Form: 8-K

Current report filing

July 31, 2007

 

Exhibit 99.1
         
  Contact:   Steve Richards
 
      Chief Financial Officer
 
      714/241-0303
TTM TECHNOLOGIES, INC. REPORTS SECOND QUARTER 2007 RESULTS
Printed Circuit Group Acquisition Continues to be Accretive for Second Consecutive Quarter
SANTA ANA, CA — July 31, 2007 — TTM Technologies, Inc. (Nasdaq: TTMI), North America’s largest printed circuit board manufacturer, today reported results for the second quarter of 2007, ended July 2, 2007.
Highlights
  •   The acquired Printed Circuit Group (PCG) continued to be accretive for the second consecutive quarter.
 
  •   The Company paid down $30 million in debt associated with the PCG acquisition ahead of schedule.
 
  •   Orders from a key networking customer returned to healthy levels at the end of May, and the aerospace/defense sector remained strong.
Second Quarter 2007 Financial Results
Second quarter 2007 net sales of $162.0 million declined $14.9 million, or 8.4 percent, from the first quarter of 2007 due primarily to the closure of the company’s Dallas, Oregon, facility in April. Compared to the second quarter of 2006, sales increased $85.3 million, or 111 percent, due to the inclusion of the Printed Circuit Group, which TTM acquired from Tyco International Ltd. on October 27, 2006.
Gross margins were 18.2 percent for the second quarter of 2007, compared with 19.6 percent in the first quarter of 2007 and 30.0 percent for the second quarter of 2006. On a year-over-year basis, gross margins were affected by the inclusion of PCG’s backplane assembly operations, which carry a lower gross margin than printed circuit board manufacturing.
Selling and marketing expense for the second quarter of 2007 was $7.6 million, representing 4.7 percent of sales. This compares to $7.6 million, or 4.3 percent of sales, in the first quarter of 2007, and $3.5 million, or 4.5 percent of sales, in the year-ago period.
General and administrative expense, including amortization of intangibles, was $8.9 million in the second quarter of 2007, compared to $9.4 million in the first quarter of 2007 and $4.0 million in the year-ago period. As a percent of sales, general and administrative expense was 5.5 percent in the second quarter of 2007 compared to 5.3 percent in the first quarter and 5.2 percent in the year-ago period.
TTM posted operating income of $13.1 million for the second quarter of 2007 compared to $17.8 million for the first quarter of 2007 and $15.6 million for the second quarter of 2006.

 


 

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Net income for the second quarter of 2007 was $6.0 million, or $0.14 per diluted share, compared with $8.5 million, or $0.20 per diluted share, for the first quarter of 2007 and $10.6 million, or $0.25 per diluted share, for the second quarter of 2006.
EBITDA (earnings before interest, taxes, depreciation and amortization) for the second quarter of 2007 was $20.1 million, compared with $25.5 million for the first quarter of 2007 and $19.4 million for the second quarter of 2006. (A reconciliation of this non-GAAP measure is provided after the GAAP financial statements below.)
PCB quick-turn business represented approximately 17 percent of net sales in the second quarter of 2007, which was unchanged from the first quarter of 2007 (excluding production from the Dallas, Oregon, facility, which was closed on April 6, 2007). In the second quarter of 2006, PCB quick-turn business represented approximately 20 percent of net sales. The year-over-year decline was primarily due to PCG’s limited quick-turn capacity.
“As we expected, a number of factors resulted in lower revenues and earnings in the second quarter of 2007,” said Kent Alder, President and CEO of TTM. “The closure of the Dallas facility reduced second quarter 2007 revenues by $11 million. A temporary slowdown in orders from a key networking customer—as they adjusted inventory levels in their supply chain—also negatively affected second quarter results. However, the customer’s orders returned to a healthy level at the end of May. In addition, we had some short-term issues related to operating efficiency and the timing of customer orders at a couple of our plants.”
“The benefits from the acquisition of the Printed Circuit Group continue to exceed our expectations,” added Alder. “At the time of the purchase, we said the combination would be accretive to earnings within the first year. In fact, it was accretive in its first full quarter—the first quarter of 2007. It was accretive again in the second quarter of 2007, and we expect it to remain so going forward.”
The Company noted that financial results for the second quarter may be subject to change pending the resolution of certain accounting matters relating to the acquisition of PCG. Should results for the second 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 August 13, 2007.
Segment Information
As a result of the PCG acquisition, TTM now has two reportable operating segments: PCB Manufacturing and Commercial Assembly. For the PCB Manufacturing segment, net sales (before inter-segment sales) were $138.6 million in the second quarter of 2007, compared with $152.1 million in the first quarter of 2007. Operating segment income (before amortization of intangibles) was $12.0 million in the second quarter of 2007, compared with $16.4 million in the first quarter of 2007.
For the Commercial Assembly segment, net sales (before inter-segment sales) were $32.2 million in the second quarter of 2007, compared with $33.7 million in the first quarter of 2007. Operating segment income (before amortization of intangibles) was $2.1 million, compared with $2.4 million in the first quarter of 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 second quarter of 2007, TTM paid down $30 million of debt, reducing the debt balance to $120 million at the end of the quarter. In July, TTM repaid an additional $11 million, bringing the current debt

 


 

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balance to $109 million. Cash and short-term investments at the end of the second quarter of 2007 totaled $26.1 million, compared with $45.4 million at the end of the first quarter of 2007.
Third Quarter Forecast
For the third quarter of 2007, TTM estimates revenues in a range of $160 million to $168 million and earnings in a range of $0.14 to $0.20 per diluted share. This estimate includes approximately $3 million in revenue from customers of the former Dallas, Oregon, plant. “We expect to benefit from renewed strength with our networking customers,” concluded Alder. “Additionally, the military sector remains very healthy. The high end computing market, however, remains soft. And we continue to experience competitive pressures and pockets of weakness, particularly in our assembly and high mix businesses.”
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 4:30 p.m. Eastern/1:30 p.m. Pacific time. To listen to the live web cast on the Internet, log on to the company’s 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 Tuesday, August 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.
-Tables Follow-

 


 

TTM TECHNOLOGIES, INC.
Selected Unaudited Financial Information
(In thousands, except per share data)
                                         
    Second Quarter     First Quarter     First Two Fiscal Quarters  
    2007     2006     2007     2007     2006  
 
                                       
CONSOLIDATED STATEMENTS OF OPERATIONS
                                       
 
Net sales
  $ 162,016     $ 76,683     $ 176,897     $ 338,913     $ 149,371  
Cost of goods sold
    132,465       53,714       142,176       274,641       106,199  
 
                             
 
                                       
Gross profit
    29,551       22,969       34,721       64,272       43,172  
 
                             
 
                                       
Operating expenses:
                                       
Selling and marketing
    7,551       3,454       7,560       15,111       6,813  
General and administrative
    7,890       3,663       8,342       16,232       7,247  
Amortization of intangibles
    1,046       301       1,025       2,071       601  
 
                             
Total operating expenses
    16,487       7,418       16,927       33,414       14,661  
 
                             
 
                                       
Operating income
    13,064       15,551       17,794       30,858       28,511  
 
                                       
Interest expense
    (3,608 )     (45 )     (5,098 )     (8,706 )     (106 )
Interest income and other, net
    235       1,118       759       994       2,095  
 
                             
 
                                       
Income before income taxes
    9,691       16,624       13,455       23,146       30,500  
Income tax provision
    (3,654 )     (6,068 )     (4,990 )     (8,644 )     (11,133 )
 
                             
 
                                       
Net income
  $ 6,037     $ 10,556     $ 8,465     $ 14,502     $ 19,367  
 
                             
 
                                       
Earnings per common share:
                                       
Basic
  $ 0.14     $ 0.25     $ 0.20     $ 0.34     $ 0.47  
Diluted
  $ 0.14     $ 0.25     $ 0.20     $ 0.34     $ 0.46  
 
                                       
Weighted average common shares:
                                       
Basic
    42,199       41,694       42,149       42,174       41,566  
Diluted
    42,496       42,512       42,398       42,447       42,242  
SELECTED BALANCE SHEET DATA
                 
    July 2, 2007   December 31, 2006
Cash and short-term investments
  $ 26,131     $ 70,656  
Accounts receivable, net
    110,367       125,435  
Inventories, net
    64,585       67,020  
Total current assets
    209,689       271,748  
Net property, plant and equipment
    127,843       150,837  
Other assets
    162,928       151,113  
Total assets
    500,460       573,698  
 
               
Current portion long-term liabilities
  $ 50,000     $ 60,705  
Accounts Payable
    45,402       49,276  
Current liabilities
    123,107       144,343  
Long-term liabilities
    72,253       142,040  
Stockholders’ equity
    305,100       287,315  
Total liabilities and stockholders’ equity
    500,460       573,698  

 


 

SUPPLEMENTAL DATA
                                         
    Second Quarter   First Quarter   First Two Fiscal Quarters
    2007   2006   2007   2007   2006
EBITDA
  $ 20,113     $ 19,443     $ 25,468     $ 45,581     $ 36,121  
EBITA
  $ 14,373     $ 16,998     $ 19,608     $ 33,981     $ 31,265  
 
Gross margin
    18.2 %     30.0 %     19.6 %     19.0 %     28.9 %
EBITDA margin
    12.4       25.4       14.4       13.4       24.2  
Operating margin
    8.1       20.3       10.1       9.1       19.1  
End Market Breakdown:
                 
    Second Quarter
    2007   2006
 
Networking/Communications
    42 %     42 %
Aerospace/Defense
    30       11  
Computing/Storage/Peripherals
    15       35  
Medical/Industrial/Instrumentation/Other
    13       12  
Stock-based Compensation:
                         
    Second Quarter     First Quarter  
    2007     2006     2007  
Amount included in:
                       
Cost of goods sold
  $ 255     $ 103     $ 187  
Selling and marketing
    48       29       50  
General and administrative
    581       202       423  
 
                 
Total stock-based compensation expense
  $ 884     $ 334     $ 660  
 
                 
Operating Segment Data:
                 
    Second Quarter     First Quarter  
Net sales:   2007     2007  
PCB Manufacturing
    138,651       152,151  
Commercial Assembly
    32,164       33,657  
 
           
Total Sales
    170,815       185,808  
Inter-Segment Sales
    (8,799 )     (8,911 )
 
           
Total Net Sales
  $ 162,016     $ 176,897  
 
           
 
               
Operating Segment Income:
               
PCB Manufacturing
    12,052       16,397  
Commercial Assembly
    2,086       2,452  
 
           
Total Op Segment Income
    14,138       18,849  
Amortization of Intangible
    (1,074 )     (1,055 )
 
           
Total Op Income
    13,064       17,794  
Total Other Income (Expense)
    (3,373 )     (4,339 )
 
           
Income Before Income Taxes
  $ 9,691     $ 13,455  
 
           
RECONCILIATIONS*
                                         
    Second Quarter     First Quarter     First Two Fiscal Quarters  
    2007     2006     2007     2007     2006  
EBITA/EBITDA reconciliation:
                                       
Net income
  $ 6,037     $ 10,556     $ 8,465     $ 14,502     $ 19,367  
Add back items:
                                       
Income taxes
    3,654       6,068       4,990       8,644       11,133  
Interest expense
    3,608       45       5,098       8,706       106  
Amortization of intangibles
    1,074       329       1,055       2,129       659  
EBITA
    14,373       16,998       19,608       33,981       31,265  
 
                                       
Depreciation expense
    5,740       2,445       5,860       11,600       4,856  
EBITDA
  $ 20,113     $ 19,443     $ 25,468     $ 45,581     $ 36,121  
 
*   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.