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CST: 22/11/2019 11:52:44   

TTM Technologies, Inc. Reports Fiscal Third Quarter 2019 Results

22 Days ago

SANTA ANA, Calif., Oct. 30, 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 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 

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