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TTM Technologies, Inc. Reports Fiscal Third Quarter 2019 Results

SANTA ANA, Calif., Oct. 30, 2019 (GLOBE NEWSWIRE) -- TTM Technologies, Inc. (TTMI), a leading global printed circuit board (“PCB”) and radio frequency (“RF”) components manufacturer, today reported results for the third quarter of fiscal 2019, which ended on September 30, 2019.

Third Quarter 2019 Highlights

  • Net sales were $716.8 million

  • GAAP net income was $15.9 million, or $0.14 per diluted share

  • Non-GAAP net income was $38.9 million, or $0.37 per diluted share

  • Cash flow from operations of $58.7 million

Third Quarter 2019 Financial Results
Net sales for the third quarter of 2019 were $716.8 million, compared to $755.8 million in the third quarter of 2018 and $633.0 million in the second quarter of 2019.

GAAP operating income for the third quarter of 2019 was $36.4 million, compared to $54.6 million in the third quarter of 2018 and $16.8 million in the second quarter of 2019.

GAAP net income for the third quarter of 2019 was $15.9 million, or $0.14 per diluted share. This compares to income of $27.0 million, or $0.22 per diluted share in the third quarter of 2018, and $3.4 million, or $0.03 per diluted share, in the second quarter of 2019.

On a non-GAAP basis, net income for the third quarter of 2019 was $38.9 million, or $0.37 per diluted share, inclusive of $0.05 of foreign exchange gains. This compares to non-GAAP net income of $55.1 million, or $0.50 per diluted share, for the third quarter of 2018 and $21.3 million, or $0.20 per diluted share, in the second quarter of 2019.

Adjusted EBITDA for the third quarter of 2019 was $103.5 million, or 14.4 percent of net sales, compared to adjusted EBITDA of $122.3 million, or 16.2 percent of net sales, for the third quarter of 2018 and $82.9 million, or 13.1 percent of net sales, for the second quarter of 2019.

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

Business Outlook
For the fourth quarter of 2019 TTM estimates that revenue will be in the range of $640 million to $680 million, and non-GAAP net income will be in the range of $0.25 to $0.31 per diluted share.

“Significant year on year declines from the automotive and networking and communications end markets are a major contributor to lower revenues in the fourth quarter. Consequently, we are exercising discipline in managing our costs and focusing on continued cash flow generation. Longer term, we are confident in our diversification and differentiation strategy and will benefit from secular growth drivers such as 5G wireless technology, increasing automotive electronic content, and ongoing demand strength in aerospace and defense electronics,” concluded Mr. Edman.

To Access the Live Webcast/Conference Call
TTM will host a conference call and webcast to discuss third quarter 2019 results and the fourth quarter 2019 outlook on Wednesday, October 30, 2019, 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 1206370). 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 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)

Third Quarter

Second Quarter

First Three Quarters

2019

2018

2019

2019

2018

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

Net sales

$

716,817

$

755,837

$

633,038

$

1,970,055

$

2,136,306

Cost of goods sold

612,983

626,253

548,423

1,692,921

1,801,904

Gross profit

103,834

129,584

84,615

277,134

334,402

Operating expenses:

Selling and marketing

18,400

18,533

17,867

55,168

54,780

General and administrative

38,845

39,974

34,693

108,561

119,822

Amortization of definite-lived intangibles

10,175

16,609

11,267

38,268

41,959

Restructuring charges

53

(82

)

3,944

4,442

1,556

Total operating expenses

67,473

75,034

67,771

206,439

218,117

Operating income

36,361

54,550

16,844

70,695

116,285

Interest expense

(20,568

)

(22,225

)

(20,871

)

(63,127

)

(56,425

)

Other, net

8,126

2,213

4,621

12,217

7,284

Income before income taxes

23,919

34,538

594

19,785

67,144

Income tax (provision) / benefit

(8,049

)

(7,537

)

2,830

(3,743

)

53,958

Net income

$

15,870

$

27,001

$

3,424

$

16,042

$

121,102

Earnings per share:

Basic

$

0.15

$

0.26

$

0.03

$

0.15

$

1.17

Diluted

$

0.14

$

0.22

$

0.03

$

0.15

$

0.98

Weighted-average shares used in computing per share amounts:

Basic

105,492

103,676

105,470

105,092

103,246

Diluted

132,412

136,435

106,107

106,065

134,871

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

Net income

$

15,870

$

27,001

$

121,102

Add back items: interest expense, net of tax

2,836

3,628

10,763

Adjusted net income

$

18,706

$

30,629

$

131,865

Weighted-average shares outstanding

105,492

103,676

103,246

Dilutive effect of convertible debt

25,938

25,938

25,939

Dilutive effect of warrants

-

5,226

4,086

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

982

1,595

1,600

Diluted shares

132,412

136,435

134,871

Earnings per share:

Basic

$

0.15

$

0.26

$

1.17

Diluted

$

0.14

$

0.22

$

0.98

SELECTED BALANCE SHEET DATA

September 30, 2019

December 31, 2018

Cash and cash equivalents, including restricted cash

$

316,589

$

256,360

Accounts and notes receivable, net

529,942

523,165

Contract assets

268,542

287,741

Inventories

126,324

109,377

Total current assets

1,277,835

1,206,914

Property, plant and equipment, net

1,027,868

1,052,024

Operating lease right of use asset

23,670

-

Other non-current assets

1,168,985

1,198,565

Total assets

3,498,358

3,457,503

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

$

-

$

30,000

Accounts payable

470,233

431,288

Total current liabilities

666,673

673,214

Debt, net of discount

1,472,578

1,462,425

Total long-term liabilities

1,584,332

1,557,202

Total equity

1,247,353

1,227,087

Total liabilities and equity

3,498,358

3,457,503

SUPPLEMENTAL DATA

Third Quarter

Second Quarter

First Three Quarters

2019

2018

2019

2019

2018

Gross margin

14.5

%

17.1

%

13.4

%

14.1

%

15.7

%

Operating margin

5.1

%

7.2

%

2.7

%

3.6

%

5.4

%

End Market Breakdown:

Third Quarter

Second Quarter

2019

2018*

2019

Aerospace/Defense

24

%

21

%

28

%

Automotive

17

%

15

%

16

%

Cellular Phone

19

%

17

%

6

%

Computing/Storage/Peripherals

12

%

14

%

15

%

Medical/Industrial/Instrumentation

13

%

14

%

15

%

Networking/Communications

13

%

17

%

17

%

Other

2

%

2

%

3

%

* Amended for Anaren integration

Stock-based Compensation:

Third Quarter

Second Quarter

2019

2018

2019

Amount included in:

Cost of goods sold

$

941

$

774

$

570

Selling and marketing

593

520

396

General and administrative

3,128

4,165

2,636

Total stock-based compensation expense

$

4,662

$

5,459

$

3,602

Operating Segment Data:

Third Quarter

Second Quarter

Net sales:

2019

2018

2019

PCB

$

649,104

$

696,356

$

573,121

E-M Solutions

67,713

59,481

59,917

Total net sales

$

716,817

$

755,837

$

633,038

Operating segment income:

PCB

$

73,230

$

98,039

$

50,989

E-M Solutions

3,236

2,205

863

Corporate

(28,750

)

(26,920

)

(22,561

)

Total operating segment income

47,716

73,324

29,291

Amortization of definite-lived intangibles

(11,355

)

(18,774

)

(12,447

)

Total operating income

36,361

54,550

16,844

Total other expense

(12,442

)

(20,012

)

(16,250

)

Income before income taxes

$

23,919

$

34,538

$

594

RECONCILIATIONS1

Third Quarter

Second Quarter

First Three Quarters

2019

2018

2019

2019

2018

Non-GAAP gross profit reconciliation2:

GAAP gross profit

$

103,834

$

129,584

$

84,615

$

277,134

$

334,402

Add back item:

Inventory markup

-

-

-

-

4,900

Amortization of definite-lived intangibles

1,180

2,165

1,180

3,539

2,165

Stock-based compensation

941

774

570

2,216

2,132

Non-GAAP gross profit

$

105,955

$

132,523

$

86,365

$

282,889

$

343,599

Non-GAAP gross margin

14.8

%

17.5

%

13.6

%

14.4

%

16.1

%

Non-GAAP operating income reconciliation3:

GAAP operating income

$

36,361

$

54,550

$

16,844

$

70,695

$

116,285

Add back items:

Amortization of definite-lived intangibles

11,355

18,774

12,447

41,807

44,124

Stock-based compensation

4,662

5,459

3,602

12,190

14,948

Inventory markup

-

-

-

-

4,900

Restructuring, acquisition-related, and other charges

1,573

230

4,351

7,027

12,693

Non-GAAP operating income

$

53,951

$

79,013

$

37,244

$

131,719

$

192,950

Non-GAAP operating margin

7.5

%

10.5

%

5.9

%

6.7

%

9.0

%

Non-GAAP net income and EPS reconciliation4:

GAAP net income

$

15,870

$

27,001

$

3,424

$

16,042

$

121,102

Add back items:

Amortization of definite-lived intangibles

11,355

18,774

12,447

41,807

44,124

Stock-based compensation

4,662

5,459

3,602

12,190

14,948

Non-cash interest expense

3,452

3,992

3,467

10,787

10,399

(Gain) on sale of Viasource

(251

)

-

(235

)

(3,557

)

-

Inventory markup

-

-

-

-

4,900

Restructuring, acquisition-related, and other charges

1,573

230

4,351

7,027

13,235

Income taxes5

2,237

(337

)

(5,789

)

(7,702

)

(73,302

)

Non-GAAP net income

$

38,898

$

55,119

$

21,267

$

76,594

$

135,406

Non-GAAP earnings per diluted share

$

0.37

$

0.50

$

0.20

$

0.72

$

1.24

Non-GAAP diluted number of shares6:

Diluted shares

132,412

136,435

106,107

106,065

134,871

Dilutive effect of convertible debt

(25,938

)

(25,938

)

-

-

(25,939

)

Non-GAAP diluted number of shares

106,474

110,497

106,107

106,065

108,932

Adjusted EBITDA reconciliation7:

GAAP net income

$

15,870

$

27,001

$

3,424

$

16,042

$

121,102

Add back items:

Income tax provision (benefit)

8,049

7,537

(2,830

)

3,743

(53,958

)

Interest expense

20,568

22,225

20,871

63,127

56,425

Amortization of definite-lived intangibles

11,355

18,774

12,447

41,807

44,124

Depreciation expense

41,719

41,092

41,235

124,556

121,165

Stock-based compensation

4,662

5,459

3,602

12,190

14,948

(Gain) on sale of Viasource

(251

)

-

(235

)

(3,557

)

-

Inventory markup

-

-

-

-

4,900

Restructuring, acquisition-related, and other charges

1,573

230

4,351

7,027

12,693

Adjusted EBITDA

$

103,545

$

122,318

$

82,865

$

264,935

$

321,399

Adjusted EBITDA margin

14.4

%

16.2

%

13.1

%

13.4

%

15.0

%

Free cash flow reconciliation:

Operating cash flow

58,742

79,992

86,123

181,789

121,370

Capital expenditures, net

(25,803

)

(35,038

)

(34,741

)

(88,990

)

(116,125

)

Free cash flow

$

32,939

$

44,954

$

51,382

$

92,799

$

5,245

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.


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