Form: 8-K

Current report filing

February 15, 2007

 

Exhibit 99.1
         
 
  Contact:   Steve Richards
 
      Chief Financial Officer
 
      714/241-0303
FOR IMMEDIATE RELEASE
TTM TECHNOLOGIES, INC. REPORTS FOURTH QUARTER
AND FULL YEAR 2006 RESULTS
Strong Financial Performance and Progress Integrating Acquired Printed Circuit Group
SANTA ANA, CA — February 15, 2007 — TTM Technologies, Inc. (Nasdaq: TTMI), a leading manufacturer of time-critical and technologically advanced printed circuit boards, today reported results for the fourth quarter of 2006, ended December 31, 2006.
FINANCIAL & OPERATIONAL HIGHLIGHTS
  •   The Company completed the acquisition of the Printed Circuit Group (PCG), making TTM North America’s largest printed circuit board manufacturer.
  •   Fourth quarter net sales of $144.3 million increased 90 percent over the 2006 third quarter and 129 percent over the fourth quarter of 2005.
  •   2006 net sales of $369.4 million increased 54 percent over 2005 net sales.
FOURTH QUARTER 2006 FINANCIAL RESULTS
Fourth quarter 2006 results include two months of the operations of PCG, which TTM acquired from Tyco International Ltd. on October 27, 2006.
Fourth quarter 2006 net sales increased $68.5 million, or 90 percent, to $144.3 million from the third quarter of 2006 and $81.1 million, or 129 percent, from the fourth quarter of 2005, due primarily to the inclusion of PCG.
PCB quick-turn business represented approximately 13 percent of net sales in the fourth quarter of 2006, compared to 17 percent for the third quarter of 2006 and 22 percent for the fourth quarter of 2005. The decrease was primarily due to PCG’s limited quick-turn capacity.
Gross margins were 18.9 percent for the fourth quarter of 2006, compared with 29.7 percent in the third quarter of 2006 and 23.8 percent for the fourth quarter of 2005. Gross profit was negatively impacted by approximately $4.0 million for the value of the manufacturing profit added to the PCG inventories at the acquisition date. These inventories were substantially sold during the fourth quarter. Gross margins also were affected by the inclusion of PCG’s backplane assembly operations, which inherently carry a lower gross margin than printed circuit board manufacturing.

 


 

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Selling expense for the fourth quarter of 2006 was $6.3 million, representing 4.4 percent of sales. This compares to $3.3 million, or 4.4 percent of sales, in the third quarter of 2006 and $3.0 million, or 4.8 percent of sales, in the year-ago period.
General and administrative expense, including amortization of intangibles, was $9.5 million in the fourth quarter of 2006, compared to $4.1 million in the third quarter of 2006 and $3.1 million in the year-ago period. G&A expense for the fourth quarter of 2006 included approximately $700,000 of audit and consulting fees related to our accounting for and integration of the PCG acquisition.
TTM posted operating income of $11.2 million for the fourth quarter of 2006, compared to $15.0 million for the third quarter of 2006 and $8.8 million for the fourth quarter of 2005.
TTM recorded its fourth quarter income tax provision at a higher rate in order to adjust the full-year provision. The PCG acquisition included additional domestic locations in different states with higher tax rates, most notably California. The company anticipates that its tax rate in the first quarter of 2007 will be approximately 38 percent.
Net income for the fourth quarter of 2006 was $4.9 million, or $0.12 per diluted share, compared with $10.5 million, or $0.25 per diluted share, for the third quarter of 2006 and $19.0 million, or $0.46 per diluted share, for the fourth quarter of 2005. Fourth quarter 2005 earnings included a $0.31 per diluted share benefit from the reversal in TTM’s deferred income tax asset valuation allowance.
EBITDA (earnings before interest, taxes, depreciation and amortization) for the fourth quarter of 2006 was $18.2 million, compared with $19.0 million for the third quarter of 2006 and $12.5 million for the fourth quarter of 2005. A reconciliation of this non-GAAP measure is provided after the GAAP financial statements below.
The Company noted that financial results for the fourth quarter may be subject to change pending the resolution of certain accounting matters relating to the acquisition of PCG. Such changes are likely to affect the opening balance sheet of the acquired entity. Should results for the fourth quarter change from those established in this press release, the Company expects that revised numbers would be issued when it files its Annual Report on Form 10-K on or about March 16, 2007.
BALANCE SHEET
The $226 million purchase price for the PCG acquisition was financed with a $200 million, 6-year term loan and $26 million from cash on the balance sheet.
Cash and short-term investments at the end of the fourth quarter totaled $70.7 million, compared with $110.3 million in the third quarter of 2006. The change in cash was primarily attributable to the PCG purchase price plus related acquisition costs of approximately $34 million and capital expenditures of $5.1 million in the fourth quarter.
FULL YEAR 2006 FINANCIAL RESULTS
Net sales for 2006, including two months of operations from PCG, were $369.4 million, compared to $240.2 million for 2005. Net income increased to $34.8 million, or $0.82 per diluted share, in 2006, compared to $30.8 million, or $0.74 per diluted share, in 2005. The reversal of the deferred income tax asset valuation allowance accounted for $12.7 million, or $0.31 per diluted share, of TTM’s 2005 net income.


 

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PROGRESS INTEGRATING ACQUIRED PRINTED CIRCUIT GROUP
Commenting on TTM’s results for the fourth quarter and year end, Kent Alder, President and CEO, noted, “We are very pleased with our performance, both operationally and financially. Our financial results were solid, and we continue to make rapid and significant progress toward our goal of integrating TTM Technologies and the Printed Circuit Group as soon as possible. In addition, TTM’s exclusive focus on printed circuit boards and backplane assembly enables us to bring greater operating efficiency and productivity to all aspects of the business.”
Alder continued, “Although quick-turn business has declined as a percentage of sales, the acquisition of PCG provides us with a significant opportunity to cross-sell TTM’s quick-turn capabilities to the PCG customer base. We are seeing strength in the networking and military markets. We gained about 500 customers through the acquisition, and we added 30 new customers during the quarter.” Alder concluded, “We are excited by our momentum and believe that we are well positioned to capitalize on the opportunities in the printed circuit board industry.”
FORECAST FOR FIRST QUARTER ENDING APRIL 2, 2007
For the first quarter of 2007, TTM estimates revenues in a range of $168 million to $174 million and earnings in a range of $0.13 to $0.18 per diluted share.
TO ACCESS THE LIVE WEB CAST / CONFERENCE CALL
The company will conduct a conference call to discuss its fourth-quarter performance and outlook today at 4:30 p.m. Eastern/1:30 p.m. Pacific time. Investors will have the opportunity to listen to the conference call over the Internet. To listen to the live web cast, log on to the company website at www.ttmtech.com. To access the live conference call, dial 800-967-7185.
TO ACCESS A REPLAY OF THE WEB CAST
A replay of the conference call will be available until Thursday, February 22, on the company’s Web site, www.ttmtech.com.
SAFE HARBOR STATEMENT
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, the unpredictability of and potential fluctuation in future revenues and operating

 


 

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results, the risks and uncertainties associated with the integration of the recently acquired PCG business, increased competition from low-cost foreign manufacturers, and other “Risk Factors” set forth in the company’s most recent SEC filings.
ABOUT TTMI
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 company’s time-critical, one-stop manufacturing services enable customers to shorten the time required to develop new products and bring them to market. TTMI’s common stock is publicly traded on the NASDAQ Global Market (NASDAQ GM: TTMI). The company is based in Santa Ana, California. Additional information can be found at http://www.ttmtechnologies.com.
- Tables Follow -

 


 

TTM TECHNOLOGIES, INC.
Selected Unaudited Financial Information
(In thousands, except per share data)
                                         
    Fourth Quarter     Third Quarter     Full Year  
    2006     2005     2006     2006     2005  
 
                                       
CONSOLIDATED STATEMENTS OF OPERATIONS
                                       
 
                                       
Net sales
  $ 144,261     $ 63,131     $ 75,765     $ 369,397     $ 240,209  
Cost of goods sold
    117,049       48,102       53,288       276,536       186,453  
 
                             
Gross profit
    27,212       15,029       22,477       92,861       53,756  
 
                             
 
                                       
Operating expenses:
                                       
Selling and marketing
    6,331       3,045       3,329       16,473       11,977  
General and administrative
    8,587       2,840       3,822       19,656       14,135  
Amortization of intangibles
    885       301       300       1,786       1,202  
Restructuring charges
    199       —       —       199       —  
 
                             
Total operating expenses
    16,002       6,186       7,451       38,114       27,314  
 
                             
 
                                       
Operating income
    11,210       8,843       15,026       54,747       26,442  
 
                                       
Interest expense
    (2,937 )     (63 )     (16 )     (3,020 )     (179 )
Amortization of debt issuance costs
    (316 )     (20 )     (19 )     (374 )     (72 )
Interest income and other, net
    998       733       1,369       4,462       2,126  
 
                             
 
                                       
Income before income taxes
    8,955       9,493       16,360       55,815       28,317  
Income tax benefit (provision)
    (4,048 )     9,555       (5,837 )     (21,018 )     2,524  
 
                             
 
                                       
Net income
  $ 4,907     $ 19,048     $ 10,523     $ 34,797     $ 30,841  
 
                             
 
                                       
Earnings per common share:
                                       
Basic
  $ 0.12     $ 0.46     $ 0.25     $ 0.83     $ 0.75  
Diluted
  $ 0.12     $ 0.46     $ 0.25     $ 0.82     $ 0.74  
 
                                       
Weighted average common shares:
                                       
Basic
    42,012       41,301       41,823       41,740       41,232  
Diluted
    42,389       41,810       42,310       42,295       41,770  

 


 

SELECTED BALANCE SHEET DATA
                 
    December 31, 2006     December 31, 2005  
Cash and short-term investments
  $ 70,656     $ 82,358  
Accounts receivable, net
    125,720       38,631  
Inventories, net
    66,962       12,564  
Total current assets
    272,504       140,415  
Net property, plant and equipment
    152,006       51,798  
Other assets
    148,507       80,930  
Total assets
    573,017       273,143  
 
               
Accounts Payable
  $ 40,014     $ 11,310  
Current liabilities
    144,343       29,191  
Long-term liabilities
    141,538       —  
Stockholders’ equity
    287,136       243,952  
Total liabilities and stockholders’ equity
    573,017       273,143  
SUPPLEMENTAL DATA
                                         
    Fourth Quarter     Third Quarter     Full Year  
    2006     2005     2006     2006     2005  
EBITDA
  $ 18,167     $ 12,477     $ 19,001     $ 73,290     $ 39,177  
EBITA
  $ 13,122     $ 9,906     $ 16,725     $ 61,112     $ 29,887  
Gross margin
    18.9 %     23.8 %     29.7 %     25.1 %     22.4 %
EBITDA margin
    12.6       19.8       25.1       19.8       16.3  
Operating margin
    7.8       14.0       19.8       14.8       11.0  
End Market Breakdown:
                                       
                 
    Fourth Quarter  
    2006     2005  
Networking/Communications
    43 %     43 %
Military/Aerospace
    22       11  
Computing/Storage/Peripherals
    22       33  
Medical/Industrial/Instrumentation/Other
    13       13  
Stock-based Compensation:
         
    Fourth Quarter  
    2006  
Amount included in:
       
Cost of goods sold
  $ 154  
Selling and marketing
    42  
General and administrative
    318  
 
     
Total stock-based compensation expense
  $ 514  
 
     
RECONCILIATIONS*
                                         
    Fourth Quarter     Third Quarter     Full Year  
    2006     2005     2006     2006     2005  
EBITA/EBITDA reconciliation:
                                       
Net income
  $ 4,907     $ 19,048     $ 10,523     $ 34,797     $ 30,841  
Add back items:
                                       
Income taxes
    4,048       (9,555 )     5,837       21,018       (2,524 )
Interest expense
    2,937       63       16       3,020       179  
Amortization of debt issuance costs
    316       20       19       374       72  
Amortization of intangibles
    914       330       330       1,903       1,319  
 
                             
EBITA
    13,122       9,906       16,725       61,112       29,887  
Depreciation expense
    5,045       2,571       2,276       12,178       9,290  
 
                             
EBITDA
  $ 18,167     $ 12,477     $ 19,001     $ 73,290     $ 39,177  
 
                             
 
*   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 of America.