Form: 8-K

Current report filing

February 5, 2020

Exhibit 99.1

 

TTM Technologies, Inc., Q4’19   

Contact:

Sameer Desai,

Senior Director, Corporate

Development & Investor Relations

Sameer.desai@ttmtech.com

714-327-3050

TTM Technologies, Inc. Reports Fiscal Fourth Quarter and 2019 Results

Santa Ana, CA – February 5, 2020 – TTM Technologies, Inc. (NASDAQ:TTMI), a leading global printed circuit board (“PCB”) and radio frequency (“RF”) components manufacturer, today reported results for the fourth quarter of fiscal 2019, which ended on December 30, 2019.

Fourth Quarter 2019 Highlights

 

  –  

Net sales were $719.3 million

  –  

GAAP net income was $25.3 million, or $0.21 per diluted share

  –  

Non-GAAP net income was $43.9 million, or $0.41 per diluted share, inclusive of $0.03 foreign exchange losses

  –  

Cash flow from operations of $130.1 million

Fourth Quarter 2019 Financial Results

Net sales for the fourth quarter of 2019 were $719.3 million, compared to $711.0 million in the fourth quarter of 2018 and $716.8 million in the third quarter of 2019.

GAAP operating income for the fourth quarter of 2019 was $49.4 million, compared to $42.8 million in the fourth quarter of 2018 and $36.4 million in the third quarter of 2019.

GAAP net income for the fourth quarter of 2019 was $25.3 million, or $0.21 per diluted share. This compares to income of $52.5 million, or $0.42 per diluted share in the fourth quarter of 2018, and $15.9 million, or $0.14 per diluted share, in the third quarter of 2019. The fourth quarter of 2018 results reflect the release of a tax valuation allowance of $43.6 million.

On a non-GAAP basis, net income for the fourth quarter of 2019 was $43.9 million, or $0.41 per diluted share. This compares to non-GAAP net income of $55.0 million, or $0.52 per diluted share, for the fourth quarter of 2018 and $38.9 million, or $0.37 per diluted share, in the third quarter of 2019.

Adjusted EBITDA for the fourth quarter of 2019 was $111.3 million, or 15.5 percent of net sales, compared to adjusted EBITDA of $117.4 million, or 16.5 percent of net sales, for the fourth quarter of 2018 and $103.5 million, or 14.4 percent of net sales, for the third quarter of 2019.

“For the fourth quarter, TTM continued to generate strong cash flow and delivered revenue and earnings above the previously guided range,” said Tom Edman, CEO of TTM. “The year over year growth we experienced in the aerospace and defense, cellular and computing end markets offset weakness in our other commercial end markets.”

Full Year 2019 Financial Results

Net sales for fiscal year 2019 decreased to $2.69 billion from $2.85 billion in fiscal year 2018, a 5.5% decrease.

GAAP operating income for fiscal year 2019 was $120.1 million, a decrease from GAAP operating income of $159.1 million in fiscal year 2018.

GAAP net income for fiscal year 2019 was $41.3 million, or $0.39 per diluted share, compared to GAAP net income of $173.6 million, or $1.38 per diluted share, for fiscal year 2018. The 2018 results reflect the release of a tax valuation allowance of $118.2 million.


TTM Technologies, Inc., Q4’19   

Contact:

Sameer Desai,

Senior Director, Corporate

Development & Investor Relations

Sameer.desai@ttmtech.com

714-327-3050

 

On a non-GAAP basis, net income for fiscal year 2019 was $120.5 million, or $1.13 per diluted share. This compares to fiscal year 2018 non-GAAP net income of $190.4 million, or $1.76 per diluted share.

Adjusted EBITDA for fiscal year 2019 was $376.2 million, or 14.0 percent of net sales, compared to $438.8 million, or 15.4 percent of net sales, for fiscal year 2018.

“In 2019, we finished with strong results in Q4 and made progress on our strategy of diversification, differentiation and discipline. Specifically, we acquired differentiating technology with an important asset purchase from i3 Technologies, which enables us to manufacture products that require finer lines and smaller spacing for our aerospace and defense and commercial end markets broadening our technology offerings in North America. In addition, in early January, we announced the sale of our more seasonal and generally more volatile mobility business,” continued Edman. “Finally, our financial discipline allowed us to generate significant year over year growth in cash flow despite year over year declines in revenues and profits.”

Business Outlook

Typically, in the first calendar quarter of every year, our China based factories are shut down over the Lunar New Year holiday. This year, due to government restrictions from the coronavirus. the shutdown has been extended approximately nine days to February 10th. Assuming our factories in the PRC can resume production on February 10th, TTM estimates that revenue for the first quarter of 2020 will be in the range of $580 million to $620 million, and non-GAAP net income will be in the range of $0.05 to $0.11 per diluted share, which includes approximately $0.09 negative impact from the additional nine days of closure. If the government extends the factory shutdown beyond February 10th, our financial results would be further negatively impacted.

To Access the Live Webcast/Conference Call

TTM will host a conference call and webcast to discuss fourth quarter 2019 results and the first quarter 2020 outlook on Wednesday, February 5, 2020, 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 800-367-2403 or international 334-777-6978 (ID 6010319). 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 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


TTM Technologies, Inc., Q4’19   

Contact:

Sameer Desai,

Senior Director, Corporate

Development & Investor Relations

Sameer.desai@ttmtech.com

714-327-3050

 

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 a comparable 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 a comparable 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  
     2019     2018     2019     2019     2018  

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

          

Net sales

   $ 719,253     $ 710,955     $ 716,817     $ 2,689,308     $ 2,847,261  

Cost of goods sold

     594,704       588,323       612,983       2,287,625       2,390,227  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     124,549       122,632       103,834       401,683       457,034  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

          

Selling and marketing

     18,843       18,533       18,400       74,011       73,313  

General and administrative

     43,535       39,615       38,845       152,096       159,437  

Amortization of definite-lived intangibles

     10,206       17,722       10,175       48,474       59,681  

Restructuring charges

     2,539       3,962       53       6,981       5,518  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     75,123       79,832       67,473       281,562       297,949  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     49,426       42,800       36,361       120,121       159,085  

Interest expense

     (20,107     (22,533     (20,568     (83,234     (78,958

Other, net

     (2,920     2,357       8,126       9,297       9,641  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     26,399       22,624       23,919       46,184       89,768  

Income tax (provision) / benefit

     (1,140     29,858       (8,049     (4,883     83,816  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 25,259     $ 52,482     $ 15,870     $ 41,301     $ 173,584  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share:

          

Basic

   $ 0.24     $ 0.51     $ 0.15     $ 0.39     $ 1.68  

Diluted

   $ 0.21     $ 0.42     $ 0.14     $ 0.39     $ 1.38  

Weighted-average shares used in computing per share amounts:

          

Basic

     105,502       103,683       105,492       105,195       103,355  

Diluted

     133,073       131,533       132,412       106,332       134,036  

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

          

Net income

   $ 25,259     $ 52,482     $ 15,870       $ 173,584  

Add back items: interest expense, net of tax

     2,825       3,030       2,836         11,906  
  

 

 

   

 

 

   

 

 

     

 

 

 

Adjusted net income

   $ 28,084     $ 55,512     $ 18,706       $ 185,490  
  

 

 

   

 

 

   

 

 

     

 

 

 

Weighted-average shares outstanding

     105,502       103,683       105,492         103,355  

Dilutive effect of convertible debt

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

Dilutive effect of warrants

     —         —         —           3,065  

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

     1,633       1,911       982         1,677  
  

 

 

   

 

 

   

 

 

     

 

 

 

Diluted shares

     133,073       131,533       132,412         134,036  
  

 

 

   

 

 

   

 

 

     

 

 

 

Earnings per share:

          

Basic

   $ 0.24     $ 0.51     $ 0.15       $ 1.68  

Diluted

   $ 0.21     $ 0.42     $ 0.14       $ 1.38  

SELECTED BALANCE SHEET DATA

          
     December 30, 2019     December 31, 2018                    

Cash and cash equivalents, including restricted cash

   $ 400,154     $ 256,360        

Accounts and notes receivable, net

     503,664       523,165        

Contract assets

     288,235       287,741        

Inventories

     122,019       109,377        

Total current assets

     1,342,684       1,206,914        

Property, plant and equipment, net

     1,022,929       1,052,024        

Operating lease right of use asset

     24,156       —          

Other non-current assets

     1,171,164       1,198,565        

Total assets

     3,560,933       3,457,503        

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

   $ 249,975     $ 30,000        

Accounts payable

     483,566       431,288        

Total current liabilities

     946,666       673,214        

Debt, net of discount

     1,225,962       1,462,425        

Total long-term liabilities

     1,335,230       1,557,202        

Total equity

     1,279,037       1,227,087        

Total liabilities and equity

     3,560,933       3,457,503        


SUPPLEMENTAL DATA

          
     Fourth Quarter     Third Quarter     Full Year  
     2019     2018     2019     2019     2018  

Gross margin

     17.3     17.2     14.5     14.9     16.1

Operating margin

     6.9     6.0     5.1     4.5     5.6

End Market Breakdown:

          
     Fourth Quarter     Third Quarter              
     2019     2018*     2019              

Aerospace/Defense

     26     23     24    

Automotive

     14     16     17    

Cellular Phone

     16     14     19    

Computing/Storage/Peripherals

     14     13     12    

Medical/Industrial/Instrumentation

     13     14     13    

Networking/Communications

     15     18     13    

Other

     2     2     2    

* Amended for Anaren integration

          

Stock-based Compensation:

          
     Fourth Quarter     Third Quarter              
     2019     2018     2019              

Amount included in:

          

Cost of goods sold

   $ 942     $ 766     $ 941      

Selling and marketing

     518       525       593      

General and administrative

     3,166       4,442       3,128      
  

 

 

   

 

 

   

 

 

     

Total stock-based compensation expense

   $ 4,626     $ 5,733     $ 4,662      
  

 

 

   

 

 

   

 

 

     

Operating Segment Data:

          
     Fourth Quarter     Third Quarter              

Net sales:

     2019       2018       2019      
  

 

 

   

 

 

   

 

 

     

PCB

   $ 671,928     $ 653,482     $ 649,104      

E-M Solutions

     47,325       57,473       67,713      
  

 

 

   

 

 

   

 

 

     

Total net sales

   $ 719,253     $ 710,955     $ 716,817      
  

 

 

   

 

 

   

 

 

     

Operating segment income:

          

PCB

   $ 93,447     $ 87,201     $ 73,230      

E-M Solutions

     1,841       3,364       3,236      

Corporate

     (34,373     (28,863     (28,750    
  

 

 

   

 

 

   

 

 

     

Total operating segment income

     60,915       61,702       47,716      

Amortization of definite-lived intangibles

     (11,489     (18,902     (11,355    
  

 

 

   

 

 

   

 

 

     

Total operating income

     49,426       42,800       36,361      

Total other expense

     (23,027     (20,176     (12,442    
  

 

 

   

 

 

   

 

 

     

Income before income taxes

   $ 26,399     $ 22,624     $ 23,919      
  

 

 

   

 

 

   

 

 

     


RECONCILIATIONS1

          
     Fourth Quarter     Third Quarter     Full Year  
     2019     2018     2019     2019     2018  

Non-GAAP gross profit reconciliation2:

          

GAAP gross profit

   $ 124,549     $ 122,632     $ 103,834     $ 401,683     $ 457,034  

Add back item:

          

Inventory markup

     —         —         —         —         4,900  

Amortization of definite-lived intangibles

     1,283       1,180       1,180       4,822       3,345  

Stock-based compensation

     942       766       941       3,158       2,898  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross profit

   $ 126,774     $ 124,578     $ 105,955     $ 409,663     $ 468,177  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross margin

     17.6     17.5     14.8     15.2     16.4

Non-GAAP operating income reconciliation3:

          

GAAP operating income

   $ 49,426     $ 42,800     $ 36,361     $ 120,121     $ 159,085  

Add back items:

          

Amortization of definite-lived intangibles

     11,489       18,902       11,355       53,296       63,026  

Stock-based compensation

     4,626       5,733       4,662       16,816       20,681  

(Gain) on sale of assets

     (66     —         —         (66     —    

Inventory markup

     —         —         —         —         4,900  

Restructuring, acquisition-related, and other charges

     6,856       6,104       1,573       13,883       18,797  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating income

   $ 72,331     $ 73,539     $ 53,951     $ 204,050     $ 266,489  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating margin

     10.1     10.3     7.5     7.6     9.4

Non-GAAP net income and EPS reconciliation4:

          

GAAP net income

   $ 25,259     $ 52,482     $ 15,870     $ 41,301     $ 173,584  

Add back items:

          

Amortization of definite-lived intangibles

     11,489       18,902       11,355       53,296       63,026  

Stock-based compensation

     4,626       5,733       4,662       16,816       20,681  

Non-cash interest expense

     3,501       4,384       3,452       14,288       14,783  

(Gain) on sale of assets

     (186     —         (251     (3,743     —    

Inventory markup

     —         —         —         —         4,900  

Restructuring, acquisition-related, and other charges

     6,856       6,104       1,573       13,883       19,339  

Income taxes5

     (7,623     (32,614     2,237       (15,325     (105,916
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net income

   $ 43,922     $ 54,991     $ 38,898     $ 120,516     $ 190,397  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP earnings per diluted share

   $ 0.41     $ 0.52     $ 0.37     $ 1.13     $ 1.76  

Non-GAAP diluted number of shares6:

          

Diluted shares

     133,073       131,533       132,412       106,332       134,036  

Dilutive effect of convertible debt

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP diluted number of shares

     107,135       105,594       106,474       106,332       108,097  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA reconciliation7:

          

GAAP net income

   $ 25,259     $ 52,482     $ 15,870     $ 41,301     $ 173,584  

Add back items:

          

Income tax provision (benefit)

     1,140       (29,858     8,049       4,883       (83,816

Interest expense

     20,107       22,533       20,568       83,234       78,958  

Amortization of definite-lived intangibles

     11,489       18,902       11,355       53,296       63,026  

Depreciation expense

     42,018       41,543       41,719       166,574       162,708  

Stock-based compensation

     4,626       5,733       4,662       16,816       20,681  

(Gain) on sale of assets

     (186     —         (251     (3,743     —    

Inventory markup

     —         —         —         —         4,900  

Restructuring, acquisition-related, and other charges

     6,856       6,104       1,573       13,883       18,797  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 111,309     $ 117,439     $ 103,545     $ 376,244     $ 438,838  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA margin

     15.5     16.5     14.4     14.0     15.4

Free cash flow reconciliation:

          

Operating cash flow

     130,148       151,768       58,742       311,937       273,138  

Capital expenditures, net

     (46,982     (33,671     (25,803     (135,972     (149,796
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Free cash flow

   $ 83,166     $ 118,097     $ 32,939     $ 175,965     $ 123,342  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

1

This information provides a reconciliation of non-GAAP gross profit, non-GAAP operating income, non-GAAP net income, non-GAAP EPS, 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, restructuring and other charges.

 

4 

This information provides non-GAAP net income and non-GAAP EPS, 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, 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 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, 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.