EX-99.1
Published on 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
Printed Circuit Group Acquisition Continues to be Accretive for Second Consecutive Quarter
SANTA ANA, CA July 31, 2007 TTM Technologies, Inc. (Nasdaq: TTMI), North Americas 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 companys 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 PCGs 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.
.../2 TTM
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 PCGs 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
customeras they adjusted inventory levels in their supply chainalso negatively affected second
quarter results. However, the customers 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
quarterthe 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
.../3 TTM
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 companys 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 companys 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 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 PCG business, increased competition from low-cost foreign manufacturers and other Risk
Factors set forth in the companys most recent SEC filings.
About TTM
TTM Technologies, Inc. is North Americas 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 companys 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.