TTM Technologies, Inc. Reports Fiscal First Quarter 2020 Results


SANTA ANA, Calif. , April 29, 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 first quarter of fiscal 2020, which ended on March 30, 2020.  On April 19th, TTM completed the  previously announced sale of its Mobility business unit.  The operating results and related assets and liabilities of the Mobility business under US GAAP are presented as discontinued operations for all periods. To facilitate the comparison of TTM’s results to prior periods and to previously issued guidance, non-GAAP financial information is also provided below which includes the results of the Mobility business unit. 

First Quarter 2020 Highlights

  • GAAP net sales were $497.6 million
  • Non-GAAP net sales were $610.8 million
  • GAAP net loss of $3.2 million, or ($0.03) per diluted share
  • Non-GAAP net income was $19.6 million, or $0.18 per diluted share, inclusive of $1.9 million in foreign exchange gains
  • Cash flow from operations of $27.9 million
  • Announced restructuring of Electro-Mechanical Solutions (E-MS) Business unit

First Quarter 2020 GAAP Financial Results
Net sales for the first quarter of 2020 were $497.6 million, compared to $536.4 million in the first quarter of 2019 and $535.7 million in the fourth quarter of 2019.

GAAP operating income for the first quarter of 2020 was $16.2 million, compared to $30.1 million in the first quarter of 2019 and $29.4 million in the fourth quarter of 2019. 

GAAP net loss for the first quarter of 2020 was $3.2 million, or ($0.03) per diluted share.  This compares to net income of $6.2 million, or $0.06 per diluted share in the first quarter of 2019, and net income of $7.3 million, or $0.07 per diluted share, in the fourth quarter of 2019.    

First Quarter 2020 Non-GAAP Financial Results
Net sales for the first quarter of 2020 were $610.8 million, compared to $620.2 million in the first quarter of 2019 and $719.3 million in the fourth quarter of 2019.
                                                                                                                                            
On a non-GAAP basis, net income for the first quarter of 2020 was $19.6 million, or $0.18 per diluted share. This compares to non-GAAP net income of $16.4 million, or $0.16 per diluted share, for the first quarter of 2019 and $43.9 million, or $0.41 per diluted share, in the fourth quarter of 2019.

Adjusted EBITDA for the first quarter of 2020 was $82.1 million, or 13.4 percent of net sales, compared to adjusted EBITDA of $78.5 million, or 12.7 percent of net sales, for the first quarter of 2019 and $111.3 million, or 15.5 percent of net sales, for the fourth quarter of 2019.

“As we start the second quarter, all of our manufacturing facilities remain operational and we are particularly proud of our urgent production of printed circuit boards used for critical medical needs.  I want to recognize all of our employees for their tremendous efforts in support of our customers during these challenging times,” said Tom Edman, CEO of TTM.  “TTM’s first priority remains the health and safety of our employees and we have taken proactive measures against the spread of COVID-19 in all of our facilities.  We have implemented enhanced cleaning, social distancing practices, temperature checks, and masks among other measures.” 

“Regarding our financial results for the first quarter, TTM delivered revenue above the midpoint and earnings above the previously guided range despite a government mandated shutdown of our manufacturing plants in China as a result of COVID-19.  The year over year growth we experienced in the aerospace and defense, cellular and computing end markets partially offset weakness in our automotive and networking and communications end markets.”   

Business Outlook
Looking ahead, we believe that COVID-19 may cause end demand weakness, supply chain disruptions, as well as inefficiencies with our own production.  Taking this into consideration, TTM estimates that revenue for the second quarter of 2020 will be in the range of $520 million to $560 million, and non-GAAP net income will be in the range of $0.11 to $0.17 per diluted share, which includes the financial impact of the Mobility business unit until it was sold on April 17th.  

Live Webcast/Conference Call
TTM will host a conference call and webcast to discuss first quarter 2020 results and the second quarter 2020 outlook on Wednesday, April 29, 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 800-309-1256 or international 720-543-0314 (ID 557290).  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, the impact of COVID-19, 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.

Contacts:

Sameer Desai
Senior Director, Corporate Development
TTM Technologies, Inc. 
+1 714 327 3050
sameer.desai@ttmtech.com

- Tables Follow -

TTM TECHNOLOGIES, INC.
Selected Unaudited Financial Information
(In thousands, except per share data)
          
          
    First Quarter Fourth Quarter 
    2020
 2019* 2019* 
          
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS       
          
Net sales  $497,646  $536,445  $535,715  
Cost of goods sold  416,304   437,619   435,470  
          
Gross profit  81,342   98,826   100,245  
          
Operating expenses:       
Selling and marketing  16,169   17,560   17,560  
General and administrative  34,339   29,850   37,192  
Research and development  4,762   4,716   4,368  
Amortization of definite-lived intangibles  9,562   16,152   9,531  
Restructuring charges  328   432   2,204  
Total operating expenses  65,160   68,710   70,855  
          
Operating income  16,182   30,116   29,390  
          
Interest expense  (19,781)  (21,135)  (19,975) 
Other, net   2,502   (357)  (1,742) 
          
(Loss) income from continuing operations before income taxes  (1,097)  8,624   7,673  
Income tax provision  (2,123)  (2,386)  (394) 
          
Net (loss) income from continuing operations  (3,220)  6,238   7,279  
Income (loss) from discontinued operations, net of income taxes  2,046   (9,490)  17,980  
Net (loss) income $(1,174) $(3,252) $25,259  
          
* Reclassified Research and development expenses as a separate line item from General and administrative expenses   
          
(Loss) earnings per share:       
Basic (loss) earnings per share from continuing operations $(0.03) $0.06  $0.07  
Basic earnings (loss) per share from discontinued operations  0.02   (0.09)  0.17  
Basic (loss) earnings per share $(0.01) $(0.03) $0.24  
          
Diluted (loss) earnings per share from continuing operations $(0.03) $0.06  $0.07  
Diluted earnings (loss) per share from discontinued operations  0.02   (0.09)  0.17  
Diluted (loss) earnings per share $(0.01) $(0.03) $0.24  
          
          
Weighted-average shares used in computing per share amounts:       
Basic   105,686   104,315   105,502  
Diluted  105,686   105,614   107,135  
          
          
Reconciliation of the denominator used to calculate basic earnings per share and diluted earnings per share:   
          
Weighted-average shares outstanding    104,315   105,502  
Dilutive effect of convertible debt    -   -  
Dilutive effect of warrants    -   -  
Dilutive effect of performance-based stock units, restricted stock units & stock options    1,299   1,633  
Diluted shares    105,614   107,135  
(Loss) earnings per share:       
Basic earnings per share from continuing operations   $0.06  $0.07  
Basic (loss) earnings per share from discontinued operations    (0.09)  0.17  
Basic (loss) earnings per share   $(0.03) $0.24  
          
Diluted earnings per share from continuing operations   $0.06  $0.07  
Diluted (loss) earnings per share from discontinued operations    (0.09)  0.17  
Diluted (loss) earnings per share   $(0.03) $0.24  
          
SELECTED BALANCE SHEET DATA        
    March 30, 2020 December 30, 2019  
Cash and cash equivalents, including restricted cash $361,992  $379,818    
Accounts and notes receivable, net  458,639   503,598    
Contract assets  256,482   254,600    
Inventories  120,949   113,753    
Current assets held for sale  522,974   67,572    
Total current assets  1,751,787   1,342,684    
Property, plant and equipment, net  666,611   678,201    
Operating lease right of use asset  21,724   22,173    
Non-current assets held for sale  -   425,597    
Other non-current assets  1,083,996   1,092,278    
Total assets  3,524,118   3,560,933    
          
Short-term debt, including current portion of long-term debt $249,975  $249,975    
Accounts payable  309,580   329,866    
Current liabilities held for sale  170,735   185,391    
Total current liabilities  904,363   946,666    
Debt, net of discount  1,229,372   1,225,962    
Non-current liabilities held for sale  -   1,530    
Total long-term liabilities  1,342,555   1,335,230    
Total equity  1,277,200   1,279,037    
Total liabilities and equity  3,524,118   3,560,933    
          
          
SUPPLEMENTAL DATA       
    First Quarter Fourth Quarter 
     2020   2019   2019  
Gross margin  16.3%  18.4%  18.7% 
Operating margin  3.3%  5.6%  5.5% 
          
End Market Breakdown, including Mobility:       
    First Quarter Fourth Quarter 
     2020   2019   2019  
          
Aerospace/Defense  30%  27%  26% 
Automotive  12%  17%  14% 
Cellular Phone  11%  7%  16% 
Computing/Storage/Peripherals  14%  13%  14% 
Medical/Industrial/Instrumentation  16%  15%  13% 
Networking/Communications  14%  18%  15% 
Other   3%  3%  2% 
          
          
Stock-based Compensation, including Mobility:       
    First Quarter Fourth Quarter 
     2020   2019   2019  
Amount included in:       
Cost of goods sold $854  $705  $942  
Selling and marketing  469   466   518  
General and administrative  3,512   2,755   3,166  
Total stock-based compensation expense $4,835  $3,926  $4,626  
          
          
Operating Segment Data:       
    First Quarter Fourth Quarter 
Net sales:  2020   2019   2019  
PCB  $467,430  $485,067  $488,390  
E-M Solutions  30,216   51,378   47,325  
Total net sales $497,646  $536,445  $535,715  
          
Operating segment income:       
PCB  $61,626  $70,494  $72,736  
E-M Solutions  (4,329)  1,179   1,841  
Corporate  (30,170)  (24,226)  (34,373) 
Total operating segment income  27,127   47,447   40,204  
Amortization of definite-lived intangibles  (10,945)  (17,331)  (10,814) 
Total operating income  16,182   30,116   29,390  
Total other expense  (17,279)  (21,492)  (21,717) 
(Loss) income from continuing operations before income taxes   $(1,097) $8,624  $7,673  
          
RECONCILIATIONS1       
    GAAP
March 30, 2020
 Mobility balances
March 30, 20202
 Combined
March 30, 2020
 
Cash and cash equivalents, including restricted cash $361,992  $68,445  $430,437  
Accounts and notes receivable, net  458,639   6   458,645  
Contract assets  256,482   30,181   286,663  
Inventories  120,949   8,643   129,592  
Current assets held for sale  522,974   (522,974)  -  
Total current assets  1,751,787   (411,721)  1,340,066  
Property, plant and equipment, net  666,611   330,312   996,923  
Operating lease right of use asset  21,724   1,593   23,317  
Non-current assets held for sale  -   -   -  
Other non-current assets  1,083,996   79,816   1,163,812  
Total assets  3,524,118   -   3,524,118  
          
Short-term debt, including current portion of long-term debt $249,975  $-  $249,975  
Accounts payable  309,580   144,715   454,295  
Current liabilities held for sale  170,735   (170,735)  -  
Total current liabilities  904,363   (1,243)  903,120  
Debt, net of discount  1,229,372   -   1,229,372  
Non-current liabilities held for sale  -   -   -  
Total long-term liabilities  1,342,555   1,243   1,343,798  
Total equity  1,277,200   -   1,277,200  
Total liabilities and equity  3,524,118   -   3,524,118  
          
    GAAP
December 30, 2019
 Mobility balances
December 30, 20192
 Combined
December 30, 2019
 
Cash and cash equivalents, including restricted cash $379,818  $20,336  $400,154  
Accounts and notes receivable, net  503,598   66   503,664  
Contract assets  254,600   33,635   288,235  
Inventories  113,753   8,266   122,019  
Current assets held for sale  67,572   (67,572)  -  
Total current assets  1,342,684   -   1,342,684  
Property, plant and equipment, net  678,201   344,728   1,022,929  
Operating lease right of use asset  22,173   1,983   24,156  
Non-current assets held for sale  425,597   (425,597)  -  
Other non-current assets  1,092,278   78,886   1,171,164  
Total assets  3,560,933   -   3,560,933  
          
Short-term debt, including current portion of long-term debt $249,975  $-  $249,975  
Accounts payable  329,866   153,700   483,566  
Current liabilities held for sale  185,391   (185,391)  -  
Total current liabilities  946,666   -   946,666  
Debt, net of discount  1,225,962   -   1,225,962  
Non-current liabilities held for sale  1,530   (1,530)  -  
Total long-term liabilities  1,335,230   -   1,335,230  
Total equity  1,279,037   -   1,279,037  
Total liabilities and equity  3,560,933   -   3,560,933  
          
          
    First Quarter Fourth Quarter 
     2020   2019   2019  
Non-GAAP revenue reconciliation3:       
GAAP revenue $497,646  $536,445  $535,715  
Revenue from discontinued operations  113,174   83,755   183,538  
Non-GAAP revenue $610,820  $620,200  $719,253  
          
Non-GAAP gross profit reconciliation4:       
GAAP gross profit $81,342  $98,826  $100,245  
Gross profit from discontinued operations  4,749   (10,141)  24,304  
Add back item:       
Amortization of definite-lived intangibles  1,383   1,179   1,283  
Stock-based compensation  854   705   942  
Non-GAAP gross profit $88,328  $90,569  $126,774  
Non-GAAP gross margin  14.5%  14.6%  17.6% 
          
Non-GAAP operating income reconciliation5:       
GAAP operating income $16,182  $30,116  $29,390  
Operating income (loss) from discontinued operations  1,441   (12,626)  20,036  
Add back items:       
Amortization of definite-lived intangibles  11,620   18,005   11,489  
Stock-based compensation  4,835   3,926   4,626  
(Gain) on sale of assets  -   -   (66) 
Restructuring, acquisition-related, and other charges  1,596   1,103   6,856  
Non-GAAP operating income $35,674  $40,524  $72,331  
Non-GAAP operating margin  5.8%  6.5%  10.1% 
          
Non-GAAP net income and EPS reconciliation6:       
GAAP net (loss) income $(3,220) $6,238  $7,279  
Net income (loss) from discontinued operations  2,046   (9,490)  17,980  
Add back items:       
Amortization of definite-lived intangibles  11,620   18,005   11,489  
Stock-based compensation  4,835   3,926   4,626  
Non-cash interest expense  3,553   3,868   3,501  
(Gain) on sale of assets  (233)  (3,071)  (186) 
Restructuring, acquisition-related, and other charges  1,596   1,103   6,856  
Income taxes7  (593)  (4,150)  (7,623) 
Non-GAAP net income $19,604  $16,429  $43,922  
Non-GAAP earnings per diluted share $0.18  $0.16  $0.41  
          
Non-GAAP diluted number of shares8:       
Diluted shares  107,378   105,614   107,135  
Dilutive effect of convertible debt  -   -   -  
Non-GAAP diluted number of shares  107,378   105,614   107,135  
          
Adjusted EBITDA reconciliation9:       
GAAP net (loss) income $(3,220) $6,238  $7,279  
Net income (loss) from discontinued operations  2,046   (9,490)  17,980  
Add back items:       
Income tax provision (benefit)  2,865   (1,476)  1,140  
Interest expense  20,004   21,688   20,107  
Amortization of definite-lived intangibles  11,620   18,005   11,489  
Depreciation expense  42,632   41,602   42,018  
Stock-based compensation  4,835   3,926   4,626  
(Gain) on sale of assets  (233)  (3,071)  (186) 
Restructuring, acquisition-related, and other charges  1,596   1,103   6,856  
Adjusted EBITDA $82,145  $78,525  $111,309  
Adjusted EBITDA margin  13.4%  12.7%  15.5% 
          
Free cash flow reconciliation, including Mobility:       
Operating cash flow  27,913   36,924   130,148  
Capital expenditures, net  (32,451)  (28,446)  (46,982) 
Free cash flow $(4,538) $8,478  $83,166  
          
1 This information provides a reconciliation of non-GAAP balance sheet data to the financial information in our consolidated condensed balance sheets and non-GAAP revenue, 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 Excludes the estimated gain on sale of Mobility.
          
3 Non-GAAP revenue includes revenue from discontinued operations.
          
4 Non-GAAP gross profit and gross margin measures include discontinued operations and exclude amortization of intangibles and stock-based compensation expense.
          
5 Non-GAAP operating income and operating margin measures include discontinued operations and exclude amortization of intangibles, stock-based compensation expense, gain on sale of assets, acquisition-related costs, restructuring and other charges.
          
6 This information provides non-GAAP net income and non-GAAP EPS, which are non-GAAP financial measures. Management believes that both measures -- which include discontinued operations and 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, 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.
          
7 Income tax adjustments reflect the difference between income taxes based on a non-GAAP tax rate and a forecasted annual GAAP tax rate.
          
8 Non-GAAP diluted number of shares used in computing non-GAAP earnings per share excludes the dilutive effect of convertible debt.
          
9 Adjusted EBITDA is defined as earnings, including discontinued operations, before interest expense, income taxes, depreciation, amortization of intangibles, stock-based compensation expense, gain on sale of assets, 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.