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

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 TTM Technologies, Inc. Reports Fiscal Third Quarter 2019 Results
   Wednesday, October 30, 2019 4:05:00 PM ET

SANTA ANA, Calif., Oct. 30, 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 third quarter of fiscal 2019, which ended on September 30, 2019.

Third Quarter 2019 Highlights

  • Net sales were $716.8 million
  • GAAP net income was $15.9 million, or $0.14 per diluted share
  • Non-GAAP net income was $38.9 million, or $0.37 per diluted share
  • Cash flow from operations of $58.7 million


Third Quarter 2019 Financial Results
Net sales for the third quarter of 2019 were $716.8 million, compared to $755.8 million in the third quarter of 2018 and $633.0 million in the second quarter of 2019.

GAAP operating income for the third quarter of 2019 was $36.4 million, compared to $54.6 million in the third quarter of 2018 and $16.8 million in the second quarter of 2019. 

GAAP net income for the third quarter of 2019 was $15.9 million, or $0.14 per diluted share. This compares to income of $27.0 million, or $0.22 per diluted share in the third quarter of 2018, and $3.4 million, or $0.03 per diluted share, in the second quarter of 2019.

On a non-GAAP basis, net income for the third quarter of 2019 was $38.9 million, or $0.37 per diluted share, inclusive of $0.05 of foreign exchange gains. This compares to non-GAAP net income of $55.1 million, or $0.50 per diluted share, for the third quarter of 2018 and $21.3 million, or $0.20 per diluted share, in the second quarter of 2019.

Adjusted EBITDA for the third quarter of 2019 was $103.5 million, or 14.4 percent of net sales, compared to adjusted EBITDA of $122.3 million, or 16.2 percent of net sales, for the third quarter of 2018 and $82.9 million, or 13.1 percent of net sales, for the second quarter of 2019.

“For the third quarter, TTM continued to generate solid cash flow and delivered revenue and earnings within the previously guided range,” said Tom Edman, CEO of TTM. “The year over year growth we experienced in the aerospace and defense and cellular end markets partially offset weakness in our other commercial end markets.”         

Business Outlook
For the fourth quarter of 2019 TTM estimates that revenue will be in the range of $640 million to $680 million, and non-GAAP net income will be in the range of $0.25 to $0.31 per diluted share.

“Significant year on year declines from the automotive and networking and communications end markets are a major contributor to lower revenues in the fourth quarter. Consequently, we are exercising discipline in managing our costs and focusing on continued cash flow generation. Longer term, we are confident in our diversification and differentiation strategy and will benefit from secular growth drivers such as 5G wireless technology, increasing automotive electronic content, and ongoing demand strength in aerospace and defense electronics,” concluded Mr. Edman.

To Access the Live Webcast/Conference Call
TTM will host a conference call and webcast to discuss third quarter 2019 results and the fourth quarter 2019 outlook on Wednesday, October 30, 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 800-367-2403 or international 334-777-6978 (ID 1206370). 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 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)
              
              
     Third Quarter Second Quarter First Three Quarters
      2019   2018   2019   2019   2018 
              
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS          
              
 Net sales $  716,817  $  755,837  $  633,038  $  1,970,055  $  2,136,306 
 Cost of goods sold    612,983     626,253     548,423     1,692,921     1,801,904 
              
 Gross profit    103,834     129,584     84,615     277,134     334,402 
              
 Operating expenses:          
  Selling and marketing    18,400     18,533     17,867     55,168     54,780 
  General and administrative    38,845     39,974     34,693     108,561     119,822 
  Amortization of definite-lived intangibles    10,175     16,609     11,267     38,268     41,959 
  Restructuring charges    53     (82)    3,944     4,442     1,556 
   Total operating expenses    67,473     75,034     67,771     206,439     218,117 
              
 Operating income    36,361     54,550     16,844     70,695     116,285 
              
 Interest expense    (20,568)    (22,225)    (20,871)    (63,127)    (56,425)
 Other, net    8,126     2,213     4,621     12,217     7,284 
              
 Income before income taxes    23,919     34,538     594     19,785     67,144 
 Income tax (provision) / benefit    (8,049)    (7,537)    2,830     (3,743)    53,958 
              
 Net income $  15,870  $  27,001  $  3,424  $  16,042  $  121,102 
              
 Earnings per share:          
  Basic $  0.15  $  0.26  $  0.03  $  0.15  $  1.17 
  Diluted $  0.14  $  0.22  $  0.03  $  0.15  $  0.98 
              
 Weighted-average shares used in computing per share amounts:          
  Basic    105,492     103,676     105,470     105,092     103,246 
  Diluted    132,412     136,435     106,107     106,065     134,871 
              
              
 Reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share:      
              
 Net income $  15,870  $  27,001      $  121,102 
  Add back items: interest expense, net of tax    2,836     3,628         10,763 
 Adjusted net income $  18,706  $  30,629      $  131,865 
 Weighted-average shares outstanding    105,492     103,676         103,246 
 Dilutive effect of convertible debt    25,938     25,938         25,939 
 Dilutive effect of warrants    -      5,226         4,086 
 Dilutive effect of performance-based stock units, restricted stock units & stock options    982     1,595         1,600 
 Diluted shares    132,412     136,435         134,871 
 Earnings per share:          
  Basic $  0.15  $  0.26      $  1.17 
  Diluted $  0.14  $  0.22      $  0.98 
              
              
SELECTED BALANCE SHEET DATA           
     September 30, 2019 December 31, 2018      
 Cash and cash equivalents, including restricted cash $  316,589  $  256,360       
 Accounts and notes receivable, net    529,942     523,165       
 Contract assets    268,542     287,741       
 Inventories    126,324     109,377       
 Total current assets    1,277,835     1,206,914       
 Property, plant and equipment, net    1,027,868     1,052,024       
 Operating lease right of use asset    23,670     -        
 Other non-current assets    1,168,985     1,198,565       
 Total assets    3,498,358     3,457,503       
              
 Short-term debt, including current portion of long-term debt $  -   $  30,000       
 Accounts payable    470,233     431,288       
 Total current liabilities    666,673     673,214       
 Debt, net of discount    1,472,578     1,462,425       
 Total long-term liabilities    1,584,332     1,557,202       
 Total equity    1,247,353     1,227,087       
 Total liabilities and equity    3,498,358     3,457,503       
              
SUPPLEMENTAL DATA          
     Third Quarter Second Quarter First Three Quarters
      2019   2018   2019   2019   2018 
 Gross margin  14.5%  17.1%  13.4%  14.1%  15.7%
 Operating margin  5.1%  7.2%  2.7%  3.6%  5.4%
              
 End Market Breakdown:          
     Third Quarter Second Quarter    
      2019  2018*  2019     
              
  Aerospace/Defense  24%  21%  28%    
  Automotive  17%  15%  16%    
  Cellular Phone  19%  17%  6%    
  Computing/Storage/Peripherals  12%  14%  15%    
  Medical/Industrial/Instrumentation  13%  14%  15%    
  Networking/Communications  13%  17%  17%    
  Other  2%  2%  3%    
  * Amended for Anaren integration          
              
 Stock-based Compensation:          
     Third Quarter Second Quarter    
      2019   2018   2019     
  Amount included in:          
   Cost of goods sold $  941  $  774  $  570     
   Selling and marketing    593     520     396     
   General and administrative    3,128     4,165     2,636     
   Total stock-based compensation expense $  4,662  $  5,459  $  3,602     
              
              
 Operating Segment Data:          
     Third Quarter Second Quarter    
   Net sales:  2019   2018   2019     
   PCB $  649,104  $  696,356  $  573,121     
   E-M Solutions    67,713      59,481      59,917      
    Total net sales $  716,817   $  755,837   $  633,038      
              
   Operating segment income:          
   PCB $  73,230  $  98,039  $  50,989     
   E-M Solutions    3,236     2,205     863     
   Corporate    (28,750)    (26,920)    (22,561)    
    Total operating segment income    47,716     73,324     29,291     
   Amortization of definite-lived intangibles    (11,355)    (18,774)    (12,447)    
    Total operating income    36,361     54,550     16,844     
   Total other expense    (12,442)    (20,012)    (16,250)    
   Income before income taxes $  23,919   $  34,538   $  594      
              
RECONCILIATIONS1          
     Third Quarter Second Quarter First Three Quarters
      2019   2018   2019   2019   2018 
 Non-GAAP gross profit reconciliation2:          
  GAAP gross profit $  103,834  $  129,584  $  84,615  $  277,134  $  334,402 
  Add back item:          
   Inventory markup    -      -      -      -      4,900 
   Amortization of definite-lived intangibles    1,180     2,165     1,180     3,539     2,165 
   Stock-based compensation    941     774     570     2,216     2,132 
  Non-GAAP gross profit $  105,955  $  132,523  $  86,365  $  282,889  $  343,599 
  Non-GAAP gross margin  14.8%  17.5%  13.6%  14.4%  16.1%
              
 Non-GAAP operating income reconciliation3:          
  GAAP operating income $  36,361  $  54,550  $  16,844  $  70,695  $  116,285 
  Add back items:          
   Amortization of definite-lived intangibles    11,355     18,774     12,447     41,807     44,124 
   Stock-based compensation    4,662     5,459     3,602     12,190     14,948 
   Inventory markup    -      -      -      -      4,900 
   Restructuring, acquisition-related, and other charges    1,573     230     4,351     7,027     12,693 
  Non-GAAP operating income $  53,951  $  79,013  $  37,244  $  131,719  $  192,950 
  Non-GAAP operating margin  7.5%  10.5%  5.9%  6.7%  9.0%
              
 Non-GAAP net income and EPS reconciliation4:          
  GAAP net income $  15,870  $  27,001  $  3,424  $  16,042  $  121,102 
  Add back items:          
   Amortization of definite-lived intangibles    11,355     18,774     12,447     41,807     44,124 
   Stock-based compensation    4,662     5,459     3,602     12,190     14,948 
   Non-cash interest expense    3,452     3,992     3,467     10,787     10,399 
   (Gain) on sale of Viasource    (251)    -      (235)    (3,557)    -  
   Inventory markup    -      -      -      -      4,900 
   Restructuring, acquisition-related, and other charges    1,573     230     4,351     7,027     13,235 
   Income taxes5         2,237     (337)    (5,789)    (7,702)    (73,302)
  Non-GAAP net income $  38,898  $  55,119  $  21,267  $  76,594  $  135,406 
  Non-GAAP earnings per diluted share $  0.37  $  0.50  $  0.20  $  0.72  $  1.24 
              
 Non-GAAP diluted number of shares6:          
  Diluted shares    132,412     136,435     106,107     106,065     134,871 
  Dilutive effect of convertible debt    (25,938)    (25,938)    -     -     (25,939)
  Non-GAAP diluted number of shares    106,474     110,497     106,107     106,065     108,932 
              
 Adjusted EBITDA reconciliation7:          
  GAAP net income $  15,870  $  27,001  $  3,424  $  16,042  $  121,102 
  Add back items:          
   Income tax provision (benefit)    8,049     7,537     (2,830)    3,743     (53,958)
   Interest expense    20,568     22,225     20,871     63,127     56,425 
   Amortization of definite-lived intangibles    11,355     18,774     12,447     41,807     44,124 
   Depreciation expense    41,719     41,092     41,235     124,556     121,165 
   Stock-based compensation    4,662     5,459     3,602     12,190     14,948 
   (Gain) on sale of Viasource    (251)    -      (235)    (3,557)    -  
   Inventory markup    -      -      -      -      4,900 
   Restructuring, acquisition-related, and other charges    1,573     230     4,351     7,027     12,693 
  Adjusted EBITDA $  103,545  $  122,318  $  82,865  $  264,935  $  321,399 
  Adjusted EBITDA margin  14.4%  16.2%  13.1%  13.4%  15.0%
              
 Free cash flow reconciliation:          
  Operating cash flow    58,742     79,992     86,123     181,789     121,370 
  Capital expenditures, net    (25,803)    (35,038)    (34,741)    (88,990)    (116,125)
  Free cash flow $  32,939  $  44,954  $  51,382  $  92,799  $  5,245 
              
 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.


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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