TTM Technologies, Inc. Reports Fiscal First Quarter 2017 Results

COSTA MESA, Calif., May 03, 2017 (GLOBE NEWSWIRE) -- TTM Technologies, Inc. (NASDAQ:TTMI), a leading global printed circuit board (“PCB”) manufacturer, today reported results for the first quarter of fiscal 2017, which ended April 3rd, 2017.

First Quarter 2017 Highlights

Net sales were $625.2 million
GAAP net income attributable to stockholders was $33 million, or $0.28 per diluted share
Non-GAAP net income attributable to stockholders was $39.2 million, or $0.37 per diluted share
Adjusted EBITDA was $95.6 million

First Quarter 2017 Financial Results
Net sales for the first quarter of 2017 were $625.2 million, compared to $583.3 million in the first quarter of 2016 and $706.5 million in the fourth quarter of 2016.

GAAP operating income for the first quarter of 2017 was $52.6 million, compared to $18.9 million in the first quarter of 2016 and $69.6 million in the fourth quarter of 2016.

GAAP net income attributable to stockholders for the first quarter of 2017 was $33 million, or $0.28 per diluted share. This compares to a GAAP net loss attributable to stockholders of $7.3 million, or $0.07 per share, in the first quarter of 2016 and a GAAP net loss of $2 million, or $0.02 per share, in the fourth quarter of 2016.

On a non-GAAP basis, net income attributable to stockholders for the first quarter of 2017 was $39.2 million, or $0.37 per diluted share. This compares to non-GAAP net income attributable to stockholders of $13.9 million, or $0.14 per diluted share, for the first quarter of 2016 and $59.8 million, or $0.58 per diluted share, in the fourth quarter of 2016.

Adjusted EBITDA for the first quarter of 2017 was $95.6 million, or 15.3 percent of net sales, compared to adjusted EBITDA of $74.5 million, or 12.8 percent of net sales, for the first quarter of 2016 and $128.5 million, or 18.2 percent of net sales, for the fourth quarter of 2016.

“TTM delivered strong organic year on year growth in the first quarter of 7 percent, near the high end of our guidance, and profitability which exceeded our forecast,” said Tom Edman, CEO of TTM. “On a year over year basis, most end markets grew, with the fastest growth coming from the cellular, computing and aerospace and defense end markets. This growth, along with strong operational execution, resulted in non-GAAP EPS above the high end of our guidance. These results represent the highest revenue and EBITDA for a first quarter in the history of the company.”

Business Outlook
For the second quarter of 2017, TTM estimates that revenue will be in the range of $605 million to $645 million, and non-GAAP net income attributable to stockholders will be in the range of $0.31 to $0.37 per diluted share.

To Access the Live Webcast/Conference Call
TTM will host a conference call and webcast to discuss first quarter 2017 results and second quarter 2017 outlook on Wednesday, May 3rd, 2017, 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 888-206-4824 or international 913-312-1522 (ID 1867334). 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. 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.

- Tables Follow -

TTM TECHNOLOGIES, INC.
Selected Unaudited Financial Information
(In thousands, except per share data)

				First Quarter						Fourth Quarter
					2017			2016			2016

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

	Net sales			$	625,247		$	583,258		$	706,534
	Cost of goods sold				520,228			499,695			573,689

	Gross profit				105,019			83,563			132,845

	Operating expenses:
		Selling and marketing			16,655			17,306			16,848
		General and administrative			30,822			36,149			38,998
		Amortization of definite-lived intangibles			5,912			5,947			6,407
		Restructuring charges			609			1,913			946
		Impairment of long-lived assets			-			3,346			-
		Gain on sale of assets			(1,549	)		-			-
			Total operating expenses		52,449			64,661			63,199

	Operating income				52,570			18,902			69,646

	Interest expense				(13,596	)		(21,784	)		(15,267	)
	Loss on extinguishment of debt				-			-			(47,767	)
	Other, net				(1,710	)		1,209			8,994

	Income before income taxes				37,264			(1,673	)		15,606
	Income tax provision				(4,139	)		(5,477	)		(17,416	)

	Net income (loss)			$	33,125		$	(7,150	)	$	(1,810	)

	Net income attributable to noncontrolling interest				(166	)		(114	)		(195	)
	Net income (loss) attributable to stockholders			$	32,959		$	(7,264	)	$	(2,005	)

	Earnings (loss) per share attributable to stockholders:
		Basic		$	0.33		$	(0.07	)	$	(0.02	)
		Diluted		$	0.28		$	(0.07	)	$	(0.02	)

	Weighted-average shares used in computing per share amounts:
		Basic			100,932			99,596			100,365
		Diluted			130,922			99,596			100,365


	Reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share:

	Net income attributable to stockholders			$	32,959
		Add back items: interest expense, net of tax			3,394
	Adjusted net income attributable to stockholders			$	36,353
	Weighted-average shares outstanding				100,932
	Dilutive effect of convertible debt				25,940
	Dilutive effect of warrants				2,183
	Dilutive effect of performance-based stock units, restricted stock units and stock options				1,867
	Diluted shares				130,922
	Earnings per share attributable to stockholders:
		Basic		$	0.33
		Diluted		$	0.28


SELECTED BALANCE SHEET DATA
				April 3, 2017			January 2, 2017
	Cash and cash equivalents, including restricted cash			$	282,871		$	256,277
	Accounts and notes receivable, net				419,216			432,596
	Inventories				275,092			269,212
	Total current assets				1,027,291			1,012,841
	Property, plant and equipment, net				976,446			966,638
	Other non-current assets				526,508			520,597
	Total assets				2,530,245			2,500,076

	Short-term debt, including current portion of long-term debt			$	160,658		$	110,652
	Accounts payable				344,257			355,774
	Total current liabilities				721,580			689,065
	Debt, net of discount				861,391			909,030
	Total long-term liabilities				935,983			981,886
	Total equity				872,682			829,125
	Total liabilities and equity				2,530,245			2,500,076

SUPPLEMENTAL DATA
				First Quarter						Fourth Quarter
					2017			2016			2016
	Gross margin				16.8	%		14.3	%		18.8	%
	Operating margin				8.4	%		3.2	%		9.9	%

	End Market Breakdown:
				First Quarter						Fourth Quarter
					2017			2016			2016

		Aerospace/Defense			15	%		15	%		14	%
		Automotive			20	%		21	%		19	%
		Cellular Phone			14	%		9	%		19	%
		Computing/Storage/Peripherals			15	%		13	%		12	%
		Medical/Industrial/Instrumentation			15	%		16	%		13	%
		Networking/Communications			20	%		24	%		21	%
		Other			1	%		2	%		2	%

	Stock-based Compensation:
				First Quarter						Fourth Quarter
					2017			2016			2016
		Amount included in:
			Cost of goods sold	$	394		$	320		$	469
			Selling and marketing	$	253			210			305
			General and administrative		2,981			1,716			2,426
			Total stock-based compensation expense	$	3,628		$	2,246		$	3,200


	Operating Segment Data:
				First Quarter						Fourth Quarter
		Net sales:			2017			2016			2016
		PCB		$	586,695		$	529,945		$	654,379
		E-M Solutions			41,669			56,478			55,332
		Corporate			-			-			-
			Total sales		628,364			586,423			709,711
		Inter-segment sales			(3,117	)		(3,165	)		(3,177	)
			Total net sales	$	625,247		$	583,258		$	706,534

		Operating segment income:
		PCB		$	82,256		$	49,367		$	95,208
		E-M Solutions			(1,642	)		387			3,029
		Corporate			(22,132	)		(24,905	)		(22,184	)
			Total operating segment income		58,482			24,849			76,053
		Amortization of definite-lived intangibles			(5,912	)		(5,947	)		(6,407	)
			Total operating income		52,570			18,902			69,646
		Total other expense			(15,306	)		(20,575	)		(54,040	)
		Income before income taxes		$	37,264		$	(1,673	)	$	15,606

RECONCILIATIONS ¹
				First Quarter						Fourth Quarter
					2017			2016			2016
	Non-GAAP gross profit reconciliation ² :
		GAAP gross profit		$	105,019		$	83,563		$	132,845
		Add back item:
			Stock-based compensation		394			320			469
		Non-GAAP gross profit		$	105,413		$	83,883		$	133,314
		Non-GAAP gross margin			16.9	%		14.4	%		18.9	%

	Non-GAAP operating income reconciliation ³ :
		GAAP operating income		$	52,570		$	18,902		$	69,646
		Add back items:
			Amortization of definite-lived intangibles		5,912			5,947			6,407
			Stock-based compensation		3,628			2,246			3,200
			Gain on sale of assets		(1,549	)		-			-
			Impairments, restructuring, acquisition-related, and other charges		709			5,950			1,725
		Non-GAAP operating income		$	61,270		$	33,045		$	80,978
		Non-GAAP operating margin			9.8	%		5.7	%		11.5	%

	Non-GAAP net income and EPS attributable to stockholders reconciliation ⁴ :
		GAAP net income (loss) attributable to stockholders		$	32,959		$	(7,264	)	$	(2,005	)
		Add back items:
			Amortization of definite-lived intangibles		5,912			5,947			6,407
			Stock-based compensation		3,628			2,246			3,200
			Non-cash interest expense		2,627			6,154			2,697
			Gain on sale of assets		(1,549	)		-			-
			Loss on extinguishment of debt		-			-			47,767
			Impairments, restructuring, acquisition-related, and other charges		709			5,950			1,725
			Income taxes		(5,093	)		821			49
		Non-GAAP net income attributable to stockholders		$	39,193		$	13,854		$	59,840
		Non-GAAP earnings per diluted share attributable to stockholders		$	0.37		$	0.14		$	0.58

	Non-GAAP diluted number of shares ⁵ :
		Diluted shares			130,922			99,596			102,563
		Dilutive effect of convertible debt			(25,940	)		-			-
		Non-GAAP diluted number of shares			104,982			99,596			102,563

	Adjusted EBITDA reconciliation ⁶ :
		GAAP net income (loss)		$	33,125		$	(7,150	)	$	(1,810	)
		Add back items:
			Income tax provision (benefit)		4,139			5,477			17,416
			Interest expense		13,596			21,784			15,267
			Amortization of definite-lived intangibles		5,912			5,947			6,407
			Depreciation expense		36,077			40,227			38,539
			Stock-based compensation		3,628			2,246			3,200
			Gain on sale of assets		(1,549	)		-			-
			Loss on extinguishment of debt		-			-			47,767
			Impairments, restructuring, acquisition-related, and other charges		709			5,950			1,725
		Adjusted EBITDA		$	95,637		$	74,481		$	128,511
		Adjusted EBITDA margin			15.3	%		12.8	%		18.2	%

	Free cash flow reconciliation:
		Operating cash flow			49,584			17,892			97,650
		Add back items:
			Payment of acquisition-related costs		153			2,324			869
		Adjusted operating cash flow			49,737			20,216			98,519
		Capital expenditures, net			(23,378	)		(20,116	)		(20,501	)
		Free cash flow		$	26,359		$	100		$	78,018

	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.

	³ Non-GAAP operating income and operating margin measures exclude amortization of intangibles, stock-based compensation expense, gain on sale of assets, 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, 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, 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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