Form: 8-K

Current report filing

February 7, 2018

TTM Technologies, Inc., Q4’17   

Contact:

Sameer Desai,

Senior Director, Corporate Development

& Investor Relations

Sameer.desai@ttmtech.com

714-327-3050

 

 

Exhibit 99.1

TTM Technologies, Inc. Reports Fiscal Fourth Quarter and Fiscal 2017 Results

Revenues and Operating Profits Exceed Expectations

COSTA MESA, CA – February 7th, 2018 – TTM Technologies, Inc. (NASDAQ:TTMI), a leading global printed circuit board (“PCB”) manufacturer, today reported results for the fourth quarter of fiscal 2017, which ended January 1st, 2018.

Fourth Quarter 2017 Highlights

  –   Net sales were $739.3 million
  –   GAAP net income attributable to stockholders was $49.2 million, or $0.40 per diluted share
  –   Non-GAAP net income attributable to stockholders was $61.2 million, or $0.57 per diluted share
  –   Adjusted EBITDA was $121.7 million
  –   Cash flow from operations a record high of $152.7 million
  –   Signed definitive agreement to acquire Anaren, Inc.

Fourth Quarter 2017 Financial Results

Net sales for the fourth quarter of 2017 were $739.3 million, compared to $706.5 million in the fourth quarter of 2016 and $668.8 million in the third quarter of 2017.

GAAP operating income for the fourth quarter of 2017 was $71.0 million, compared to $69.6 million in the fourth quarter of 2016 and $44.1 million in the third quarter of 2017.

GAAP net income attributable to stockholders for the fourth quarter of 2017 was $49.2 million, or $0.40 per diluted share. This compares to a GAAP net loss attributable to stockholders of $2.0 million, or $0.02 per share, in the fourth quarter of 2016 and a GAAP net income of $21.5 million, or $0.19 per diluted share, in the third quarter of 2017.

On a non-GAAP basis, net income attributable to stockholders for the fourth quarter of 2017 was $61.2 million, or $0.57 per diluted share. This compares to non-GAAP net income attributable to stockholders of $59.8 million, or $0.58 per diluted share, for the fourth quarter of 2016 and $33.4 million, or $0.32 per diluted share, in the third quarter of 2017.

Adjusted EBITDA for the fourth quarter of 2017 was $121.7 million, or 16.5 percent of net sales, compared to adjusted EBITDA of $128.5 million, or 18.2 percent of net sales, for the fourth quarter of 2016 and $85.7 million, or 12.9 percent of net sales, for the third quarter of 2017.

“TTM delivered the fifth consecutive quarter of year on year organic growth with revenues and operating performance that significantly exceeded expectations” said Tom Edman, CEO of TTM. “On a year over year basis, the fastest growth in the fourth quarter came from the cellular and the aerospace and defense end markets. This drove cash flow from operations to a record high of $152.7 million in the quarter.”

Full Year 2017 Financial Results

Net sales for fiscal year 2017 increased to $2.7 billion from $2.5 billion in fiscal year 2016, a 4.9% increase year over year.

GAAP operating income for fiscal year 2017 was $212.8 million, an increase from GAAP operating income of $173.5 million in fiscal year 2016.

GAAP net income attributable to stockholders for fiscal year 2017 was $124.2 million, or $1.04 per diluted share, compared to GAAP net income attributable to stockholders of $34.9 million, or $0.34 per diluted share, for fiscal year 2016.


TTM Technologies, Inc., Q4’17   

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 2017 was $167.1 million, or $1.57 per diluted share. This compares to fiscal year 2016 non-GAAP net income attributable to stockholders of $142.3 million, or $1.40 per diluted share.

Adjusted EBITDA for fiscal year 2017 was $388.6 million, or 14.6 percent of net sales, compared to $395.4 million, or 15.6 percent of net sales, for fiscal year 2016.

“2017 continued to validate TTM’s strategy of diversification, differentiation and discipline. We saw solid organic growth in the aerospace and defense, cellular and computing end markets that more than offset the decline in the networking and communications end markets,” continued Edman. “I would like to thank our employees for their tremendous efforts to achieve these results for the year 2017.”

“In the first quarter of 2018, we face short term seasonal challenges in our consumer oriented cellular and computing end markets, but remain optimistic for full year growth in nearly all 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 2018, TTM estimates that revenue will be in the range of $610 million to $660 million, and non-GAAP net income attributable to stockholders will be in the range of $0.22 to $0.28 per diluted share.

To Access the Live Webcast/Conference Call

TTM will host a conference call and webcast to discuss fourth quarter 2017 results and first quarter 2018 outlook on Wednesday, February 7th, 2018, 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 800-239-9838 or international 323-794-2551 (ID 5818058). 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.


TTM Technologies, Inc., Q4’17   

Contact:

Sameer Desai,

Senior Director, Corporate Development

& Investor Relations

Sameer.desai@ttmtech.com

714-327-3050

 

 

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, 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.

With respect to the Company’s outlook for non-GAAP net income attributable to stockholders per diluted share, we are unable to predict with reasonable certainty or without unreasonable effort certain items that may affect such measure calculated and presented in accordance with GAAP. Our expected non-GAAP net income attributable to stockholders per diluted share excludes primarily the future impact of restructuring actions, impairment charges, unusual gains and losses, and tax adjustments. These reconciling items are highly variable and difficult to predict due to various factors outside of management’s control and could have a material impact on our future period net income attributable to stockholders per diluted share calculated and presented in accordance with GAAP. Accordingly, a reconciliation of non-GAAP net income attributable to stockholders per diluted share to such measure calculated and presented in accordance with GAAP is not available without unreasonable effort and has not been provided.

- Tables Follow -


TTM TECHNOLOGIES, INC.

Selected Unaudited Financial Information

(In thousands, except per share data)

 

     Fourth Quarter     Third Quarter     Full Year  
     2017     2016     2017     2017     2016  

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

          

Net sales

   $ 739,349     $ 706,534     $ 666,814     $ 2,658,592     $ 2,533,359  

Cost of goods sold

     607,488       573,689       569,980       2,229,011       2,109,744  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     131,861       132,845       96,834       429,581       423,615  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

          

Selling and marketing

     17,081       16,848       16,269       65,856       66,366  

General and administrative

     37,764       38,998       30,018       128,489       148,719  

Amortization of definite-lived intangibles

     5,907       6,407       5,905       23,634       24,252  

Restructuring charges

     65       946       100       1,190       8,951  

Impairment of long-lived assets

     —         —         —         —         3,346  

(Gain)/loss on sale of assets

     —         —         452       (2,348     (1,472
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     60,817       63,199       52,744       216,821       250,162  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     71,044       69,646       44,090       212,760       173,453  

Interest expense

     (13,782     (15,267     (13,598     (53,898     (76,008

Loss on extinguishment of debt

     —         (47,767     (768     (769     (47,767

Other, net

     (3,617     8,994       (6,984     (18,135     17,324  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     53,645       15,606       22,740       139,958       67,002  

Income tax provision

     (4,329     (17,416     (1,205     (15,231     (31,427
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 49,316     $ (1,810   $ 21,535     $ 124,727     $ 35,575  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to noncontrolling interest

     (105     (195     (82     (513     (714
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to stockholders

   $ 49,211     $ (2,005   $ 21,453     $ 124,214     $ 34,861  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss) per share attributable to stockholders:

          

Basic

   $ 0.48     $ (0.02   $ 0.21     $ 1.22     $ 0.35  

Diluted

   $ 0.40     $ (0.02   $ 0.19     $ 1.04     $ 0.34  

Weighted-average shares used in computing per share amounts:

          

Basic

     101,817       100,365       101,814       101,580       100,099  

Diluted

     133,170       100,365       131,596       132,476       101,482  

Reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share:

          

Net income attributable to stockholders

   $ 49,211       $ 21,453     $ 124,214    

Add back items: interest expense, net of tax

     3,508         3,469       13,803    
  

 

 

     

 

 

   

 

 

   

Adjusted net income attributable to stockholders

   $ 52,719       $ 24,922     $ 138,017    
  

 

 

     

 

 

   

 

 

   

Weighted-average shares outstanding

     101,817         101,814       101,580    

Dilutive effect of convertible debt

     25,939         25,939       25,940    

Dilutive effect of warrants

     2,938         2,151       2,799    

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

     2,476         1,692       2,157    
  

 

 

     

 

 

   

 

 

   

Diluted shares

     133,170         131,596       132,476    
  

 

 

     

 

 

   

 

 

   

Earnings per share attributable to stockholders:

          

Basic

   $ 0.48       $ 0.21     $ 1.22    

Diluted

   $ 0.40       $ 0.19     $ 1.04    

SELECTED BALANCE SHEET DATA

          
     January 1, 2018     January 2, 2017                    

Cash and cash equivalents, including restricted cash

   $ 409,326     $ 256,277        

Accounts and notes receivable, net

     483,903       432,788        

Inventories

     294,588       269,212        

Total current assets

     1,221,307       1,012,841        

Property, plant and equipment, net

     1,056,845       966,638        

Other non-current assets

     503,730       520,597        

Total assets

     2,781,882       2,500,076        

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

   $ 4,578     $ 110,652        

Accounts payable

     438,990       371,610        

Total current liabilities

     720,356       689,065        

Debt, net of discount

     975,479       909,030        

Total long-term liabilities

     1,050,146       981,886        

Total equity

     1,011,380       829,125        

Total liabilities and equity

     2,781,882       2,500,076        


SUPPLEMENTAL DATA

          
     Fourth Quarter     Third Quarter     Full Year  
     2017     2016     2017     2017     2016  

Gross margin

     17.8     18.8     14.5     16.2     16.7

Operating margin

     9.6     9.9     6.6     8.0     6.8

End Market Breakdown:

          
     Fourth Quarter     Third Quarter              
     2017     2016     2017              

Aerospace/Defense

     15     14     16    

Automotive

     18     19     20    

Cellular Phone

     27     19     17    

Computing/Storage/Peripherals

     10     12     14    

Medical/Industrial/Instrumentation

     12     13     14    

Networking/Communications

     17     21     17    

Other

     1     2     2    

Stock-based Compensation:

          
     Fourth Quarter     Third Quarter              
     2017     2016     2017              

Amount included in:

          

Cost of goods sold

   $ 613     $ 469     $ 606      

Selling and marketing

   $ 450       305       369      

General and administrative

     3,921       2,426       3,703      
  

 

 

   

 

 

   

 

 

     

Total stock-based compensation expense

   $ 4,984     $ 3,200     $ 4,678      
  

 

 

   

 

 

   

 

 

     

Operating Segment Data:

          
     Fourth Quarter     Third Quarter              

Net sales:

     2017       2016       2017      
  

 

 

   

 

 

   

 

 

     

PCB

   $ 688,572     $ 654,379     $ 609,742      

E-M Solutions

     54,899       55,332       60,620      

Corporate

     —         —         —        
  

 

 

   

 

 

   

 

 

     

Total sales

     743,471       709,711       670,362      

Inter-segment sales

     (4,122     (3,177     (3,548    
  

 

 

   

 

 

   

 

 

     

Total net sales

   $ 739,349     $ 706,534     $ 666,814      
  

 

 

   

 

 

   

 

 

     

Operating segment income:

          

PCB

   $ 100,352     $ 95,208     $ 70,443      

E-M Solutions

     2,799       3,029       2,870      

Corporate

     (26,200     (22,184     (23,318    
  

 

 

   

 

 

   

 

 

     

Total operating segment income

     76,951       76,053       49,995      

Amortization of definite-lived intangibles

     (5,907     (6,407     (5,905    
  

 

 

   

 

 

   

 

 

     

Total operating income

     71,044       69,646       44,090      

Total other expense

     (17,399     (54,040     (21,350    
  

 

 

   

 

 

   

 

 

     

Income before income taxes

   $ 53,645     $ 15,606     $ 22,740      
  

 

 

   

 

 

   

 

 

     


RECONCILIATIONS1

          
     Fourth Quarter     Third Quarter     Full Year  
     2017     2016     2017     2017     2016  

Non-GAAP gross profit reconciliation2:

          

GAAP gross profit

   $ 131,861     $ 132,845     $ 96,834     $ 429,581     $ 423,615  

Add back item:

          

Stock-based compensation

     613       469       606       2,252       1,630  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross profit

   $ 132,474     $ 133,314     $ 97,440     $ 431,833     $ 425,245  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross margin

     17.9     18.9     14.6     16.2     16.8

Non-GAAP operating income reconciliation3:

          

GAAP operating income

   $ 71,044     $ 69,646     $ 44,090     $ 212,760     $ 173,453  

Add back items:

          

Amortization of definite-lived intangibles

     5,907       6,407       5,905       23,634       24,252  

Stock-based compensation

     4,984       3,200       4,678       18,290       11,090  

(Gain)/loss on sale of assets

     —         —         452       (2,348     (1,472

Impairments, restructuring, acquisition-related, and other charges

     2,331       1,725       100       3,556       14,569  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating income

   $ 84,266     $ 80,978     $ 55,225     $ 255,892     $ 221,892  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating margin

     11.4     11.5     8.3     9.6     8.8

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

          

GAAP net income (loss) attributable to stockholders

   $ 49,211     $ (2,005   $ 21,453     $ 124,214     $ 34,861  

Add back items:

          

Amortization of definite-lived intangibles

     5,907       6,407       5,905       23,634       24,252  

Stock-based compensation

     4,984       3,200       4,678       18,290       11,090  

Non-cash interest expense

     3,017       2,697       2,699       11,069       19,180  

(Gain)/loss on sale of assets

     —         —         452       (2,348     (1,472

Loss on extinguishment of debt

     —         47,767       768       769       47,767  

Impairments, restructuring, acquisition-related, and other charges

     2,331       1,725       100       3,556       14,569  

Income taxes5

     (4,204     49       (2,643     (12,059     (7,987
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net income attributable to stockholders

   $ 61,246     $ 59,840     $ 33,412     $ 167,125     $ 142,260  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP earnings per diluted share attributable to stockholders

   $ 0.57     $ 0.58     $ 0.32     $ 1.57     $ 1.40  

Non-GAAP diluted number of shares6:

          

Diluted shares

     133,170       102,563       131,596       132,476       101,482  

Dilutive effect of convertible debt

     (25,939     —         (25,939     (25,940     —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP diluted number of shares

     107,231       102,563       105,657       106,536       101,482  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA reconciliation7:

          

GAAP net income (loss)

   $ 49,316     $ (1,810   $ 21,535     $ 124,727     $ 35,575  

Add back items:

          

Income tax provision (benefit)

     4,329       17,416       1,205       15,231       31,427  

Interest expense

     13,782       15,267       13,598       53,898       76,008  

Amortization of definite-lived intangibles

     5,907       6,407       5,905       23,634       24,252  

Depreciation expense

     41,090       38,539       37,496       150,809       156,229  

Stock-based compensation

     4,984       3,200       4,678       18,290       11,090  

(Gain)/loss on sale of assets

     —         —         452       (2,348     (1,472

Loss on extinguishment of debt

     —         47,767       768       769       47,767  

Impairments, restructuring, acquisition-related, and other charges

     2,331       1,725       100       3,556       14,569  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 121,739     $ 128,511     $ 85,737     $ 388,566     $ 395,445  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA margin

     16.5     18.2     12.9     14.6     15.6

Free cash flow reconciliation:

          

Operating cash flow

     152,691       97,650       71,366       332,755       298,336  

Capital expenditures, net

     (32,209     (20,501     (22,877     (124,090     (81,498
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Free cash flow

   $ 120,482     $ 77,149     $ 48,489     $ 208,665     $ 216,838  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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.

3   Non-GAAP operating income and operating margin measures exclude amortization of intangibles, stock-based compensation expense, gain on sale of assets, 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, 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   Income tax adjustments reflect the difference between income taxes based on a non-GAAP tax rate and a forecasted annual GAAP tax rate.

6   Non-GAAP diluted number of shares used in computing non-GAAP earnings per share attributable to stockholders excludes the dilutive effect of convertible debt.

7   Adjusted EBITDA is defined as earnings before interest expense, income taxes, depreciation, amortization of intangibles, stock-based compensation expense, gain on sale of assets, 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.