TTM Technologies, Inc. Reports First Quarter 2016 Results

Strong Execution Drives Year on Year Improvement in Non-GAAP Net Income

| Source: TTM Technologies TTM Technologies

COSTA MESA, Calif., April 27, 2016 (GLOBE NEWSWIRE) -- TTM Technologies, Inc. (Nasdaq:TTMI), a major global printed circuit board (“PCB”) manufacturer, today reported results for the first quarter 2016, which ended March 28, 2016.  Our results include the contribution from the Viasystems Group, Inc. ("Viasystems") acquisition, which was completed on May 31, 2015.

First Quarter 2016 Highlights

  • Net sales were $583.3 million
  • GAAP net loss attributable to stockholders was $7.3 million, or $0.07 per share
  • Non-GAAP net income attributable to stockholders was $13.9 million, or $0.14 per diluted share
  • Adjusted EBITDA was $74.5 million

First Quarter 2016 Financial Results
Net sales for the first quarter of 2016 were $583.3 million, compared to $329.2 million in the first quarter of 2015 and $668.9 million in the fourth quarter.

GAAP operating income for the first quarter of 2016 was $18.9 million, compared to operating income of $8.3 million in the first quarter of 2015 and $36.5 million in the fourth quarter. 

GAAP net loss attributable to stockholders for the first quarter of 2016 was $7.3 million, or $0.07 per share.  This compares to GAAP net income of $3.4 million, or $0.04 per diluted share, in the first quarter of 2015 and $9.5 million, or $0.09 per diluted share, in the fourth quarter.  The GAAP results were negatively impacted by approximately $6.0 million of expenses related to the acquisition and integration of Viasystems.

On a non-GAAP basis, net income attributable to stockholders for the first quarter of 2016 was $13.9 million, or $0.14 per diluted share.  This compares to non-GAAP net income of $10.8 million, or $0.13 per diluted share, for the first quarter of 2015 and $31.5 million, or $0.31 per diluted share, in the fourth quarter of last year.

Adjusted EBITDA for the first quarter of 2016 was $74.5 million, or 12.8 percent of net sales, compared to adjusted EBITDA of $42.5 million, or 12.9 percent of net sales, for the first quarter of 2015 and $95.8 million, or 14.3 percent of net sales, for the fourth quarter of 2015.

“Our first quarter results marked a solid start to the year and demonstrated the benefits of our diversification initiative,” said Tom Edman, CEO of TTM.  “Strong operational execution across all of our business units drove non-GAAP earnings above the high end of our guidance.  Relative strength in the aerospace and defense, automotive and computing end markets helped offset a softer demand environment in the cellular phone end market.”

“We continue to deliver on our integration milestones and have now implemented or announced actions that represent more than 90% of our $55 million annualized synergy target.  The new market focused business unit structure put in place at the beginning of the year has already begun to yield operational benefits.  We believe a larger and more diverse TTM with focus on key end markets such as Aerospace & Defense and Automotive is an important differentiator in the PCB market,” concluded Mr. Edman.

Business Outlook
For the second quarter of 2016, TTM estimates that revenue will be in the range of $580 million to $620 million, and non-GAAP net income will be in the range of $0.16 to $0.22 per diluted share. 

To Access the Live Webcast/Conference Call
TTM will host a conference call and webcast to discuss first quarter 2016 results and second quarter 2016 outlook on Wednesday, April 27, 2016, at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time).  The conference call may include forward-looking statements.

Telephone access is available by dialing domestic 888-417-8516 or international 719-325-2354 (ID 1413218).  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 major global printed circuit board manufacturer, focusing on quick-turn and technologically advanced PCBs, backplane assemblies and electro-mechanical solutions. 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, the successful integration of Viasystems, including, the planned plant combinations and closure, 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.

- Tables Follow -

TTM TECHNOLOGIES, INC.
Selected Unaudited Financial Information
(In thousands, except per share data)
            
      First Quarter Fourth Quarter 
       2016   2015   2015  
            
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS       
            
 Net sales  $  583,258  $  329,164  $  668,874  
 Cost of goods sold    499,695     277,605     560,604  
            
 Gross profit    83,563     51,559     108,270  
            
 Operating expenses:       
  Selling and marketing    17,306     9,455     17,963  
  General and administrative    36,149     33,990     41,654  
  Amortization of definite-lived intangibles    5,947     1,874     6,683  
  Restructuring charges    1,913     479     5,429  
  Impairment of long-lived assets    3,346     -      -   
  Gain on sale of asset    -      (2,504)    -   
   Total operating expenses    64,661     43,294     71,729  
            
 Operating income (loss)    18,902     8,265     36,541  
            
 Interest expense    (21,784)    (5,765)    (20,208) 
 Other, net     1,209     (415)    3,925  
            
 Income (loss) before income taxes    (1,673)    2,085     20,258  
 Income tax (provision) benefit     (5,477)    1,361     (10,601) 
            
 Net income (loss) $  (7,150) $  3,446  $  9,657  
            
 Net income attributable to noncontrolling interest    (114)    -      (136) 
 Net income (loss) attributable to stockholders $  (7,264) $  3,446  $  9,521  
            
 Earnings (loss) per share attributable to stockholders:       
  Basic  $  (0.07) $  0.04  $  0.10  
  Diluted  $  (0.07) $  0.04  $  0.09  
            
 Weighted-average shares used in computing per share amounts:       
  Basic     99,596     83,603     99,134  
  Diluted     99,596     84,465     126,329  
            
            
 Reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share:   
            
 Net income attributable to stockholders     $  9,521  
  Add back items: interest expense, net of tax        2,009  
 Adjusted net income attributable to stockholders     $  11,530  
 Weighted-average shares outstanding        99,134  
 Dilutive effect of convertible debt        25,940  
 Dilutive effect of performance-based stock units, restricted stock units and stock options        1,255  
 Diluted shares        126,329  
 Earnings per share attributable to stockholders:       
  Basic      $  0.10  
  Diluted      $  0.09  
            
            
SELECTED BALANCE SHEET DATA        
      March 28, 2016 December 28, 2015   
 Cash and cash equivalents, including restricted cash $  183,678  $  262,630    
 Accounts and notes receivable, net    431,276     454,001    
 Inventories     264,555     268,923    
 Total current assets    908,210     1,022,520    
 Property, plant and equipment, net    1,075,613     1,103,067    
 Other non-current assets    512,009     545,717    
 Total assets    2,495,832     2,640,133    
            
 Short-term debt, including current portion of long-term debt $  80,358  $  157,375    
 Accounts payable    308,156     347,916    
 Total current liabilities    598,406     744,994    
 Debt, net of discount    1,021,866     1,013,411    
 Total long-term liabilities    1,079,499     1,068,470    
 Total equity    817,927     826,669    
 Total liabilities and equity    2,495,832     2,640,133    
            
SUPPLEMENTAL DATA       
      First Quarter Fourth Quarter 
       2016   2015   2015  
 Gross margin  14.3%  15.7%  16.2% 
 Operating margin  3.2%  2.5%  5.5% 
            
 End Market Breakdown:       
      First Quarter Fourth Quarter 
       2016   2015   2015  
            
  Aerospace/Defense  15%  15%  13% 
  Automotive  21%  3%  18% 
  Cellular Phone  9%  30%  18% 
  Computing/Storage/Peripherals  13%  11%  12% 
  Medical/Industrial/Instrumentation  16%  9%  13% 
  Networking/Communications  24%  29%  23% 
  Other   2%  3%  3% 
            
 Stock-based Compensation:       
      First Quarter Fourth Quarter 
       2016   2015   2015  
  Amount included in:       
   Cost of goods sold $  320  $  225  $  327  
   Selling and marketing    210     271     301  
   General and administrative    1,716     1,544     2,007  
   Total stock-based compensation expense $  2,246  $  2,040  $  2,635  
            
            
 Operating Segment Data:       
      First Quarter Fourth Quarter 
  Net sales:  2016   2015   2015  
  PCB  $  529,945  $  310,324  $  611,045  
  E-M Solutions    56,478     19,462     61,021  
  Corporate    -      -      -   
   Total sales    586,423     329,786     672,066  
  Inter-segment sales    (3,165)    (622)    (3,192) 
   Total net sales $  583,258  $  329,164  $  668,874  
            
  Operating segment income:       
  PCB  $  49,367  $  23,260  $  66,320  
  E-M Solutions    387     651     2,612  
  Corporate    (24,905)    (13,772)    (25,708) 
   Total operating segment income    24,849     10,139     43,224  
  Amortization of definite-lived intangibles    (5,947)    (1,874)    (6,683) 
   Total operating income    18,902     8,265     36,541  
  Total other expense    (20,575)    (6,180)    (16,283) 
  Income before income taxes $  (1,673) $  2,085  $  20,258  
            
RECONCILIATIONS1       
      First Quarter Fourth Quarter 
       2016   2015   2015  
 Non-GAAP gross profit reconciliation2:       
  GAAP gross profit $  83,563  $  51,559  $  108,270  
  Add back item:       
   Inventory markup and PP&E step up    -      -      598  
   Stock-based compensation    320     225     327  
  Non-GAAP gross profit $  83,883  $  51,784  $  109,195  
  Non-GAAP gross margin  14.4%  15.7%  16.3% 
            
 Non-GAAP operating income reconciliation3:       
  GAAP operating income (loss) $  18,902  $  8,265  $  36,541  
  Add back items:       
   Amortization of definite-lived intangibles    5,947     1,874     6,683  
   Stock-based compensation    2,246     2,040     2,635  
   Gain on sale of asset    -      (2,504)    -   
   Acquisition-related costs    691     8,235     1,521  
   Inventory markup and PP&E step up    -      -      598  
   Impairments and restructuring charges    5,259     479     5,429  
  Non-GAAP operating income $  33,045  $  18,389  $  53,407  
  Non-GAAP operating margin  5.7%  5.6%  8.0% 
            
 Non-GAAP net income and EPS attributable to stockholders reconciliation4:       
  GAAP net income (loss) attributable to stockholders $  (7,264) $  3,446  $  9,521  
  Add back items:       
   Amortization of definite-lived intangibles    5,947     1,874     6,683  
   Stock-based compensation    2,246     2,040     2,635  
   Non-cash interest expense    6,154     2,625     4,893  
   Gain on sale of asset    -      (2,504)    -   
   Acquisition-related costs    691     8,235     1,521  
   Inventory markup and PP&E step up    -      -      598  
   Impairments, restructuring and other charges    5,259     479     5,429  
   Income taxes    821     (5,366)    247  
  Non-GAAP net income attributable to stockholders $  13,854  $  10,829  $  31,527  
  Non-GAAP earnings per diluted share attributable to stockholders $  0.14  $  0.13  $  0.31  
            
 Non-GAAP diluted number of shares5:       
  Diluted shares    99,596     84,465     126,329  
  Dilutive effect of convertible debt    -     -     (25,940) 
  Non-GAAP diluted number of shares    99,596     84,465     100,389  
            
 Adjusted EBITDA reconciliation6:       
  GAAP net income (loss) $  (7,150) $  3,446  $  9,657  
  Add back items:       
   Income tax provision (benefit)    5,477     (1,361)    10,601  
   Interest expense    21,784     5,765     20,208  
   Amortization of definite-lived intangibles    5,947     1,874     6,683  
   Depreciation expense    40,227     24,536     39,105  
   Stock-based compensation    2,246     2,040     2,635  
   Gain on sale of asset    -      (2,504)    -   
   Acquisition-related costs    691     8,235     1,521  
   Impairments, restructuring and other charges    5,259     479     5,429  
  Adjusted EBITDA $  74,481  $  42,510  $  95,839  
  Adjusted EBITDA margin  12.8%  12.9%  14.3% 
            
 Free cash flow reconciliation:       
  Operating cash flow    17,892     67,354     139,829  
  Add back items:       
   Payment of acquisition-related costs    2,324     4,720     1,522  
  Adjusted operating cash flow    20,216     72,074     141,351  
  Capital expenditures, net    (20,116)    (22,776)    (22,967) 
  Free cash flow $  100  $  49,298  $  118,384  

 

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, inventory markup and PP&E step up.
           
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 Non-GAAP diluted number of shares used in computing non-GAAP earnings per share attributable to stockholders excludes the dilutive effect of convertible debt.
           
6 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.



            











    

        

        
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