SANTA ANA, Calif., Feb. 05, 2020 (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 of fiscal 2019, which ended on December 30, 2019.

Fourth Quarter 2019 Highlights

  • Net sales were $719.3 million
  • GAAP net income was $25.3 million, or $0.21 per diluted share
  • Non-GAAP net income was $43.9 million, or $0.41 per diluted share, inclusive of $0.03 foreign exchange losses
  • Cash flow from operations of $130.1 million

Fourth Quarter 2019 Financial Results
Net sales for the fourth quarter of 2019 were $719.3 million, compared to $711.0 million in the fourth quarter of 2018 and $716.8 million in the third quarter of 2019.

GAAP operating income for the fourth quarter of 2019 was $49.4 million, compared to $42.8 million in the fourth quarter of 2018 and $36.4 million in the third quarter of 2019. 

GAAP net income for the fourth quarter of 2019 was $25.3 million, or $0.21 per diluted share.  This compares to income of $52.5 million, or $0.42 per diluted share in the fourth quarter of 2018, and $15.9 million, or $0.14 per diluted share, in the third quarter of 2019.  The fourth quarter of 2018 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 2019 was $43.9 million, or $0.41 per diluted share. This compares to non-GAAP net income of $55.0 million, or $0.52 per diluted share, for the fourth quarter of 2018 and $38.9 million, or $0.37 per diluted share, in the third quarter of 2019.

Adjusted EBITDA for the fourth quarter of 2019 was $111.3 million, or 15.5 percent of net sales, compared to adjusted EBITDA of $117.4 million, or 16.5 percent of net sales, for the fourth quarter of 2018 and $103.5 million, or 14.4 percent of net sales, for the third quarter of 2019.

“For the fourth quarter, TTM continued to generate strong cash flow and delivered revenue and earnings above the previously guided range,” said Tom Edman, CEO of TTM.  “The year over year growth we experienced in the aerospace and defense, cellular and computing end markets offset weakness in our other commercial end markets.”

Full Year 2019 Financial Results
Net sales for fiscal year 2019 decreased to $2.69 billion from $2.85 billion in fiscal year 2018, a 5.5% decrease.

GAAP operating income for fiscal year 2019 was $120.1 million, a decrease from GAAP operating income of $159.1 million in fiscal year 2018.

GAAP net income for fiscal year 2019 was $41.3 million, or $0.39 per diluted share, compared to GAAP net income of $173.6 million, or $1.38 per diluted share, for fiscal year 2018.  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 2019 was $120.5 million, or $1.13 per diluted share. This compares to fiscal year 2018 non-GAAP net income of $190.4 million, or $1.76 per diluted share.

Adjusted EBITDA for fiscal year 2019 was $376.2 million, or 14.0 percent of net sales, compared to $438.8 million, or 15.4 percent of net sales, for fiscal year 2018. 

"In 2019, we finished with strong results in Q4 and made progress on our strategy of diversification, differentiation and discipline.  Specifically, we acquired differentiating technology with an important asset purchase from i3 Technologies, which enables us to manufacture products that require finer lines and smaller spacing for our aerospace and defense and commercial end markets broadening our technology offerings in North America.  In addition, in early January, we announced the sale of our more seasonal and generally more volatile mobility business," continued Edman.  “Finally, our financial discipline allowed us to generate significant year over year growth in cash flow despite year over year declines in revenues and profits.”

Business Outlook
Typically, in the first calendar quarter of every year, our China based factories are shut down over the Lunar New Year holiday.  This year, due to government restrictions from the coronavirus. the shutdown has been extended approximately nine days to February 10th.  Assuming our factories in the PRC can resume production on February 10th, TTM estimates that revenue for the first quarter of 2020 will be in the range of $580 million to $620 million, and non-GAAP net income will be in the range of $0.05 to $0.11 per diluted share, which includes approximately $0.09 negative impact from the additional nine days of closure. If the government extends the factory shutdown beyond February 10th, our financial results would be further negatively impacted.

To Access the Live Webcast/Conference Call
TTM will host a conference call and webcast to discuss fourth quarter 2019 results and the first quarter 2020 outlook on Wednesday, February 5, 2020, 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 6010319).  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)
               
               
      Fourth Quarter Third Quarter Full Year
      2019 2018 2019 2019 2018
               
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS          
               
 Net sales  $  719,253 $  710,955 $  716,817 $  2,689,308 $  2,847,261
 Cost of goods sold   594,704   588,323   612,983   2,287,625   2,390,227
               
 Gross profit   124,549   122,632   103,834   401,683   457,034
               
 Operating expenses:          
  Selling and marketing   18,843   18,533   18,400   74,011   73,313
  General and administrative   43,535   39,615   38,845   152,096   159,437
  Amortization of definite-lived intangibles   10,206   17,722   10,175   48,474   59,681
  Restructuring charges   2,539   3,962   53   6,981   5,518
   Total operating expenses   75,123   79,832   67,473   281,562   297,949
               
 Operating income   49,426   42,800   36,361   120,121   159,085
               
 Interest expense   (20,107)   (22,533)   (20,568)   (83,234)   (78,958)
 Other, net    (2,920)   2,357   8,126   9,297   9,641
               
 Income before income taxes   26,399   22,624   23,919   46,184   89,768
 Income tax (provision) / benefit   (1,140)   29,858   (8,049)   (4,883)   83,816
               
 Net income $  25,259 $  52,482 $  15,870 $  41,301 $  173,584
               
 Earnings per share:          
  Basic  $  0.24 $  0.51 $  0.15 $  0.39 $  1.68
  Diluted  $  0.21 $  0.42 $  0.14 $  0.39 $  1.38
               
 Weighted-average shares used in computing per share amounts:          
  Basic    105,502   103,683   105,492   105,195   103,355
  Diluted    133,073   131,533   132,412   106,332   134,036
               
               
 Reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share:      
               
 Net income $  25,259 $  52,482 $  15,870   $  173,584
  Add back items: interest expense, net of tax   2,825   3,030   2,836     11,906
 Adjusted net income $  28,084 $  55,512 $  18,706   $  185,490
 Weighted-average shares outstanding   105,502   103,683   105,492     103,355
 Dilutive effect of convertible debt   25,938   25,939   25,938     25,939
 Dilutive effect of warrants   -    -    -      3,065
 Dilutive effect of performance-based stock units, restricted stock units & stock options   1,633   1,911   982     1,677
 Diluted shares   133,073   131,533   132,412     134,036
 Earnings per share:          
  Basic  $  0.24 $  0.51 $  0.15   $  1.68
  Diluted  $  0.21 $  0.42 $  0.14   $  1.38
               
               
SELECTED BALANCE SHEET DATA           
      December 30, 2019 December 31, 2018      
 Cash and cash equivalents, including restricted cash $  400,154 $  256,360      
 Accounts and notes receivable, net   503,664   523,165      
 Contract assets   288,235   287,741      
 Inventories    122,019   109,377      
 Total current assets   1,342,684   1,206,914      
 Property, plant and equipment, net   1,022,929   1,052,024      
 Operating lease right of use asset   24,156   -       
 Other non-current assets   1,171,164   1,198,565      
 Total assets   3,560,933   3,457,503      
               
 Short-term debt, including current portion of long-term debt $  249,975 $  30,000      
 Accounts payable   483,566   431,288      
 Total current liabilities   946,666   673,214      
 Debt, net of discount   1,225,962   1,462,425      
 Total long-term liabilities   1,335,230   1,557,202      
 Total equity   1,279,037   1,227,087      
 Total liabilities and equity   3,560,933   3,457,503      
               
SUPPLEMENTAL DATA          
      Fourth Quarter Third Quarter Full Year
      2019 2018 2019 2019 2018
 Gross margin 17.3% 17.2% 14.5% 14.9% 16.1%
 Operating margin 6.9% 6.0% 5.1% 4.5% 5.6%
               
 End Market Breakdown:          
      Fourth Quarter Third Quarter    
      2019 2018* 2019    
               
  Aerospace/Defense 26% 23% 24%    
  Automotive 14% 16% 17%    
  Cellular Phone 16% 14% 19%    
  Computing/Storage/Peripherals 14% 13% 12%    
  Medical/Industrial/Instrumentation 13% 14% 13%    
  Networking/Communications 15% 18% 13%    
  Other  2% 2% 2%    
  * Amended for Anaren integration          
               
 Stock-based Compensation:          
      Fourth Quarter Third Quarter    
      2019 2018 2019    
  Amount included in:          
   Cost of goods sold $  942 $  766 $  941    
   Selling and marketing   518   525   593    
   General and administrative   3,166   4,442   3,128    
   Total stock-based compensation expense $  4,626 $  5,733 $  4,662    
               
               
 Operating Segment Data:          
      Fourth Quarter Third Quarter    
   Net sales:  2019 2018 2019    
   PCB   $  671,928 $  653,482 $  649,104    
   E-M Solutions    47,325   57,473   67,713    
    Total net sales  $  719,253 $  710,955 $  716,817    
               
   Operating segment income:           
   PCB   $  93,447 $  87,201 $  73,230    
   E-M Solutions    1,841   3,364   3,236    
   Corporate    (34,373)   (28,863)   (28,750)    
    Total operating segment income    60,915   61,702   47,716    
   Amortization of definite-lived intangibles    (11,489)   (18,902)   (11,355)    
    Total operating income    49,426   42,800   36,361    
   Total other expense    (23,027)   (20,176)   (12,442)    
   Income before income taxes  $  26,399 $  22,624 $  23,919    
               
RECONCILIATIONS1          
      Fourth Quarter Third Quarter Full Year
      2019 2018 2019 2019 2018
 Non-GAAP gross profit reconciliation2:          
  GAAP gross profit $  124,549 $  122,632 $  103,834 $  401,683 $  457,034
  Add back item:          
   Inventory markup   -    -    -    -    4,900
   Amortization of definite-lived intangibles   1,283   1,180   1,180   4,822   3,345
   Stock-based compensation   942   766   941   3,158   2,898
  Non-GAAP gross profit $  126,774 $  124,578 $  105,955 $  409,663 $  468,177
  Non-GAAP gross margin 17.6% 17.5% 14.8% 15.2% 16.4%
               
 Non-GAAP operating income reconciliation3:          
  GAAP operating income $  49,426 $  42,800 $  36,361 $  120,121 $  159,085
  Add back items:          
   Amortization of definite-lived intangibles   11,489   18,902   11,355   53,296   63,026
   Stock-based compensation   4,626   5,733   4,662   16,816   20,681
   (Gain) on sale of assets   (66)   -    -    (66)   - 
   Inventory markup   -    -    -    -    4,900
   Restructuring, acquisition-related, and other charges   6,856   6,104   1,573   13,883   18,797
  Non-GAAP operating income $  72,331 $  73,539 $  53,951 $  204,050 $  266,489
  Non-GAAP operating margin 10.1% 10.3% 7.5% 7.6% 9.4%
               
 Non-GAAP net income and EPS reconciliation4:          
  GAAP net income $  25,259 $  52,482 $  15,870 $  41,301 $  173,584
  Add back items:          
   Amortization of definite-lived intangibles   11,489   18,902   11,355   53,296   63,026
   Stock-based compensation   4,626   5,733   4,662   16,816   20,681
   Non-cash interest expense   3,501   4,384   3,452   14,288   14,783
   (Gain) on sale of assets   (186)   -    (251)   (3,743)   - 
   Inventory markup   -    -    -    -    4,900
   Restructuring, acquisition-related, and other charges   6,856   6,104   1,573   13,883   19,339
   Income taxes5   (7,623)   (32,614)   2,237   (15,325)   (105,916)
  Non-GAAP net income $  43,922 $  54,991 $  38,898 $  120,516 $  190,397
  Non-GAAP earnings per diluted share $  0.41 $  0.52 $  0.37 $  1.13 $  1.76
               
 Non-GAAP diluted number of shares6:          
  Diluted shares   133,073   131,533   132,412   106,332   134,036
  Dilutive effect of convertible debt   (25,938)   (25,939)   (25,938)   -   (25,939)
  Non-GAAP diluted number of shares   107,135   105,594   106,474   106,332   108,097
               
 Adjusted EBITDA reconciliation7:          
  GAAP net income $  25,259 $  52,482 $  15,870 $  41,301 $  173,584
  Add back items:          
   Income tax provision (benefit)   1,140   (29,858)   8,049   4,883   (83,816)
   Interest expense   20,107   22,533   20,568   83,234   78,958
   Amortization of definite-lived intangibles   11,489   18,902   11,355   53,296   63,026
   Depreciation expense   42,018   41,543   41,719   166,574   162,708
   Stock-based compensation   4,626   5,733   4,662   16,816   20,681
   (Gain) on sale of assets   (186)   -    (251)   (3,743)   - 
   Inventory markup   -    -    -    -    4,900
   Restructuring, acquisition-related, and other charges   6,856   6,104   1,573   13,883   18,797
  Adjusted EBITDA $  111,309 $  117,439 $  103,545 $  376,244 $  438,838
  Adjusted EBITDA margin 15.5% 16.5% 14.4% 14.0% 15.4%
               
 Free cash flow reconciliation:          
  Operating cash flow   130,148   151,768   58,742   311,937   273,138
  Capital expenditures, net   (46,982)   (33,671)   (25,803)   (135,972)   (149,796)
  Free cash flow $  83,166 $  118,097 $  32,939 $  175,965 $  123,342
               
 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