TTM Technologies, Inc. Reports Fiscal First Quarter 2019 Results - TTM Technologies (NASDAQ:TTMI)

COSTA MESA, Calif., May 01, 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 first quarter of fiscal 2019, which ended on April 1, 2019.

First Quarter 2019 Highlights

Net sales were $620.2 million
GAAP net income was a loss of $3.3 million, or ($0.03) per share
Non-GAAP net income was $16.4 million, or $0.16 per diluted share, inclusive of $0.03 of foreign exchange losses
Cash flow from operations of $36.9 million
Repaid $30 million of our Term Loan B

First Quarter 2019 Financial Results
Net sales for the first quarter of 2019 were $620.2 million, compared to $663.6 million in the first quarter of 2018 and $711.0 million in the fourth quarter of 2018.

GAAP operating income for the first quarter of 2019 was $17.5 million, compared to $30.0 million in the first quarter of 2018 and $42.8 million in the fourth quarter of 2018.

GAAP net income for the first quarter of 2019 was a loss of $3.3 million, or ($0.03) per share. This compares to income of $10.1 million, or $0.09 per diluted share, in the first quarter of 2018 and $52.5 million, or $0.42 per diluted share, in the fourth quarter of 2018.

On a non-GAAP basis, net income for the first quarter of 2019 was $16.4 million, or $0.16 per diluted share. This compares to non-GAAP net income of $28.0 million, or $0.26 per diluted share, for the first quarter of 2018 and $55.0 million, or $0.52 per diluted share, in the fourth quarter of 2018.

Adjusted EBITDA for the first quarter of 2019 was $78.5 million, or 12.7 percent of net sales, compared to adjusted EBITDA of $83.2 million, or 12.5 percent of net sales, for the first quarter of 2018 and $117.4 million, or 16.5 percent of net sales, for the fourth quarter of 2018.

"For the first quarter, TTM generated good cash flow and delivered earnings within the previously guided range, despite weakness in some of our commercial end markets," said Tom Edman, CEO of TTM. "We were pleased to see solid year over year growth from the aerospace and defense end market that partially offset weakness in our cellular and automotive end markets. We expect softness in the commercial markets to continue in Q2 and plan to address this challenge with the same discipline we have demonstrated in the past. At the same time, we will continue to be focused on cash flow generation and our strategic goals of diversification and differentiation."

Business Outlook
For the second quarter of 2019 TTM estimates that revenue will be in the range of $610 million to $650 million, and non-GAAP net income will be in the range of $0.15 to $0.21 per diluted share.

To Access the Live Webcast/Conference Call
TTM will host a conference call and webcast to discuss first quarter 2019 results and second quarter 2019 outlook on Wednesday, May 1, 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 800-667-5617 or international 334-323-0509 (ID 2910354). 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 such 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 such measure calculated and presented in accordance with GAAP is not available without unreasonable effort and has not been provided.

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

- Tables Follow –

TTM TECHNOLOGIES, INC.
Selected Unaudited Financial Information
(In thousands, except per share data)

				First Quarter						Fourth Quarter
					2019			2018			2018

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

	Net sales			$	620,200		$	663,582		$	710,955
	Cost of goods sold				531,515			574,904			588,323

	Gross profit				88,685			88,678			122,632

	Operating expenses:
		Selling and marketing			18,901			17,628			18,533
		General and administrative			35,023			34,127			39,615
		Amortization of definite-lived intangibles			16,826			5,861			17,722
		Restructuring charges			445			1,061			3,962
			Total operating expenses		71,195			58,677			79,832

	Operating income				17,490			30,001			42,800

	Interest expense				(21,688	)		(13,747	)		(22,533	)
	Other, net				(530	)		(1,107	)		2,357

	Income (loss) before income taxes				(4,728	)		15,147			22,624
	Income tax (provision) / benefit				1,476			(5,050	)		29,858

	Net income (loss)			$	(3,252	)	$	10,097		$	52,482

	Earnings per share:
		Basic		$	(0.03	)	$	0.10		$	0.51
		Diluted		$	(0.03	)	$	0.09		$	0.42

	Weighted-average shares used in computing per share amounts:
		Basic			104,315			102,508			103,683
		Diluted			104,315			107,517			131,533


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

	Net income									$	52,482
		Add back items: interest expense, net of tax									3,030
	Adjusted net income									$	55,512
	Weighted-average shares outstanding										103,683
	Dilutive effect of convertible debt										25,939
	Dilutive effect of warrants										-
	Dilutive effect of performance-based stock units, restricted stock units & stock options										1,911
	Diluted shares										131,533
	Earnings per share:
		Basic								$	0.51
		Diluted								$	0.42

SELECTED BALANCE SHEET DATA
		April 1, 2019		December 31, 2018
	Cash and cash equivalents, including restricted cash	$	235,219	$	256,360
	Accounts and notes receivable, net		516,828		523,165
	Contract assets		263,073		287,741
	Inventories		114,800		109,377
	Total current assets		1,169,549		1,206,914
	Property, plant and equipment, net		1,037,696		1,052,024
	Operating lease right of use asset		21,631		-
	Other non-current assets		1,185,409		1,198,565
	Total assets		3,414,285		3,457,503

	Short-term debt, including current portion of long-term debt	$	-	$	30,000
	Accounts payable		424,291		431,288
	Total current liabilities		607,732		673,214
	Debt, net of discount		1,466,010		1,462,425
	Total long-term liabilities		1,579,694		1,557,202
	Total equity		1,226,859		1,227,087
	Total liabilities and equity		3,414,285		3,457,503

SUPPLEMENTAL DATA
				First Quarter						Fourth Quarter
					2019			2018			2018
	Gross margin				14.3	%		13.4	%		17.2	%
	Operating margin				2.8	%		4.5	%		6.0	%

	End Market Breakdown:
				First Quarter						Fourth Quarter
					2019			2018			2018

		Aerospace/Defense			27	%		19	%		23	%
		Automotive			17	%		21	%		16	%
		Cellular Phone			7	%		16	%		14	%
		Computing/Storage/Peripherals			13	%		13	%		13	%
		Medical/Industrial/Instrumentation			15	%		15	%		14	%
		Networking/Communications			18	%		15	%		18	%
		Other			3	%		1	%		2	%

	Stock-based Compensation:
				First Quarter						Fourth Quarter
					2019			2018			2018
		Amount included in:
			Cost of goods sold	$	705		$	529		$	766
			Selling and marketing		466			374			525
			General and administrative		2,755			2,719			4,442
			Total stock-based compensation expense	$	3,926		$	3,622		$	5,733


	Operating Segment Data:
				First Quarter						Fourth Quarter
		Net sales:			2019			2018			2018
		PCB		$	571,804		$	619,329		$	655,706
		E-M Solutions			51,378			47,151			57,473
		Corporate			-			-			-
			Total sales		623,182			666,480			713,179
		Inter-segment sales			(2,982	)		(2,898	)		(2,224	)
			Total net sales	$	620,200		$	663,582		$	710,955

		Operating segment income:
		PCB		$	58,542		$	63,464		$	87,201
		E-M Solutions			1,179			40			3,364
		Corporate			(24,226	)		(27,642	)		(28,863	)
			Total operating segment income		35,495			35,862			61,702
		Amortization of definite-lived intangibles			(18,005	)		(5,861	)		(18,902	)
			Total operating income		17,490			30,001			42,800
		Total other expense			(22,218	)		(14,854	)		(20,176	)
		Income (loss) before income taxes		$	(4,728	)	$	15,147		$	22,624

RECONCILIATIONS¹
				First Quarter						Fourth Quarter
					2019			2018			2018
	Non-GAAP gross profit reconciliation²:
		GAAP gross profit		$	88,685		$	88,678		$	122,632
		Add back item:
			Amortization of definite-lived intangibles		1,179			-			1,180
			Stock-based compensation		705			529			766
		Non-GAAP gross profit		$	90,569		$	89,207		$	124,578
		Non-GAAP gross margin			14.6%			13.4%			17.5%

	Non-GAAP operating income reconciliation³:
		GAAP operating income		$	17,490		$	30,001		$	42,800
		Add back items:
			Amortization of definite-lived intangibles		18,005			5,861			18,902
			Stock-based compensation		3,926			3,622			5,733
			Restructuring, acquisition-related, and other charges		1,103			5,034			6,104
		Non-GAAP operating income		$	40,524		$	44,518		$	73,539
		Non-GAAP operating margin			6.5%			6.7%			10.3%

	Non-GAAP net income and EPS reconciliation⁴:
		GAAP net income (loss)		$	(3,252	)	$	10,097		$	52,482
		Add back items:
			Amortization of definite-lived intangibles		18,005			5,861			18,902
			Stock-based compensation		3,926			3,622			5,733
			Non-cash interest expense		3,868			3,054			4,384
			(Gain) on sale of Viasource		(3,071	)		-			-
			Restructuring, acquisition-related, and other charges		1,103			5,263			6,104
			Income taxes⁵		(4,150	)		108			(32,614	)
		Non-GAAP net income		$	16,429		$	28,005		$	54,991
		Non-GAAP earnings per diluted share		$	0.16		$	0.26		$	0.52

	Non-GAAP diluted number of shares⁶:
		Diluted shares			105,614			107,517			131,533
		Dilutive effect of convertible debt			-			-			(25,939	)
		Non-GAAP diluted number of shares			105,614			107,517			105,594

	Adjusted EBITDA reconciliation⁷:
		GAAP net income (loss)		$	(3,252	)	$	10,097		$	52,482
		Add back items:
			Income tax provision (benefit)		(1,476	)		5,050			(29,858	)
			Interest expense		21,688			13,747			22,533
			Amortization of definite-lived intangibles		18,005			5,861			18,902
			Depreciation expense		41,602			39,775			41,543
			Stock-based compensation		3,926			3,622			5,733
			(Gain) on sale of Viasource		(3,071	)		-			-
			Restructuring, acquisition-related, and other charges		1,103			5,034			6,104
		Adjusted EBITDA		$	78,525		$	83,186		$	117,439
		Adjusted EBITDA margin			12.7%			12.5%			16.5%

	Free cash flow reconciliation:
		Operating cash flow			36,924			(14,261	)		151,768
		Capital expenditures, net			(28,446	)		(42,139	)		(33,671	)
		Free cash flow		$	8,478		$	(56,400	)	$	118,097

	¹This 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.

	²Non-GAAP gross profit and gross margin measures exclude amortization of intangibles, stock-based compensation expense and inventory markup.

	³Non-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.

Market News and Data brought to you by Benzinga APIs