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CST: 21/08/2019 08:45:30   

TTM Technologies, Inc. Reports Fiscal Second Quarter 2019 Results

20 Days ago

SANTA ANA, Calif., July 31, 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 second quarter of fiscal 2019, which ended on July 1, 2019.

Second Quarter 2019 Highlights

  • Net sales were $633.0 million
  • GAAP net income was $3.4 million, or $0.03 per diluted share
  • Non-GAAP net income was $21.3 million, or $0.20 per diluted share
  • Cash flow from operations of $86.1 million

Second Quarter 2019 Financial Results
Net sales for the second quarter of 2019 were $633.0 million, compared to $716.9 million in the second quarter of 2018 and $620.2 million in the first quarter of 2019.

GAAP operating income for the second quarter of 2019 was $16.8 million, compared to $31.7 million in the second quarter of 2018 and $17.5 million in the first quarter of 2019. 

GAAP net income for the second quarter of 2019 was $3.4 million, or $0.03 per diluted share.  This compares to income of $84.0 million, or $0.65 per diluted share in the second quarter of 2018, inclusive of the release of a tax valuation allowance of $74.6 million, and a loss of $3.3 million, or ($0.03) per share, in the first quarter of 2019.
                                                                                                                                            
On a non-GAAP basis, net income for the second quarter of 2019 was $21.3 million, or $0.20 per diluted share, inclusive of $0.02 of foreign exchange gains. This compares to non-GAAP net income of $52.3 million, or $0.48 per diluted share, for the second quarter of 2018 and $16.4 million, or $0.16 per diluted share, in the first quarter of 2019.

Adjusted EBITDA for the second quarter of 2019 was $82.9 million, or 13.1 percent of net sales, compared to adjusted EBITDA of $115.9 million, or 16.2 percent of net sales, for the second quarter of 2018 and $78.5 million, or 12.7 percent of net sales, for the first quarter of 2019.

“For the second quarter, TTM continued to generate strong cash flow and delivered earnings at the high end of the previously guided range,” said Tom Edman, CEO of TTM.  “The year over year growth we are experiencing in the aerospace and defense end market partially offset weakness in our commercial end markets.  We see Q2 as the low point of the year and we expect that continued strength in the aerospace and defense market combined with a strong rebound in the cellular end market in Q3 will drive overall revenue growth and improved profitability.  At the same time, we will continue to be focused on cash flow generation and our strategic goals of diversification, differentiation and discipline.”               

Business Outlook
For the third quarter of 2019 TTM estimates that revenue will be in the range of $690 million to $730 million, and non-GAAP net income will be in the range of $0.35 to $0.41 per diluted share.

To Access the Live Webcast/Conference Call
TTM will host a conference call and webcast to discuss second quarter 2019 results and third quarter 2019 outlook on Wednesday, July 31, 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 800-289-0438 or international 323-794-2423 (ID 7407724).  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

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TTM TECHNOLOGIES, INC.
Selected Unaudited Financial Information
(In thousands, except per share data)
                             
                             
            Second Quarter   First Quarter   First Two Quarters
             2019     2018     2019     2019     2018 
                             
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS                    
                             
  Net sales     $ 633,038     $ 716,887     $ 620,200     $ 1,253,238     $ 1,380,469  
  Cost of goods sold     548,423       600,747       531,515       1,079,938       1,175,651  
                             
  Gross profit     84,615       116,140       88,685       173,300       204,818  
                             
  Operating expenses:                    
    Selling and marketing     17,867       18,619       18,901       36,768       36,247  
    General and administrative     34,693       45,721       35,023       69,716       79,848  
    Amortization of definite-lived intangibles     11,267       19,489       16,826       28,093       25,350  
    Restructuring charges     3,944       577       445       4,389       1,638  
      Total operating expenses     67,771       84,406       71,195       138,966       143,083  
                             
  Operating income     16,844       31,734       17,490       34,334       61,735  
                             
  Interest expense     (20,871 )     (20,453 )     (21,688 )     (42,559 )     (34,200 )
  Other, net       4,621       6,178       (530 )     4,091       5,071  
                             
  Income (loss) before income taxes     594       17,459       (4,728 )     (4,134 )     32,606  
  Income tax (provision) / benefit     2,830       66,545       1,476       4,306       61,495  
                             
  Net income (loss)   $ 3,424     $ 84,004     $ (3,252 )   $ 172     $ 94,101  
                             
  Earnings per share:                    
    Basic     $ 0.03     $ 0.81     $ (0.03 )   $ 0.00     $ 0.91  
    Diluted     $ 0.03     $ 0.65     $ (0.03 )   $ 0.00     $ 0.75  
                             
  Weighted-average shares used in computing per share amounts:                    
    Basic       105,470       103,553       104,315       104,893       103,030  
    Diluted       106,107       134,721       104,315       105,860       134,088  
                             
                             
  Reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share:            
                             
  Net income       $ 84,004             $ 94,101  
    Add back items: interest expense, net of tax         3,587               7,135  
  Adjusted net income       $ 87,591             $ 101,236  
  Weighted-average shares outstanding         103,553               103,030  
  Dilutive effect of convertible debt         25,938               25,938  
  Dilutive effect of warrants         3,854               3,517  
  Dilutive effect of performance-based stock units, restricted stock units & stock options         1,376               1,603  
  Diluted shares         134,721               134,088  
  Earnings per share:                    
    Basic         $ 0.81             $ 0.91  
    Diluted         $ 0.65             $ 0.75  
                             
                             
SELECTED BALANCE SHEET DATA                      
            July 1, 2019   December 31, 2018            
  Cash and cash equivalents, including restricted cash   $ 284,466     $ 256,360              
  Accounts and notes receivable, net     482,740       523,165              
  Contract assets     261,071       287,741              
  Inventories       122,149       109,377              
  Total current assets     1,189,686       1,206,914              
  Property, plant and equipment, net     1,037,087       1,052,024              
  Operating lease right of use asset     25,625       -              
  Other non-current assets     1,187,715       1,198,565              
  Total assets     3,440,113       3,457,503              
                             
  Short-term debt, including current portion of long-term debt   $ -     $ 30,000              
  Accounts payable     432,936       431,288              
  Total current liabilities     623,955       673,214              
  Debt, net of discount     1,469,270       1,462,425              
  Total long-term liabilities     1,587,081       1,557,202              
  Total equity     1,229,077       1,227,087              
  Total liabilities and equity     3,440,113       3,457,503              
                             
SUPPLEMENTAL DATA                    
            Second Quarter   First Quarter   First Two Quarters
              2019       2018       2019       2019       2018  
  Gross margin     13.4 %     16.2 %     14.3 %     13.8 %     14.8 %
  Operating margin     2.7 %     4.4 %     2.8 %     2.7 %     4.5 %
                             
  End Market Breakdown:                    
            Second Quarter   First Quarter        
              2019     2018*     2019          
                             
    Aerospace/Defense     28 %     23 %     27 %        
    Automotive     16 %     19 %     17 %        
    Cellular Phone     6 %     8 %     7 %        
    Computing/Storage/Peripherals     15 %     15 %     13 %        
    Medical/Industrial/Instrumentation     15 %     15 %     15 %        
    Networking/Communications     17 %     17 %     18 %        
    Other       3 %     3 %     3 %        
    * Amended for Anaren integration                    
                             
  Stock-based Compensation:                    
            Second Quarter   First Quarter        
              2019       2018       2019          
    Amount included in:                    
      Cost of goods sold   $ 570     $ 829     $ 705          
      Selling and marketing     396       545       466          
      General and administrative     2,636       4,493       2,755          
      Total stock-based compensation expense   $ 3,602     $ 5,867     $ 3,926          
                             
                             
  Operating Segment Data:                    
            Second Quarter   First Quarter        
    Net sales:     2019       2018       2019          
    PCB     $ 573,121     $ 655,045     $ 568,822          
    E-M Solutions       59,917         61,842         51,378          
      Total net sales   $   633,038     $   716,887     $   620,200          
                             
    Operating segment income:                    
    PCB     $ 50,989     $ 80,964     $ 58,542          
    E-M Solutions     863       2,496       1,179          
    Corporate       (22,561 )       (32,237 )       (24,226 )        
      Total operating segment income     29,291       51,223       35,495          
    Amortization of definite-lived intangibles       (12,447 )       (19,489 )       (18,005 )        
      Total operating income     16,844       31,734       17,490          
    Total other expense       (16,250 )       (14,275 )       (22,218 )        
    Income (loss) before income taxes   $   594     $   17,459     $   (4,728 )        
                             
RECONCILIATIONS 1                    
            Second Quarter   First Quarter   First Two Quarters
              2019       2018       2019       2019       2018  
  Non-GAAP gross profit reconciliation2:                    
    GAAP gross profit   $ 84,615     $ 116,140     $ 88,685     $ 173,300     $ 204,818  
    Add back item:                    
      Inventory markup     -       4,900       -       -       4,900  
      Amortization of definite-lived intangibles     1,180       -       1,179       2,359       -  
      Stock-based compensation     570       829       705       1,275       1,358  
    Non-GAAP gross profit   $ 86,365     $ 121,869     $ 90,569     $ 176,934     $ 211,076  
    Non-GAAP gross margin     13.6 %     17.0 %     14.6 %     14.1 %     15.3 %
                             
  Non-GAAP operating income reconciliation3:                    
    GAAP operating income   $ 16,844     $ 31,734     $ 17,490     $ 34,334     $ 61,735  
    Add back items:                    
      Amortization of definite-lived intangibles     12,447       19,489       18,005       30,452       25,350  
      Stock-based compensation     3,602       5,867       3,926       7,528       9,489  
      Inventory markup     -       4,900       -       -       4,900  
      Restructuring, acquisition-related, and other charges     4,351       7,429       1,103       5,454       12,463  
    Non-GAAP operating income   $ 37,244     $ 69,419     $ 40,524     $ 77,768     $ 113,937  
    Non-GAAP operating margin     5.9 %     9.7 %     6.5 %     6.2 %     8.3 %
                             
  Non-GAAP net income and EPS reconciliation4:                    
    GAAP net income (loss)   $ 3,424     $ 84,004     $ (3,252 )   $ 172     $ 94,101  
    Add back items:                    
      Amortization of definite-lived intangibles     12,447       19,489       18,005       30,452       25,350  
      Stock-based compensation     3,602       5,867       3,926       7,528       9,489  
      Non-cash interest expense     3,467       3,353       3,868       7,335       6,407  
      (Gain) on sale of Viasource     (235 )     -       (3,071 )     (3,306 )     -  
      Inventory markup     -       4,900       -       -       4,900  
      Restructuring, acquisition-related, and other charges     4,351       7,742       1,103       5,454       13,005  
      Income taxes5     (5,789 )     (73,073 )     (4,150 )     (9,939 )     (72,965 )
    Non-GAAP net income   $ 21,267     $ 52,282     $ 16,429     $ 37,696     $ 80,287  
    Non-GAAP earnings per diluted share   $ 0.20     $ 0.48     $ 0.16     $ 0.36     $ 0.74  
                             
  Non-GAAP diluted number of shares6:                    
    Diluted shares     106,107       134,721       105,614       105,860       134,088  
    Dilutive effect of convertible debt     -       (25,938 )     -       -       (25,938 )
    Non-GAAP diluted number of shares     106,107       108,783       105,614       105,860       108,150  
                             
  Adjusted EBITDA reconciliation7:                    
    GAAP net income (loss)   $ 3,424     $ 84,004     $ (3,252 )   $ 172     $ 94,101  
    Add back items:                    
      Income tax provision (benefit)     (2,830 )     (66,545 )     (1,476 )     (4,306 )     (61,495 )
      Interest expense     20,871       20,453       21,688       42,559       34,200  
      Amortization of definite-lived intangibles     12,447       19,489       18,005       30,452       25,350  
      Depreciation expense     41,235       40,298       41,602       82,837       80,073  
      Stock-based compensation     3,602       5,867       3,926       7,528       9,489  
      (Gain) on sale of Viasource     (235 )     -       (3,071 )     (3,306 )     -  
      Inventory markup     -       4,900       -       -       4,900  
      Restructuring, acquisition-related, and other charges     4,351       7,429       1,103       5,454       12,463  
    Adjusted EBITDA   $ 82,865     $ 115,895     $ 78,525     $ 161,390     $ 199,081  
    Adjusted EBITDA margin     13.1 %     16.2 %     12.7 %     12.9 %     14.4 %
                             
  Free cash flow reconciliation:                    
    Operating cash flow     86,123       55,639       36,924       123,047       41,378  
    Capital expenditures, net     (34,741 )     (38,948 )     (28,446 )     (63,187 )     (81,087 )
    Free cash flow   $ 51,382     $ 16,691     $ 8,478     $ 59,860     $ (39,709 )
                             
  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.

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