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TTM Technologies, Inc. Reports Fiscal Second Quarter 2018 Results

August 1, 2018 4:05 PM

COSTA MESA, Calif., Aug. 01, 2018 (GLOBE NEWSWIRE) -- TTM Technologies, Inc. (NASDAQ: TTMI), a leading global printed circuit board (“PCB”) manufacturer, today reported results for the second quarter of fiscal 2018, which ended July 2nd, 2018. The financial results provided below for the second quarter include a partial quarter contribution from the acquisition of Anaren, Inc. (“Anaren”), which was completed on April 18th, 2018.

Second Quarter 2018 Highlights

Second Quarter 2018 Financial Results Net sales for the second quarter of 2018 were $716.9 million, compared to $627.2 million in the second quarter of 2017 and $663.6 million in the first quarter of 2018.

GAAP operating income for the second quarter of 2018 was $31.7 million, compared to $45.1 million in the second quarter of 2017 and $30.0 million in the first quarter of 2018.

GAAP net income for the second quarter of 2018 was $84.0 million, or $0.65 per diluted share. This compares to $20.6 million, or $0.18 per diluted share, in the second quarter of 2017 and $10.1 million, or $0.09 per diluted share, in the first quarter of 2018. The current quarter results reflect the release of a tax valuation allowance of $74.6 million. On a non-GAAP basis, net income for the second quarter of 2018 was $52.3 million, or $0.48 per diluted share. This compares to non-GAAP net income of $33.3 million, or $0.31 per diluted share, for the second quarter of 2017 and $28.0 million, or $0.26 per diluted share, in the first quarter of 2018.

Adjusted EBITDA for the second quarter of 2018 was $115.9 million, or 16.2 percent of net sales, compared to adjusted EBITDA of $85.5 million, or 13.6 percent of net sales, for the second quarter of 2017 and $83.2 million, or 12.5 percent of net sales, for the first quarter of 2018.

“In the second quarter, TTM delivered strong results,” said Tom Edman, CEO of TTM. “We were pleased to see solid year over year growth from the aerospace and defense, automotive, computing and medical/industrial/instrumentation end markets that more than offset weakness in our cellular end market. Further, Anaren’s contribution in the quarter was better than forecasted. Longer term, Anaren’s deep RF expertise will strengthen TTM’s ability to engage with customers at the design stage in order to provide more value added solutions.”

Business Outlook For the third quarter of 2018 TTM estimates that revenue will be in the range of $730 million to $770 million, and non-GAAP net income will be in the range of $0.41 to $0.47 per diluted share.

To Access the Live Webcast/Conference CallTTM will host a conference call and webcast to discuss second quarter 2018 results and third quarter 2018 outlook on Wednesday, August 1st, 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 800-289-0438 or international 323-794-2423 (ID 2502044). The conference call also will be webcast on TTM’s website at www.ttm.com.

To Access a Replay of the WebcastThe replay of the webcast will remain accessible for one week following the live event on TTM’s website at www.ttm.com.

About TTMTTM 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 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 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 MeasuresThis 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)
Second Quarter First Quarter First Two Quarters
2018 2017 2018 2018 2017
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
Net sales $ 716,887 $ 627,182 $ 663,582 $ 1,380,469 $ 1,252,429
Cost of goods sold 600,747 531,315 574,904 1,175,651 1,051,543
Gross profit 116,140 95,867 88,678 204,818 200,886
Operating expenses:
Selling and marketing 18,619 15,851 17,628 36,247 32,506
General and administrative 45,721 29,885 34,127 79,848 60,707
Amortization of definite-lived intangibles 19,489 5,910 5,861 25,350 11,822
Restructuring charges 577 416 1,061 1,638 1,025
(Gain)/loss on sale of assets - (1,251) - - (2,800)
Total operating expenses 84,406 50,811 58,677 143,083 103,260
Operating income 31,734 45,056 30,001 61,735 97,626
Interest expense (20,453) (12,922) (13,747) (34,200) (26,518)
Other, net 6,178 (5,825) (1,107) 5,071 (7,535)
Income before income taxes 17,459 26,309 15,147 32,606 63,573
Income tax (provision) / benefit 66,545 (5,558) (5,050) 61,495 (9,697)
Net income $ 84,004 $ 20,751 $ 10,097 $ 94,101 $ 53,876
Net income attributable to noncontrolling interest - (160) - - (326)
Net income attributable to stockholders $ 84,004 $ 20,591 $ 10,097 $ 94,101 $ 53,550
Earnings per share attributable to stockholders:
Basic $ 0.81 $ 0.20 $ 0.10 $ 0.91 $ 0.53
Diluted $ 0.65 $ 0.18 $ 0.09 $ 0.75 $ 0.46
Weighted-average shares used in computing per share amounts:
Basic 103,553 101,756 102,508 103,030 101,344
Diluted 134,721 133,224 107,517 134,088 132,073
Reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share:
Net income attributable to stockholders $ 84,004 $ 20,591 $ 94,101 $ 53,550
Add back items: interest expense, net of tax 3,587 3,432 7,135 6,826
Adjusted net income attributable to stockholders $ 87,591 $ 24,023 $ 101,236 $ 60,376
Weighted-average shares outstanding 103,553 101,756 103,030 101,344
Dilutive effect of convertible debt 25,938 25,940 25,938 25,940
Dilutive effect of warrants 3,854 3,924 3,517 3,054
Dilutive effect of performance-based stock units, restricted stock units & stock options 1,376 1,604 1,603 1,735
Diluted shares 134,721 133,224 134,088 132,073
Earnings per share attributable to stockholders:
Basic $ 0.81 $ 0.20 $ 0.91 $ 0.53
Diluted $ 0.65 $ 0.18 $ 0.75 $ 0.46
SELECTED BALANCE SHEET DATA
July 2, 2018 January 1, 2018
Cash and cash equivalents, including restricted cash $ 204,100 $ 409,326
Accounts and notes receivable, net 541,587 483,903
Contract assets 300,717 -
Inventories 121,285 294,588
Total current assets 1,202,639 1,221,307
Property, plant and equipment, net 1,072,578 1,056,845
Other non-current assets 1,203,715 503,730
Total assets 3,478,932 2,781,882
Short-term debt, including current portion of long-term debt $ 40,729 $ 4,578
Accounts payable 448,455 497,455
Total current liabilities 689,276 720,356
Debt, net of discount 1,555,425 975,479
Total long-term liabilities 1,648,363 1,050,146
Total equity 1,141,293 1,011,380
Total liabilities and equity 3,478,932 2,781,882
SUPPLEMENTAL DATA
Second Quarter First Quarter First Two Quarters
2018 2017 2018 2018 2017
Gross margin 16.2% 15.3% 13.4% 14.8% 16.0%
Operating margin 4.4% 7.2% 4.5% 4.5% 7.8%
End Market Breakdown:
Second Quarter First Quarter
2018 2017 2018
Aerospace/Defense 24% 17% 18%
Automotive 19% 20% 20%
Cellular Phone 8% 13% 15%
Computing/Storage/Peripherals 15% 14% 12%
Medical/Industrial/Instrumentation 14% 15% 15%
Networking/Communications 17% 20% 16%
Other 3% 1% 4%
Stock-based Compensation:
Second Quarter First Quarter
2018 2017 2018
Amount included in:
Cost of goods sold $ 829 $ 639 $ 529
Selling and marketing 545 386 374
General and administrative 4,493 3,975 2,719
Total stock-based compensation expense $ 5,867 $ 5,000 $ 3,622
Operating Segment Data:
Second Quarter First Quarter
Net sales: 2018 2017 2018
PCB $ 596,461 $ 576,566 $ 619,329
Anaren 62,011 - -
E-M Solutions 61,842 52,898 47,151
Corporate - - -
Total sales 720,314 629,464 666,480
Inter-segment sales (3,427) (2,282) (2,898)
Total net sales $ 716,887 $ 627,182 $ 663,582
Operating segment income:
PCB $ 68,028 $ 69,435 $ 63,464
Anaren 12,936 - -
E-M Solutions 2,496 2,689 40
Corporate (32,237) (21,158) (27,642)
Total operating segment income 51,223 50,966 35,862
Amortization of definite-lived intangibles (19,489) (5,910) (5,861)
Total operating income 31,734 45,056 30,001
Total other expense (14,275) (18,747) (14,854)
Income before income taxes $ 17,459 $ 26,309 $ 15,147
RECONCILIATIONS1
Second Quarter First Quarter First Two Quarters
2018 2017 2018 2018 2017
Non-GAAP gross profit reconciliation2:
GAAP gross profit $ 116,140 $ 95,867 $ 88,678 $ 204,818 $ 200,886
Add back item:
Inventory markup 4,900 - - 4,900 -
Stock-based compensation 829 639 529 1,358 1,033
Non-GAAP gross profit $ 121,869 $ 96,506 $ 89,207 $ 211,076 $ 201,919
Non-GAAP gross margin 17.0% 15.4% 13.4% 15.3% 16.1%
Non-GAAP operating income reconciliation3:
GAAP operating income $ 31,734 $ 45,056 $ 30,001 $ 61,735 $ 97,626
Add back items:
Amortization of definite-lived intangibles 19,489 5,910 5,861 25,350 11,822
Stock-based compensation 5,867 5,000 3,622 9,489 8,628
(Gain)/loss on sale of assets - (1,251) - - (2,800)
Inventory markup 4,900 - - 4,900 -
Impairments, restructuring, acquisition-related, and other charges 7,429 417 5,034 12,463 1,126
Non-GAAP operating income $ 69,419 $ 55,132 $ 44,518 $ 113,937 $ 116,402
Non-GAAP operating margin 9.7% 8.8% 6.7% 8.3% 9.3%
Non-GAAP net income and EPS attributable to stockholders reconciliation4:
GAAP net income attributable to stockholders $ 84,004 $ 20,591 $ 10,097 $ 94,101 $ 53,550
Add back items:
Amortization of definite-lived intangibles 19,489 5,910 5,861 25,350 11,822
Stock-based compensation 5,867 5,000 3,622 9,489 8,628
Non-cash interest expense 3,353 2,726 3,054 6,407 5,353
(Gain)/loss on sale of assets - (1,251) - - (2,800)
Inventory markup 4,900 - - 4,900 -
Impairments, restructuring, acquisition-related, and other charges 7,742 417 5,263 13,005 1,126
Income taxes5 (73,073) (119) 108 (72,965) (5,212)
Non-GAAP net income attributable to stockholders $ 52,282 $ 33,274 $ 28,005 $ 80,287 $ 72,467
Non-GAAP earnings per diluted share attributable to stockholders $ 0.48 $ 0.31 $ 0.26 $ 0.74 $ 0.68
Non-GAAP diluted number of shares6:
Diluted shares 134,721 133,224 107,517 134,088 132,073
Dilutive effect of convertible debt (25,938) (25,940) - (25,938) (25,940)
Non-GAAP diluted number of shares 108,783 107,284 107,517 108,150 106,133
Adjusted EBITDA reconciliation7:
GAAP net income $ 84,004 $ 20,751 $ 10,097 $ 94,101 $ 53,876
Add back items:
Income tax provision (benefit) (66,545) 5,558 5,050 (61,495) 9,697
Interest expense 20,453 12,922 13,747 34,200 26,518
Amortization of definite-lived intangibles 19,489 5,910 5,861 25,350 11,822
Depreciation expense 40,298 36,146 39,775 80,073 72,223
Stock-based compensation 5,867 5,000 3,622 9,489 8,628
(Gain)/loss on sale of assets - (1,251) - - (2,800)
Inventory markup 4,900 - - 4,900 -
Impairments, restructuring, acquisition-related, and other charges 7,429 417 5,034 12,463 1,126
Adjusted EBITDA $ 115,895 $ 85,453 $ 83,186 $ 199,081 $ 181,090
Adjusted EBITDA margin 16.2% 13.6% 12.5% 14.4% 14.5%
Free cash flow reconciliation:
Operating cash flow 55,639 59,114 (14,261) 41,378 108,698
Capital expenditures, net (38,948) (45,626) (42,139) (81,087) (69,004)
Free cash flow $ 16,691 $ 13,488 $ (56,400) $ (39,709) $ 39,694
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 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[email protected]714-327-3050

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Source: TTM Technologies

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