TTM Technologies, Inc. Reports Fiscal Second Quarter 2021 Results

Santa Ana, California, UNITED STATES


SANTA ANA, Calif., July 28, 2021 (GLOBE NEWSWIRE) -- TTM Technologies, Inc. (NASDAQ:TTMI), a leading global printed circuit board (“PCB”) and radio frequency (“RF”) components and assemblies manufacturer, today reported results for the second quarter of fiscal 2021, which ended on June 28, 2021.

Second Quarter 2021 Highlights

  • Net sales were $567.4 million
  • GAAP net income of $28.3 million, or $0.26 per diluted share
  • Non-GAAP net income was $40.0 million, or $0.36 per diluted share
  • Cash flow from operations was $56.9 million, or 10% of revenues

Second Quarter 2021 Financial Results
Net sales for the second quarter of 2021 were $567.4 million, compared to $570.3 million from continuing operations in the second quarter of 2020.

GAAP operating income for the second quarter of 2021 was $40.9 million. This compares to GAAP operating income of $23.0 million from continuing operations in the second quarter of 2020.

GAAP net income for the second quarter of 2021 was $28.3 million, or $0.26 per diluted share, compared to net income of $9.3 million, or $0.09 per diluted share from continuing operations in the second quarter of 2020.

On a non-GAAP basis, net income for the second quarter of 2021 was $40.0 million, or $0.36 per diluted share. This compares to non-GAAP net income of $33.0 million, or $0.31 per diluted share from continuing operations in the second quarter of 2020.

Adjusted EBITDA in the second quarter of 2021 was $75.6 million, or 13.3 percent of net sales, compared to adjusted EBITDA of $76.8 million, or 13.5 percent of net sales, from continuing operations, in the second quarter of 2020.

“In the second quarter, TTM delivered revenue and non-GAAP earnings above the high end of the previously guided range despite significant challenges from COVID-19 and tight supply conditions for certain raw materials. The solid performance was driven by better than expected sales in our commercial end markets led by strong year on year growth from the automotive and data center computing end markets,” said Tom Edman, CEO of TTM. “Additionally, strict financial discipline drove strong and consistent operating cash flow in the quarter. These achievements reflect the strategic changes made to strengthen TTM, particularly the divestiture of the volatile mobility business which historically caused weak seasonal results in the first half of the year.”

Business Outlook
The stronger than expected revenues in Q2 pulled forward some demand from Q3 and the tight raw material supply conditions will have a greater impact in our third quarter. As a result, TTM estimates that revenue for the third quarter of 2021 will be in the range of $530 million to $570 million, and non-GAAP net income will be in the range of $0.31 to $0.37 per diluted share.

Live Webcast/Conference Call
TTM will host a conference call and webcast to discuss second quarter 2021 results and the third quarter 2021 outlook on Wednesday, July 28th, 2021 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 3384553). 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 and backplane assemblies as well as a global designer and manufacturer of high-frequency radio frequency (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
The preliminary financial results included in this press release represent the most current information available to management. The company’s actual results when disclosed in its Form 10-Q may differ from these preliminary results as a result of the completion of the company’s financial closing procedures; final adjustments; completion of the review by the company’s independent registered accounting firm; and other developments that may arise between now and the disclosure of the final results. 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 and raw materials used in 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)
             
             
     Second Quarter First Two Quarters 
     2021 2020* 2021 2020* 
             
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS        
             
 Net sales $567,383  $570,298  $1,093,815  $1,067,944  
 Cost of goods sold 467,473   469,868   912,305   886,172  
             
 Gross profit 99,910   100,430   181,510   181,772  
             
 Operating expenses:        
  Selling and marketing 14,605   15,969   30,887   32,138  
  General and administrative 30,634   33,309   58,929   67,648  
  Research and development 4,182   5,181   8,652   9,943  
  Amortization of definite-lived intangibles 9,042   9,561   18,563   19,123  
  Restructuring charges 559   13,414   3,791   13,742  
   Total operating expenses 59,022   77,434   120,822   142,594  
             
 Operating income 40,888   22,996   60,688   39,178  
             
 Interest expense (11,079)  (18,572)  (22,468)  (38,353) 
 Loss on extinguishment of debt -   -   (15,217)  -  
 Other, net  306   455   2,813   2,957  
             
 Income from continuing operations before income taxes 30,115   4,879   25,816   3,782  
 Income tax (provision) benefit (1,854)  4,467   (747)  2,344  
             
 Net income from continuing operations 28,261   9,346   25,069   6,126  
 Income from discontinued operations, net of income taxes -   172,421   -   174,467  
 Net income$28,261  $181,767  $25,069  $180,593  
             
             
 Earnings per share:        
  Basic earnings per share from continuing operations$0.26  $0.09  $0.23  $0.06  
  Basic earnings per share from discontinued operations -   1.62   -   1.64  
   Basic earnings per share$0.26  $1.71  $0.23  $1.70  
             
  Diluted earnings per share from continuing operations$0.26  $0.09  $0.23  $0.06  
  Diluted earnings per share from discontinued operations -   1.60   -   1.62  
   Diluted earnings per share$0.26  $1.69  $0.23  $1.68  
             
 *Prior period amounts have been revised to correct an immaterial error to income from discontinued operations, net of income taxes, net income, basic earnings per share from discontinued operations, basic earnings per share, diluted earnings per share from discontinued operations and diluted earnings per share. 
             
 Weighted-average shares used in computing per share amounts:        
  Basic  107,148   106,295   106,987   105,990  
  Diluted 109,795   107,485   109,250   107,431  
             
             
 Reconciliation of the denominator used to calculate basic earnings per share and diluted earnings per share:       
             
 Weighted-average shares outstanding 107,148   106,295   106,987   105,990  
 Dilutive effect of warrants 802   -   401   -  
 Dilutive effect of performance-based stock units, restricted stock units & stock options 1,845   1,190   1,862   1,441  
 Diluted shares 109,795   107,485   109,250   107,431  
             
SELECTED BALANCE SHEET DATA         
     June 28, 2021 December 28, 2020    
 Cash and cash equivalents, including restricted cash$558,291  $451,565      
 Accounts and notes receivable, net 378,762   381,105      
 Contract assets 300,697   273,256      
 Inventories 126,355   115,651      
 Total current assets 1,404,515   1,248,758      
 Property, plant and equipment, net 650,764   650,435      
 Operating lease right of use asset 20,134   24,340      
 Other non-current assets 950,323   972,411      
 Total assets 3,025,736   2,895,944      
             
 Accounts payable$364,005  $327,102      
 Total current liabilities 554,750   518,046      
 Debt, net of discount 926,523   842,853      
 Total long-term liabilities 1,000,615   933,889      
 Total equity 1,470,371   1,444,009      
 Total liabilities and equity 3,025,736   2,895,944      
             
SUPPLEMENTAL DATA        
     Second Quarter First Two Quarters 
     2021 2020 2021 2020 
 Gross margin 17.6%  17.6%  16.6%  17.0% 
 Operating margin 7.2%  4.0%  5.5%  3.7% 
             
 End Market Breakdown, excludes Mobility:        
     Second Quarter     
     2021 2020     
             
  Aerospace/Defense 33%  33%     
  Automotive 18%  12%     
  Data Center Computing 14%  13%     
  Medical/Industrial/Instrumentation 19%  21%     
  Networking/Communications 15%  20%     
  Other  1%  1%     
             
 Stock-based Compensation:        
     Second Quarter     
     2021 2020     
  Amount included in:        
   Cost of goods sold$861  $620      
   Selling and marketing 442   291      
   General and administrative 2,015   1,690      
   Research and development 32   46      
   Total stock-based compensation expense$3,350  $2,647      
             
             
 Operating Segment Data:        
     Second Quarter     
  Net sales:2021 2020     
  PCB $553,480  $536,843      
  RF&S Components 13,903   12,091      
  Other1 -   21,364      
   Total net sales$567,383  $570,298      
             
  Operating segment income:        
  PCB $73,055  $77,714      
  RF&S Components 4,730   4,310      
  Corporate & Other1 (26,472)  (48,083)     
   Total operating segment income 51,313   33,941      
  Amortization of definite-lived intangibles (10,425)  (10,945)     
   Total operating income 40,888   22,996      
  Total other expense (10,773)  (18,117)     
  Income from continuing operations before income taxes$30,115  $4,879      
             
RECONCILIATIONS2        
             
     Second Quarter First Two Quarters 
     2021 2020 2021 2020 
 Non-GAAP gross profit reconciliation3:        
  GAAP gross profit from continuing operations$99,910  $100,430  $181,510  $181,772  
  Add back item:        
   Amortization of definite-lived intangibles 1,383   1,384   2,767   2,767  
   Accelerated depreciation -   2,397   -   2,397  
   Stock-based compensation 861   620   2,026   1,470  
   Unrealized gain on commodity hedge (99)  -   (99)  -  
   Restructuring and other charges -   -   254   -  
  Non-GAAP gross profit$102,055  $104,831  $186,458  $188,406  
  Non-GAAP gross margin 18.0%  18.4%  17.0%  17.6% 
             
 Non-GAAP operating income reconciliation4:        
  GAAP operating income from continuing operations$40,888  $22,996  $60,688  $39,178  
  Add back items:        
   Amortization of definite-lived intangibles 10,425   10,945   21,330   21,890  
   Accelerated depreciation -   2,754   -   2,754  
   Stock-based compensation 3,350   2,647   7,559   7,482  
   (Gain) on sale of assets (11)  -   (421)  -  
   Unrealized gain on commodity hedge (99)  -   (99)  -  
   Restructuring, acquisition-related, and other charges 566   14,273   3,851   15,869  
  Non-GAAP operating income$55,119  $53,615  $92,908  $87,173  
  Non-GAAP operating margin 9.7%  9.4%  8.5%  8.2% 
             
 Non-GAAP net income and EPS reconciliation5:        
  GAAP net income from continuing operations$28,261  $9,346  $25,069  $6,126  
  Add back items:        
   Amortization of definite-lived intangibles 10,425   10,945   21,330   21,890  
   Accelerated depreciation -   2,754   -   2,754  
   Stock-based compensation 3,350   2,647   7,559   7,482  
   Non-cash interest expense 536   3,604   1,073   7,157  
   (Gain) on sale of assets (11)  (274)  (991)  (507) 
   Change in fair value of warrant liabilities (1,027)  -   (1,199)  -  
   Loss on extinguishment of debt -   -   15,217   -  
   Unrealized gain on commodity hedge (99)  -   (99)  -  
   Restructuring, acquisition-related, and other charges 566   14,273   3,851   15,869  
   Income taxes6 (1,958)  (10,292)  (6,509)  (11,107) 
  Non-GAAP net income$40,043  $33,003  $65,301  $49,664  
  Non-GAAP earnings per diluted share$0.36  $0.31  $0.60  $0.46  
             
 Adjusted EBITDA reconciliation7:        
  GAAP net income from continuing operations$28,261  $9,346  $25,069  $6,126  
  Add back items:        
   Income tax provision (benefit) 1,854   (4,467)  747   (2,344) 
   Interest expense 11,079   18,572   22,468   38,353  
   Amortization of definite-lived intangibles 10,425   10,945   21,330   21,890  
   Depreciation expense 21,241   25,756   42,717   50,128  
   Stock-based compensation 3,350   2,647   7,559   7,482  
   (Gain) on sale of assets (11)  (274)  (991)  (507) 
   Change in fair value of warrant liabilities (1,027)  -   (1,199)  -  
   Loss on extinguishment of debt -   -   15,217   -  
   Unrealized gain on commodity hedge (99)  -   (99)  -  
   Restructuring, acquisition-related, and other charges 566   14,273   3,851   15,869  
  Adjusted EBITDA$75,639  $76,798  $136,669  $136,997  
  Adjusted EBITDA margin 13.3%  13.5%  12.5%  12.8% 
             
 Free cash flow reconciliation8:        
  Operating cash flow$56,909  $100,820  $98,054  $107,447  
  Capital expenditures, net (22,727)  (21,339)  (43,693)  (45,271) 
  Free cash flow$34,182  $79,481  $54,361  $62,176  
             
             
 1Other represents the SH E-MS and SZ results. 
             
 2This 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. 
             
 3 Non-GAAP gross profit and gross margin measures exclude amortization of intangibles, accelerated depreciation, stock-based compensation expense, unrealized gain on commodity hedge, restructuring and other charges. 
             
 4 Non-GAAP operating income and operating margin measures exclude amortization of intangibles, accelerated depreciation, stock-based compensation expense, gain on sale of assets, unrealized gain on commodity hedge, restructuring, acquisition-related costs, and other charges. 
             
 5 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, accelerated depreciation, stock-based compensation expense, non-cash interest expense on debt (before consideration of capitalized interest), gain on sale of assets, change in fair value of warrant liabilities, loss on extinguishment of debt, unrealized gain on commodity hedge, restructuring, acquisition-related costs, 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. 
             
 6 Income tax adjustments reflect the difference between income taxes based on a non-GAAP tax rate and a forecasted annual GAAP tax rate. 
             
 7Adjusted EBITDA is defined as earnings before interest expense, income taxes, depreciation, amortization of intangibles, stock-based compensation expense, gain on sale of assets, change in fair value of warrant liabilities, loss on extinguishment of debt, unrealized gain on commodity hedge, restructuring, acquisition-related costs, 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. 
   
 8 Free Cash Flow in 2020 has been restated to exclude the Mobility business which was sold in Q2 of 2020. 

 

Contact:
Sameer Desai,
Vice President, Corporate Development & Investor Relations
Sameer.desai@ttmtech.com
714-327-3050