Form: 8-K

Current report filing

May 2, 2007

 

Exhibit 99.1
     
Contact:
  Steve Richards
Chief Financial Officer
714/241-0303
TTM TECHNOLOGIES REPORTS STRONG FIRST QUARTER 2007 RESULTS
Printed Circuit Group Accretive to First Quarter Earnings Ahead of Schedule
SANTA ANA, CA –– May 2, 2007 –– TTM Technologies, Inc. (Nasdaq: TTMI), North America’s largest printed circuit board manufacturer, today reported results for the first quarter of 2007, which ended April 2, 2007.
Financial & Operational Highlights – First Quarter 2007
  •   First quarter net sales of $176.9 million increased 143 percent compared with the same period a year ago and 23 percent sequentially.
 
  •   The Printed Circuit Group (PCG) acquisition was accretive to earnings in the first quarter 2007, which was ahead of plan.
 
  •   First quarter gross profit of $34.7 million increased $7.2 million sequentially.
 
  •   The Company benefited from the PCG acquisition, which diversified our customer base and broadened our end market exposure.
First Quarter 2007 Financial Results
First quarter 2007 net sales increased $32.7 million, or 23 percent, from the fourth quarter of 2006, and $104.2 million, or 143 percent, to $176.9 million from the first quarter of 2006 due to the inclusion of PCG. First quarter 2007 results included a full quarter of the operations of PCG, which TTM acquired from Tyco International Ltd. on October 27, 2006, compared with two months in the fourth quarter of 2006.
Gross margins were 19.6 percent for the first quarter of 2007, compared with 19.1 percent in the fourth quarter of 2006 and 27.8 percent for the first quarter of 2006. On a year-over-year basis, gross margins were affected by the inclusion of PCG’s backplane assembly operations, which inherently carry a lower gross margin than printed circuit board manufacturing.
Selling and marketing expense for the first quarter of 2007 was $7.6 million, representing 4.3 percent of sales. This compares with $6.3 million, or 4.4 percent of sales, in the fourth quarter of 2006 and $3.4 million, or 4.6 percent of sales, in the year-ago period.
General and administrative expense, including amortization of intangibles, was $9.4 million in the first quarter of 2007, compared with $9.5 million in the fourth quarter of 2006 and $3.9 million in the year-ago period.
TTM posted operating income of $17.8 million for the first quarter of 2007, compared with $11.5 million for the fourth quarter of 2006 and $13.0 million for the first quarter of 2006.

 


 

Net income for the first quarter of 2007 was $8.5 million, or $0.20 per diluted share, compared with $5.1 million, or $0.12 per diluted share, for the fourth quarter of 2006 and $8.8 million, or $0.21 per diluted share, for the first quarter of 2006.
EBITDA (earnings before interest, taxes, depreciation and amortization) for the first quarter of 2007 was $25.5 million, compared with $18.5 million for the fourth quarter of 2006 and $16.7 million for the first quarter of 2006. (A reconciliation of this non-GAAP measure is provided after the GAAP financial statements below.)
PCB quick-turn business represented approximately 15 percent of net sales in the first quarter of 2007, compared to 13 percent for the fourth quarter of 2006 and 21 percent for the first quarter of 2006. The year-over-year decline was primarily due to PCG’s limited quick-turn capacity.
“We are pleased with the Company’s solid financial results for the first quarter of 2007, the first full quarter of contributions from the PCG acquisition,” said Kent Alder, President and CEO. “Our results reflect the success of our strategy to diversify our customer base through the acquisition of PCG, which clearly differentiates us from our peers. With the exception of high-end computing and the inventory realignment by one of our key customers, we saw continued steady demand.”
Commenting on TTM’s integration of PCG, Alder noted, “The integration is basically complete, which is a tribute to the planning and execution of our combined management team. The Company has paid down debt ahead of schedule, which helped make the acquisition accretive to earnings in the first quarter of 2007.” Alder concluded, “We are off to a solid start in 2007 and will continue to benefit from the greater size, expanded customer base, diversification, and cross-selling opportunities that we gain with the acquisition of the Printed Circuit Group.”
The Company noted that financial results for the first 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 first quarter change from those established in this press release, the Company expects that revised numbers would be issued when it files its Quarterly Report on Form 10-Q on or about May 14, 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. In the first quarter of 2007, TTM paid down $50 million, or 25 percent of the debt, and funded net capital expenditures of $3.6 million. Cash and short-term investments at the end of the first quarter of 2007 totaled $45.4 million, compared with $70.7 million at year-end 2006.
Second Quarter Forecast
For the second quarter of 2007, TTM estimates revenues in a range of $158 million to $167 million and earnings in a range of $0.13 to $0.19 per diluted share. “We expect satisfactory demand from most end markets, and we anticipate that the aerospace/defense sector will remain solid,” said Alder. “In addition, we expect the PCG acquisition to continue to be accretive to earnings despite the closure of the Dallas, Oregon, facility on April 6, 2007, which will reduce second quarter revenues by approximately $10 million. We paid down an

 


 

additional $25 million of debt in April, reducing our outstanding balance to $125 million, and we expect to continue paying down debt ahead of the required schedule in the second quarter.”
To Access the Live Web Cast/Conference Call
The company will conduct a conference call to discuss its first-quarter performance and outlook today at 10 a.m. Eastern/7 a.m. Pacific time. To listen to the live web cast on the Internet, log on to the company website at www.ttmtech.com. To access the live conference call, dial 800-946-0742.
To Access A Replay of the Web Cast
A replay of the conference call will be available until Monday, May 7, 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 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 TTM
TTM Technologies, Inc. is North America’s largest printed circuit board manufacturer, focusing on quick-turn and technologically advanced PCBs and the backplane and sub-system assembly business. 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. Additional information can be found at www.ttmtech.com.
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TTM TECHNOLOGIES, INC.
Selected Unaudited Financial Information
(In thousands, except per share data)
                         
    First Quarter     Fourth Quarter  
    2007     2006     2006  
CONSOLIDATED STATEMENTS OF OPERATIONS
                       
 
Net sales
  $ 176,897     $ 72,688     $ 144,180  
Cost of goods sold
    142,176       52,485       116,681  
 
                 
 
                       
Gross profit
    34,721       20,203       27,499  
 
                 
 
                       
Operating expenses:
                       
Selling and marketing
    7,560       3,359       6,331  
General and administrative
    8,342       3,584       8,587  
Amortization of intangibles
    1,025       300       885  
Restructuring charges
    —       —       199  
 
                 
Total operating expenses
    16,927       7,243       16,002  
 
                 
 
                       
Operating income
    17,794       12,960       11,497  
 
                       
Interest expense
    (5,098 )     (61 )     (3,253 )
Interest income and other, net
    759       977       998  
 
                 
 
                       
Income before income taxes
    13,455       13,876       9,242  
Income tax provision
    (4,990 )     (5,065 )     (4,093 )
 
                 
 
                       
Net income
  $ 8,465     $ 8,811     $ 5,149  
 
                 
 
                       
Earnings per common share:
                       
Basic
  $ 0.20     $ 0.21     $ 0.12  
Diluted
  $ 0.20     $ 0.21     $ 0.12  
 
                       
Weighted average common shares:
                       
Basic
    42,149       41,441       42,012  
Diluted
    42,398       41,978       42,389  

 


 

                         
SELECTED BALANCE SHEET DATA
                       
                 
    April 2, 2007     December 31, 2006  
Cash and short-term investments
  $ 45,381     $ 70,656  
Accounts receivable, net
    119,823       125,435  
Inventories, net
    66,781       67,020  
Total current assets
    239,497       271,748  
Net property, plant and equipment
    132,424       150,837  
Other assets
    165,510       151,113  
Total assets
    537,431       573,698  
 
Current portion long-term liabilities
  $ 55,000     $ 60,705  
Accounts Payable
    54,281       49,276  
Current liabilities
    144,477       144,343  
Long-term liabilities
    95,928       142,040  
Stockholders’ equity
    297,026       287,315  
Total liabilities and stockholders’ equity
    537,431       573,698  
 
SUPPLEMENTAL DATA
               
                         
    First Quarter     Fourth Quarter  
    2007     2006     2006  
EBITDA
  $ 25,468     $ 16,678     $ 18,454  
EBITA
  $ 19,608     $ 14,267     $ 13,409  
Gross margin
    19.6 %     27.8 %     19.1
EBITDA margin
    14.4       22.9       12.8  
Operating margin
    10.1       17.8       8.0  
 
End Market Breakdown:
                       
                 
    First Quarter  
    2007     2006  
Networking/Communications
    43 %     42 %
Aerospace/Defense
    28       13  
Computing/Storage/Peripherals
    13       32  
Medical/Industrial/Instrumentation/Other
    16       13  
 
Stock-based Compensation:
               
                         
    First Quarter     Fourth Quarter  
    2007     2006     2006  
Amount included in:
                       
Cost of goods sold
  $ 187     $ 90     $ 154  
Selling and marketing
    50       20       42  
General and administrative
    423       145       318  
 
                 
Total stock-based compensation expense
  $ 660     $ 255     $ 514  
 
                 
RECONCILIATIONS*
                       
                         
    First Quarter     Fourth Quarter  
    2007     2006     2006  
EBITA/EBITDA reconciliation:
                       
Net income
  $ 8,465     $ 8,811     $ 5,149  
Add back items:
                       
Income taxes
    4,990       5,065       4,093  
Interest expense
    5,098       61       3,253  
Amortization of intangibles
    1,055       330       914  
 
                 
EBITA
    19,608       14,267       13,409  
 
Depreciation expense
    5,860       2,411       5,045  
 
                 
EBITDA
  $ 25,468     $ 16,678     $ 18,454  
 
                 
 
*   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.