Form: 8-K

Current report filing

February 8, 2017

Exhibit 99.1

 

TTM Technologies, Inc., Q4’16      Contact:
     Sameer Desai,
    

Senior Director, Corporate

Development & Investor Relations

     sameer.desai@ttmtech.com
     714-327-3050

TTM Technologies, Inc. Reports Fourth Quarter and Fiscal Year 2016 Results

Broad Based Growth Drives Results Ahead of Guidance Delivering Record Revenues

COSTA MESA, CA – February 8th, 2017 – TTM Technologies, Inc. (NASDAQ:TTMI), a leading global printed circuit board (“PCB”) manufacturer, today reported results for the fourth quarter of fiscal 2016, which ended January 2nd, 2017.

Fourth Quarter 2016 Highlights

 

  •   Net sales were $706.5 million

 

  •   GAAP net loss attributable to stockholders was $2.0 million, or $0.02 per share, which included a pre-tax charge of $47.8 million for debt extinguishment

 

  •   Non-GAAP net income attributable to stockholders was $59.8 million, or $0.58 per diluted share

 

  •   Adjusted EBITDA was $128.5 million

Fourth Quarter 2016 Financial Results

Net sales for the fourth quarter of 2016 were $706.5 million, compared to $668.9 million in the fourth quarter of 2015 and $641.7 million in the third quarter of 2016.

GAAP operating income for the fourth quarter of 2016 was $69.6 million, compared to $36.5 million in the fourth quarter of 2015 and $50.2 million in the third quarter of 2016.

GAAP net loss attributable to stockholders for the fourth quarter of 2016 was $2.0 million, or $0.02 per share. This compares to a GAAP net income attributable to stockholders of $9.5 million, or $0.09 per diluted share, in the fourth quarter of 2015 and $25.6 million, or $0.23 per diluted share, in the third quarter of 2016. The fourth quarter GAAP net loss includes a pre-tax charge of $47.8 million due to the early extinguishment of debt.

On a non-GAAP basis, net income attributable to stockholders for the fourth quarter of 2016 was $59.8 million, or $0.58 per diluted share. This compares to non-GAAP net income attributable to stockholders of $31.5 million, or $0.31 per diluted share, for the fourth quarter of 2015 and $40.1 million, or $0.39 per diluted share, in the third quarter of 2016.

Adjusted EBITDA for the fourth quarter of 2016 was $128.5 million, or 18.2 percent of net sales, compared to adjusted EBITDA of $95.8 million, or 14.3 percent of net sales, for the fourth quarter of 2015 and $102.2 million, or 15.9 percent of net sales, for the third quarter of 2016.

“Our fourth quarter revenues exceeded the high end of our guidance and our profitability was better than our forecast,” said Tom Edman, CEO of TTM. “On a year over year basis, most end markets grew, with the fastest growth coming from the cellular and automotive end markets. This drove substantial operating income leverage in the business resulting in the highest non-GAAP EPS in the history of the company.”

Full Year 2016 Financial Results

Net sales for fiscal year 2016 increased to $2.5 billion from $2.1 billion in fiscal year 2015.

GAAP operating income for fiscal year 2016 was $173.5 million, an increase from GAAP operating income of $61.3 million in fiscal year 2015.

GAAP net income attributable to stockholders for fiscal year 2016 was $34.9 million, or $0.34 per diluted share, compared to GAAP net loss attributable to stockholders of $25.9 million, or $0.28 per share, for fiscal year 2015.


TTM Technologies, Inc., Q4’16      Contact:
     Sameer Desai,
    

Senior Director, Corporate

Development & Investor Relations

     sameer.desai@ttmtech.com
     714-327-3050

 

On a non-GAAP basis, net income attributable to stockholders for fiscal year 2016 was $142.3 million, or $1.40 per diluted share. This compares to fiscal year 2015 non-GAAP net income attributable to stockholders of $81.1 million, or $0.87 per diluted share.

Adjusted EBITDA for fiscal year 2016 was $395.4 million, or 15.6 percent of net sales, compared to $285.7 million, or 13.6 percent of net sales, for fiscal year 2015.

“2016 was the year that validated TTM’s strategy of diversification, differentiation and discipline. We saw solid growth in the automotive and aerospace and defense end markets that partially offset the declines in the cellular and networking and communications end markets. Due to disciplined execution of synergies and cost controls, we generated $217 million in free cash flow and repaid approximately $218 million of our debt, allowing us to achieve a net debt to EBITDA ratio of less than 2.0 well ahead of our original timeline,” continued Edman. “I would like to thank our employees for their tremendous efforts to achieve these results for the year 2016 as we created a new “One TTM” resulting from the combination of Viasystems and TTM Technologies.”

“In 2017, we are looking forward to year on year growth in many of our end markets driven by megatrends such as growing automotive electronic content, increased aerospace and defense procurement, and upgrades in cellular phones.”

Business Outlook

For the first quarter of 2017, TTM estimates that revenue will be in the range of $595 million to $635 million, and non-GAAP net income attributable to stockholders will be in the range of $0.25 to $0.31 per diluted share.

To Access the Live Webcast/Conference Call

TTM will host a conference call and webcast to discuss fourth quarter 2016 results and first quarter 2017 outlook on Wednesday, February 8th, 2017, at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time). The conference call will include forward-looking statements.

Telephone access is available by dialing domestic 888-278-8459 or international 913-312-1495 (ID 6391150). 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 leading global printed circuit board manufacturer, focusing on quick-turn and volume production of 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


TTM Technologies, Inc., Q4’16      Contact:
     Sameer Desai,
    

Senior Director, Corporate

Development & Investor Relations

     sameer.desai@ttmtech.com
     714-327-3050

 

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, 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)

 

     Fourth Quarter     Third Quarter     Full Year  
     2016     2015     2016     2016     2015  

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

          

Net sales

   $ 706,534     $ 668,874     $ 641,720     $ 2,533,359     $ 2,095,488  

Cost of goods sold

     573,689       560,604       532,158       2,109,744       1,785,351  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     132,845       108,270       109,562       423,615       310,137  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

          

Selling and marketing

     16,848       17,963       15,643       66,366       57,361  

General and administrative

     38,998       41,654       35,641       148,719       167,109  

Amortization of definite-lived intangibles

     6,407       6,683       5,949       24,252       18,888  

Restructuring charges

     946       5,429       2,103       8,951       7,941  

Impairment of long-lived assets

     —         —         —         3,346       —    

Gain on sale of assets

     —         —         —         (1,472     (2,504
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     63,199       71,729       59,336       250,162       248,795  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     69,646       36,541       50,226       173,453       61,342  

Interest expense

     (15,267     (20,208     (18,873     (76,008     (59,753

Loss on extinguishment of debt

     (47,767     —         —         (47,767     (802

Other, net

     8,994       3,925       3,930       17,324       8,189  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     15,606       20,258       35,283       67,002       8,976  

Income tax provision

     (17,416     (10,601     (9,513     (31,427     (34,594
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ (1,810   $ 9,657     $ 25,770     $ 35,575     $ (25,618
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to noncontrolling interest

     (195     (136     (188     (714     (264
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to stockholders

   $ (2,005   $ 9,521     $ 25,582     $ 34,861     $ (25,882
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss) per share attributable to stockholders:

          

Basic

   $ (0.02   $ 0.10     $ 0.26     $ 0.35     $ (0.28

Diluted

   $ (0.02   $ 0.09     $ 0.23     $ 0.34     $ (0.28

Weighted-average shares used in computing per share amounts:

          

Basic

     100,365       99,134       100,245       100,099       92,675  

Diluted

     100,365       126,329       127,645       101,482       92,675  

 

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      $ 25,582  

Add back items: interest expense, net of tax

     2,009        3,321  
  

 

 

    

 

 

 

Adjusted net income attributable to stockholders

   $ 11,530      $ 28,903  
  

 

 

    

 

 

 

Weighted-average shares outstanding

     99,134        100,245  

Dilutive effect of convertible debt

     25,940        25,940  

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

     1,255        1,460  
  

 

 

    

 

 

 

Diluted shares

     126,329        127,645  
  

 

 

    

 

 

 

Earnings per share attributable to stockholders:

     

Basic

   $ 0.10      $ 0.26  

Diluted

   $ 0.09      $ 0.23  

SELECTED BALANCE SHEET DATA

 

     January 2, 2017      December 28, 2015  

Cash and cash equivalents, including restricted cash

   $ 256,277      $ 262,630  

Accounts and notes receivable, net

     432,596        454,001  

Inventories

     269,212        268,923  

Total current assets

     1,012,841        1,022,520  

Property, plant and equipment, net

     966,638        1,103,067  

Other non-current assets

     520,597        514,546  

Total assets

     2,500,076        2,640,133  

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

   $ 110,652      $ 157,375  

Accounts payable

     355,774        347,916  

Total current liabilities

     689,065        744,994  

Debt, net of discount

     909,030        1,013,411  

Total long-term liabilities

     981,886        1,068,470  

Total equity

     829,125        826,669  

Total liabilities and equity

     2,500,076        2,640,133  


SUPPLEMENTAL DATA

 

     Fourth Quarter     Third Quarter     Full Year  
     2016     2015     2016     2016     2015  

Gross margin

     18.8     16.2     17.1     16.7     14.8

Operating margin

     9.9     5.5     7.8     6.8     2.9

End Market Breakdown:

          
     Fourth Quarter     Third Quarter        
     2016     2015     2016    

Aerospace/Defense

     14     13     15  

Automotive

     19     18     19  

Cellular Phone

     19     18     17  

Computing/Storage/Peripherals

     12     12     12  

Medical/Industrial/Instrumentation

     13     13     14  

Networking/Communications

     21     23     21  

Other

     2     3     2  

 

Stock-based Compensation:

        
     Fourth Quarter     Third Quarter    
     2016     2015     2016    

Amount included in:

        

Cost of goods sold

   $ 469     $ 327     $ 412    

Selling and marketing

   $ 305       301       268    

General and administrative

     2,426       2,007       2,119    
  

 

 

   

 

 

   

 

 

   

Total stock-based compensation expense

   $ 3,200     $ 2,635     $ 2,799    
  

 

 

   

 

 

   

 

 

   

 

Operating Segment Data:

        
     Fourth Quarter     Third Quarter    
     2016     2015     2016    

Net sales:

        

PCB

   $ 654,379     $ 611,045     $ 598,656    

E-M Solutions

     55,332       61,021       46,246    

Corporate

     —         —         —      
  

 

 

   

 

 

   

 

 

   

Total sales

     709,711       672,066       644,902    

Inter-segment sales

     (3,177     (3,192     (3,182  
  

 

 

   

 

 

   

 

 

   

Total net sales

   $ 706,534     $ 668,874     $ 641,720    
  

 

 

   

 

 

   

 

 

   

Operating segment income:

        

PCB

   $ 95,208     $ 66,320     $ 75,501    

E-M Solutions

     3,029       2,612       1,421    

Corporate

     (22,184     (25,708     (20,747  
  

 

 

   

 

 

   

 

 

   

Total operating segment income

     76,053       43,224       56,175    

Amortization of definite-lived intangibles

     (6,407     (6,683     (5,949  
  

 

 

   

 

 

   

 

 

   

Total operating income

     69,646       36,541       50,226    

Total other expense

     (54,040     (16,283     (14,943  
  

 

 

   

 

 

   

 

 

   

Income before income taxes

   $ 15,606     $ 20,258     $ 35,283    
  

 

 

   

 

 

   

 

 

   


RECONCILIATIONS1

 

     Fourth Quarter     Third Quarter     Full Year  
     2016     2015     2016     2016     2015  

Non-GAAP gross profit reconciliation2:

          

GAAP gross profit

   $ 132,845     $ 108,270     $ 109,562     $ 423,615     $ 310,137  

Add back item:

          

Inventory markup

     —         598       —         —         16,220  

Stock-based compensation

     469       327       412       1,630       1,117  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross profit

   $ 133,314     $ 109,195     $ 109,974     $ 425,245     $ 327,474  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross margin

     18.9     16.3     17.1     16.8     15.6

Non-GAAP operating income reconciliation3:

          

GAAP operating income

   $ 69,646     $ 36,541     $ 50,226     $ 173,453     $ 61,342  

Add back items:

          

Amortization of definite-lived intangibles

     6,407       6,683       5,949       24,252       18,888  

Stock-based compensation

     3,200       2,635       2,799       11,090       9,661  

Gain on sale of assets

     —         —         —         (1,472     (2,504

Acquisition-related costs

     195       1,521       197       1,688       34,448  

Inventory markup

     —         598       —         —         16,220  

Impairments, restructuring, and other charges

     1,530       5,429       2,103       12,881       7,941  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating income

   $ 80,978     $ 53,407     $ 61,274     $ 221,892     $ 145,996  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating margin

     11.5     8.0     9.5     8.8     7.0

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

          

GAAP net income (loss) attributable to stockholders

   $ (2,005   $ 9,521     $ 25,582     $ 34,861     $ (25,882

Add back items:

          

Amortization of definite-lived intangibles

     6,407       6,683       5,949       24,252       18,888  

Stock-based compensation

     3,200       2,635       2,799       11,090       9,661  

Non-cash interest expense

     2,697       4,893       4,721       19,180       15,626  

Gain on sale of assets

     —         —         —         (1,472     (2,504

Acquisition-related costs

     195       1,521       197       1,688       34,448  

Inventory markup

     —         598       —         —         16,220  

Loss on extinguishment of debt

     47,767       —         —         47,767       802  

Impairments, restructuring and other charges

     1,530       5,429       2,103       12,881       7,941  

Income taxes

     49       247       (1,208     (7,987     5,869  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net income attributable to stockholders

   $ 59,840     $ 31,527     $ 40,143     $ 142,260     $ 81,069  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP earnings per diluted share attributable to stockholders

   $ 0.58     $ 0.31     $ 0.39     $ 1.40     $ 0.87  

Non-GAAP diluted number of shares5:

          

Diluted shares

     102,563       126,329       127,645       101,482       93,640  

Dilutive effect of convertible debt

     —         (25,940     (25,940     —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP diluted number of shares

     102,563       100,389       101,705       101,482       93,640  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA reconciliation6:

          

GAAP net income (loss)

   $ (1,810   $ 9,657     $ 25,770     $ 35,575     $ (25,618

Add back items:

          

Income tax provision (benefit)

     17,416       10,601       9,513       31,427       34,594  

Interest expense

     15,267       20,208       18,873       76,008       59,753  

Amortization of definite-lived intangibles

     6,407       6,683       5,949       24,252       18,888  

Depreciation expense

     38,539       39,105       37,006       156,229       133,508  

Stock-based compensation

     3,200       2,635       2,799       11,090       9,661  

Gain on sale of assets

     —         —         —         (1,472     (2,504

Acquisition-related costs

     195       1,521       197       1,688       34,448  

Inventory markup

     —         —         —         —         14,200  

Loss on extinguishment of debt

     47,767       —         —         47,767       802  

Impairments, restructuring and other charges

     1,530       5,429       2,103       12,881       7,941  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 128,511     $ 95,839     $ 102,210     $ 395,445     $ 285,673  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA margin

     18.2     14.3     15.9     15.6     13.6

Free cash flow reconciliation:

          

Operating cash flow

     97,650       139,829       102,737       298,336       237,462  

Add back items:

          

Payment of accreted interest on convertible sr. notes

     —         —         —         —         8,730  

Payment of acquisition-related costs

     869       1,522       11       3,895       36,210  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted operating cash flow

     98,519       141,351       102,748       302,231       282,402  

Capital expenditures, net

     (22,619     (22,967     (24,221     (85,139     (99,718
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Free cash flow

   $ 75,900     $ 118,384     $ 78,527     $ 217,092     $ 182,684  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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.