Form: 8-K

Current report filing

October 28, 2020

Exhibit 99.1

 

TTM Technologies, Inc., Q2’20                    Contact:
   Sameer Desai,
  

Senior Director, Corporate

Development & Investor Relations

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

TTM Technologies, Inc. Reports Fiscal Third Quarter 2020 Results

Santa Ana, CA – October 28, 2020 – 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 2020, which ended on September 28, 2020.

On April 19th, 2020, TTM completed the previously announced sale of its Mobility business unit. The operating results and related assets and liabilities of the Mobility business under US GAAP are presented as discontinued operations for all periods. Non-GAAP results do not include Mobility results but still include the two E-MS plants being shut down. Please refer to the earnings schedule for additional details on exited businesses and continuing operations.

Third Quarter 2020 Highlights

 

  •  

Net sales were $513.6 million

 

  •  

GAAP net loss of $41.5 million, or ($0.39) per diluted share, inclusive of a goodwill impairment charge of $69.2 million

 

  •  

Non-GAAP net income was $26.8 million, or $0.25 per diluted share

 

  •  

Cash flow from operations of $84.8 million

 

  •  

Received all remaining proceeds from Mobility sale and repaid $400 million of Term Loan B

 

  •  

Leverage ratio at September 28th was 1.6x defined as net debt/last twelve months EBITDA excluding Mobility

Third Quarter 2020 GAAP Financial Results

Net sales from continuing operations for the third quarter of 2020 were $513.6 million, compared to $534.2 million in the third quarter of 2019.

GAAP operating loss from continuing operations for the third quarter of 2020 was $40.3 million, inclusive of a goodwill impairment charge of $69.2 million. This compares to GAAP operating income of $21.1 million in the third quarter of 2019.

GAAP net loss for the third quarter of 2020 was $41.5 million, or ($0.39) per diluted share, compared to net income of $15.9 million, or $0.15 per diluted share in the third quarter of 2019.    

Third Quarter 2020 Non-GAAP Financial Results    

On a non-GAAP basis, net income for the third quarter of 2020 was $26.8 million, or $0.25 per diluted share. This compares to non-GAAP net income of $23.2 million, or $0.22 per diluted share, for the third quarter of 2019.

Adjusted EBITDA for the third quarter of 2020 was $67.2 million, or 13.1 percent of net sales, compared to adjusted EBITDA of $66.7 million, or 12.5 percent of net sales, for the third quarter of 2019.

“In the third quarter, TTM demonstrated excellent operational execution to deliver revenue and earnings above the previously guided range. The diversified mix of end markets that we serve enabled the PCB segment to grow revenues and outperform profit expectations due to solid growth in the data center and defense end markets despite weakness in the commercial aerospace end market,” said Tom Edman, CEO of TTM. “Additionally, strict financial discipline led to strong operating cash flow in the quarter driving our net debt leverage ratio down to 1.6x.”


TTM Technologies, Inc., Q2’20                    Contact:
   Sameer Desai,
  

Senior Director, Corporate

Development & Investor Relations

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

 

Business Outlook

TTM estimates that revenue for the fourth quarter of 2020 will be in the range of $490 million to $530 million, and non-GAAP net income will be in the range of $0.22 to $0.28 per diluted share. This guidance continues to include the E-MS business unit while that business winds down.

Live Webcast/Conference Call

TTM will host a conference call and webcast to discuss third quarter 2020 results and the fourth quarter 2020 outlook on Wednesday, October 28, 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 9148146). 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 and backplane assemblies as well as a global designer and manufacturer of high-frequency radio frequency (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, the impact of COVID-19, 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.


TTM Technologies, Inc., Q2’20                    Contact:
   Sameer Desai,
  

Senior Director, Corporate

Development & Investor Relations

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

 

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)

 

     Third Quarter     First Three Quarters  
     2020     2019*     2020     2019*  

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

        

Net sales

   $ 513,576     $ 534,173     $ 1,581,520     $ 1,597,495  

Cost of goods sold

     424,298       448,915       1,310,470       1,320,563  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     89,278       85,258       271,050       276,932  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

        

Selling and marketing

     15,895       17,153       48,033       51,611  

General and administrative

     27,998       33,104       95,646       92,091  

Research and development

     5,223       4,358       15,166       13,570  

Amortization of definite-lived intangibles

     10,126       9,500       29,249       36,245  

Restructuring charges

     1,088       12       14,830       3,176  

Impairment of goodwill

     69,200       —         69,200       —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     129,530       64,127       272,124       196,693  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating (loss) income

     (40,252     21,131       (1,074     80,239  

Interest expense

     (20,204     (20,423     (58,557     (62,111

Other, net

     (2,316     5,875       641       8,525  
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income from continuing operations before income taxes

     (62,772     6,583       (58,990     26,653  

Income tax benefit (provision)

     1,300       (4,190     3,644       (5,529
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income from continuing operations

     (61,472     2,393       (55,346     21,124  

Income (loss) from discontinued operations, net of income taxes

     20,021       13,477       193,921       (5,082
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income

   $ (41,451   $ 15,870     $ 138,575     $ 16,042  
  

 

 

   

 

 

   

 

 

   

 

 

 

*   Reclassified Research and development expenses as a separate line item from General and administrative expenses

 

    

(Loss) earnings per share:

        

Basic (loss) earnings per share from continuing operations

   $ (0.58   $ 0.02     $ (0.52   $ 0.20  

Basic earnings (loss) per share from discontinued operations

     0.19       0.13       1.83       (0.05
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic (loss) earnings per share

   $ (0.39   $ 0.15     $ 1.31     $ 0.15  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted (loss) earnings per share from continuing operations

   $ (0.58   $ 0.02     $ (0.52   $ 0.20  

Diluted earnings (loss) per share from discontinued operations

     0.19       0.13       1.83       (0.05
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted (loss) earnings per share

   $ (0.39   $ 0.15     $ 1.31     $ 0.15  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average shares used in computing per share amounts:

        

Basic

     106,729       105,492       106,130       105,092  

Diluted

     106,729       106,474       106,130       106,065  

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

 

     

Weighted-average shares outstanding

       105,492         105,092  

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

       982         973  
    

 

 

     

 

 

 

Diluted shares

       106,474         106,065  
    

 

 

     

 

 

 

 

SELECTED BALANCE SHEET DATA

     
     September 28, 2020      December 30, 2019  

Cash and cash equivalents, including restricted cash1

   $ 663,285      $ 379,818  

Accounts and notes receivable, net

     374,971        503,598  

Contract assets

     281,663        254,600  

Inventories

     127,588        113,753  

Current assets held for sale

     —          67,572  

Total current assets

     1,486,177        1,342,684  

Property, plant and equipment, net

     654,837        678,201  

Operating lease right of use asset

     22,993        22,173  

Non-current assets held for sale

     —          425,597  

Other non-current assets

     984,407        1,092,278  

Total assets

     3,148,414        3,560,933  

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

   $ 249,975      $ 249,975  

Accounts payable

     341,505        329,866  

Current liabilities held for sale

     —          185,391  

Total current liabilities

     787,322        946,666  

Debt, net of discount

     840,023        1,225,962  

Non-current liabilities held for sale

     —          1,530  

Total long-term liabilities

     961,789        1,335,230  

Total equity

     1,399,303        1,279,037  

Total liabilities and equity

     3,148,414        3,560,933  
  

 

 

    

 

 

 

 


SUPPLEMENTAL DATA

        
     Third Quarter     First Three Quarters  
     2020     2019     2020     2019  

Gross margin

     17.4     16.0     17.1     17.3

Operating margin

     (7.8 )%      4.0     (0.1 )%      5.0

Stock-based Compensation:

        

 

     Third Quarter  
     2020      2019  

Amount included in:

     

Cost of goods sold

   $ 1,173      $ 937  

Selling and marketing

     557        574  

General and administrative

     2,705        3,089  

Research and development

     44        62  
  

 

 

    

 

 

 

Total stock-based compensation expense

   $ 4,479      $ 4,662  
  

 

 

    

 

 

 

 

RECONCILIATIONS2

        
     Third Quarter     First Three Quarters  
     2020     2019     2020     2019  

Non-GAAP gross profit reconciliation3:

        

GAAP gross profit from continuing operations

   $ 89,278     $ 85,258     $ 271,050     $ 276,932  

Add back item:

        

Amortization of definite-lived intangibles

     1,384       1,180       4,151       3,539  

Accelerated depreciation

     2,539       —         4,936       —    

Stock-based compensation

     1,173       937       2,647       2,210  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross profit

   $ 94,374     $ 87,375     $ 282,784     $ 282,681  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross margin

     18.4     16.4     17.9     17.7

Non-GAAP operating income reconciliation4:

        

GAAP operating (loss) income from continuing operations

   $ (40,252   $ 21,131     $ (1,074   $ 80,239  

Add back items:

        

Amortization of definite-lived intangibles

     11,510       10,680       33,400       39,784  

Accelerated depreciation

     2,940       —         5,694       —    

Stock-based compensation

     4,479       4,662       11,961       12,190  

Impairments, restructuring, acquisition-related, and other charges

     68,270       1,532       84,139       5,761  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating income

   $ 46,947     $ 38,005     $ 134,120     $ 137,974  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating margin

     9.1     7.1     8.5     8.6

Non-GAAP net income and EPS reconciliation5:

        

GAAP net (loss) income from continuing operations

   $ (61,472   $ 2,393     $ (55,346   $ 21,124  

Add back items:

        

Amortization of definite-lived intangibles

     11,510       10,680       33,400       39,784  

Accelerated depreciation

     2,940       —         5,694       —    

Stock-based compensation

     4,479       4,662       11,961       12,190  

Non-cash interest expense

     7,332       3,452       14,489       10,787  

(Gain) on sale of assets

     (199     (251     (706     (3,557

Impairments, restructuring, acquisition-related, and other charges

     68,270       1,532       84,139       5,761  

Income taxes6

     (6,081     725       (17,188     (6,436
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net income

   $ 26,779     $ 23,193     $ 76,443     $ 79,653  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP earnings per diluted share

   $ 0.25     $ 0.22     $ 0.72     $ 0.75  

Adjusted EBITDA reconciliation7:

        

GAAP net (loss) income from continuing operations

   $ (61,472   $ 2,393     $ (55,346   $ 21,124  

Add back items:

        

Income tax (benefit) provision

     (1,300     4,190       (3,644     5,529  

Interest expense

     20,204       20,423       58,557       62,111  

Amortization of definite-lived intangibles

     11,510       10,680       33,400       39,784  

Depreciation expense

     25,669       23,031       75,797       69,957  

Stock-based compensation

     4,479       4,662       11,961       12,190  

(Gain) on sale of assets

     (199     (251     (706     (3,557

Impairments, restructuring, acquisition-related, and other charges

     68,270       1,532       84,139       5,761  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 67,161     $ 66,660     $ 204,158     $ 212,899  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA margin

     13.1     12.5     12.9     13.3

Free cash flow reconciliation, including Mobility:

        

Operating cash flow

     84,776       58,742       231,685       181,789  

Capital expenditures, net

     (29,067     (25,803     (83,888     (88,990
  

 

 

   

 

 

   

 

 

   

 

 

 

Free cash flow

   $ 55,709     $ 32,939     $ 147,797     $ 92,799  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

1 

Includes restricted cash of $249,975 as of September 28, 2020.

2 

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.

3

Non-GAAP gross profit and gross margin measures exclude amortization of intangibles, accelerated depreciation due to restructuring of two E-M Solutions plants, and stock-based compensation expense.

4

Non-GAAP operating income and operating margin measures exclude amortization of intangibles, accelerated depreciation due to restructuring of two E-M Solutions plants, stock-based compensation expense, impairment of goodwill, acquisition-related costs, restructuring and other charges.

5 

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, accelerated depreciation due to restructuring of two E-M Solutions plants, stock-based compensation expense, non-cash interest expense on debt (before consideration of capitalized interest), gain on sale of assets, impairment of goodwill, 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.

6 

Income tax adjustments reflect the difference between income taxes based on a non-GAAP tax rate and a forecasted annual GAAP tax rate.

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, impairment of goodwill, 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.