TTMI TTM Technologies Inc

TTM Technologies, Inc. (NASDAQ:TTMI), a leading global printed circuit board (“PCB”) manufacturer, today reported results for the first quarter of fiscal 2017, which ended April 3rd, 2017. 

First Quarter 2017 Highlights

• Net sales were $625.2 million
• GAAP net income attributable to stockholders was $33 million, or $0.28 per diluted share
• Non-GAAP net income attributable to stockholders was $39.2 million, or $0.37 per diluted share
• Adjusted EBITDA was $95.6 million

First Quarter 2017 Financial Results Net sales for the first quarter of 2017 were $625.2 million, compared to $583.3 million in the first quarter of 2016 and $706.5 million in the fourth quarter of 2016.

GAAP operating income for the first quarter of 2017 was $52.6 million, compared to $18.9 million in the first quarter of 2016 and $69.6 million in the fourth quarter of 2016. 

GAAP net income attributable to stockholders for the first quarter of 2017 was $33 million, or $0.28 per diluted share.  This compares to a GAAP net loss attributable to stockholders of $7.3 million, or $0.07 per share, in the first quarter of 2016 and a GAAP net loss of $2 million, or $0.02 per share, in the fourth quarter of 2016. 

On a non-GAAP basis, net income attributable to stockholders for the first quarter of 2017 was $39.2 million, or $0.37 per diluted share.  This compares to non-GAAP net income attributable to stockholders of $13.9 million, or $0.14 per diluted share, for the first quarter of 2016 and $59.8 million, or $0.58 per diluted share, in the fourth quarter of 2016.

Adjusted EBITDA for the first quarter of 2017 was $95.6 million, or 15.3 percent of net sales, compared to adjusted EBITDA of $74.5 million, or 12.8 percent of net sales, for the first quarter of 2016 and $128.5 million, or 18.2 percent of net sales, for the fourth quarter of 2016.

“TTM delivered strong organic year on year growth in the first quarter of 7 percent, near the high end of our guidance, and profitability which exceeded our forecast,” said Tom Edman, CEO of TTM.  “On a year over year basis, most end markets grew, with the fastest growth coming from the cellular, computing and aerospace and defense end markets.  This growth, along with strong operational execution, resulted in non-GAAP EPS above the high end of our guidance.  These results represent the highest revenue and EBITDA for a first quarter in the history of the company.”

Business Outlook For the second quarter of 2017, TTM estimates that revenue will be in the range of $605 million to $645 million, and non-GAAP net income attributable to stockholders will be in the range of $0.31 to $0.37 per diluted share.

To Access the Live Webcast/Conference CallTTM will host a conference call and webcast to discuss first quarter 2017 results and second quarter 2017 outlook on Wednesday, May 3rd, 2017, 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 888-206-4824 or international 913-312-1522 (ID 1867334).  The conference call also will be webcast on TTM’s website at www.ttm.com.

To Access a Replay of the WebcastThe replay of the webcast will remain accessible for one week following the live event on TTM’s website at www.ttm.com.  

About TTMTTM Technologies, Inc. is a leading global printed circuit board manufacturer, focusing on quick-turn and volume production of technologically advanced PCBs, backplane assemblies and electro-mechanical solutions. TTM stands for time-to-market, representing how TTM's time-critical, one-stop manufacturing services enable customers to shorten the time required to develop new products and bring them to market. Additional information can be found at www.ttm.com.

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 MeasuresThis 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.

- Tables Follow -

TTM TECHNOLOGIES, INC.
Selected Unaudited Financial Information
(In thousands, except per share data)
						First Quarter								Fourth Quarter
							2017				2016				2016
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
	Net sales					$	625,247			$	583,258			$	706,534
	Cost of goods sold						520,228				499,695				573,689
	Gross profit						105,019				83,563				132,845
	Operating expenses:
		Selling and marketing					16,655				17,306				16,848
		General and administrative					30,822				36,149				38,998
		Amortization of definite-lived intangibles					5,912				5,947				6,407
		Restructuring charges					609				1,913				946
		Impairment of long-lived assets					-				3,346				-
		Gain on sale of assets					(1,549	)			-				-
			Total operating expenses				52,449				64,661				63,199
	Operating income						52,570				18,902				69,646
	Interest expense						(13,596	)			(21,784	)			(15,267	)
	Loss on extinguishment of debt						-				-				(47,767	)
	Other, net						(1,710	)			1,209				8,994
	Income before income taxes						37,264				(1,673	)			15,606
	Income tax provision						(4,139	)			(5,477	)			(17,416	)
	Net income (loss)					$	33,125			$	(7,150	)		$	(1,810	)
	Net income attributable to noncontrolling interest						(166	)			(114	)			(195	)
	Net income (loss) attributable to stockholders					$	32,959			$	(7,264	)		$	(2,005	)
	Earnings (loss) per share attributable to stockholders:
		Basic				$	0.33			$	(0.07	)		$	(0.02	)
		Diluted				$	0.28			$	(0.07	)		$	(0.02	)
	Weighted-average shares used in computing per share amounts:
		Basic					100,932				99,596				100,365
		Diluted					130,922				99,596				100,365
	Reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share:
	Net income attributable to stockholders					$	32,959
		Add back items: interest expense, net of tax					3,394
	Adjusted net income attributable to stockholders					$	36,353
	Weighted-average shares outstanding						100,932
	Dilutive effect of convertible debt						25,940
	Dilutive effect of warrants						2,183
	Dilutive effect of performance-based stock units, restricted stock units and stock options						1,867
	Diluted shares						130,922
	Earnings per share attributable to stockholders:
		Basic				$	0.33
		Diluted				$	0.28
SELECTED BALANCE SHEET DATA
						April 3, 2017				January 2, 2017
	Cash and cash equivalents, including restricted cash					$	282,871			$	256,277
	Accounts and notes receivable, net						419,216				432,596
	Inventories						275,092				269,212
	Total current assets						1,027,291				1,012,841
	Property, plant and equipment, net						976,446				966,638
	Other non-current assets						526,508				520,597
	Total assets						2,530,245				2,500,076
	Short-term debt, including current portion of long-term debt					$	160,658			$	110,652
	Accounts payable						344,257				355,774
	Total current liabilities						721,580				689,065
	Debt, net of discount						861,391				909,030
	Total long-term liabilities						935,983				981,886
	Total equity						872,682				829,125
	Total liabilities and equity						2,530,245				2,500,076
SUPPLEMENTAL DATA
						First Quarter								Fourth Quarter
							2017				2016				2016
	Gross margin						16.8	%			14.3	%			18.8	%
	Operating margin						8.4	%			3.2	%			9.9	%
	End Market Breakdown:
						First Quarter								Fourth Quarter
							2017				2016				2016
		Aerospace/Defense					15	%			15	%			14	%
		Automotive					20	%			21	%			19	%
		Cellular Phone					14	%			9	%			19	%
		Computing/Storage/Peripherals					15	%			13	%			12	%
		Medical/Industrial/Instrumentation					15	%			16	%			13	%
		Networking/Communications					20	%			24	%			21	%
		Other					1	%			2	%			2	%
	Stock-based Compensation:
						First Quarter								Fourth Quarter
							2017				2016				2016
		Amount included in:
			Cost of goods sold			$	394			$	320			$	469
			Selling and marketing			$	253				210				305
			General and administrative				2,981				1,716				2,426
			Total stock-based compensation expense			$	3,628			$	2,246			$	3,200
	Operating Segment Data:
						First Quarter								Fourth Quarter
		Net sales:					2017				2016				2016
		PCB				$	586,695			$	529,945			$	654,379
		E-M Solutions					41,669				56,478				55,332
		Corporate					-				-				-
			Total sales				628,364				586,423				709,711
		Inter-segment sales					(3,117	)			(3,165	)			(3,177	)
			Total net sales			$	625,247			$	583,258			$	706,534
		Operating segment income:
		PCB				$	82,256			$	49,367			$	95,208
		E-M Solutions					(1,642	)			387				3,029
		Corporate					(22,132	)			(24,905	)			(22,184	)
			Total operating segment income				58,482				24,849				76,053
		Amortization of definite-lived intangibles					(5,912	)			(5,947	)			(6,407	)
			Total operating income				52,570				18,902				69,646
		Total other expense					(15,306	)			(20,575	)			(54,040	)
		Income before income taxes				$	37,264			$	(1,673	)		$	15,606
RECONCILIATIONS1
						First Quarter								Fourth Quarter
							2017				2016				2016
	Non-GAAP gross profit reconciliation2:
		GAAP gross profit				$	105,019			$	83,563			$	132,845
		Add back item:
			Stock-based compensation				394				320				469
		Non-GAAP gross profit				$	105,413			$	83,883			$	133,314
		Non-GAAP gross margin					16.9	%			14.4	%			18.9	%
	Non-GAAP operating income reconciliation3:
		GAAP operating income				$	52,570			$	18,902			$	69,646
		Add back items:
			Amortization of definite-lived intangibles				5,912				5,947				6,407
			Stock-based compensation				3,628				2,246				3,200
			Gain on sale of assets				(1,549	)			-				-
			Impairments, restructuring, acquisition-related, and other charges				709				5,950				1,725
		Non-GAAP operating income				$	61,270			$	33,045			$	80,978
		Non-GAAP operating margin					9.8	%			5.7	%			11.5	%
	Non-GAAP net income and EPS attributable to stockholders reconciliation4:
		GAAP net income (loss) attributable to stockholders				$	32,959			$	(7,264	)		$	(2,005	)
		Add back items:
			Amortization of definite-lived intangibles				5,912				5,947				6,407
			Stock-based compensation				3,628				2,246				3,200
			Non-cash interest expense				2,627				6,154				2,697
			Gain on sale of assets				(1,549	)			-				-
			Loss on extinguishment of debt				-				-				47,767
			Impairments, restructuring, acquisition-related, and other charges				709				5,950				1,725
			Income taxes				(5,093	)			821				49
		Non-GAAP net income attributable to stockholders				$	39,193			$	13,854			$	59,840
		Non-GAAP earnings per diluted share attributable to stockholders				$	0.37			$	0.14			$	0.58
	Non-GAAP diluted number of shares5:
		Diluted shares					130,922				99,596				102,563
		Dilutive effect of convertible debt					(25,940	)			-				-
		Non-GAAP diluted number of shares					104,982				99,596				102,563
	Adjusted EBITDA reconciliation6:
		GAAP net income (loss)				$	33,125			$	(7,150	)		$	(1,810	)
		Add back items:
			Income tax provision (benefit)				4,139				5,477				17,416
			Interest expense				13,596				21,784				15,267
			Amortization of definite-lived intangibles				5,912				5,947				6,407
			Depreciation expense				36,077				40,227				38,539
			Stock-based compensation				3,628				2,246				3,200
			Gain on sale of assets				(1,549	)			-				-
			Loss on extinguishment of debt				-				-				47,767
			Impairments, restructuring, acquisition-related, and other charges				709				5,950				1,725
		Adjusted EBITDA				$	95,637			$	74,481			$	128,511
		Adjusted EBITDA margin					15.3	%			12.8	%			18.2	%
	Free cash flow reconciliation:
		Operating cash flow					49,584				17,892				97,650
		Add back items:
			Payment of acquisition-related costs				153				2,324				869
		Adjusted operating cash flow					49,737				20,216				98,519
		Capital expenditures, net					(23,378	)			(20,116	)			(20,501	)
		Free cash flow				$	26,359			$	100			$	78,018
	1 This information provides a reconciliation of non-GAAP gross profit, non-GAAP operating income, non-GAAP net income attributable to stockholders, non-GAAP EPS attributable to stockholders, and adjusted EBITDA to the financial information in our consolidated condensed statements of operations.
	2 Non-GAAP gross profit and gross margin measures exclude stock-based compensation expense.
	3 Non-GAAP operating income and operating margin measures exclude amortization of intangibles, stock-based compensation expense, gain on sale of assets, acquisition-related costs, asset impairments, restructuring and other charges.
	4 This information provides non-GAAP net income attributable to stockholders and non-GAAP EPS attributable to stockholders, which are non-GAAP financial measures. Management believes that both measures -- which add back amortization of intangibles, stock-based compensation expense, non-cash interest expense on debt (before consideration of capitalized interest), gain on sale of assets, acquisition-related costs, asset impairments, restructuring and other charges as well as the associated tax impact of these charges and discrete tax items -- provide additional useful information to investors regarding the Company's ongoing financial condition and results of operations.
	5 Non-GAAP diluted number of shares used in computing non-GAAP earnings per share attributable to stockholders excludes the dilutive effect of convertible debt.
	6 Adjusted EBITDA is defined as earnings before interest expense, income taxes, depreciation, amortization of intangibles, stock-based compensation expense, gain on sale of assets, acquisition-related costs, asset impairments, restructuring and other charges. We present adjusted EBITDA to enhance the understanding of our operating results, and it is a key measure we use to evaluate our operations.  In addition, we provide our adjusted EBITDA because we believe that investors and securities analysts will find adjusted EBITDA to be a useful measure for evaluating our operating performance and comparing our operating performance with that of similar companies that have different capital structures and for evaluating our ability to meet our future debt service, capital expenditures, and working capital requirements.  However, adjusted EBITDA should not be considered as an alternative to cash flows from operating activities as a measure of liquidity or as an alternative to net income as a measure of operating results in accordance with accounting principles generally accepted in the United States of America.

 

Contact:
Sameer Desai,
Senior Director, Corporate Development & Investor Relations
sameer.desai@ttmtech.com 
714-327-3050