Form: 8-K

Current report filing

October 30, 2018

Exhibit 99.1

 

TTM Technologies, Inc., Q3’18    Contact:

Sameer Desai,

Senior Director, Corporate

Development & Investor Relations

Sameer.desai@ttmtech.com

714-327-3050

TTM Technologies, Inc. Reports Fiscal Third Quarter 2018 Results

COSTA MESA, CA – October 30, 2018 – TTM Technologies, Inc. (NASDAQ:TTMI), a leading global printed circuit board (“PCB”) and radio frequency (“RF”) components manufacturer, today reported results for the third quarter of fiscal 2018, which ended October 1, 2018. The financial results provided below for the third quarter include a full quarter contribution from the acquisition of Anaren, Inc. (“Anaren”), which was completed on April 18, 2018.

Third Quarter 2018 Highlights

 

  -

Net sales were $755.8 million

 

  -

GAAP net income was $27.0 million, or $0.22 per diluted share

 

  -

Non-GAAP net income was $55.1 million, or $0.50 per diluted share

 

  -

Cash flow from operations of $80.0 million

Third Quarter 2018 Financial Results

Net sales for the third quarter of 2018 were $755.8 million, compared to $666.8 million in the third quarter of 2017 and $716.9 million in the second quarter of 2018.

GAAP operating income for the third quarter of 2018 was $54.6 million, compared to $44.1 million in the third quarter of 2017 and $31.7 million in the second quarter of 2018.

GAAP net income for the third quarter of 2018 was $27.0 million, or $0.22 per diluted share. This compares to $21.5 million, or $0.19 per diluted share, in the third quarter of 2017 and $84.0 million, or $0.65 per diluted share, in the second quarter of 2018.

On a non-GAAP basis, net income for the third quarter of 2018 was $55.1 million, or $0.50 per diluted share. This compares to non-GAAP net income of $33.4 million, or $0.32 per diluted share, for the third quarter of 2017 and $52.3 million, or $0.48 per diluted share, in the second quarter of 2018.

Adjusted EBITDA for the third quarter of 2018 was $122.3 million, or 16.2 percent of net sales, compared to adjusted EBITDA of $85.7 million, or 12.9 percent of net sales, for the third quarter of 2017 and $115.9 million, or 16.2 percent of net sales, for the second quarter of 2018.

“TTM delivered record revenues and earnings for a third quarter,” said Tom Edman, CEO of TTM. “We were pleased to see solid year over year growth from the aerospace and defense, cellular, computing and medical/industrial/instrumentation end markets that more than offset weakness in our automotive end market. Following record third quarter revenues in the cellular end market, we’re anticipating weaker sales and profits in the fourth quarter.”

Business Outlook

For the fourth quarter of 2018 TTM estimates that revenue will be in the range of $720 million to $760 million, and non-GAAP net income will be in the range of $0.44 to $0.50 per diluted share.

To Access the Live Webcast/Conference Call

TTM will host a conference call and webcast to discuss third quarter 2018 results and fourth quarter 2018 outlook on Tuesday, October 30, 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 800-667-5617 or international 334-323-0509 (ID 9367022). The conference call also will be webcast on TTM’s website at www.ttm.com.


TTM Technologies, Inc., Q3’18    Contact:

Sameer Desai,

Senior Director, Corporate

Development & Investor Relations

Sameer.desai@ttmtech.com

714-327-3050

 

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 as well as a global designer and manufacturer of RF and microwave components and assemblies. 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, 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 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 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 per diluted share calculated and presented in accordance with GAAP. Accordingly, a reconciliation of non-GAAP net income 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)

 

     Third Quarter     Second
Quarter
    First Three Quarters  
     2018     2017     2018     2018     2017  

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

          

Net sales

   $ 755,837     $ 666,814     $ 716,887     $ 2,136,306     $ 1,919,243  

Cost of goods sold

     626,253       569,980       600,747       1,801,904       1,621,523  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     129,584       96,834       116,140       334,402       297,720  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

          

Selling and marketing

     18,533       16,269       18,619       54,780       48,775  

General and administrative

     39,974       30,018       45,721       119,822       90,725  

Amortization of definite-lived intangibles

     16,609       5,905       19,489       41,959       17,727  

Restructuring charges

     (82     100       577       1,556       1,125  

(Gain)/loss on sale of assets

     —         452       —         —         (2,348
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     75,034       52,744       84,406       218,117       156,004  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     54,550       44,090       31,734       116,285       141,716  

Interest expense

     (22,225     (13,598     (20,453     (56,425     (40,116

Loss on extinguishment of debt

     —         (768     —         —         (769

Other, net

     2,213       (6,984     6,178       7,284       (14,518
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     34,538       22,740       17,459       67,144       86,313  

Income tax (provision) / benefit

     (7,537     (1,205     66,545       53,958       (10,902
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 27,001     $ 21,535     $ 84,004     $ 121,102     $ 75,411  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to noncontrolling interest

     —         (82     —         —         (408
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to stockholders

   $ 27,001     $ 21,453     $ 84,004     $ 121,102     $ 75,003  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share attributable to stockholders:

          

Basic

   $ 0.26     $ 0.21     $ 0.81     $ 1.17     $ 0.74  

Diluted

   $ 0.22     $ 0.19     $ 0.65     $ 0.98     $ 0.65  

Weighted-average shares used in computing per share amounts:

          

Basic

     103,676       101,814       103,553       103,246       101,501  

Diluted

     136,435       131,596       134,721       134,871       131,914  

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

          

Net income attributable to stockholders

   $ 27,001     $ 21,453     $ 84,004     $ 121,102     $ 75,003  

Add back items: interest expense, net of tax

     3,628       3,469       3,587       10,763       10,296  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income attributable to stockholders

   $ 30,629     $ 24,922     $ 87,591     $ 131,865     $ 85,299  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average shares outstanding

     103,676       101,814       103,553       103,246       101,501  

Dilutive effect of convertible debt

     25,938       25,939       25,938       25,939       25,939  

Dilutive effect of warrants

     5,226       2,151       3,854       4,086       2,753  

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

     1,595       1,692       1,376       1,600       1,721  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted shares

     136,435       131,596       134,721       134,871       131,914  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share attributable to stockholders:

          

Basic

   $ 0.26     $ 0.21     $ 0.81     $ 1.17     $ 0.74  

Diluted

   $ 0.22     $ 0.19     $ 0.65     $ 0.98     $ 0.65  

SELECTED BALANCE SHEET DATA

          
     October 1,
2018
    January 1,
2018
                   

Cash and cash equivalents, including restricted cash

   $ 207,952     $ 409,326        

Accounts and notes receivable, net

     569,215       483,903        

Contract assets

     296,836       —          

Inventories

     122,232       294,588        

Total current assets

     1,233,008       1,221,307        

Property, plant and equipment, net

     1,059,246       1,056,845        

Other non-current assets

     1,196,972       503,730        

Total assets

     3,489,226       2,781,882        

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

   $ 40,000     $ 4,578        

Accounts payable

     451,645       497,455        

Total current liabilities

     695,276       720,356        

Debt, net of discount

     1,518,315       975,479        

Total long-term liabilities

     1,619,039       1,050,146        

Total equity

     1,174,911       1,011,380        

Total liabilities and equity

     3,489,226       2,781,882        


SUPPLEMENTAL DATA

          
     Third Quarter     Second
Quarter
    First Three Quarters  
     2018     2017     2018     2018     2017  

Gross margin

     17.1     14.5     16.2     15.7     15.5

Operating margin

     7.2     6.6     4.4     5.4     7.4

End Market Breakdown:

          
     Third Quarter     Second
Quarter
             
     2018     2017     2018              

Aerospace/Defense

     23     16     24    

Automotive

     15     20     19    

Cellular Phone

     17     17     8    

Computing/Storage/Peripherals

     14     14     15    

Medical/Industrial/Instrumentation

     13     14     14    

Networking/Communications

     17     17     17    

Other

     1     2     3    

Stock-based Compensation:

          
     Third Quarter     Second
Quarter
             
     2018     2017     2018              

Amount included in:

          

Cost of goods sold

   $ 774     $ 606     $ 829      

Selling and marketing

     520       369       545      

General and administrative

     4,165       3,703       4,493      
  

 

 

   

 

 

   

 

 

     

Total stock-based compensation expense

   $ 5,459     $ 4,678     $ 5,867      
  

 

 

   

 

 

   

 

 

     

Operating Segment Data:

          
     Third Quarter     Second
Quarter
             
                Net sales:    2018     2017     2018              

PCB

   $ 698,983     $ 609,742     $ 657,601      

E-M Solutions

     59,481       60,620       61,842      

Corporate

     —         —         —        
  

 

 

   

 

 

   

 

 

     

Total sales

     758,464       670,362       719,443      

Inter-segment sales

     (2,627     (3,548     (2,556    
  

 

 

   

 

 

   

 

 

     

Total net sales

   $ 755,837     $ 666,814     $ 716,887      
  

 

 

   

 

 

   

 

 

     

Operating segment income:

          

PCB

   $ 98,039     $ 70,443     $ 80,964      

E-M Solutions

     2,205       2,870       2,496      

Corporate

     (26,920     (23,318     (32,237    
  

 

 

   

 

 

   

 

 

     

Total operating segment income

     73,324       49,995       51,223      

Amortization of definite-lived intangibles

     (18,774     (5,905     (19,489    
  

 

 

   

 

 

   

 

 

     

Total operating income

     54,550       44,090       31,734      

Total other expense

     (20,012     (21,350     (14,275    
  

 

 

   

 

 

   

 

 

     

Income before income taxes

   $ 34,538     $ 22,740     $ 17,459      
  

 

 

   

 

 

   

 

 

     


RECONCILIATIONS1

          
     Third Quarter     Second
Quarter
    First Three Quarters  
     2018     2017     2018     2018     2017  

Non-GAAP gross profit reconciliation2:

          

GAAP gross profit

   $ 129,584     $ 96,834     $ 116,140     $ 334,402     $ 297,720  

Add back item:

          

Inventory markup

     —         —         4,900       4,900       —    

Amortization of definite-lived intangibles

     2,165       —         —         2,165       —    

Stock-based compensation

     774       606       829       2,132       1,639  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross profit

   $ 132,523     $ 97,440     $ 121,869     $ 343,599     $ 299,359  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross margin

     17.5     14.6     17.0     16.1     15.6

Non-GAAP operating income reconciliation3:

          

GAAP operating income

   $ 54,550     $ 44,090     $ 31,734     $ 116,285     $ 141,716  

Add back items:

          

Amortization of definite-lived intangibles

     18,774       5,905       19,489       44,124       17,727  

Stock-based compensation

     5,459       4,678       5,867       14,948       13,306  

(Gain)/loss on sale of assets

     —         452       —         —         (2,348

Inventory markup

     —         —         4,900       4,900       —    

Impairments, restructuring, acquisition-related, and other charges

     230       100       7,429       12,693       1,225  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating income

   $ 79,013     $ 55,225     $ 69,419     $ 192,950     $ 171,626  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating margin

     10.5     8.3     9.7     9.0     8.9

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

          

GAAP net income attributable to stockholders

   $ 27,001     $ 21,453     $ 84,004     $ 121,102     $ 75,003  

Add back items:

          

Amortization of definite-lived intangibles

     18,774       5,905       19,489       44,124       17,727  

Stock-based compensation

     5,459       4,678       5,867       14,948       13,306  

Non-cash interest expense

     3,992       2,699       3,353       10,399       8,052  

(Gain)/loss on sale of assets

     —         452       —         —         (2,348

Inventory markup

     —         —         4,900       4,900       —    

Loss on extinguishment of debt

     —         768       —         —         769  

Impairments, restructuring, acquisition-related, and other charges

     230       100       7,742       13,235       1,225  

Income taxes5

     (337     (2,643     (73,073     (73,302     (7,855
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net income attributable to stockholders

   $ 55,119     $ 33,412     $ 52,282     $ 135,406     $ 105,879  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP earnings per diluted share attributable to stockholders

   $ 0.50     $ 0.32     $ 0.48     $ 1.24     $ 1.00  

Non-GAAP diluted number of shares6:

          

Diluted shares

     136,435       131,596       134,721       134,871       131,914  

Dilutive effect of convertible debt

     (25,938     (25,939     (25,938     (25,939     (25,939
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP diluted number of shares

     110,497       105,657       108,783       108,932       105,975  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA reconciliation7:

          

GAAP net income

   $ 27,001     $ 21,535     $ 84,004     $ 121,102     $ 75,411  

Add back items:

          

Income tax provision (benefit)

     7,537       1,205       (66,545     (53,958     10,902  

Interest expense

     22,225       13,598       20,453       56,425       40,116  

Amortization of definite-lived intangibles

     18,774       5,905       19,489       44,124       17,727  

Depreciation expense

     41,092       37,496       40,298       121,165       109,719  

Stock-based compensation

     5,459       4,678       5,867       14,948       13,306  

(Gain)/loss on sale of assets

     —         452       —         —         (2,348

Inventory markup

     —         —         4,900       4,900       —    

Loss on extinguishment of debt

     —         768       —         —         769  

Impairments, restructuring, acquisition-related, and other charges

     230       100       7,429       12,693       1,225  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 122,318     $ 85,737     $ 115,895     $ 321,399     $ 266,827  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA margin

     16.2     12.9     16.2     15.0     13.9

Free cash flow reconciliation:

          

Operating cash flow

     79,992       71,366       55,639       121,370       180,064  

Capital expenditures, net

     (35,038     (22,877     (38,948     (116,125     (91,881
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Free cash flow

   $ 44,954     $ 48,489     $ 16,691     $ 5,245     $ 88,183  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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 amortization of intangibles, 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 

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, 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.