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TTM Technologies, Inc. Reports Fiscal Second Quarter 2018 Results

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COSTA MESA, Calif., Aug. 01, 2018 (GLOBE NEWSWIRE) -- TTM Technologies, Inc. (NASDAQ:TTMI), a leading global printed circuit board ("PCB") manufacturer, today reported results for the second quarter of fiscal 2018, which ended July 2nd, 2018.  The financial results provided below for the second quarter include a partial quarter contribution from the acquisition of Anaren, Inc. ("Anaren"), which was completed on April 18th, 2018.

Second Quarter 2018 Highlights

  • Net sales were $716.9 million
  • GAAP net income was $84.0 million, or $0.65 per diluted share
  • Non-GAAP net income was $52.3 million, or $0.48 per diluted share
  • Completed the acquisition of Anaren, Inc.
  • Cash flow from operations of $55.6 million

Second Quarter 2018 Financial Results
Net sales for the second quarter of 2018 were $716.9 million, compared to $627.2 million in the second quarter of 2017 and $663.6 million in the first quarter of 2018.

GAAP operating income for the second quarter of 2018 was $31.7 million, compared to $45.1 million in the second quarter of 2017 and $30.0 million in the first quarter of 2018. 

GAAP net income for the second quarter of 2018 was $84.0 million, or $0.65 per diluted share.  This compares to $20.6 million, or $0.18 per diluted share, in the second quarter of 2017 and $10.1 million, or $0.09 per diluted share, in the first quarter of 2018. The current quarter results reflect the release of a tax valuation allowance of $74.6 million. 
                                                                                                                                            
On a non-GAAP basis, net income for the second quarter of 2018 was $52.3 million, or $0.48 per diluted share. This compares to non-GAAP net income of $33.3 million, or $0.31 per diluted share, for the second quarter of 2017 and $28.0 million, or $0.26 per diluted share, in the first quarter of 2018.

Adjusted EBITDA for the second quarter of 2018 was $115.9 million, or 16.2 percent of net sales, compared to adjusted EBITDA of $85.5 million, or 13.6 percent of net sales, for the second quarter of 2017 and $83.2 million, or 12.5 percent of net sales, for the first quarter of 2018.

"In the second quarter, TTM delivered strong results," said Tom Edman, CEO of TTM.  "We were pleased to see solid year over year growth from the aerospace and defense, automotive, computing and medical/industrial/instrumentation end markets that more than offset weakness in our cellular end market.  Further, Anaren's contribution in the quarter was better than forecasted.  Longer term, Anaren's deep RF expertise will strengthen TTM's ability to engage with customers at the design stage in order to provide more value added solutions."

Business Outlook
For the third quarter of 2018 TTM estimates that revenue will be in the range of $730 million to $770 million, and non-GAAP net income will be in the range of $0.41 to $0.47 per diluted share.

To Access the Live Webcast/Conference Call
TTM will host a conference call and webcast to discuss second quarter 2018 results and third quarter 2018 outlook on Wednesday, August 1st, 2018, 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 800-289-0438 or international 323-794-2423 (ID 2502044).  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 high-frequency radio frequency (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.

- Tables Follow -

   
   
TTM TECHNOLOGIES, INC.  
Selected Unaudited Financial Information  
(In thousands, except per share data)  
                               
                               
            Second Quarter   First Quarter   First Two Quarters  
              2018       2017       2018       2018       2017    
                               
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS                      
                               
  Net sales     $   716,887     $   627,182     $   663,582     $   1,380,469     $   1,252,429    
  Cost of goods sold       600,747         531,315         574,904         1,175,651         1,051,543    
                               
  Gross profit       116,140         95,867         88,678         204,818         200,886    
                               
  Operating expenses:                      
    Selling and marketing       18,619         15,851         17,628         36,247         32,506    
    General and administrative       45,721         29,885         34,127         79,848         60,707    
    Amortization of definite-lived intangibles       19,489         5,910         5,861         25,350         11,822    
    Restructuring charges       577         416         1,061         1,638         1,025    
    (Gain)/loss on sale of assets       -          (1,251 )       -          -          (2,800 )  
      Total operating expenses       84,406         50,811         58,677         143,083         103,260    
                               
  Operating income       31,734         45,056         30,001         61,735         97,626    
                               
  Interest expense       (20,453 )       (12,922 )       (13,747 )       (34,200 )       (26,518 )  
  Other, net         6,178         (5,825 )       (1,107 )       5,071         (7,535 )  
                               
  Income before income taxes       17,459         26,309         15,147         32,606         63,573    
  Income tax (provision) / benefit       66,545         (5,558 )       (5,050 )       61,495         (9,697 )  
                               
  Net income   $   84,004     $   20,751     $   10,097     $   94,101     $   53,876    
                               
  Net income attributable to noncontrolling interest       -          (160 )       -          -          (326 )  
  Net income attributable to stockholders   $   84,004     $   20,591     $   10,097     $   94,101     $   53,550    
                               
  Earnings per share attributable to stockholders:                      
    Basic     $   0.81     $   0.20     $   0.10     $   0.91     $   0.53    
    Diluted     $   0.65     $   0.18     $   0.09     $   0.75     $   0.46    
                               
  Weighted-average shares used in computing per share amounts:                      
    Basic         103,553         101,756         102,508         103,030         101,344    
    Diluted         134,721         133,224         107,517         134,088         132,073    
                               
                               
  Reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share:              
                               
  Net income attributable to stockholders   $   84,004     $   20,591         $   94,101     $   53,550    
    Add back items: interest expense, net of tax       3,587         3,432             7,135         6,826    
  Adjusted net income attributable to stockholders   $   87,591     $   24,023         $   101,236     $   60,376    
  Weighted-average shares outstanding       103,553         101,756             103,030         101,344    
  Dilutive effect of convertible debt       25,938         25,940             25,938         25,940    
  Dilutive effect of warrants       3,854         3,924             3,517         3,054    
  Dilutive effect of performance-based stock units, restricted stock units & stock options       1,376         1,604             1,603         1,735    
  Diluted shares       134,721         133,224             134,088         132,073    
  Earnings per share attributable to stockholders:                      
    Basic     $   0.81     $   0.20         $   0.91     $   0.53    
    Diluted     $   0.65     $   0.18         $   0.75     $   0.46    
                               
                               
SELECTED BALANCE SHEET DATA                       
            July 2, 2018   January 1, 2018              
  Cash and cash equivalents, including restricted cash   $   204,100     $   409,326                
  Accounts and notes receivable, net       541,587         483,903                
  Contract assets       300,717         -                 
  Inventories         121,285         294,588                
  Total current assets       1,202,639         1,221,307                
  Property, plant and equipment, net       1,072,578         1,056,845                
  Other non-current assets       1,203,715         503,730                
  Total assets       3,478,932         2,781,882                
                               
  Short-term debt, including current portion of long-term debt   $   40,729     $   4,578                
  Accounts payable       448,455         497,455                
  Total current liabilities       689,276         720,356                
  Debt, net of discount       1,555,425         975,479                
  Total long-term liabilities       1,648,363         1,050,146                
  Total equity       1,141,293         1,011,380                
  Total liabilities and equity       3,478,932         2,781,882                
                               
SUPPLEMENTAL DATA                      
            Second Quarter   First Quarter   First Two Quarters  
              2018       2017       2018       2018       2017    
  Gross margin     16.2 %     15.3 %     13.4 %     14.8 %     16.0 %  
  Operating margin     4.4 %     7.2 %     4.5 %     4.5 %     7.8 %  
                               
  End Market Breakdown:                      
            Second Quarter   First Quarter          
              2018       2017       2018            
                               
    Aerospace/Defense     24 %     17 %     18 %          
    Automotive     19 %     20 %     20 %          
    Cellular Phone     8 %     13 %     15 %          
    Computing/Storage/Peripherals     15 %     14 %     12 %          
    Medical/Industrial/Instrumentation     14 %     15 %     15 %          
    Networking/Communications     17 %     20 %     16 %          
    Other       3 %     1 %     4 %          
                               
  Stock-based Compensation:                      
            Second Quarter   First Quarter          
              2018       2017       2018            
    Amount included in:                      
      Cost of goods sold   $   829     $   639     $   529            
      Selling and marketing       545         386         374            
      General and administrative       4,493         3,975         2,719            
      Total stock-based compensation expense   $   5,867     $   5,000     $   3,622            
                               
                               
  Operating Segment Data:                      
            Second Quarter   First Quarter          
     Net sales:      2018       2017       2018            
     PCB      $   596,461     $   576,566     $   619,329            
     Anaren          62,011         -         -            
     E-M Solutions        61,842         52,898         47,151            
     Corporate        -          -          -             
       Total sales        720,314         629,464         666,480            
     Inter-segment sales        (3,427 )       (2,282 )       (2,898 )          
       Total net sales    $   716,887     $   627,182     $   663,582            
                               
     Operating segment income:                       
     PCB      $   68,028     $   69,435     $   63,464            
     Anaren          12,936         -         -            
     E-M Solutions        2,496         2,689         40            
     Corporate        (32,237 )       (21,158 )       (27,642 )          
       Total operating segment income        51,223         50,966         35,862            
     Amortization of definite-lived intangibles        (19,489 )       (5,910 )       (5,861 )          
       Total operating income        31,734         45,056         30,001            
     Total other expense        (14,275 )       (18,747 )       (14,854 )          
     Income before income taxes    $   17,459     $   26,309     $   15,147            
                               
RECONCILIATIONS1                      
            Second Quarter   First Quarter   First Two Quarters  
              2018       2017       2018       2018       2017    
  Non-GAAP gross profit reconciliation2:                      
    GAAP gross profit   $   116,140     $   95,867     $   88,678     $   204,818     $   200,886    
    Add back item:                      
      Inventory markup       4,900         -          -          4,900         -     
      Stock-based compensation       829         639         529         1,358         1,033    
    Non-GAAP gross profit   $   121,869     $   96,506     $   89,207     $   211,076     $   201,919    
    Non-GAAP gross margin     17.0 %     15.4 %     13.4 %     15.3 %     16.1 %  
                               
  Non-GAAP operating income reconciliation3:                      
    GAAP operating income   $   31,734     $   45,056     $   30,001     $   61,735     $   97,626    
    Add back items:                      
      Amortization of definite-lived intangibles       19,489         5,910         5,861         25,350         11,822    
      Stock-based compensation       5,867         5,000         3,622         9,489         8,628    
      (Gain)/loss on sale of assets       -          (1,251 )       -          -          (2,800 )  
      Inventory markup       4,900         -          -          4,900         -     
      Impairments, restructuring, acquisition-related, and other charges       7,429         417         5,034         12,463         1,126    
    Non-GAAP operating income   $   69,419     $   55,132     $   44,518     $   113,937     $   116,402    
    Non-GAAP operating margin     9.7 %     8.8 %     6.7 %     8.3 %     9.3 %  
                               
  Non-GAAP net income and EPS attributable to stockholders reconciliation4:                      
    GAAP net income attributable to stockholders   $   84,004     $   20,591     $   10,097     $   94,101     $   53,550    
    Add back items:                      
      Amortization of definite-lived intangibles       19,489         5,910         5,861         25,350         11,822    
      Stock-based compensation       5,867         5,000         3,622         9,489         8,628    
      Non-cash interest expense       3,353         2,726         3,054         6,407         5,353    
      (Gain)/loss on sale of assets       -          (1,251 )       -          -          (2,800 )  
      Inventory markup       4,900         -          -          4,900         -     
      Impairments, restructuring, acquisition-related, and other charges       7,742         417         5,263         13,005         1,126    
      Income taxes5       (73,073 )       (119 )       108         (72,965 )       (5,212 )  
    Non-GAAP net income attributable to stockholders   $   52,282     $   33,274     $   28,005     $   80,287     $   72,467    
    Non-GAAP earnings per diluted share attributable to stockholders   $   0.48     $   0.31     $   0.26     $   0.74     $   0.68    
                               
  Non-GAAP diluted number of shares6:                      
    Diluted shares       134,721         133,224         107,517         134,088         132,073    
    Dilutive effect of convertible debt       (25,938 )       (25,940 )       -         (25,938 )       (25,940 )  
    Non-GAAP diluted number of shares       108,783         107,284         107,517         108,150         106,133    
                               
  Adjusted EBITDA reconciliation7:                      
    GAAP net income   $   84,004     $   20,751     $   10,097     $   94,101     $   53,876    
    Add back items:                      
      Income tax provision (benefit)       (66,545 )       5,558         5,050         (61,495 )       9,697    
      Interest expense       20,453         12,922         13,747         34,200         26,518    
      Amortization of definite-lived intangibles       19,489         5,910         5,861         25,350         11,822    
      Depreciation expense       40,298         36,146         39,775         80,073         72,223    
      Stock-based compensation       5,867         5,000         3,622         9,489         8,628    
      (Gain)/loss on sale of assets       -          (1,251 )       -          -          (2,800 )  
      Inventory markup       4,900         -          -          4,900         -     
      Impairments, restructuring, acquisition-related, and other charges       7,429         417         5,034         12,463         1,126    
    Adjusted EBITDA   $   115,895     $   85,453     $   83,186     $   199,081     $   181,090    
    Adjusted EBITDA margin     16.2 %     13.6 %     12.5 %     14.4 %     14.5 %  
                               
  Free cash flow reconciliation:                      
    Operating cash flow       55,639         59,114         (14,261 )       41,378         108,698    
    Capital expenditures, net       (38,948 )       (45,626 )       (42,139 )       (81,087 )       (69,004 )  
    Free cash flow   $   16,691     $   13,488     $   (56,400 )   $   (39,709 )   $   39,694    
                               
  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 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, 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, inventory markup, 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 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 attributable to stockholders 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, 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

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