Form: 8-K

Current report filing

November 1, 2023

Exhibit 99.1

 

     

Contact:

Sameer Desai,

Vice President, Corporate

Development & Investor Relations

Sameer.desai@ttmtech.com

714-327-3050

TTM Technologies, Inc. Reports Fiscal Third Quarter 2023 Results

Santa Ana, CA – November 1, 2023– TTM Technologies, Inc. (NASDAQ: TTMI), a leading global manufacturer of technology solutions including mission systems, radio frequency (“RF”) components and RF microwave/microelectronic assemblies, and printed circuit boards (“PCB”), today reported results for the third quarter fiscal 2023, which ended on October 2, 2023.

Third Quarter 2023 Highlights

 

   

Net sales were $572.6 million

 

   

GAAP net loss of $37.1 million, or ($0.36) per diluted share, inclusive of a goodwill impairment charge of $44.1 million

 

   

Non-GAAP net income was $44.9 million, or $0.43 per diluted share

 

   

Cash flow from operations was $58.9 million

 

   

Repurchased 1 million shares of common stock for $14.6 million at an average price of $14.33 per share

Third Quarter 2023 GAAP Financial Results

Net sales for the third quarter of 2023 were $572.6 million, compared to $671.1 million in the third quarter of 2022.

GAAP operating loss for the third quarter of 2023 was $10.2 million, inclusive of a $44.1 million goodwill impairment charge related to the RF&S Components segment. This compares to GAAP operating income of $49.8 million in the third quarter of 2022.

GAAP net loss for the third quarter of 2023 was $37.1 million, or ($0.36) per diluted share, compared to GAAP net income of $43.5 million, or $0.42 per diluted share in the third quarter of 2022.

Third Quarter 2023 Non-GAAP Financial Results

On a non-GAAP basis, net income for the third quarter of 2023 was $44.9 million, or $0.43 per diluted share. This compares to non-GAAP net income of $57.9 million, or $0.56 per diluted share, for the third quarter of 2022.

Adjusted EBITDA in the third quarter of 2023 was $84.1 million, or 14.7% of sales compared to adjusted EBITDA of $102.5 million, or 15.3% of sales for the third quarter of 2022.

“Our Non-GAAP EPS was well above the guided range as a result of improved execution, particularly in our North America region and strength in our Data Center Computing end market,” said Tom Edman, CEO of TTM. “In addition, cash flow from operations was a healthy 10.3% of revenue enabling us to repurchase stock while maintaining a solid balance sheet with a net leverage ratio of 1.5x,” concluded Mr. Edman.

Business Outlook

For the fourth quarter of 2023, TTM estimates that revenues will be in the range of $550 million to $590 million, and non-GAAP net income will be in the range of $0.34 to $0.40 per diluted share.


     

Contact:

Sameer Desai,

Vice President, Corporate

Development & Investor Relations

Sameer.desai@ttmtech.com

714-327-3050

 

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 has not been provided because the Company is unable to provide such reconciliation without unreasonable effort. For the same reasons, TTM is unable to address the probable significance of the information.

Live Webcast/Conference Call

TTM will host a conference call and webcast to discuss third quarter 2023 results and the fourth quarter 2023 outlook on Wednesday, November 1st, 2023, at 10:00 a.m. Eastern Time (7:00 a.m. Pacific Time). The conference call will include forward-looking statements.

Access to the conference call is available by clicking on the registration link TTM Technologies, Inc. third quarter fiscal year 2023 conference call. Registering participants will receive dial in information and a unique PIN to join the call. Participants can register at any time up to the start of the conference call. The conference call will also be simulcast on the company’s website, and can be accessed by clicking on the link TTM Technologies, Inc. third quarter fiscal year 2023 webcast. The webcast will remain accessible for one week following the live event.

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 TTM Technologies, Inc. third quarter fiscal year 2023 webcast.

About TTM

TTM Technologies, Inc. is a leading global manufacturer of technology solutions including mission systems, RF components/RF microwave/microelectronic assemblies, quick-turn and technologically advanced PCBs. 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

The preliminary financial results included in this press release represent the most current information available to management. The company’s actual results when disclosed in its Form 10-Q may differ from these preliminary results as a result of the completion of the company’s financial closing procedures, final adjustments, completion of the review by the company’s independent registered accounting firm, and other developments that may arise between now and the disclosure of the final results. 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.


     

Contact:

Sameer Desai,

Vice President, Corporate

Development & Investor Relations

Sameer.desai@ttmtech.com

714-327-3050

 

About Our Non-GAAP Financial Measures

To supplement our consolidated condensed financial statements presented on a GAAP basis, 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 reconciliations below to the most directly comparable GAAP financial measure. However, the non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.

- Tables Follow -


TTM TECHNOLOGIES, INC.

Selected Unaudited Financial Information

(In thousands, except per share data)

 

     Third Quarter     First Three Quarters  
     2023     2022     2023     2022  

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

        

Net sales

   $ 572,582     $ 671,080     $ 1,663,528     $ 1,877,890  

Cost of goods sold

     459,312       542,513       1,365,628       1,541,327  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     113,270       128,567       297,900       336,563  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

        

Selling and marketing

     18,763       19,824       58,245       55,653  

General and administrative

     38,916       40,743       111,829       121,863  

Research and development

     6,173       7,322       19,682       18,110  

Amortization of definite-lived intangibles

     11,429       10,273       37,245       26,822  

Restructuring charges

     4,091       627       19,061       1,267  

Impairment of goodwill

     44,100       —        44,100       —   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     123,472       78,789       290,162       223,715  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating (loss) income

     minus(10,202     49,778       7,738       112,848  

Interest expense

     minus(10,101     minus(10,939     minus(34,751     minus(33,011

Loss on extinguishment of debt

     —        —        minus(1,154     —   

Gain on sale of subsidiary

     —        —        1,270       —   

Other, net

     3,044       10,324       9,310       19,932  
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income before income taxes

     minus(17,259     49,163       minus(17,587     99,769  

Income tax provision

     minus(19,807     minus(5,635     minus(18,469     minus(11,203
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income

   $ minus(37,066   $ 43,528     $ minus(36,056   $ 88,566  
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) earnings per share:

        

Basic

   $ minus(0.36   $ 0.43     $ minus(0.35   $ 0.87  

Diluted

     minus(0.36     0.42       minus(0.35     0.85  

Weighted-average shares used in computing per share amounts:

        

Basic

     103,510       102,196       102,873       102,016  

Diluted

     103,510       103,720       102,873       103,738  

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

        

Weighted-average shares outstanding

     103,510       102,196       102,873       102,016  

Dilutive effect of warrants

     —        —        —        2  

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

     —        1,524       —        1,720  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted shares

     103,510       103,720       102,873       103,738  
  

 

 

   

 

 

   

 

 

   

 

 

 


SELECTED BALANCE SHEET DATA    October 2, 2023      January 2, 2023  

Cash and cash equivalents, including restricted cash

   $ 408,331      $ 402,749  

Accounts and notes receivable, net

     390,902        473,225  

Receivable from sale of SH E-MS property

     6,554        69,240  

Contract assets

     304,279        335,788  

Inventories

     206,176        170,639  

Total current assets

     1,353,236        1,493,056  

Property, plant and equipment, net

     808,371        724,204  

Operating lease right of use asset

     89,290        18,862  

Other non-current assets

     1,015,605        1,087,482  

Total assets

     3,266,502        3,323,604  

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

   $ 2,625      $ 50,000  

Accounts payable

     336,070        361,788  

Total current liabilities

     688,286        761,325  

Debt, net of discount

     864,824        879,407  

Total long-term liabilities

     1,077,102        1,026,700  

Total equity

     1,501,114        1,535,579  

Total liabilities and equity

     3,266,502        3,323,604  


SUPPLEMENTAL DATA    Third Quarter     First Three Quarters  
     2023     2022     2023     2022  

Gross margin

     19.8     19.2     17.9     17.9

Operating margin

     minus(1.8 )%      7.4     0.5     6.0

End Market Breakdown:

        
     Third Quarter              
     2023     2022              

Aerospace and Defense

     45     38    

Automotive

     15     15    

Data Center Computing

     17     14    

Medical/Industrial/Instrumentation

     16     19    

Networking

     7     14    

Stock-based Compensation:

        
     Third Quarter              
     2023     2022              

Amount included in:

        

Cost of goods sold

   $ 2,212     $ 1,699      

Selling and marketing

     888       762      

General and administrative

     2,958       2,685      

Research and development

     309       324      
  

 

 

   

 

 

     

Total stock-based compensation expense

   $ 6,367     $ 5,470      
  

 

 

   

 

 

     

Operating Segment Data:

        
     Third Quarter              
     2023     2022              

Net sales:

        

PCB*

   $ 563,676     $ 657,175      

RF&S Components

     8,906       13,905      
  

 

 

   

 

 

     

Total net sales

   $ 572,582     $ 671,080      
  

 

 

   

 

 

     

Operating segment income:

        

PCB*

   $ 82,868     $ 89,868      

RF&S Components

     minus(41,441     5,984      

Corporate & Other*

     minus(37,865     minus(34,417    
  

 

 

   

 

 

     

Total operating segment income

     3,562       61,435      

Amortization of definite-lived intangibles

     minus(13,764     minus(11,657    
  

 

 

   

 

 

     

Total operating (loss) income

     minus(10,202     49,778      

Total other expense

     minus(7,057     minus(615    
  

 

 

   

 

 

     

(Loss) income before income taxes

   $ minus(17,259   $ 49,163      
  

 

 

   

 

 

     

 

*

Amended for Telephonics integration


RECONCILIATIONS1    Third Quarter     First Three Quarters  
     2023     2022     2023     2022  

Non-GAAP gross profit reconciliation2:

        

GAAP gross profit

   $  113,270     $  128,567     $ 297,900     $  336,563  

Add back item:

        

Amortization of definite-lived intangibles

     2,335       1,384       10,566       4,151  

Accelerated depreciation associated with plant closures

     725       19       3,374       124  

Stock-based compensation

     2,212       1,699       5,371       4,147  

Unrealized loss (gain) on commodity hedge

     770       385       minus(491     4,192  

Purchase accounting related inventory markup

     —        248       327       248  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross profit

   $ 119,312     $ 132,302     $ 317,047     $ 349,425  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross margin

     20.8     19.7     19.1     18.6

Non-GAAP operating income reconciliation3:

        

GAAP operating (loss) income

   $ minus (10,202   $ 49,778     $ 7,738     $ 112,848  

Add back items:

        

Amortization of definite-lived intangibles

     13,764       11,657       47,811       30,973  

Accelerated depreciation associated with plant closures

     725       19       3,374       124  

Stock-based compensation

     6,367       5,470       16,728       14,131  

Loss (gain) on sale of assets

     111       —        minus(104     —   

Unrealized loss (gain) on commodity hedge

     770       385       minus(491     4,192  

Purchase accounting related inventory markup

     —        248       327       248  

Impairment, restructuring, acquisition-related and other charges

     46,356       655       61,948       12,805  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating income

   $ 57,891     $ 68,212     $ 137,331     $ 175,321  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating margin

     10.1     10.2     8.3     9.3

Non-GAAP net income and EPS reconciliation4:

        

GAAP net (loss) income

   $ minus (37,066   $ 43,528     $ minus (36,056   $ 88,566  

Add back items:

        

Amortization of definite-lived intangibles

     13,764       11,657       47,811       30,973  

Accelerated depreciation associated with plant closures

     725       19       3,374       124  

Stock-based compensation

     6,367       5,470       16,728       14,131  

Non-cash interest expense

     502       540       1,726       1,609  

Loss (gain) on sale of assets

     111       —        minus(104     minus(827

Change in fair value of warrant liabilities

     —        —        —        minus(99

Loss on extinguishment of debt

     —        —        1,154       —   

Gain on sale of subsidiary

     —        —        minus(1,270     —   

Unrealized loss (gain) on commodity hedge

     770       385       minus(491     4,192  

Purchase accounting related inventory markup

     —        248       327       248  

Impairment, restructuring, acquisition-related and other charges

     46,356       655       61,948       12,805  

Income taxes5

     13,353       minus(4,586     1,427       minus(13,236
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net income

   $ 44,882     $ 57,916     $ 96,574     $ 138,486  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP earnings per diluted share

   $ 0.43     $ 0.56     $ 0.92     $ 1.33  

Non-GAAP diluted number of shares:

        

GAAP diluted number of shares

     103,510       103,720       102,873       103,738  

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

     1,419       —        1,809       —   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP diluted number of shares

     104,929       103,720       104,682       103,738  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA reconciliation6:

        

GAAP net (loss) income

   $ minus (37,066   $ 43,528     $ minus (36,056   $ 88,566  

Add back items:

        

Income tax provision

     19,807       5,635       18,469       11,203  

Interest expense

     10,101       10,939       34,751       33,011  

Amortization of definite-lived intangibles

     13,764       11,657       47,811       30,973  

Depreciation expense

     23,870       24,017       74,060       67,306  

Stock-based compensation

     6,367       5,470       16,728       14,131  

Loss (gain) on sale of assets

     111       —        minus(104     minus(827

Change in fair value of warrant liabilities

     —        —        —        minus(99

Loss on extinguishment of debt

     —        —        1,154       —   

Gain on sale of subsidiary

     —        —        minus(1,270     —   

Unrealized loss (gain) on commodity hedge

     770       385       minus(491     4,192  

Purchase accounting related inventory markup

     —        248       327       248  

Impairment, restructuring, acquisition-related and other charges

     46,356       655       61,948       12,805  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 84,080     $ 102,534     $ 217,327     $ 261,509  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA margin

     14.7     15.3     13.1     13.9

Free cash flow reconciliation:

        

Operating cash flow

   $ 58,852     $ 80,006     $ 139,814     $ 195,314  

Capital expenditures, net

     minus(33,659     minus(26,281     minus(113,783     minus(76,095
  

 

 

   

 

 

   

 

 

   

 

 

 

Free cash flow

   $ 25,193     $ 53,725     $ 26,031     $ 119,219  
  

 

 

   

 

 

   

 

 

   

 

 

 


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, accelerated depreciation associated with plant closures, stock-based compensation expense, unrealized loss (gain) on commodity hedge, and purchase accounting related inventory markup.

 

3

Non-GAAP operating income and operating margin measures exclude amortization of intangibles, accelerated depreciation associated with plant closures, stock-based compensation expense, loss (gain) on sale of assets, unrealized loss (gain) on commodity hedge, purchase accounting related inventory markup, impairment of goodwill, restructuring, acquisition-related costs, 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, accelerated depreciation associated with plant closures, stock-based compensation expense, non-cash interest expense on debt (before consideration of capitalized interest), loss (gain) on sale of assets, change in fair value of warrant liabilities, loss on extinguishment of debt, gain on sale of subsidiary, unrealized loss (gain) on commodity hedge, purchase accounting related inventory markup, impairment of goodwill, restructuring, acquisition-related costs, 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

Adjusted EBITDA is defined as earnings before income taxes, interest expense, amortization of intangibles, depreciation, stock-based compensation expense, loss (gain) on sale of assets, change in fair value of warrant liabilities, loss on extinguishment of debt, gain on sale of subsidiary, unrealized loss (gain) on commodity hedge, purchase accounting related inventory markup, impairment of goodwill, restructuring, acquisition-related costs, 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.