market conditions were
relatively stable in the third quarter. We effectively planned for and managed our business to
account for higher raw material costs. We continue to provide our customers with value-added
services as well as technically advanced products on a timely basis, which helps us to maintain our
gross margins.
Acquisition of Tyco Printed Circuit Group
On October 27, 2006, TTM completed the acquisition of substantially all of the assets of the Tyco
Printed Circuit Group (TPCG). The combination makes TTM Technologies the largest PCB manufacturer
in North America, with annualized sales of approximately $650 million, stated Alder. In addition
to our leadership position in quick turn and technology, we are now a leader in the attractive
military/aerospace sector of the PCB market and will provide expanded service capabilities to a
more diversified customer base.
Although TPCG has lower profit margins than TTM, our exclusive focus on printed circuit boards and
related technologies should enable us to bring greater operating efficiency and productivity to the
combined operations, added Alder. Of course, TPCGs operations include back-plane assembly, which
is inherently less profitable than PCB manufacturing. We expect the acquisition to be accretive to
earnings within one year.
Outlook
For the fourth quarter of 2006, TTM is estimating revenues in a range of $140 million to $148
million and earnings in a range of $0.13 to $0.19 per diluted share. TTMs fourth quarter results
will include roughly two months of TPCGs results.
We expect the printed circuit board market to remain relatively stable, with flat pricing and flat
to slightly higher volume, concluded Alder. In the fourth quarter, profits will be negatively
impacted due to costs to integrate the TPCG operations. In addition, the accounting treatment
associated with allocating the purchase price to the fair market value of TPCGs assets will affect
our earnings.
Conference Call/Webcast
TTM Technologies, Inc. is a leading supplier of time-critical and technologically advanced printed
circuit boards to original equipment manufacturers and electronics manufacturing services
companies. TTM stands for time-to-market, representing how
the companys time-critical, one-stop
manufacturing services enable customers to shorten the time required to develop new products and
bring them to market.
The company will conduct a conference call to discuss its third-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 November 3, 2006, on the companys website, www.ttmtech.com.
This release contains forward-looking statements that relate to future events or performance.
These statements reflect the companys 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 companys 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 companys dependence upon the electronics industry, the companys 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, the risks and uncertainties associated with the integration of the recently acquired TPCG
business, increased competition from low-cost foreign manufacturers, and other Risk Factors set
forth in the companys most recent SEC filings.
- Tables Follow -
TTM TECHNOLOGIES, INC.
Selected Unaudited Financial Information
Selected Unaudited Financial Information
(In
thousands, except per share data)
Third Quarter | Second Quarter | First Three Fiscal Quarters | ||||||||||||||||||
2006 | 2005 | 2006 | 2006 | 2005 | ||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||||||||||||||
Net sales |
$ | 75,765 | $ | 60,979 | $ | 76,683 | $ | 225,136 | $ | 177,078 | ||||||||||
Cost of goods sold |
53,288 | 46,827 | 53,714 | 159,487 | 138,351 | |||||||||||||||
Gross profit |
22,477 | 14,152 | 22,969 | 65,649 | 38,727 | |||||||||||||||
Operating expenses: |
||||||||||||||||||||
Selling and marketing |
3,329 | 3,050 | 3,454 | 10,142 | 8,932 | |||||||||||||||
General and administrative |
3,822 | 4,856 | 3,663 | 11,069 | 11,295 | |||||||||||||||
Amortization of intangibles |
300 | 300 | 301 | 901 | 901 | |||||||||||||||
Total operating expenses |
7,451 | 8,206 | 7,418 | 22,112 | 21,128 | |||||||||||||||
Operating income |
15,026 | 5,946 | 15,551 | 43,537 | 17,599 | |||||||||||||||
Interest expense |
(16 | ) | (16 | ) | (25 | ) | (83 | ) | (116 | ) | ||||||||||
Amortization of debt issuance costs |
(19 | ) | (26 | ) | (20 | ) | (58 | ) | (52 | ) | ||||||||||
Interest income and other, net |
1,369 | 547 | 1,118 | 3,464 | 1,393 | |||||||||||||||
Income before income taxes |
16,360 | 6,451 | 16,624 | 46,860 | 18,824 | |||||||||||||||
Income tax provision |
(5,837 | ) | (2,390 | ) | (6,068 | ) | (16,970 | ) | (7,031 | ) | ||||||||||
Net income |
$ | 10,523 | $ | 4,061 | $ | 10,556 | $ | 29,890 | $ | 11,793 | ||||||||||
Earnings per common share: |
||||||||||||||||||||
Basic |
0.25 | 0.10 | 0.25 | 0.72 | 0.29 | |||||||||||||||
Diluted |
0.25 | 0.10 | 0.25 | 0.71 | 0.28 | |||||||||||||||
Weighted average common shares: |
||||||||||||||||||||
Basic |
41,823 | 41,288 | 41,694 | 41,651 | 41,210 | |||||||||||||||
Diluted |
42,310 | 41,726 | 42,512 | 42,265 | 41,761 |
SELECTED BALANCE SHEET DATA
October 2, 2006 | December 31, 2005 | |||||||
Cash and short-term investments |
$ | 110,291 | $ | 82,358 | ||||
Accounts receivable, net |
45,196 | 38,631 | ||||||
Inventories, net |
14,937 | 12,564 | ||||||
Total current assets |
177,180 | 140,415 | ||||||
Net property, plant and equipment |
53,084 | 51,798 | ||||||
Other assets |
78,731 | 80,930 | ||||||
Total assets |
308,995 | 273,143 | ||||||
Accounts payable |
$ | 13,709 | $ | 11,310 | ||||
Total current liabilities |
28,237 | 29,191 | ||||||
Stockholders equity |
280,758 | 243,952 | ||||||
Total liabilities and stockholders equity |
308,995 | 273,143 |
SUPPLEMENTAL DATA
Third Quarter | Second Quarter | First Three Fiscal Quarters | ||||||||||||||||||
2006 | 2005 | 2006 | 2006 | 2005 | ||||||||||||||||
EBITDA |
$ | 19,001 | $ | 9,130 | $ | 19,444 | $ | 55,122 | $ | 26,700 | ||||||||||
EBITA |
$ | 16,725 | $ | 6,823 | $ | 16,999 | $ | 47,990 | $ | 19,981 | ||||||||||
Gross margin |
29.7 | % | 23.2 | % | 30.0 | % | 29.2 | % | 21.9 | % | ||||||||||
EBITDA margin |
25.1 | 15.0 | 25.4 | 24.5 | 15.1 | |||||||||||||||
Operating margin |
19.8 | 9.8 | 20.3 | 19.3 | 9.9 |
End Market Breakdown:
Third Quarter | ||||||||||||||||||||
2006 | 2005 | |||||||||||||||||||
Networking/communications |
45.5 | % | 43.8 | % | ||||||||||||||||
High-end computing |
28.3 | 26.9 | ||||||||||||||||||
Industrial/medical |
14.1 | 15.6 | ||||||||||||||||||
Computer peripherals |
4.3 | 5.3 | ||||||||||||||||||
Handheld |
3.0 | 4.8 | ||||||||||||||||||
Other |
4.8 | 3.6 |
Stock-based compensation:
Third Quarter | ||||||||||||||||||||
2006 | ||||||||||||||||||||
Amount included in: |
||||||||||||||||||||
Cost of goods sold |
$ | 135 | ||||||||||||||||||
Selling and marketing |
39 | |||||||||||||||||||
General and administrative |
276 | |||||||||||||||||||
Total stock-based compensation expense |
$ | 450 | ||||||||||||||||||
RECONCILIATIONS*
Third Quarter | Second Quarter | First Three Fiscal Quarters | ||||||||||||||||||
2006 | 2005 | 2006 | 2006 | 2005 | ||||||||||||||||
EBITA/EBITDA reconciliation: |
||||||||||||||||||||
Net income |
$ | 10,523 | $ | 4,061 | $ | 10,556 | $ | 29,890 | $ | 11,793 | ||||||||||
Add back items: |
||||||||||||||||||||
Income taxes |
5,837 | 2,390 | 6,068 | 16,970 | 7,031 | |||||||||||||||
Interest expense |
16 | 16 | 25 | 83 | 116 | |||||||||||||||
Amortization of debt issuance costs |
19 | 26 | 20 | 58 | 52 | |||||||||||||||
Amortization of intangibles |
330 | 330 | 330 | 989 | 989 | |||||||||||||||
EBITA |
16,725 | 6,823 | 16,999 | 47,990 | 19,981 | |||||||||||||||
Depreciation expense |
2,276 | 2,307 | 2,445 | 7,132 | 6,719 | |||||||||||||||
EBITDA |
$ | 19,001 | $ | 9,130 | $ | 19,444 | $ | 55,122 | $ | 26,700 | ||||||||||
* 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.