TTM Technologies, Inc. Reports Fiscal Fourth Quarter and Fiscal

TTM Technologies, Inc. Reports Fiscal Fourth Quarter and Fiscal 2018 Results

- Tables Follow -

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


				Fourth Quarter						Third Quarter			Full Year
					2018			2017			2018			2018			2017

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

	Net sales			$	710,955		$	739,349		$	755,837		$	2,847,261		$	2,658,592
	Cost of goods sold				588,323			607,488			626,253			2,390,227			2,229,011

	Gross profit				122,632			131,861			129,584			457,034			429,581

	Operating expenses:
		Selling and marketing			18,533			17,081			18,533			73,313			65,856
		General and administrative			39,615			37,764			39,974			159,437			128,489
		Amortization of definite-lived intangibles			17,722			5,907			16,609			59,681			23,634
		Restructuring charges			3,962			65			(82	)		5,518			1,190
		(Gain)/loss on sale of assets			-			-			-			-			(2,348	)
			Total operating expenses		79,832			60,817			75,034			297,949			216,821

	Operating income				42,800			71,044			54,550			159,085			212,760

	Interest expense				(22,533	)		(13,782	)		(22,225	)		(78,958	)		(53,898	)
	Loss on extinguishment of debt				-			-			-			-			(769	)
	Other, net				2,357			(3,617	)		2,213			9,641			(18,135	)

	Income before income taxes				22,624			53,645			34,538			89,768			139,958
	Income tax (provision) / benefit				29,858			(4,329	)		(7,537	)		83,816			(15,231	)

	Net income			$	52,482		$	49,316		$	27,001		$	173,584		$	124,727

	Net income attributable to noncontrolling interest				-			(105	)		-			-			(513	)
	Net income attributable to stockholders			$	52,482		$	49,211		$	27,001		$	173,584		$	124,214

	Earnings per share attributable to stockholders:
		Basic		$	0.51		$	0.48		$	0.26		$	1.68		$	1.22
		Diluted		$	0.42		$	0.40		$	0.22		$	1.38		$	1.04

	Weighted-average shares used in computing per share amounts:
		Basic			103,683			101,817			103,676			103,355			101,580
		Diluted			131,533			133,170			136,435			134,036			132,476


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

	Net income attributable to stockholders			$	52,482		$	49,211		$	27,001		$	173,584		$	124,214
		Add back items: interest expense, net of tax			3,030			3,508			3,628			11,906			13,803
	Adjusted net income attributable to stockholders			$	55,512		$	52,719		$	30,629		$	185,490		$	138,017
	Weighted-average shares outstanding				103,683			101,817			103,676			103,355			101,580
	Dilutive effect of convertible debt				25,939			25,939			25,938			25,939			25,940
	Dilutive effect of warrants				-			2,938			5,226			3,065			2,799
	Dilutive effect of performance-based stock units, restricted stock units & stock options				1,911			2,476			1,595			1,677			2,157
	Diluted shares				131,533			133,170			136,435			134,036			132,476
	Earnings per share attributable to stockholders:
		Basic		$	0.51		$	0.48		$	0.26		$	1.68		$	1.22
		Diluted		$	0.42		$	0.40		$	0.22		$	1.38		$	1.04


SELECTED BALANCE SHEET DATA
				December 31, 2018			January 1, 2018
	Cash and cash equivalents, including restricted cash			$	256,360		$	409,326
	Accounts and notes receivable, net				523,165			483,903
	Contract assets				287,741			-
	Inventories				109,377			294,588
	Total current assets				1,206,914			1,221,307
	Property, plant and equipment, net				1,052,024			1,056,845
	Other non-current assets				1,198,565			503,730
	Total assets				3,457,503			2,781,882

	Short-term debt, including current portion of long-term debt			$	30,000		$	4,578
	Accounts payable				431,288			497,455
	Total current liabilities				673,214			720,356
	Debt, net of discount				1,462,425			975,479
	Total long-term liabilities				1,557,202			1,050,146
	Total equity				1,227,087			1,011,380
	Total liabilities and equity				3,457,503			2,781,882

SUPPLEMENTAL DATA
				Fourth Quarter						Third Quarter			Full Year
					2018			2017			2018			2018			2017
	Gross margin				17.2	%		17.8	%		17.1	%		16.1	%		16.2	%
	Operating margin				6.0	%		9.6	%		7.2	%		5.6	%		8.0	%

	End Market Breakdown:
				Fourth Quarter						Third Quarter
					2018			2017			2018

		Aerospace/Defense			24	%		15	%		23	%
		Automotive			16	%		18	%		15	%
		Cellular Phone			14	%		27	%		17	%
		Computing/Storage/Peripherals			13	%		10	%		14	%
		Medical/Industrial/Instrumentation			14	%		12	%		13	%
		Networking/Communications			18	%		17	%		17	%
		Other			1	%		1	%		1	%

	Stock-based Compensation:
				Fourth Quarter						Third Quarter
					2018			2017			2018
		Amount included in:
			Cost of goods sold	$	766		$	613		$	774
			Selling and marketing		525			450			520
			General and administrative		4,442			3,921			4,165
			Total stock-based compensation expense	$	5,733		$	4,984		$	5,459


	Operating Segment Data:
				Fourth Quarter						Third Quarter
		Net sales:			2018			2017			2018
		PCB		$	655,706		$	688,572		$	698,983
		E-M Solutions			57,473			54,899			59,481
		Corporate			-			-			-
			Total sales		713,179			743,471			758,464
		Inter-segment sales			(2,224	)		(4,122	)		(2,627	)
			Total net sales	$	710,955		$	739,349		$	755,837

		Operating segment income:
		PCB		$	87,201		$	100,352		$	98,039
		E-M Solutions			3,364			2,799			2,205
		Corporate			(28,863	)		(26,200	)		(26,920	)
			Total operating segment income		61,702			76,951			73,324
		Amortization of definite-lived intangibles			(18,902	)		(5,907	)		(18,774	)
			Total operating income		42,800			71,044			54,550
		Total other expense			(20,176	)		(17,399	)		(20,012	)
		Income before income taxes		$	22,624		$	53,645		$	34,538

RECONCILIATIONS ¹
				Fourth Quarter						Third Quarter			Full Year
					2018			2017			2018			2018			2017
	Non-GAAP gross profit reconciliation ² :
		GAAP gross profit		$	122,632		$	131,861		$	129,584		$	457,034		$	429,581
		Add back item:
			Inventory markup		-			-			-			4,900			-
			Amortization of definite-lived intangibles		1,180			-			2,165			3,345			-
			Stock-based compensation		766			613			774			2,898			2,252
		Non-GAAP gross profit		$	124,578		$	132,474		$	132,523		$	468,177		$	431,833
		Non-GAAP gross margin			17.5	%		17.9	%		17.5	%		16.4	%		16.2	%

	Non-GAAP operating income reconciliation ³ :
		GAAP operating income		$	42,800		$	71,044		$	54,550		$	159,085		$	212,760
		Add back items:
			Amortization of definite-lived intangibles		18,902			5,907			18,774			63,026			23,634
			Stock-based compensation		5,733			4,984			5,459			20,681			18,290
			(Gain)/loss on sale of assets		-			-			-			-			(2,348	)
			Inventory markup		-			-			-			4,900			-
			Impairments, restructuring, acquisition-related, and other charges		6,104			2,331			230			18,797			3,556
		Non-GAAP operating income		$	73,539		$	84,266		$	79,013		$	266,489		$	255,892
		Non-GAAP operating margin			10.3	%		11.4	%		10.5	%		9.4	%		9.6	%

	Non-GAAP net income and EPS attributable to stockholders reconciliation ⁴ :
		GAAP net income attributable to stockholders		$	52,482		$	49,211		$	27,001		$	173,584		$	124,214
		Add back items:
			Amortization of definite-lived intangibles		18,902			5,907			18,774			63,026			23,634
			Stock-based compensation		5,733			4,984			5,459			20,681			18,290
			Non-cash interest expense		4,384			3,017			3,992			14,783			11,069
			(Gain)/loss on sale of assets		-			-			-			-			(2,348	)
			Inventory markup		-			-			-			4,900			-
			Loss on extinguishment of debt		-			-			-			-			769
			Impairments, restructuring, acquisition-related, and other charges		6,104			2,331			230			19,339			3,556
			Income taxes ⁵		(32,614	)		(4,204	)		(337	)		(105,916	)		(12,059	)
		Non-GAAP net income attributable to stockholders		$	54,991		$	61,246		$	55,119		$	190,397		$	167,125
		Non-GAAP earnings per diluted share attributable to stockholders		$	0.52		$	0.57		$	0.50		$	1.76		$	1.57

	Non-GAAP diluted number of shares ⁶ :
		Diluted shares			131,533			133,170			136,435			134,036			132,476
		Dilutive effect of convertible debt			(25,939	)		(25,939	)		(25,938	)		(25,939	)		(25,940	)
		Non-GAAP diluted number of shares			105,594			107,231			110,497			108,097			106,536

	Adjusted EBITDA reconciliation ⁷ :
		GAAP net income		$	52,482		$	49,316		$	27,001		$	173,584		$	124,727
		Add back items:
			Income tax provision (benefit)		(29,858	)		4,329			7,537			(83,816	)		15,231
			Interest expense		22,533			13,782			22,225			78,958			53,898
			Amortization of definite-lived intangibles		18,902			5,907			18,774			63,026			23,634
			Depreciation expense		41,543			41,090			41,092			162,708			150,809
			Stock-based compensation		5,733			4,984			5,459			20,681			18,290
			(Gain)/loss on sale of assets		-			-			-			-			(2,348	)
			Inventory markup		-			-			-			4,900			-
			Loss on extinguishment of debt		-			-			-			-			769
			Impairments, restructuring, acquisition-related, and other charges		6,104			2,331			230			18,797			3,556
		Adjusted EBITDA		$	117,439		$	121,739		$	122,318		$	438,838		$	388,566
		Adjusted EBITDA margin			16.5	%		16.5	%		16.2	%		15.4	%		14.6	%

	Free cash flow reconciliation:
		Operating cash flow			151,768			152,691			79,992			273,138			332,755
		Capital expenditures, net			(33,671	)		(32,209	)		(35,038	)		(149,796	)		(124,090	)
		Free cash flow		$	118,097		$	120,482		$	44,954		$	123,342		$	208,665

	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 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, 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 an 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.

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