Form: 8-K

Current report filing

July 27, 2016

Exhibit 99.1

 

LOGO    Contact:
   Sameer Desai,
   Senior Director, Corporate

Development & Investor Relations

sameer.desai@ttmtech.com

   714-327-3050

TTM Technologies, Inc. Reports Second Quarter 2016 Results

Strong Execution Drives Non-GAAP EPS Well Ahead of Guidance

COSTA MESA, CA – July 27, 2016 – TTM Technologies, Inc. (Nasdaq:TTMI), a major global printed circuit board (“PCB”) manufacturer, today reported results for the second quarter 2016, which ended June 27, 2016. Our results include the contribution from the Viasystems Group, Inc. (“Viasystems”) acquisition, which was completed on May 31, 2015.

Second Quarter 2016 Highlights

 

  - Net sales were $601.8 million

 

  - GAAP net income attributable to stockholders was $18.5 million, or $0.17 per diluted share

 

  - Non-GAAP net income attributable to stockholders was $28.4 million, or $0.28 per diluted share

 

  - Adjusted EBITDA was $90.2 million

 

  - Debt repayment of $30 million

Second Quarter 2016 Financial Results

Net sales for the second quarter of 2016 were $601.8 million, compared to $445.4 million in the second quarter of 2015 and $583.3 million in the first quarter of 2016.

GAAP operating income for the second quarter of 2016 was $34.7 million, compared to an operating loss of $7.1 million in the second quarter of 2015 and operating income of $18.9 million in the first quarter of 2016.

GAAP net income attributable to stockholders for the second quarter of 2016 was $18.5 million, or $0.17 per diluted share. This compares to a GAAP net loss attributable to stockholders of $36.6 million, or $0.41 per share, in the second quarter of 2015 and a GAAP net loss of $7.3 million, or $0.07 per share, in the first quarter of 2016.

On a non-GAAP basis, net income attributable to stockholders for the second quarter of 2016 was $28.4 million, or $0.28 per diluted share. This compares to non-GAAP net income of $14.9 million, or $0.17 per diluted share, for the second quarter of 2015 and $13.9 million, or $0.14 per diluted share, in the first quarter of 2016.

Adjusted EBITDA for the second quarter of 2016 was $90.2 million, or 15 percent of net sales, compared to adjusted EBITDA of $59.7 million, or 13.4 percent of net sales, for the second quarter of 2015 and $74.5 million, or 12.8 percent of net sales, for the first quarter of 2016.

“Our second quarter results reflect continued year on year improvements in revenue and earnings as sales to our customer base in diversified end markets have dampened historical volatility,” said Tom Edman, CEO of TTM. “Strong operational execution across all of our business units drove non-GAAP earnings well above the high end of our guidance. A rebound in the cellular and communications end markets more than offset modest declines in the automotive and computing end markets, and our aerospace and defense end market hit a quarterly record in revenues.”

Business Outlook

For the third quarter of 2016, TTM estimates that revenue will be in the range of $620 million to $660 million, and non-GAAP net income will be in the range of $0.29 to $0.35 per diluted share.


TTM Technologies, Inc., Q2’16    Contact:
   Sameer Desai,
   Senior Director, Corporate

Development & Investor Relations

sameer.desai@ttmtech.com

   714-327-3050

 

To Access the Live Webcast/Conference Call

TTM will host a conference call and webcast to discuss second quarter 2016 results and third quarter 2016 outlook on Wednesday, July 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 719-325-2491 (ID 7624574). 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, 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.


TTM Technologies, Inc., Q2’16    Contact:
   Sameer Desai,
   Senior Director, Corporate

Development & Investor Relations

sameer.desai@ttmtech.com

   714-327-3050

 

- Tables Follow -


TTM TECHNOLOGIES, INC.

Selected Unaudited Financial Information

(In thousands, except per share data)

 

     Second Quarter     First Quarter     First Two Quarters  
     2016     2015     2016     2016     2015  

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

          

Net sales

   $ 601,847      $ 445,445      $ 583,258      $ 1,185,105      $ 774,609   

Cost of goods sold

     504,202        384,255        499,695        1,003,897        661,860   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     97,645        61,190        83,563        181,208        112,749   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

          

Selling and marketing

     16,569        12,301        17,306        33,875        21,756   

General and administrative

     37,931        52,009        36,149        74,080        85,999   

Amortization of definite-lived intangibles

     5,949        3,910        5,947        11,896        5,784   

Restructuring charges

     3,989        30        1,913        5,902        509   

Impairment of long-lived assets

     —          —          3,346        3,346        —     

Gain on sale of assets

     (1,472     —          —          (1,472     (2,504
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     62,966        68,250        64,661        127,627        111,544   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     34,679        (7,060     18,902        53,581        1,205   

Interest expense

     (20,084     (12,778     (21,784     (41,868     (18,543

Loss on extinguishment of debt

     —          (802     —          —          (802

Other, net

     3,191        681        1,209        4,400        266   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     17,786        (19,959     (1,673     16,113        (17,874

Income tax (provision) benefit

     979        (16,624     (5,477     (4,498     (15,263
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 18,765      $ (36,583   $ (7,150   $ 11,615      $ (33,137
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to noncontrolling interest

     (217     (29     (114     (331     (29
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to stockholders

   $ 18,548      $ (36,612   $ (7,264   $ 11,284      $ (33,166
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss) per share attributable to stockholders:

          

Basic

   $ 0.19      $ (0.41   $ (0.07   $ 0.11      $ (0.38

Diluted

   $ 0.17      $ (0.41   $ (0.07   $ 0.11      $ (0.38

Weighted-average shares used in computing per share amounts:

          

Basic

     100,170        88,834        99,596        99,883        86,218   

Diluted

     126,950        88,834        99,596        100,789        86,218   
Reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share:   

Net income attributable to stockholders

   $ 18,548           

Add back items: interest expense, net of tax

     3,285           
  

 

 

         

Adjusted net income attributable to stockholders

   $ 21,833           
  

 

 

         

Weighted-average shares outstanding

     100,170           

Dilutive effect of convertible debt

     25,940           

Dilutive effect of performance-based stock units, restricted stock units and stock options

     840           
  

 

 

         

Diluted shares

     126,950           
  

 

 

         

Earnings per share attributable to stockholders:

          

Basic

   $ 0.19           

Diluted

   $ 0.17           

SELECTED BALANCE SHEET DATA

          
     June 27, 2016     December 28, 2015                    

Cash and cash equivalents, including restricted cash

   $ 216,151      $ 262,630         

Accounts and notes receivable, net

     424,038        454,001         

Inventories

     270,790        268,923         

Total current assets

     941,975        1,022,520         

Property, plant and equipment, net

     1,047,187        1,103,067         

Other non-current assets

     532,625        514,546         

Total assets

     2,521,787        2,640,133         

Short-term debt, including current portion of long-term debt

   $ 80,358      $ 157,375         

Accounts payable

     334,283        347,916         

Total current liabilities

     622,489        744,994         

Debt, net of discount

     997,207        1,013,411         

Total long-term liabilities

     1,069,574        1,068,470         

Total equity

     829,724        826,669         

Total liabilities and equity

     2,521,787        2,640,133         


SUPPLEMENTAL DATA

 

     Second Quarter     First Quarter     First Two Quarters  
     2016     2015     2016     2016     2015  

Gross margin

     16.2     13.7     14.3     15.3     14.6

Operating margin

     5.8     (1.6 )%      3.2     4.5     0.2

End Market Breakdown:

          
     Second Quarter     First Quarter              
     2016     2015     2016              

Aerospace/Defense

     16     15     15    

Automotive

     19     7     21    

Cellular Phone

     10     24     9    

Computing/Storage/Peripherals

     13     11     13    

Medical/Industrial/Instrumentation

     16     12     16    

Networking/Communications

     25     26     24    

Other

     1     5     2    

Stock-based Compensation:

          
     Second Quarter     First Quarter              
     2016     2015     2016              

Amount included in:

          

Cost of goods sold

   $ 429      $ 243      $ 320       

Selling and marketing

     271        269        210       

General and administrative

     2,145        1,802        1,716       
  

 

 

   

 

 

   

 

 

     

Total stock-based compensation expense

   $ 2,845      $ 2,314      $ 2,246       
  

 

 

   

 

 

   

 

 

     

Operating Segment Data:

          
     Second Quarter     First Quarter              
     2016     2015     2016              

Net sales:

          

PCB

   $ 563,574      $ 417,901      $ 529,945       

E-M Solutions

     40,427        28,514        56,478       

Corporate

     —          —          —         
  

 

 

   

 

 

   

 

 

     

Total sales

     604,001        446,415        586,423       

Inter-segment sales

     (2,154     (970     (3,165    
  

 

 

   

 

 

   

 

 

     

Total net sales

   $ 601,847      $ 445,445      $ 583,258       
  

 

 

   

 

 

   

 

 

     

Operating segment income:

          

PCB

   $ 64,970      $ 30,456      $ 49,367       

E-M Solutions

     (153     (110     387       

Corporate

     (24,189     (33,496     (24,905    
  

 

 

   

 

 

   

 

 

     

Total operating segment income

     40,628        (3,150     24,849       

Amortization of definite-lived intangibles

     (5,949     (3,910     (5,947    
  

 

 

   

 

 

   

 

 

     

Total operating income

     34,679        (7,060     18,902       

Total other expense

     (16,893     (12,899     (20,575    
  

 

 

   

 

 

   

 

 

     

Income before income taxes

   $ 17,786      $ (19,959   $ (1,673    
  

 

 

   

 

 

   

 

 

     


RECONCILIATIONS1

 

     Second Quarter     First Quarter     First Two Quarters  
     2016     2015     2016     2016     2015  

Non-GAAP gross profit reconciliation2:

          

GAAP gross profit

   $ 97,645      $ 61,190      $ 83,563      $ 181,208      $ 112,749   

Add back item:

          

Inventory markup

     —          7,408        —          —          7,408   

Stock-based compensation

     429        243        320        749        468   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross profit

   $ 98,074      $ 68,841      $ 83,883      $ 181,957      $ 120,625   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross margin

     16.3     15.5     14.4     15.4     15.6

Non-GAAP operating income reconciliation3:

          

GAAP operating income (loss)

   $ 34,679      $ (7,060   $ 18,902      $ 53,581      $ 1,205   

Add back items:

          

Amortization of definite-lived intangibles

     5,949        3,910        5,947        11,896        5,784   

Stock-based compensation

     2,845        2,314        2,246        5,091        4,354   

Gain on sale of assets

     (1,472     —          —          (1,472     (2,504

Acquisition-related costs

     605        22,627        691        1,296        30,862   

Inventory markup

     —          7,408        —          —          7,408   

Impairments and restructuring charges

     3,989        30        5,259        9,248        509   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating income

   $ 46,595      $ 29,229      $ 33,045      $ 79,640      $ 47,618   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating margin

     7.7     6.6     5.7     6.7     6.1

Non-GAAP net income and EPS attributable to stockholders reconciliation4:

          

GAAP net income (loss) attributable to stockholders

   $ 18,548      $ (36,612   $ (7,264   $ 11,284      $ (33,166

Add back items:

          

Amortization of definite-lived intangibles

     5,949        3,910        5,947        11,896        5,784   

Stock-based compensation

     2,845        2,314        2,246        5,091        4,354   

Non-cash interest expense

     5,608        3,289        6,154        11,762        5,914   

Gain on sale of assets

     (1,472     —          —          (1,472     (2,504

Acquisition-related costs

     605        22,627        691        1,296        30,862   

Inventory markup

     —          7,408        —          —          7,408   

Impairments, restructuring and other charges

     3,989        832        5,259        9,248        1,311   

Income taxes

     (7,649     11,110        821        (6,828     5,744   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net income attributable to stockholders

   $ 28,423      $ 14,878      $ 13,854      $ 42,277      $ 25,707   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP earnings per diluted share attributable to stockholders

   $ 0.28      $ 0.17      $ 0.14      $ 0.42      $ 0.29   

Non-GAAP diluted number of shares5:

          

Diluted shares

     126,950        89,864        99,596        126,730        87,164   

Dilutive effect of convertible debt

     (25,940     —          —          (25,940     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP diluted number of shares

     101,010        89,864        99,596        100,790        87,164   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA reconciliation6:

          

GAAP net income (loss)

   $ 18,765      $ (36,583   $ (7,150   $ 11,615      $ (33,137

Add back items:

          

Income tax provision (benefit)

     (979     16,624        5,477        4,498        15,263   

Interest expense

     20,084        12,778        21,784        41,868        18,543   

Amortization of definite-lived intangibles

     5,949        3,910        5,947        11,896        5,784   

Depreciation expense

     40,457        29,776        40,227        80,684        54,312   

Stock-based compensation

     2,845        2,314        2,246        5,091        4,354   

Gain on sale of assets

     (1,472     —          —          (1,472     (2,504

Acquisition-related costs

     605        22,627        691        1,296        30,862   

Inventory markup

     —          7,408        —          —          7,408   

Impairments, restructuring and other charges

     3,989        832        5,259        9,248        1,311   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 90,243      $ 59,686      $ 74,481      $ 164,724      $ 102,196   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA margin

     15.0     13.4     12.8     13.9     13.2

Free cash flow reconciliation:

          

Operating cash flow

     80,057        15,543        17,892        97,949        82,897   

Add back items:

          

Payment of accreted interest on convertible sr. notes

     —          8,731        —          —          8,731   

Payment of acquisition-related costs

     691        23,358        2,324        3,015        28,078   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted operating cash flow

     80,748        47,632        20,216        100,964        119,706   

Capital expenditures, net

     (18,183     (23,687     (20,116     (38,299     (46,463
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Free cash flow

   $ 62,565      $ 23,945      $ 100      $ 62,665      $ 73,243   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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, and inventory markup.
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.