TTM Technologies, Inc. Reports Fiscal First Quarter 2019 Results

Santa Ana, California, UNITED STATES


COSTA MESA, Calif., May 01, 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 first quarter of fiscal 2019, which ended on April 1, 2019.

First Quarter 2019 Highlights

  • Net sales were $620.2 million
  • GAAP net income was a loss of $3.3 million, or ($0.03) per share
  • Non-GAAP net income was $16.4 million, or $0.16 per diluted share, inclusive of $0.03 of foreign exchange losses
  • Cash flow from operations of $36.9 million
  • Repaid $30 million of our Term Loan B

First Quarter 2019 Financial Results
Net sales for the first quarter of 2019 were $620.2 million, compared to $663.6 million in the first quarter of 2018 and $711.0 million in the fourth quarter of 2018.

GAAP operating income for the first quarter of 2019 was $17.5 million, compared to $30.0 million in the first quarter of 2018 and $42.8 million in the fourth quarter of 2018. 

GAAP net income for the first quarter of 2019 was a loss of $3.3 million, or ($0.03) per share.  This compares to income of $10.1 million, or $0.09 per diluted share, in the first quarter of 2018 and $52.5 million, or $0.42 per diluted share, in the fourth quarter of 2018. 

On a non-GAAP basis, net income for the first quarter of 2019 was $16.4 million, or $0.16 per diluted share. This compares to non-GAAP net income of $28.0 million, or $0.26 per diluted share, for the first quarter of 2018 and $55.0 million, or $0.52 per diluted share, in the fourth quarter of 2018.

Adjusted EBITDA for the first quarter of 2019 was $78.5 million, or 12.7 percent of net sales, compared to adjusted EBITDA of $83.2 million, or 12.5 percent of net sales, for the first quarter of 2018 and $117.4 million, or 16.5 percent of net sales, for the fourth quarter of 2018.

“For the first quarter, TTM generated good cash flow and delivered earnings within the previously guided range, despite weakness in some of our commercial end markets,” said Tom Edman, CEO of TTM.  “We were pleased to see solid year over year growth from the aerospace and defense end market that partially offset weakness in our cellular and automotive end markets.  We expect softness in the commercial markets to continue in Q2 and plan to address this challenge with the same discipline we have demonstrated in the past.  At the same time, we will continue to be focused on cash flow generation and our strategic goals of diversification and differentiation.”

Business Outlook
For the second 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 $0.15 to $0.21 per diluted share.

To Access the Live Webcast/Conference Call
TTM will host a conference call and webcast to discuss first quarter 2019 results and second quarter 2019 outlook on Wednesday, May 1, 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 800-667-5617 or international 334-323-0509 (ID 2910354).  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

- Tables Follow –

TTM TECHNOLOGIES, INC.
Selected Unaudited Financial Information
(In thousands, except per share data)
           
      First Quarter Fourth Quarter
       2019   2018   2018 
           
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS      
           
 Net sales  $620,200  $663,582  $710,955 
 Cost of goods sold  531,515   574,904   588,323 
           
 Gross profit  88,685   88,678   122,632 
           
 Operating expenses:      
  Selling and marketing  18,901   17,628   18,533 
  General and administrative  35,023   34,127   39,615 
  Amortization of definite-lived intangibles  16,826   5,861   17,722 
  Restructuring charges  445   1,061   3,962 
   Total operating expenses  71,195   58,677   79,832 
           
 Operating income  17,490   30,001   42,800 
           
 Interest expense  (21,688)  (13,747)  (22,533)
 Other, net   (530)  (1,107)  2,357 
           
 Income (loss) before income taxes  (4,728)  15,147   22,624 
 Income tax (provision) / benefit  1,476   (5,050)  29,858 
           
 Net income (loss) $(3,252) $10,097  $52,482 
           
 Earnings per share:      
  Basic  $(0.03) $0.10  $0.51 
  Diluted  $(0.03) $0.09  $0.42 
           
 Weighted-average shares used in computing per share amounts:      
  Basic   104,315   102,508   103,683 
  Diluted   104,315   107,517   131,533 
           
           
 Reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share:  
           
 Net income     $52,482 
  Add back items: interest expense, net of tax      3,030 
 Adjusted net income     $55,512 
 Weighted-average shares outstanding      103,683 
 Dilutive effect of convertible debt      25,939 
 Dilutive effect of warrants      - 
 Dilutive effect of performance-based stock units, restricted stock units & stock options      1,911 
 Diluted shares      131,533 
 Earnings per share:      
  Basic      $0.51 
  Diluted      $0.42 
           


SELECTED BALANCE SHEET DATA      
      April 1, 2019 December 31, 2018 
 Cash and cash equivalents, including restricted cash $235,219 $256,360 
 Accounts and notes receivable, net  516,828  523,165 
 Contract assets  263,073  287,741 
 Inventories   114,800  109,377 
 Total current assets  1,169,549  1,206,914 
 Property, plant and equipment, net  1,037,696  1,052,024 
 Operating lease right of use asset  21,631  - 
 Other non-current assets  1,185,409  1,198,565 
 Total assets  3,414,285  3,457,503 
          
 Short-term debt, including current portion of long-term debt $- $30,000 
 Accounts payable  424,291  431,288 
 Total current liabilities  607,732  673,214 
 Debt, net of discount  1,466,010  1,462,425 
 Total long-term liabilities  1,579,694  1,557,202 
 Total equity  1,226,859  1,227,087 
 Total liabilities and equity  3,414,285  3,457,503 


SUPPLEMENTAL DATA      
      First Quarter Fourth Quarter
       2019   2018   2018 
 Gross margin  14.3%  13.4%  17.2%
 Operating margin  2.8%  4.5%  6.0%
           
 End Market Breakdown:      
      First Quarter Fourth Quarter
       2019   2018   2018 
           
  Aerospace/Defense  27%  19%  23%
  Automotive  17%  21%  16%
  Cellular Phone  7%  16%  14%
  Computing/Storage/Peripherals  13%  13%  13%
  Medical/Industrial/Instrumentation  15%  15%  14%
  Networking/Communications  18%  15%  18%
  Other   3%  1%  2%
           
 Stock-based Compensation:      
      First Quarter Fourth Quarter
       2019   2018   2018 
  Amount included in:      
   Cost of goods sold $705  $529  $766 
   Selling and marketing  466   374   525 
   General and administrative  2,755   2,719   4,442 
   Total stock-based compensation expense $3,926  $3,622  $5,733 
           
           
 Operating Segment Data:      
      First Quarter Fourth Quarter
  Net sales:  2019   2018   2018 
  PCB  $571,804  $619,329  $655,706 
  E-M Solutions  51,378   47,151   57,473 
  Corporate  -   -   - 
   Total sales  623,182   666,480   713,179 
  Inter-segment sales  (2,982)  (2,898)  (2,224)
   Total net sales $620,200  $663,582  $710,955 
                 
  Operating segment income:            
  PCB  $58,542  $63,464  $87,201 
  E-M Solutions  1,179   40   3,364 
  Corporate  (24,226)  (27,642)  (28,863)
   Total operating segment income  35,495   35,862   61,702 
  Amortization of definite-lived intangibles  (18,005)  (5,861)  (18,902)
   Total operating income  17,490   30,001   42,800 
  Total other expense  (22,218)  (14,854)  (20,176)
  Income (loss) before income taxes $(4,728) $15,147  $22,624 
                 


RECONCILIATIONS1      
      First Quarter Fourth Quarter
       2019   2018   2018 
 Non-GAAP gross profit reconciliation2:      
  GAAP gross profit $88,685  $88,678  $122,632 
  Add back item:      
   Amortization of definite-lived intangibles  1,179   -   1,180 
   Stock-based compensation  705   529   766 
  Non-GAAP gross profit $90,569  $89,207  $124,578 
  Non-GAAP gross margin  14.6%   13.4%   17.5% 
           
 Non-GAAP operating income reconciliation3:      
  GAAP operating income $17,490  $30,001  $42,800 
  Add back items:      
   Amortization of definite-lived intangibles  18,005   5,861   18,902 
   Stock-based compensation  3,926   3,622   5,733 
   Restructuring, acquisition-related, and other charges  1,103   5,034   6,104 
  Non-GAAP operating income $40,524  $44,518  $73,539 
  Non-GAAP operating margin  6.5%   6.7%   10.3% 
           
 Non-GAAP net income and EPS reconciliation4:      
  GAAP net income (loss) $(3,252) $10,097  $52,482 
  Add back items:      
   Amortization of definite-lived intangibles  18,005   5,861   18,902 
   Stock-based compensation  3,926   3,622   5,733 
   Non-cash interest expense  3,868   3,054   4,384 
   (Gain) on sale of Viasource  (3,071)  -   - 
   Restructuring, acquisition-related, and other charges  1,103   5,263   6,104 
   Income taxes5  (4,150)  108   (32,614)
  Non-GAAP net income $16,429  $28,005  $54,991 
  Non-GAAP earnings per diluted share $0.16  $0.26  $0.52 
           
 Non-GAAP diluted number of shares6:      
  Diluted shares  105,614   107,517   131,533 
  Dilutive effect of convertible debt  -   -   (25,939)
  Non-GAAP diluted number of shares  105,614   107,517   105,594 
           
 Adjusted EBITDA reconciliation7:      
  GAAP net income (loss) $(3,252) $10,097  $52,482 
  Add back items:      
   Income tax provision (benefit)  (1,476)  5,050   (29,858)
   Interest expense  21,688   13,747   22,533 
   Amortization of definite-lived intangibles  18,005   5,861   18,902 
   Depreciation expense  41,602   39,775   41,543 
   Stock-based compensation  3,926   3,622   5,733 
   (Gain) on sale of Viasource  (3,071)  -   - 
   Restructuring, acquisition-related, and other charges  1,103   5,034   6,104 
  Adjusted EBITDA $78,525  $83,186  $117,439 
  Adjusted EBITDA margin  12.7%   12.5%   16.5% 
           
 Free cash flow reconciliation:      
  Operating cash flow  36,924   (14,261)  151,768 
  Capital expenditures, net  (28,446)  (42,139)  (33,671)
  Free cash flow $8,478  $(56,400) $118,097 
           
 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.