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CST: 21/08/2019 08:21:15   

TTM Technologies, Inc. Reports Fiscal Fourth Quarter and Fiscal 2018 Results

195 Days ago

COSTA MESA, Calif., Feb. 06, 2019 (GLOBE NEWSWIRE) -- TTM Technologies, Inc. (NASDAQ:TTMI), a leading global printed circuit board (“PCB”) and radio frequency (“RF”) components manufacturer, today reported results for the fourth quarter and full year of fiscal 2018, which ended December 31st, 2018.

Fourth Quarter 2018 Highlights

  • Net sales were $711.0 million
  • GAAP net income was $52.5 million, or $0.42 per diluted share
  • Non-GAAP net income was $55.0 million, or $0.52 per diluted share
  • Cash flow from operations of $151.8 million
  • Repaid $70 million of our Term Loan B in Q4 and an additional $30 million on February 1st, 2019

Fiscal Year 2018 Highlights

  • Net sales were $2.85 billion, a record high
  • GAAP net income was $173.6 million, or $1.38 per diluted share
  • Non-GAAP net income was $190.4 million, or $1.76 per diluted share, a record high
  • Cash flow from operations of $273.1 million
  • Repaid $114 million of our Term Loan B in 2018

Fourth Quarter 2018 Financial Results
Net sales for the fourth quarter of 2018 were $711.0 million, compared to $739.3 million in the fourth quarter of 2017 and $755.8 million in the third quarter of 2018.

GAAP operating income for the fourth quarter of 2018 was $42.8 million, compared to $71.0 million in the fourth quarter of 2017 and $54.6 million in the third quarter of 2018. 

GAAP net income for the fourth quarter of 2018 was $52.5 million, or $0.42 per diluted share.  This compares to $49.2 million, or $0.40 per diluted share, in the fourth quarter of 2017 and $27.0 million, or $0.22 per diluted share, in the third quarter of 2018. The current quarter results reflect the release of a tax valuation allowance of $43.6 million. 
                                                                                                                                            
On a non-GAAP basis, net income for the fourth quarter of 2018 was $55.0 million, or $0.52 per diluted share. This compares to non-GAAP net income of $61.2 million, or $0.57 per diluted share, for the fourth quarter of 2017 and $55.1 million, or $0.50 per diluted share, in the third quarter of 2018.

Adjusted EBITDA for the fourth quarter of 2018 was $117.4 million, or 16.5 percent of net sales, compared to adjusted EBITDA of $121.7 million, or 16.5 percent of net sales, for the fourth quarter of 2017 and $122.3 million, or 16.2 percent of net sales, for the third quarter of 2018.

“For the fourth quarter, TTM delivered earnings above the high end of guidance, despite softening commercial end markets,” said Tom Edman, CEO of TTM.  “We were pleased to see strong year over year growth from the aerospace and defense, computing and medical/industrial/instrumentation end markets that partially offset weakness in our cellular and automotive end markets.  Solid operational execution and expense management resulted in our operating margin exceeding expectations.”
                                    
Full Year 2018 Financial Results
Net sales for fiscal year 2018 increased to $2.85 billion from $2.66 billion in fiscal year 2017, a 7.1% increase year over year.

GAAP operating income for fiscal year 2018 was $159.1 million, a decrease from GAAP operating income of $212.8 million in fiscal year 2017.

GAAP net income for fiscal year 2018 was $173.6 million, or $1.38 per diluted share, compared to GAAP net income of $124.2 million, or $1.04 per diluted share, for fiscal year 2017.  The 2018 results reflect the release of a tax valuation allowance of $118.2 million. 

On a non-GAAP basis, net income for fiscal year 2018 was $190.4 million, or $1.76 per diluted share. This compares to fiscal year 2017 non-GAAP net income of $167.1 million, or $1.57 per diluted share.

Adjusted EBITDA for fiscal year 2018 was $438.8 million, or 15.4 percent of net sales, compared to $388.6 million, or 14.6 percent of net sales, for fiscal year 2017.  

"2018 validated TTM’s strategy of diversification, differentiation and discipline.  We saw solid organic growth in the aerospace and defense, medical, industrial and instrumentation and computing end markets," continued Edman.  “In addition, we closed the acquisition of Anaren which allows us to engage with customers earlier in the design cycle providing differentiated, value added RF solutions.”

Business Outlook
For the first 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 $0.14 to $0.20 per diluted share.

“In the first quarter of 2019, we are seeing significant weakness in our cellular end market which is resulting in the under-utilization of our advanced technology factories. 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 as well as 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 fourth quarter 2018 results and first quarter 2019 outlook on Wednesday, February 6, 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 866-548-4713 or international 323-794-2093 (ID 3216797).  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.

- Tables Follow -

TTM TECHNOLOGIES, INC.  
Selected Unaudited Financial Information  
(In thousands, except per share data)  
                               
                               
            Fourth Quarter   Third Quarter   Full Year  
              2018       2017       2018       2018       2017    
                               
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS                      
                               
  Net sales     $   710,955     $   739,349     $   755,837     $   2,847,261     $   2,658,592    
  Cost of goods sold       588,323         607,488         626,253         2,390,227         2,229,011    
                               
  Gross profit       122,632         131,861         129,584         457,034         429,581    
                               
  Operating expenses:                      
    Selling and marketing       18,533         17,081         18,533         73,313         65,856    
    General and administrative       39,615         37,764         39,974         159,437         128,489    
    Amortization of definite-lived intangibles       17,722         5,907         16,609         59,681         23,634    
    Restructuring charges       3,962         65         (82 )       5,518         1,190    
    (Gain)/loss on sale of assets       -          -          -          -          (2,348 )  
      Total operating expenses       79,832         60,817         75,034         297,949         216,821    
                               
  Operating income       42,800         71,044         54,550         159,085         212,760    
                               
  Interest expense       (22,533 )       (13,782 )       (22,225 )       (78,958 )       (53,898 )  
  Loss on extinguishment of debt       -          -          -          -          (769 )  
  Other, net         2,357         (3,617 )       2,213         9,641         (18,135 )  
                               
  Income before income taxes       22,624         53,645         34,538         89,768         139,958    
  Income tax (provision) / benefit       29,858         (4,329 )       (7,537 )       83,816         (15,231 )  
                               
  Net income   $   52,482     $   49,316     $   27,001     $   173,584     $   124,727    
                               
  Net income attributable to noncontrolling interest       -          (105 )       -          -          (513 )  
  Net income attributable to stockholders   $   52,482     $   49,211     $   27,001     $   173,584     $   124,214    
                               
  Earnings per share attributable to stockholders:                      
    Basic     $   0.51     $   0.48     $   0.26     $   1.68     $   1.22    
    Diluted     $   0.42     $   0.40     $   0.22     $   1.38     $   1.04    
                               
  Weighted-average shares used in computing per share amounts:                      
    Basic         103,683         101,817         103,676         103,355         101,580    
    Diluted         131,533         133,170         136,435         134,036         132,476    
                               
                               
  Reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share:              
                               
  Net income attributable to stockholders   $   52,482     $   49,211     $   27,001     $   173,584     $   124,214    
    Add back items: interest expense, net of tax       3,030         3,508         3,628         11,906         13,803    
  Adjusted net income attributable to stockholders   $   55,512     $   52,719     $   30,629     $   185,490     $   138,017    
  Weighted-average shares outstanding       103,683         101,817         103,676         103,355         101,580    
  Dilutive effect of convertible debt       25,939         25,939         25,938         25,939         25,940    
  Dilutive effect of warrants       -          2,938         5,226         3,065         2,799    
  Dilutive effect of performance-based stock units, restricted stock units & stock options       1,911         2,476         1,595         1,677         2,157    
  Diluted shares       131,533         133,170         136,435         134,036         132,476    
  Earnings per share attributable to stockholders:                      
    Basic     $   0.51     $   0.48     $   0.26     $   1.68     $   1.22    
    Diluted     $   0.42     $   0.40     $   0.22     $   1.38     $   1.04    
                               
                               
SELECTED BALANCE SHEET DATA                        
            December 31, 2018   January 1, 2018              
  Cash and cash equivalents, including restricted cash   $   256,360     $   409,326                
  Accounts and notes receivable, net       523,165         483,903                
  Contract assets       287,741         -                 
  Inventories         109,377         294,588                
  Total current assets       1,206,914         1,221,307                
  Property, plant and equipment, net       1,052,024         1,056,845                
  Other non-current assets       1,198,565         503,730                
  Total assets       3,457,503         2,781,882                
                               
  Short-term debt, including current portion of long-term debt   $   30,000     $   4,578                
  Accounts payable       431,288         497,455                
  Total current liabilities       673,214         720,356                
  Debt, net of discount       1,462,425         975,479                
  Total long-term liabilities       1,557,202         1,050,146                
  Total equity       1,227,087         1,011,380                
  Total liabilities and equity       3,457,503         2,781,882                
                               
SUPPLEMENTAL DATA                      
            Fourth Quarter   Third Quarter   Full Year  
              2018       2017       2018       2018       2017    
  Gross margin     17.2 %     17.8 %     17.1 %     16.1 %     16.2 %  
  Operating margin     6.0 %     9.6 %     7.2 %     5.6 %     8.0 %  
                               
  End Market Breakdown:                      
            Fourth Quarter   Third Quarter          
              2018       2017       2018            
                               
    Aerospace/Defense     24 %     15 %     23 %          
    Automotive     16 %     18 %     15 %          
    Cellular Phone     14 %     27 %     17 %          
    Computing/Storage/Peripherals     13 %     10 %     14 %          
    Medical/Industrial/Instrumentation     14 %     12 %     13 %          
    Networking/Communications     18 %     17 %     17 %          
    Other       1 %     1 %     1 %          
                               
  Stock-based Compensation:                      
            Fourth Quarter   Third Quarter          
              2018       2017       2018            
    Amount included in:                      
      Cost of goods sold   $   766     $   613     $   774            
      Selling and marketing       525         450         520            
      General and administrative       4,442         3,921         4,165            
      Total stock-based compensation expense   $   5,733     $   4,984     $   5,459            
                               
                               
  Operating Segment Data:                      
            Fourth Quarter   Third Quarter          
     Net sales:      2018       2017       2018            
     PCB      $   655,706     $   688,572     $   698,983            
     E-M Solutions        57,473         54,899         59,481            
     Corporate        -          -          -             
       Total sales        713,179         743,471         758,464            
     Inter-segment sales        (2,224 )       (4,122 )       (2,627 )          
       Total net sales    $   710,955     $   739,349     $   755,837            
                               
     Operating segment income:                       
     PCB      $   87,201     $   100,352     $   98,039            
     E-M Solutions        3,364         2,799         2,205            
     Corporate        (28,863 )       (26,200 )       (26,920 )          
       Total operating segment income        61,702         76,951         73,324            
     Amortization of definite-lived intangibles        (18,902 )       (5,907 )       (18,774 )          
       Total operating income        42,800         71,044         54,550            
     Total other expense        (20,176 )       (17,399 )       (20,012 )          
     Income before income taxes    $   22,624     $   53,645     $   34,538            
                               
RECONCILIATIONS 1                      
            Fourth Quarter   Third Quarter   Full Year  
              2018       2017       2018       2018       2017    
  Non-GAAP gross profit reconciliation2:                      
    GAAP gross profit   $   122,632     $   131,861     $   129,584     $   457,034     $   429,581    
    Add back item:                      
      Inventory markup       -          -          -          4,900         -     
      Amortization of definite-lived intangibles       1,180         -          2,165         3,345         -     
      Stock-based compensation       766         613         774         2,898         2,252    
    Non-GAAP gross profit   $   124,578     $   132,474     $   132,523     $   468,177     $   431,833    
    Non-GAAP gross margin     17.5 %     17.9 %     17.5 %     16.4 %     16.2 %  
                               
  Non-GAAP operating income reconciliation3:                      
    GAAP operating income   $   42,800     $   71,044     $   54,550     $   159,085     $   212,760    
    Add back items:                      
      Amortization of definite-lived intangibles       18,902         5,907         18,774         63,026         23,634    
      Stock-based compensation       5,733         4,984         5,459         20,681         18,290    
      (Gain)/loss on sale of assets       -          -          -          -          (2,348 )  
      Inventory markup       -          -          -          4,900         -     
      Impairments, restructuring, acquisition-related, and other charges       6,104         2,331         230         18,797         3,556    
    Non-GAAP operating income   $   73,539     $   84,266     $   79,013     $   266,489     $   255,892    
    Non-GAAP operating margin     10.3 %     11.4 %     10.5 %     9.4 %     9.6 %  
                               
  Non-GAAP net income and EPS attributable to stockholders reconciliation4:                      
    GAAP net income attributable to stockholders   $   52,482     $   49,211     $   27,001     $   173,584     $   124,214    
    Add back items:                      
      Amortization of definite-lived intangibles       18,902         5,907         18,774         63,026         23,634    
      Stock-based compensation       5,733         4,984         5,459         20,681         18,290    
      Non-cash interest expense       4,384         3,017         3,992         14,783         11,069    
      (Gain)/loss on sale of assets       -          -          -          -          (2,348 )  
      Inventory markup       -          -          -          4,900         -     
      Loss on extinguishment of debt       -          -          -          -          769    
      Impairments, restructuring, acquisition-related, and other charges       6,104         2,331         230         19,339         3,556    
      Income taxes5       (32,614 )       (4,204 )       (337 )       (105,916 )       (12,059 )  
    Non-GAAP net income attributable to stockholders   $   54,991     $   61,246     $   55,119     $   190,397     $   167,125    
    Non-GAAP earnings per diluted share attributable to stockholders   $   0.52     $   0.57     $   0.50     $   1.76     $   1.57    
                               
  Non-GAAP diluted number of shares6:                      
    Diluted shares       131,533         133,170         136,435         134,036         132,476    
    Dilutive effect of convertible debt       (25,939 )       (25,939 )       (25,938 )       (25,939 )       (25,940 )  
    Non-GAAP diluted number of shares       105,594         107,231         110,497         108,097         106,536    
                               
  Adjusted EBITDA reconciliation7:                      
    GAAP net income   $   52,482     $   49,316     $   27,001     $   173,584     $   124,727    
    Add back items:                      
      Income tax provision (benefit)       (29,858 )       4,329         7,537         (83,816 )       15,231    
      Interest expense       22,533         13,782         22,225         78,958         53,898    
      Amortization of definite-lived intangibles       18,902         5,907         18,774         63,026         23,634    
      Depreciation expense       41,543         41,090         41,092         162,708         150,809    
      Stock-based compensation       5,733         4,984         5,459         20,681         18,290    
      (Gain)/loss on sale of assets       -          -          -          -          (2,348 )  
      Inventory markup       -          -          -          4,900         -     
      Loss on extinguishment of debt       -          -          -          -          769    
      Impairments, restructuring, acquisition-related, and other charges       6,104         2,331         230         18,797         3,556    
    Adjusted EBITDA   $   117,439     $   121,739     $   122,318     $   438,838     $   388,566    
    Adjusted EBITDA margin     16.5 %     16.5 %     16.2 %     15.4 %     14.6 %  
                               
  Free cash flow reconciliation:                      
    Operating cash flow       151,768         152,691         79,992         273,138         332,755    
    Capital expenditures, net       (33,671 )       (32,209 )       (35,038 )       (149,796 )       (124,090 )  
    Free cash flow   $   118,097     $   120,482     $   44,954     $   123,342     $   208,665    
                               
  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 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, 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 an 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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