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TTM Technologies Inc.$12.42($.01)(.08%)

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 TTM Technologies, Inc. Reports Fiscal Second Quarter 2019 Results
   Wednesday, July 31, 2019 4:05:00 PM ET

SANTA ANA, Calif., July 31, 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 second quarter of fiscal 2019, which ended on July 1, 2019.

Second Quarter 2019 Highlights

  • Net sales were $633.0 million
  • GAAP net income was $3.4 million, or $0.03 per diluted share
  • Non-GAAP net income was $21.3 million, or $0.20 per diluted share
  • Cash flow from operations of $86.1 million


Second Quarter 2019 Financial Results
Net sales for the second quarter of 2019 were $633.0 million, compared to $716.9 million in the second quarter of 2018 and $620.2 million in the first quarter of 2019.

GAAP operating income for the second quarter of 2019 was $16.8 million, compared to $31.7 million in the second quarter of 2018 and $17.5 million in the first quarter of 2019. 

GAAP net income for the second quarter of 2019 was $3.4 million, or $0.03 per diluted share.  This compares to income of $84.0 million, or $0.65 per diluted share in the second quarter of 2018, inclusive of the release of a tax valuation allowance of $74.6 million, and a loss of $3.3 million, or ($0.03) per share, in the first quarter of 2019.
                                                                                                                                            
On a non-GAAP basis, net income for the second quarter of 2019 was $21.3 million, or $0.20 per diluted share, inclusive of $0.02 of foreign exchange gains. This compares to non-GAAP net income of $52.3 million, or $0.48 per diluted share, for the second quarter of 2018 and $16.4 million, or $0.16 per diluted share, in the first quarter of 2019.

Adjusted EBITDA for the second quarter of 2019 was $82.9 million, or 13.1 percent of net sales, compared to adjusted EBITDA of $115.9 million, or 16.2 percent of net sales, for the second quarter of 2018 and $78.5 million, or 12.7 percent of net sales, for the first quarter of 2019.

“For the second quarter, TTM continued to generate strong cash flow and delivered earnings at the high end of the previously guided range,” said Tom Edman, CEO of TTM.  “The year over year growth we are experiencing in the aerospace and defense end market partially offset weakness in our commercial end markets.  We see Q2 as the low point of the year and we expect that continued strength in the aerospace and defense market combined with a strong rebound in the cellular end market in Q3 will drive overall revenue growth and improved profitability.  At the same time, we will continue to be focused on cash flow generation and our strategic goals of diversification, differentiation and discipline.”               

Business Outlook
For the third quarter of 2019 TTM estimates that revenue will be in the range of $690 million to $730 million, and non-GAAP net income will be in the range of $0.35 to $0.41 per diluted share.

To Access the Live Webcast/Conference Call
TTM will host a conference call and webcast to discuss second quarter 2019 results and third quarter 2019 outlook on Wednesday, July 31, 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 800-289-0438 or international 323-794-2423 (ID 7407724).  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)
               
               
      Second Quarter First Quarter First Two Quarters
       2019   2018   2019   2019   2018 
               
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS          
               
 Net sales  $633,038  $716,887  $620,200  $1,253,238  $1,380,469 
 Cost of goods sold  548,423   600,747   531,515   1,079,938   1,175,651 
               
 Gross profit  84,615   116,140   88,685   173,300   204,818 
               
 Operating expenses:          
  Selling and marketing  17,867   18,619   18,901   36,768   36,247 
  General and administrative  34,693   45,721   35,023   69,716   79,848 
  Amortization of definite-lived intangibles  11,267   19,489   16,826   28,093   25,350 
  Restructuring charges  3,944   577   445   4,389   1,638 
   Total operating expenses  67,771   84,406   71,195   138,966   143,083 
               
 Operating income  16,844   31,734   17,490   34,334   61,735 
               
 Interest expense  (20,871)  (20,453)  (21,688)  (42,559)  (34,200)
 Other, net   4,621   6,178   (530)  4,091   5,071 
               
 Income (loss) before income taxes  594   17,459   (4,728)  (4,134)  32,606 
 Income tax (provision) / benefit  2,830   66,545   1,476   4,306   61,495 
               
 Net income (loss) $3,424  $84,004  $(3,252) $172  $94,101 
               
 Earnings per share:          
  Basic  $0.03  $0.81  $(0.03) $0.00  $0.91 
  Diluted  $0.03  $0.65  $(0.03) $0.00  $0.75 
               
 Weighted-average shares used in computing per share amounts:          
  Basic   105,470   103,553   104,315   104,893   103,030 
  Diluted   106,107   134,721   104,315   105,860   134,088 
               
               
 Reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share:      
               
 Net income   $84,004      $94,101 
  Add back items: interest expense, net of tax    3,587       7,135 
 Adjusted net income   $87,591      $101,236 
 Weighted-average shares outstanding    103,553       103,030 
 Dilutive effect of convertible debt    25,938       25,938 
 Dilutive effect of warrants    3,854       3,517 
 Dilutive effect of performance-based stock units, restricted stock units & stock options    1,376       1,603 
 Diluted shares    134,721       134,088 
 Earnings per share:          
  Basic    $0.81      $0.91 
  Diluted    $0.65      $0.75 
               
               
SELECTED BALANCE SHEET DATA           
      July 1, 2019 December 31, 2018      
 Cash and cash equivalents, including restricted cash $284,466  $256,360       
 Accounts and notes receivable, net  482,740   523,165       
 Contract assets  261,071   287,741       
 Inventories   122,149   109,377       
 Total current assets  1,189,686   1,206,914       
 Property, plant and equipment, net  1,037,087   1,052,024       
 Operating lease right of use asset  25,625   -       
 Other non-current assets  1,187,715   1,198,565       
 Total assets  3,440,113   3,457,503       
               
 Short-term debt, including current portion of long-term debt $-  $30,000       
 Accounts payable  432,936   431,288       
 Total current liabilities  623,955   673,214       
 Debt, net of discount  1,469,270   1,462,425       
 Total long-term liabilities  1,587,081   1,557,202       
 Total equity  1,229,077   1,227,087       
 Total liabilities and equity  3,440,113   3,457,503       
               
SUPPLEMENTAL DATA          
      Second Quarter First Quarter First Two Quarters
       2019   2018   2019   2019   2018 
 Gross margin  13.4%  16.2%  14.3%  13.8%  14.8%
 Operating margin  2.7%  4.4%  2.8%  2.7%  4.5%
               
 End Market Breakdown:          
      Second Quarter First Quarter    
       2019  2018*  2019     
               
  Aerospace/Defense  28%  23%  27%    
  Automotive  16%  19%  17%    
  Cellular Phone  6%  8%  7%    
  Computing/Storage/Peripherals  15%  15%  13%    
  Medical/Industrial/Instrumentation  15%  15%  15%    
  Networking/Communications  17%  17%  18%    
  Other   3%  3%  3%    
  * Amended for Anaren integration          
               
 Stock-based Compensation:          
      Second Quarter First Quarter    
       2019   2018   2019     
  Amount included in:          
   Cost of goods sold $570  $829  $705     
   Selling and marketing  396   545   466     
   General and administrative  2,636   4,493   2,755     
   Total stock-based compensation expense $3,602  $5,867  $3,926     
               
               
 Operating Segment Data:          
      Second Quarter First Quarter    
  Net sales:  2019   2018   2019     
  PCB  $573,121  $655,045  $568,822     
  E-M Solutions    59,917     61,842     51,378     
   Total net sales $  633,038  $  716,887  $  620,200     
               
  Operating segment income:          
  PCB  $50,989  $80,964  $58,542     
  E-M Solutions  863   2,496   1,179     
  Corporate    (22,561)    (32,237)    (24,226)    
   Total operating segment income  29,291   51,223   35,495     
  Amortization of definite-lived intangibles    (12,447)    (19,489)    (18,005)    
   Total operating income  16,844   31,734   17,490     
  Total other expense    (16,250)    (14,275)    (22,218)    
  Income (loss) before income taxes $  594  $  17,459  $  (4,728)    
               
RECONCILIATIONS1          
      Second Quarter First Quarter First Two Quarters
       2019   2018   2019   2019   2018 
 Non-GAAP gross profit reconciliation2:          
  GAAP gross profit $84,615  $116,140  $88,685  $173,300  $204,818 
  Add back item:          
   Inventory markup  -   4,900   -   -   4,900 
   Amortization of definite-lived intangibles  1,180   -   1,179   2,359   - 
   Stock-based compensation  570   829   705   1,275   1,358 
  Non-GAAP gross profit $86,365  $121,869  $90,569  $176,934  $211,076 
  Non-GAAP gross margin  13.6%  17.0%  14.6%  14.1%  15.3%
               
 Non-GAAP operating income reconciliation3:          
  GAAP operating income $16,844  $31,734  $17,490  $34,334  $61,735 
  Add back items:          
   Amortization of definite-lived intangibles  12,447   19,489   18,005   30,452   25,350 
   Stock-based compensation  3,602   5,867   3,926   7,528   9,489 
   Inventory markup  -   4,900   -   -   4,900 
   Restructuring, acquisition-related, and other charges  4,351   7,429   1,103   5,454   12,463 
  Non-GAAP operating income $37,244  $69,419  $40,524  $77,768  $113,937 
  Non-GAAP operating margin  5.9%  9.7%  6.5%  6.2%  8.3%
               
 Non-GAAP net income and EPS reconciliation4:          
  GAAP net income (loss) $3,424  $84,004  $(3,252) $172  $94,101 
  Add back items:          
   Amortization of definite-lived intangibles  12,447   19,489   18,005   30,452   25,350 
   Stock-based compensation  3,602   5,867   3,926   7,528   9,489 
   Non-cash interest expense  3,467   3,353   3,868   7,335   6,407 
   (Gain) on sale of Viasource  (235)  -   (3,071)  (3,306)  - 
   Inventory markup  -   4,900   -   -   4,900 
   Restructuring, acquisition-related, and other charges  4,351   7,742   1,103   5,454   13,005 
   Income taxes5  (5,789)  (73,073)  (4,150)  (9,939)  (72,965)
  Non-GAAP net income $21,267  $52,282  $16,429  $37,696  $80,287 
  Non-GAAP earnings per diluted share $0.20  $0.48  $0.16  $0.36  $0.74 
               
 Non-GAAP diluted number of shares6:          
  Diluted shares  106,107   134,721   105,614   105,860   134,088 
  Dilutive effect of convertible debt  -   (25,938)  -   -   (25,938)
  Non-GAAP diluted number of shares  106,107   108,783   105,614   105,860   108,150 
               
 Adjusted EBITDA reconciliation7:          
  GAAP net income (loss) $3,424  $84,004  $(3,252) $172  $94,101 
  Add back items:          
   Income tax provision (benefit)  (2,830)  (66,545)  (1,476)  (4,306)  (61,495)
   Interest expense  20,871   20,453   21,688   42,559   34,200 
   Amortization of definite-lived intangibles  12,447   19,489   18,005   30,452   25,350 
   Depreciation expense  41,235   40,298   41,602   82,837   80,073 
   Stock-based compensation  3,602   5,867   3,926   7,528   9,489 
   (Gain) on sale of Viasource  (235)  -   (3,071)  (3,306)  - 
   Inventory markup  -   4,900   -   -   4,900 
   Restructuring, acquisition-related, and other charges  4,351   7,429   1,103   5,454   12,463 
  Adjusted EBITDA $82,865  $115,895  $78,525  $161,390  $199,081 
  Adjusted EBITDA margin  13.1%  16.2%  12.7%  12.9%  14.4%
               
 Free cash flow reconciliation:          
  Operating cash flow  86,123   55,639   36,924   123,047   41,378 
  Capital expenditures, net  (34,741)  (38,948)  (28,446)  (63,187)  (81,087)
  Free cash flow $51,382  $16,691  $8,478  $59,860  $(39,709)
               
 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.

TTM Logo with Tagline 09-06-07.jpg

Source: TTM Technologies


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