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 TTM Technologies, Inc. Reports Fiscal Third Quarter 2018 Results
   Tuesday, October 30, 2018 4:05:00 PM ET

COSTA MESA, Calif., Oct. 30, 2018 (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 2018, which ended October 1, 2018.  The financial results provided below for the third quarter include a full quarter contribution from the acquisition of Anaren, Inc. (“Anaren”), which was completed on April 18, 2018.

Third Quarter 2018 Highlights

  • Net sales were $755.8 million
  • GAAP net income was $27.0 million, or $0.22 per diluted share
  • Non-GAAP net income was $55.1 million, or $0.50 per diluted share
  • Cash flow from operations of $80.0 million


Third Quarter 2018 Financial Results
Net sales for the third quarter of 2018 were $755.8 million, compared to $666.8 million in the third quarter of 2017 and $716.9 million in the second quarter of 2018.

GAAP operating income for the third quarter of 2018 was $54.6 million, compared to $44.1 million in the third quarter of 2017 and $31.7 million in the second quarter of 2018. 

GAAP net income for the third quarter of 2018 was $27.0 million, or $0.22 per diluted share.  This compares to $21.5 million, or $0.19 per diluted share, in the third quarter of 2017 and $84.0 million, or $0.65 per diluted share, in the second quarter of 2018.
                                                                                                                                            
On a non-GAAP basis, net income for the third quarter of 2018 was $55.1 million, or $0.50 per diluted share. This compares to non-GAAP net income of $33.4 million, or $0.32 per diluted share, for the third quarter of 2017 and $52.3 million, or $0.48 per diluted share, in the second quarter of 2018.

Adjusted EBITDA for the third quarter of 2018 was $122.3 million, or 16.2 percent of net sales, compared to adjusted EBITDA of $85.7 million, or 12.9 percent of net sales, for the third quarter of 2017 and $115.9 million, or 16.2 percent of net sales, for the second quarter of 2018.

“TTM delivered record revenues and earnings for a third quarter,” said Tom Edman, CEO of TTM.  “We were pleased to see solid year over year growth from the aerospace and defense, cellular, computing and medical/industrial/instrumentation end markets that more than offset weakness in our automotive end market.  Following record third quarter revenues in the cellular end market, we’re anticipating weaker sales and profits in the fourth quarter.”

Business Outlook
For the fourth quarter of 2018 TTM estimates that revenue will be in the range of $720 million to $760 million, and non-GAAP net income will be in the range of $0.44 to $0.50 per diluted share.

To Access the Live Webcast/Conference Call
TTM will host a conference call and webcast to discuss third quarter 2018 results and fourth quarter 2018 outlook on Tuesday, October 30, 2018, 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 9367022).  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.

- Tables Follow -

TTM TECHNOLOGIES, INC. 
Selected Unaudited Financial Information 
(In thousands, except per share data) 
                
                
      Third Quarter Second Quarter First Three Quarters 
       2018   2017   2018   2018   2017  
                
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS           
                
 Net sales  $  755,837  $  666,814  $  716,887  $  2,136,306  $  1,919,243  
 Cost of goods sold    626,253     569,980     600,747     1,801,904     1,621,523  
                
 Gross profit    129,584     96,834     116,140     334,402     297,720  
                
 Operating expenses:           
  Selling and marketing    18,533     16,269     18,619     54,780     48,775  
  General and administrative    39,974     30,018     45,721     119,822     90,725  
  Amortization of definite-lived intangibles    16,609     5,905     19,489     41,959     17,727  
  Restructuring charges    (82)    100     577     1,556     1,125  
  (Gain)/loss on sale of assets    -      452     -      -      (2,348) 
   Total operating expenses    75,034     52,744     84,406     218,117     156,004  
                
 Operating income    54,550     44,090     31,734     116,285     141,716  
                
 Interest expense    (22,225)    (13,598)    (20,453)    (56,425)    (40,116) 
 Loss on extinguishment of debt    -      (768)    -      -      (769) 
 Other, net     2,213     (6,984)    6,178     7,284     (14,518) 
                
 Income before income taxes    34,538     22,740     17,459     67,144     86,313  
 Income tax (provision) / benefit    (7,537)    (1,205)    66,545     53,958     (10,902) 
                
 Net income $  27,001  $  21,535  $  84,004  $  121,102  $  75,411  
                
 Net income attributable to noncontrolling interest    -      (82)    -      -      (408) 
 Net income attributable to stockholders $  27,001  $  21,453  $  84,004  $  121,102  $  75,003  
                
 Earnings per share attributable to stockholders:           
  Basic  $  0.26  $  0.21  $  0.81  $  1.17  $  0.74  
  Diluted  $  0.22  $  0.19  $  0.65  $  0.98  $  0.65  
                
 Weighted-average shares used in computing per share amounts:           
  Basic     103,676     101,814     103,553     103,246     101,501  
  Diluted     136,435     131,596     134,721     134,871     131,914  
                
                
 Reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share:       
                
 Net income attributable to stockholders $  27,001  $  21,453  $  84,004  $  121,102  $  75,003  
  Add back items: interest expense, net of tax    3,628     3,469     3,587     10,763     10,296  
 Adjusted net income attributable to stockholders $  30,629  $  24,922  $  87,591  $  131,865  $  85,299  
 Weighted-average shares outstanding    103,676     101,814     103,553     103,246     101,501  
 Dilutive effect of convertible debt    25,938     25,939     25,938     25,939     25,939  
 Dilutive effect of warrants    5,226     2,151     3,854     4,086     2,753  
 Dilutive effect of performance-based stock units, restricted stock units & stock options    1,595     1,692     1,376     1,600     1,721  
 Diluted shares    136,435     131,596     134,721     134,871     131,914  
 Earnings per share attributable to stockholders:           
  Basic  $  0.26  $  0.21  $  0.81  $  1.17  $  0.74  
  Diluted  $  0.22  $  0.19  $  0.65  $  0.98  $  0.65  
                
                
SELECTED BALANCE SHEET DATA            
      October 1, 2018 January 1, 2018       
 Cash and cash equivalents, including restricted cash $  207,952  $  409,326        
 Accounts and notes receivable, net    569,215     483,903        
 Contract assets    296,836     -         
 Inventories     122,232     294,588        
 Total current assets    1,233,008     1,221,307        
 Property, plant and equipment, net    1,059,246     1,056,845        
 Other non-current assets    1,196,972     503,730        
 Total assets    3,489,226     2,781,882        
                
 Short-term debt, including current portion of long-term debt $  40,000  $  4,578        
 Accounts payable    451,645     497,455        
 Total current liabilities    695,276     720,356        
 Debt, net of discount    1,518,315     975,479        
 Total long-term liabilities    1,619,039     1,050,146        
 Total equity    1,174,911     1,011,380        
 Total liabilities and equity    3,489,226     2,781,882        
                
SUPPLEMENTAL DATA           
      Third Quarter Second Quarter First Three Quarters 
       2018   2017   2018   2018   2017  
 Gross margin  17.1%  14.5%  16.2%  15.7%  15.5% 
 Operating margin  7.2%  6.6%  4.4%  5.4%  7.4% 
                
 End Market Breakdown:           
      Third Quarter Second Quarter     
       2018   2017   2018      
                
  Aerospace/Defense  23%  16%  24%     
  Automotive  15%  20%  19%     
  Cellular Phone  17%  17%  8%     
  Computing/Storage/Peripherals  14%  14%  15%     
  Medical/Industrial/Instrumentation  13%  14%  14%     
  Networking/Communications  17%  17%  17%     
  Other   1%  2%  3%     
                
 Stock-based Compensation:           
      Third Quarter Second Quarter     
       2018   2017   2018      
  Amount included in:           
   Cost of goods sold $  774  $  606  $  829      
   Selling and marketing    520     369     545      
   General and administrative    4,165     3,703     4,493      
   Total stock-based compensation expense $  5,459  $  4,678  $  5,867      
                
                
 Operating Segment Data:           
      Third Quarter Second Quarter     
   Net sales:   2018   2017   2018      
   PCB   $  698,983  $  609,742  $  657,601      
   E-M Solutions     59,481     60,620     61,842      
   Corporate     -       -       -        
    Total sales     758,464     670,362     719,443      
   Inter-segment sales     (2,627)    (3,548)    (2,556)     
    Total net sales  $   755,837   $   666,814   $   716,887       
                
   Operating segment income:            
   PCB   $  98,039  $  70,443  $  80,964      
   E-M Solutions     2,205     2,870     2,496      
   Corporate     (26,920)    (23,318)    (32,237)     
    Total operating segment income     73,324     49,995     51,223      
   Amortization of definite-lived intangibles     (18,774)    (5,905)    (19,489)     
    Total operating income     54,550     44,090     31,734      
   Total other expense     (20,012)    (21,350)    (14,275)     
   Income before income taxes  $   34,538   $   22,740   $   17,459       
                
RECONCILIATIONS1           
      Third Quarter Second Quarter First Three Quarters 
       2018   2017   2018   2018   2017  
 Non-GAAP gross profit reconciliation2:           
  GAAP gross profit $  129,584  $  96,834  $  116,140  $  334,402  $  297,720  
  Add back item:           
   Inventory markup    -      -      4,900     4,900     -   
   Amortization of definite-lived intangibles    2,165     -      -      2,165     -   
   Stock-based compensation    774     606     829     2,132     1,639  
  Non-GAAP gross profit $  132,523  $  97,440  $  121,869  $  343,599  $  299,359  
  Non-GAAP gross margin  17.5%  14.6%  17.0%  16.1%  15.6% 
                
 Non-GAAP operating income reconciliation3:           
  GAAP operating income $  54,550  $  44,090  $  31,734  $  116,285  $  141,716  
  Add back items:           
   Amortization of definite-lived intangibles    18,774     5,905     19,489     44,124     17,727  
   Stock-based compensation    5,459     4,678     5,867     14,948     13,306  
   (Gain)/loss on sale of assets    -      452     -      -      (2,348) 
   Inventory markup    -      -      4,900     4,900     -   
   Impairments, restructuring, acquisition-related, and other charges    230     100     7,429     12,693     1,225  
  Non-GAAP operating income $  79,013  $  55,225  $  69,419  $  192,950  $  171,626  
  Non-GAAP operating margin  10.5%  8.3%  9.7%  9.0%  8.9% 
                
 Non-GAAP net income and EPS attributable to stockholders reconciliation4:           
  GAAP net income attributable to stockholders $  27,001  $  21,453  $  84,004  $  121,102  $  75,003  
  Add back items:           
   Amortization of definite-lived intangibles    18,774     5,905     19,489     44,124     17,727  
   Stock-based compensation    5,459     4,678     5,867     14,948     13,306  
   Non-cash interest expense    3,992     2,699     3,353     10,399     8,052  
   (Gain)/loss on sale of assets    -      452     -      -      (2,348) 
   Inventory markup    -      -      4,900     4,900     -   
   Loss on extinguishment of debt    -      768     -      -      769  
   Impairments, restructuring, acquisition-related, and other charges    230     100     7,742     13,235     1,225  
   Income taxes5    (337)    (2,643)    (73,073)    (73,302)    (7,855) 
  Non-GAAP net income attributable to stockholders $  55,119  $  33,412  $  52,282  $  135,406  $  105,879  
  Non-GAAP earnings per diluted share attributable to stockholders $  0.50  $  0.32  $  0.48  $  1.24  $  1.00  
                
 Non-GAAP diluted number of shares6:           
  Diluted shares    136,435     131,596     134,721     134,871     131,914  
  Dilutive effect of convertible debt    (25,938)    (25,939)    (25,938)    (25,939)    (25,939) 
  Non-GAAP diluted number of shares    110,497     105,657     108,783     108,932     105,975  
                
 Adjusted EBITDA reconciliation7:           
  GAAP net income $  27,001  $  21,535  $  84,004  $  121,102  $  75,411  
  Add back items:           
   Income tax provision (benefit)    7,537     1,205     (66,545)    (53,958)    10,902  
   Interest expense    22,225     13,598     20,453     56,425     40,116  
   Amortization of definite-lived intangibles    18,774     5,905     19,489     44,124     17,727  
   Depreciation expense    41,092     37,496     40,298     121,165     109,719  
   Stock-based compensation    5,459     4,678     5,867     14,948     13,306  
   (Gain)/loss on sale of assets    -      452     -      -      (2,348) 
   Inventory markup    -      -      4,900     4,900     -   
   Loss on extinguishment of debt    -      768     -      -      769  
   Impairments, restructuring, acquisition-related, and other charges    230     100     7,429     12,693     1,225  
  Adjusted EBITDA $  122,318  $  85,737  $  115,895  $  321,399  $  266,827  
  Adjusted EBITDA margin  16.2%  12.9%  16.2%  15.0%  13.9% 
                
 Free cash flow reconciliation:           
  Operating cash flow    79,992     71,366     55,639     121,370     180,064  
  Capital expenditures, net    (35,038)    (22,877)    (38,948)    (116,125)    (91,881) 
  Free cash flow $  44,954  $  48,489  $  16,691  $  5,245  $  88,183  
                
 1 This information provides a reconciliation of non-GAAP gross profit, non-GAAP operating income, non-GAAP net income attributable to stockholders, non-GAAP EPS attributable to stockholders, 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, asset impairments, restructuring and other charges. 
                
 4 This information provides non-GAAP net income attributable to stockholders and non-GAAP EPS attributable to stockholders, 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, asset impairments, 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 attributable to stockholders 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, asset impairments, 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

 

TTM Logo with Tagline 09-06-07.jpg

Source: TTM Technologies


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