Form: 8-K

Current report filing

April 27, 2016

Documents

EXHIBIT 99.1

TTM Technologies, Inc. Reports First Quarter 2016 Results

Strong Execution Drives Year on Year Improvement in Non-GAAP Net Income

COSTA MESA, Calif., April 27, 2016 (GLOBE NEWSWIRE) -- TTM Technologies, Inc. (Nasdaq:TTMI), a major global printed circuit board (“PCB”) manufacturer, today reported results for the first quarter 2016, which ended March 28, 2016.  Our results include the contribution from the Viasystems Group, Inc. ("Viasystems") acquisition, which was completed on May 31, 2015.

First Quarter 2016 Highlights

  • Net sales were $583.3 million
  • GAAP net loss attributable to stockholders was $7.3 million, or $0.07 per share
  • Non-GAAP net income attributable to stockholders was $13.9 million, or $0.14 per diluted share
  • Adjusted EBITDA was $74.5 million

First Quarter 2016 Financial Results
Net sales for the first quarter of 2016 were $583.3 million, compared to $329.2 million in the first quarter of 2015 and $668.9 million in the fourth quarter.

GAAP operating income for the first quarter of 2016 was $18.9 million, compared to operating income of $8.3 million in the first quarter of 2015 and $36.5 million in the fourth quarter. 

GAAP net loss attributable to stockholders for the first quarter of 2016 was $7.3 million, or $0.07 per share.  This compares to GAAP net income of $3.4 million, or $0.04 per diluted share, in the first quarter of 2015 and $9.5 million, or $0.09 per diluted share, in the fourth quarter.  The GAAP results were negatively impacted by approximately $6.0 million of expenses related to the acquisition and integration of Viasystems.

On a non-GAAP basis, net income attributable to stockholders for the first quarter of 2016 was $13.9 million, or $0.14 per diluted share.  This compares to non-GAAP net income of $10.8 million, or $0.13 per diluted share, for the first quarter of 2015 and $31.5 million, or $0.31 per diluted share, in the fourth quarter of last year.

Adjusted EBITDA for the first quarter of 2016 was $74.5 million, or 12.8 percent of net sales, compared to adjusted EBITDA of $42.5 million, or 12.9 percent of net sales, for the first quarter of 2015 and $95.8 million, or 14.3 percent of net sales, for the fourth quarter of 2015.

“Our first quarter results marked a solid start to the year and demonstrated the benefits of our diversification initiative,” said Tom Edman, CEO of TTM.  “Strong operational execution across all of our business units drove non-GAAP earnings above the high end of our guidance.  Relative strength in the aerospace and defense, automotive and computing end markets helped offset a softer demand environment in the cellular phone end market.”

“We continue to deliver on our integration milestones and have now implemented or announced actions that represent more than 90% of our $55 million annualized synergy target.  The new market focused business unit structure put in place at the beginning of the year has already begun to yield operational benefits.  We believe a larger and more diverse TTM with focus on key end markets such as Aerospace & Defense and Automotive is an important differentiator in the PCB market,” concluded Mr. Edman.

Business Outlook
For the second quarter of 2016, TTM estimates that revenue will be in the range of $580 million to $620 million, and non-GAAP net income will be in the range of $0.16 to $0.22 per diluted share. 

To Access the Live Webcast/Conference Call
TTM will host a conference call and webcast to discuss first quarter 2016 results and second quarter 2016 outlook on Wednesday, April 27, 2016, at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time).  The conference call may include forward-looking statements.

Telephone access is available by dialing domestic 888-417-8516 or international 719-325-2354 (ID 1413218).  The conference call also will be webcast on TTM’s website at www.ttm.com.

To Access a Replay of the Webcast
The replay of the webcast will remain accessible for one week following the live event on TTM’s website at www.ttm.com.  

About TTM
TTM Technologies, Inc. is a major global printed circuit board manufacturer, focusing on quick-turn and technologically advanced PCBs, backplane assemblies and electro-mechanical solutions. TTM stands for time-to-market, representing how TTM'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.ttm.com.

Forward-Looking Statements
This release contains forward-looking statements that relate to future events or performance. TTM cautions you that such statements are simply predictions and actual events or results may differ materially. These statements reflect TTM's current expectations, and TTM 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 TTM statements will not be realized. Further, these statements involve risks and uncertainties, many of which are beyond TTM'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 successful integration of Viasystems, including, the planned plant combinations and closure, general market and economic conditions, including interest rates, currency exchange rates and consumer spending, demand for TTM's products, market pressures on prices of TTM's products, warranty claims, changes in product mix, contemplated significant capital expenditures and related financing requirements, TTM's dependence upon a small number of customers and other factors set forth in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's public reports filed with the SEC.

About Our Non-GAAP Financial Measures
This release includes information about TTM’s adjusted EBITDA, non-GAAP net income and non-GAAP earnings per share, all of which are non-GAAP financial measures. TTM presents non-GAAP financial information to enable investors to see TTM through the eyes of management and to provide better insight into TTM’s ongoing financial performance. 

A material limitation associated with the use of the above non-GAAP financial measures is that they have no standardized measurement prescribed by GAAP and may not be comparable to similar non-GAAP financial measures used by other companies.  TTM compensates for these limitations by providing full disclosure of each non-GAAP financial measure and reconciliation to the most directly comparable GAAP financial measure.  However, the non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.

- Tables Follow -

TTM TECHNOLOGIES, INC.
Selected Unaudited Financial Information
(In thousands, except per share data)
                       
            First Quarter   Fourth Quarter  
              2016       2015       2015    
                       
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS              
                       
  Net sales     $   583,258     $   329,164     $   668,874    
  Cost of goods sold       499,695         277,605         560,604    
                       
  Gross profit       83,563         51,559         108,270    
                       
  Operating expenses:              
    Selling and marketing       17,306         9,455         17,963    
    General and administrative       36,149         33,990         41,654    
    Amortization of definite-lived intangibles       5,947         1,874         6,683    
    Restructuring charges       1,913         479         5,429    
    Impairment of long-lived assets       3,346         -          -     
    Gain on sale of asset       -          (2,504 )       -     
      Total operating expenses       64,661         43,294         71,729    
                       
  Operating income (loss)       18,902         8,265         36,541    
                       
  Interest expense       (21,784 )       (5,765 )       (20,208 )  
  Other, net         1,209         (415 )       3,925    
                       
  Income (loss) before income taxes       (1,673 )       2,085         20,258    
  Income tax (provision) benefit        (5,477 )       1,361         (10,601 )  
                       
  Net income (loss)   $   (7,150 )   $   3,446     $   9,657    
                       
  Net income attributable to noncontrolling interest       (114 )       -          (136 )  
  Net income (loss) attributable to stockholders   $   (7,264 )   $   3,446     $   9,521    
                       
  Earnings (loss) per share attributable to stockholders:              
    Basic     $   (0.07 )   $   0.04     $   0.10    
    Diluted     $   (0.07 )   $   0.04     $   0.09    
                       
  Weighted-average shares used in computing per share amounts:              
    Basic         99,596         83,603         99,134    
    Diluted         99,596         84,465         126,329    
                       
                       
  Reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share:      
                       
  Net income attributable to stockholders           $   9,521    
    Add back items: interest expense, net of tax               2,009    
  Adjusted net income attributable to stockholders           $   11,530    
  Weighted-average shares outstanding               99,134    
  Dilutive effect of convertible debt               25,940    
  Dilutive effect of performance-based stock units, restricted stock units and stock options               1,255    
  Diluted shares               126,329    
  Earnings per share attributable to stockholders:              
    Basic             $   0.10    
    Diluted             $   0.09    
                       
                       
SELECTED BALANCE SHEET DATA               
            March 28, 2016   December 28, 2015      
  Cash and cash equivalents, including restricted cash   $   183,678     $   262,630        
  Accounts and notes receivable, net       431,276         454,001        
  Inventories         264,555         268,923        
  Total current assets       908,210         1,022,520        
  Property, plant and equipment, net       1,075,613         1,103,067        
  Other non-current assets       512,009         545,717        
  Total assets       2,495,832         2,640,133        
                       
  Short-term debt, including current portion of long-term debt   $   80,358     $   157,375        
  Accounts payable       308,156         347,916        
  Total current liabilities       598,406         744,994        
  Debt, net of discount       1,021,866         1,013,411        
  Total long-term liabilities       1,079,499         1,068,470        
  Total equity       817,927         826,669        
  Total liabilities and equity       2,495,832         2,640,133        
                       
SUPPLEMENTAL DATA              
            First Quarter   Fourth Quarter  
              2016       2015       2015    
  Gross margin     14.3 %     15.7 %     16.2 %  
  Operating margin     3.2 %     2.5 %     5.5 %  
                       
  End Market Breakdown:              
            First Quarter   Fourth Quarter  
              2016       2015       2015    
                       
    Aerospace/Defense     15 %     15 %     13 %  
    Automotive     21 %     3 %     18 %  
    Cellular Phone     9 %     30 %     18 %  
    Computing/Storage/Peripherals     13 %     11 %     12 %  
    Medical/Industrial/Instrumentation     16 %     9 %     13 %  
    Networking/Communications     24 %     29 %     23 %  
    Other       2 %     3 %     3 %  
                       
  Stock-based Compensation:              
            First Quarter   Fourth Quarter  
              2016       2015       2015    
    Amount included in:              
      Cost of goods sold   $   320     $   225     $   327    
      Selling and marketing       210         271         301    
      General and administrative       1,716         1,544         2,007    
      Total stock-based compensation expense   $   2,246     $   2,040     $   2,635    
                       
                       
  Operating Segment Data:              
            First Quarter   Fourth Quarter  
    Net sales:     2016       2015       2015    
    PCB     $   529,945     $   310,324     $   611,045    
    E-M Solutions       56,478         19,462         61,021    
    Corporate       -          -          -     
      Total sales       586,423         329,786         672,066    
    Inter-segment sales       (3,165 )       (622 )       (3,192 )  
      Total net sales   $   583,258     $   329,164     $   668,874    
                       
    Operating segment income:              
    PCB     $   49,367     $   23,260     $   66,320    
    E-M Solutions       387         651         2,612    
    Corporate       (24,905 )       (13,772 )       (25,708 )  
      Total operating segment income       24,849         10,139         43,224    
    Amortization of definite-lived intangibles       (5,947 )       (1,874 )       (6,683 )  
      Total operating income       18,902         8,265         36,541    
    Total other expense       (20,575 )       (6,180 )       (16,283 )  
    Income before income taxes   $   (1,673 )   $   2,085     $   20,258    
                       
RECONCILIATIONS1              
            First Quarter   Fourth Quarter  
              2016       2015       2015    
  Non-GAAP gross profit reconciliation2:              
    GAAP gross profit   $   83,563     $   51,559     $   108,270    
    Add back item:              
      Inventory markup and PP&E step up       -          -          598    
      Stock-based compensation       320         225         327    
    Non-GAAP gross profit   $   83,883     $   51,784     $   109,195    
    Non-GAAP gross margin     14.4 %     15.7 %     16.3 %  
                       
  Non-GAAP operating income reconciliation3:              
    GAAP operating income (loss)   $   18,902     $   8,265     $   36,541    
    Add back items:              
      Amortization of definite-lived intangibles       5,947         1,874         6,683    
      Stock-based compensation       2,246         2,040         2,635    
      Gain on sale of asset       -          (2,504 )       -     
      Acquisition-related costs       691         8,235         1,521    
      Inventory markup and PP&E step up       -          -          598    
      Impairments and restructuring charges       5,259         479         5,429    
    Non-GAAP operating income   $   33,045     $   18,389     $   53,407    
    Non-GAAP operating margin     5.7 %     5.6 %     8.0 %  
                       
  Non-GAAP net income and EPS attributable to stockholders reconciliation4:              
    GAAP net income (loss) attributable to stockholders   $   (7,264 )   $   3,446     $   9,521    
    Add back items:              
      Amortization of definite-lived intangibles       5,947         1,874         6,683    
      Stock-based compensation       2,246         2,040         2,635    
      Non-cash interest expense       6,154         2,625         4,893    
      Gain on sale of asset       -          (2,504 )       -     
      Acquisition-related costs       691         8,235         1,521    
      Inventory markup and PP&E step up       -          -          598    
      Impairments, restructuring and other charges       5,259         479         5,429    
      Income taxes       821         (5,366 )       247    
    Non-GAAP net income attributable to stockholders   $   13,854     $   10,829     $   31,527    
    Non-GAAP earnings per diluted share attributable to stockholders   $   0.14     $   0.13     $   0.31    
                       
  Non-GAAP diluted number of shares5:              
    Diluted shares       99,596         84,465         126,329    
    Dilutive effect of convertible debt       -         -         (25,940 )  
    Non-GAAP diluted number of shares       99,596         84,465         100,389    
                       
  Adjusted EBITDA reconciliation6:              
    GAAP net income (loss)   $   (7,150 )   $   3,446     $   9,657    
    Add back items:              
      Income tax provision (benefit)       5,477         (1,361 )       10,601    
      Interest expense       21,784         5,765         20,208    
      Amortization of definite-lived intangibles       5,947         1,874         6,683    
      Depreciation expense       40,227         24,536         39,105    
      Stock-based compensation       2,246         2,040         2,635    
      Gain on sale of asset       -          (2,504 )       -     
      Acquisition-related costs       691         8,235         1,521    
      Impairments, restructuring and other charges       5,259         479         5,429    
    Adjusted EBITDA   $   74,481     $   42,510     $   95,839    
    Adjusted EBITDA margin     12.8 %     12.9 %     14.3 %  
                       
  Free cash flow reconciliation:              
    Operating cash flow       17,892         67,354         139,829    
    Add back items:              
      Payment of acquisition-related costs       2,324         4,720         1,522    
    Adjusted operating cash flow       20,216         72,074         141,351    
    Capital expenditures, net       (20,116 )       (22,776 )       (22,967 )  
    Free cash flow   $   100     $   49,298     $   118,384    

 

1 This information provides a reconciliation of non-GAAP gross profit, non-GAAP operating income, non-GAAP net income attributable to stockholders, non-GAAP EPS attributable to stockholders, and adjusted EBITDA to the financial information in our consolidated condensed statements of operations.
                     
2 Non-GAAP gross profit and gross margin measures exclude stock-based compensation expense, inventory markup and PP&E step up.
                     
3 Non-GAAP operating income and operating margin measures exclude amortization of intangibles, stock-based compensation expense, gain on sale of assets, inventory markup, acquisition-related costs, asset impairments, restructuring and other charges.
                     
4 This information provides non-GAAP net income attributable to stockholders and non-GAAP EPS attributable to stockholders, which are non-GAAP financial measures. Management believes that both measures -- which add back amortization of intangibles, stock-based compensation expense, non-cash interest expense on debt (before consideration of capitalized interest), gain on sale of assets, inventory markup, acquisition-related costs, asset impairments, restructuring and other charges as well as the associated tax impact of these charges and discrete tax items -- provide additional useful information to investors regarding the Company's ongoing financial condition and results of operations.
                     
5 Non-GAAP diluted number of shares used in computing non-GAAP earnings per share attributable to stockholders excludes the dilutive effect of convertible debt.
                     
6 Adjusted EBITDA is defined as earnings before interest expense, income taxes, depreciation, amortization of intangibles, stock-based compensation expense, gain on sale of assets, inventory markup, acquisition-related costs, asset impairments, restructuring and other charges. We present adjusted EBITDA to enhance the understanding of our operating results, and it is a key measure we use to evaluate our operations.  In addition, we provide our adjusted EBITDA because we believe that investors and securities analysts will find adjusted EBITDA 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, adjusted EBITDA 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.


Contact:
Sameer Desai,
Senior Director, Corporate 
Development & Investor Relations
sameer.desai@ttmtech.com 
714-327-3050