TTMI TTM Technologies Inc

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 quick-turn and technologically advanced printed circuit boards (“PCB”), today reported results for the fourth quarter and full year 2023, which ended on January 1, 2024.  

Fourth Quarter 2023 Highlights

• Net sales were $569.0 million
• GAAP net income of $17.3 million, or $0.17 per diluted share
• Non-GAAP net income was $43.0 million, or $0.41 per diluted share
• Cash flow from operations was $47.5 million
• Repurchased 784 thousand shares of common stock for $9.8 million at an average price of $12.52 per share

Fourth Quarter 2023 GAAP Financial Results

Net sales for the fourth quarter of 2023 were $569.0 million, compared to $617.2 million in the fourth quarter of 2022.

GAAP operating income for the fourth quarter of 2023 was $34.6 million. GAAP operating income for the fourth quarter of 2022 was $97.6 million and included a gain of $51.8 million in December 2022 from the sale of the property occupied by our former Shanghai E-MS entity.

GAAP net income for the fourth quarter of 2023 was $17.3 million, or $0.17 per diluted share, compared to GAAP net income of $6.0 million, or $0.06 per diluted share in the fourth quarter of 2022.

Fourth Quarter 2023 Non-GAAP Financial Results

On a non-GAAP basis, net income for the fourth quarter of 2023 was $43.0 million, or $0.41 per diluted share. This compares to non-GAAP net income of $42.7 million, or $0.41 per diluted share, for the fourth quarter of 2022.

Adjusted EBITDA in the fourth quarter of 2023 was $80.9 million, or 14.2% of sales compared to adjusted EBITDA of $81.6 million, or 13.2% of sales for the fourth quarter of 2022.

“TTM executed a strong finish to the year registering a Non-GAAP EPS that was above the high end of the guided range due to excellent operating performance and favorable product mix. Revenues were within the guided range as upside in our Aerospace and Defense and Data Center Computing end markets was offset by demand softness in our Automotive and Medical, Industrial and Instrumentation end markets,” said Tom Edman, CEO of TTM. “In addition, cash flow from operations was a healthy 8.3% of revenue enabling us to repurchase stock while maintaining a solid balance sheet with a net leverage ratio of 1.6x. Finally, our Penang facility has all major processes running and we are currently sampling product to customers,” concluded Mr. Edman.

Full Year 2023 ResultsNet sales for 2023 decreased to $2.2 billion from $2.5 billion in 2022, an 11% decrease.

GAAP operating income for 2023 was $42.3 million, inclusive of a $44.1 million goodwill impairment charge related to the RF&S Components segment. This is a decrease from GAAP operating income of $210.4 million in 2022.

GAAP net loss for 2023 was $18.7 million, or ($0.18) per diluted share, compared to GAAP net income of $94.6 million, or $0.91 per diluted share, in 2022.

On a non-GAAP basis, net income for 2023 was $139.5 million, or $1.33 per diluted share. This compares to 2022 non-GAAP net income of $181.2 million, or $1.74 per diluted share.

Adjusted EBITDA for 2023 was $298.2 million, or 13.4% of net sales, compared to $343.1 million, or 13.8% of net sales, for 2022.

"We delivered solid results in 2023 despite a challenging year. Declines in our commercial end markets were partially offset with growth in our Aerospace and Defense end market. Better product mix and execution in North America and Asia Pacific helped to mitigate margin declines," continued Edman. “We refinanced our Term Loan and ABL, improving tenor, resulting in no maturities until 2028. Finally, in 2023, we generated $187.3 million in operating cash flow which enabled us to strengthen our balance sheet, while returning $24.4 million of capital to our shareholders.”

Business Outlook

For the first quarter of 2024, TTM estimates that revenues will be in the range of $530 million to $570 million, and non-GAAP net income will be in the range of $0.24 to $0.30 per diluted share.  

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 CallTTM will host a conference call and webcast to discuss fourth quarter 2023 results and the first quarter 2024 outlook on Wednesday, February 7, 2024, at 11:00 a.m. Eastern Time (8:00 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. fourth quarter and full 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. fourth quarter and full year 2023 webcast. The webcast will remain accessible for one week following the live event.

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 TTM Technologies, Inc. fourth quarter and full year 2023 webcast.

About TTMTTM 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-K 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.

About Our Non-GAAP Financial MeasuresTo 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.

Contact:Sameer Desai,Vice President, Corporate Development & Investor RelationsSameer.desai@ttmtech.com714-327-3050

TTM TECHNOLOGIES, INC.
Selected Unaudited Financial Information
(In thousands, except per share data)
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS						Fourth Quarter								Full Year
							2023				2022				2023				2022
	Net sales					$	569,039			$	617,156			$	2,232,567			$	2,495,046
	Cost of goods sold						453,671				495,754				1,819,299				2,037,081
	Gross profit						115,368				121,402				413,268				457,965
	Operating expenses:
		Selling and marketing					18,677				19,529				76,922				75,182
		General and administrative					37,802				36,317				149,631				158,180
		Research and development					7,590				6,698				27,272				24,808
		Amortization of definite-lived intangibles					11,430				10,275				48,675				37,097
		Impairment of goodwill					-				-				44,100				-
		Restructuring charges					5,291				2,827				24,352				4,094
		Gain on sale of SH E-MS property					-				(51,804	)			-				(51,804	)
			Total operating expenses				80,790				23,842				370,952				247,557
	Operating income						34,578				97,560				42,316				210,408
	Interest expense						(13,373	)			(12,506	)			(48,124	)			(45,517	)
	Loss on extinguishment of debt						-				-				(1,154	)			-
	Gain on sale of subsidiary						-				-				1,270				-
	Other, net						(3,321	)			(1,960	)			5,989				17,972
	Income before income taxes						17,884				83,094				297				182,863
	Income tax provision						(546	)			(77,077	)			(19,015	)			(88,280	)
	Net income (loss)					$	17,338			$	6,017			$	(18,718	)		$	94,583
	Earnings (loss) per share:
		Basic				$	0.17			$	0.06			$	(0.18	)		$	0.93
		Diluted					0.17				0.06				(0.18	)			0.91
	Weighted-average shares used in computing per share amounts:
		Basic					102,327				102,217				102,744				102,074
		Diluted					104,302				104,220				102,744				103,866
	Reconciliation of the denominator used to calculate basic earnings per share and diluted earnings per share:
	Weighted-average shares outstanding						102,327				102,217				102,744				102,074
	Dilutive effect of warrants						-				-				-				1
	Dilutive effect of performance-based stock units, restricted stock units & stock options						1,975				2,003				-				1,791
	Diluted shares						104,302				104,220				102,744				103,866

SELECTED BALANCE SHEET DATA							January 1, 2024			January 2, 2023
	Cash and cash equivalents, including restricted cash					$	450,208		$	402,749
	Accounts and notes receivable, net						413,557			473,225
	Receivable from sale of SH E-MS property						6,737			69,240
	Contract assets						292,050			335,788
	Inventories						213,075			170,639
	Total current assets						1,429,687			1,493,056
	Property, plant and equipment, net						807,667			724,204
	Operating lease right of use asset						86,286			18,862
	Other non-current assets						1,000,023			1,087,482
	Total assets						3,323,663			3,323,604
	Short-term debt, including current portion of long-term debt					$	3,500		$	50,000
	Accounts payable						334,609			361,788
	Total current liabilities						703,984			761,325
	Debt, net of discount						914,336			879,407
	Total long-term liabilities						1,108,640			1,026,700
	Total equity						1,511,039			1,535,579
	Total liabilities and equity						3,323,663			3,323,604

SUPPLEMENTAL DATA						Fourth Quarter								Full Year
							2023				2022			2023			2022
	Gross margin						20.3	%			19.7	%		18.5	%		18.4	%
	Operating margin						6.1	%			15.8	%		1.9	%		8.4	%
	End Market Breakdown:
						Fourth Quarter
							2023				2022
		Aerospace and Defense					46	%			40	%
		Automotive					15	%			16	%
		Data Center Computing					17	%			14	%
		Medical/Industrial/Instrumentation					16	%			17	%
		Networking					6	%			13	%
	Stock-based Compensation:
						Fourth Quarter
		Amount included in:					2023				2022
			Cost of goods sold			$	2,084			$	1,699
			Selling and marketing				878				717
			General and administrative				2,891				2,674
			Research and development				306				304
			Total stock-based compensation expense			$	6,159			$	5,394
	Operating Segment Data:
						Fourth Quarter
		Net sales:					2023				2022
		PCB				$	559,728			$	605,268
		RF&S Components					9,311				11,888
			Total net sales			$	569,039			$	617,156
		Operating segment income:
		PCB				$	78,117			$	79,573
		RF&S Components					2,913				5,122
		Corporate & Other					(32,687	)			24,523
			Total operating segment income				48,343				109,218
		Amortization of definite-lived intangibles					(13,765	)			(11,658	)
			Total operating income				34,578				97,560
			Total other expense				(16,694	)			(14,466	)
		Income before income taxes				$	17,884			$	83,094

RECONCILIATIONS1						Fourth Quarter								Full Year
							2023				2022				2023				2022
	Non-GAAP gross profit reconciliation2:
		GAAP gross profit				$	115,368			$	121,402			$	413,268			$	457,965
		Add back item:
			Amortization of definite-lived intangibles				2,335				1,383				12,901				5,534
			Accelerated depreciation associated with plant closures/restructuring				1,950				-				5,324				124
			Stock-based compensation				2,084				1,699				7,455				5,846
			Unrealized (gain) loss on commodity hedge				(701	)			(2,407	)			(1,192	)			1,785
			Purchase accounting related inventory markup				-				79				327				327
		Non-GAAP gross profit				$	121,036			$	122,156			$	438,083			$	471,581
		Non-GAAP gross margin					21.3	%			19.8	%			19.6	%			18.9	%
	Non-GAAP operating income reconciliation3:
		GAAP operating income				$	34,578			$	97,560			$	42,316			$	210,408
		Add back items:
			Amortization of definite-lived intangibles				13,765				11,658				61,576				42,631
			Accelerated depreciation associated with plant closures/restructuring				1,950				-				5,324				124
			Stock-based compensation				6,159				5,394				22,887				19,525
			Gain on sale of assets				-				(55,979	)			(104	)			(55,979	)
			Unrealized (gain) loss on commodity hedge				(701	)			(2,407	)			(1,192	)			1,785
			Purchase accounting related inventory markup				-				79				327				327
			Impairment, restructuring, acquisition-related and other charges				5,291				3,261				67,239				16,066
		Non-GAAP operating income				$	61,042			$	59,566			$	198,373			$	234,887
		Non-GAAP operating margin					10.7	%			9.7	%			8.9	%			9.4	%
	Non-GAAP net income and EPS reconciliation4:
		GAAP net income (loss)				$	17,338			$	6,017			$	(18,718	)		$	94,583
		Add back items:
			Amortization of definite-lived intangibles				13,765				11,658				61,576				42,631
			Accelerated depreciation associated with plant closures/restructuring				1,950				-				5,324				124
			Stock-based compensation				6,159				5,394				22,887				19,525
			Non-cash interest expense				478				543				2,204				2,152
			Gain on sale of assets				-				(55,979	)			(104	)			(56,806	)
			Change in fair value of warrant liabilities				-				-				-				(99	)
			Loss on extinguishment of debt				-				-				1,154				-
			Gain on sale of subsidiary				-				-				(1,270	)			-
			Unrealized (gain) loss on commodity hedge				(701	)			(2,407	)			(1,192	)			1,785
			Purchase accounting related inventory markup				-				79				327				327
			Impairment, restructuring, acquisition-related and other charges				5,291				3,261				67,239				16,066
			Income taxes5				(1,314	)			74,131				113				60,895
		Non-GAAP net income				$	42,966			$	42,697			$	139,540			$	181,183
		Non-GAAP earnings per diluted share				$	0.41			$	0.41			$	1.33			$	1.74
	Non-GAAP diluted number of shares:
		GAAP diluted number of shares					104,302				104,220				102,744				103,866
		Dilutive effect of performance-based stock units, restricted stock units & stock options					-				-				1,851				-
		Non-GAAP diluted number of shares					104,302				104,220				104,595				103,866
	Adjusted EBITDA reconciliation6:
		GAAP net income (loss)				$	17,338			$	6,017			$	(18,718	)		$	94,583
		Add back items:
			Income tax provision				546				77,077				19,015				88,280
			Interest expense				13,373				12,506				48,124				45,517
			Amortization of definite-lived intangibles				13,765				11,658				61,576				42,631
			Depreciation expense				25,095				23,970				99,155				91,276
			Stock-based compensation				6,159				5,394				22,887				19,525
			Gain on sale of assets				-				(55,979	)			(104	)			(56,806	)
			Change in fair value of warrant liabilities				-				-				-				(99	)
			Loss on extinguishment of debt				-				-				1,154				-
			Gain on sale of subsidiary				-				-				(1,270	)			-
			Unrealized (gain) loss on commodity hedge				(701	)			(2,407	)			(1,192	)			1,785
			Purchase accounting related inventory markup				-				79				327				327
			Impairment, restructuring, acquisition-related and other charges				5,291				3,261				67,239				16,066
		Adjusted EBITDA				$	80,866			$	81,576			$	298,193			$	343,085
		Adjusted EBITDA margin					14.2	%			13.2	%			13.4	%			13.8	%
	Free cash flow reconciliation:
		Operating cash flow				$	47,470			$	77,559			$	187,284			$	272,873
		Capital expenditures, net					(45,954	)			(20,779	)			(159,737	)			(96,874	)
		Free cash flow				$	1,516			$	56,780			$	27,547			$	175,999
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/restructuring, stock-based compensation expense, unrealized (gain) loss 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/restructuring, stock-based compensation expense, gain on sale of assets, unrealized (gain) loss 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/restructuring, stock-based compensation expense, non-cash interest expense on debt (before consideration of capitalized interest), gain on sale of assets, change in fair value of warrant liabilities, loss on extinguishment of debt, gain on sale of subsidiary, unrealized (gain) loss 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, gain on sale of assets, change in fair value of warrant liabilities, loss on extinguishment of debt, gain on sale of subsidiary, unrealized (gain) loss 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.