TTM Technologies, Inc. Reports Second Quarter 2016 Results

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

Second Quarter 2016 Highlights

• Net sales were $601.8 million
• GAAP net income attributable to stockholders was $18.5 million, or $0.17 per diluted share
• Non-GAAP net income attributable to stockholders was $28.4 million, or $0.28 per diluted share
• Adjusted EBITDA was $90.2 million
• Debt repayment of $30 million

Second Quarter 2016 Financial Results
Net sales for the second quarter of 2016 were $601.8 million, compared to $445.4 million in the second quarter of 2015 and $583.3 million in the first quarter of 2016.

GAAP operating income for the second quarter of 2016 was $34.7 million, compared to an operating loss of $7.1 million in the second quarter of 2015 and operating income of $18.9 million in the first quarter of 2016. 

GAAP net income attributable to stockholders for the second quarter of 2016 was $18.5 million, or $0.17 per diluted share.  This compares to a GAAP net loss attributable to stockholders of $36.6 million, or $0.41 per share, in the second quarter of 2015 and a GAAP net loss of $7.3 million, or $0.07 per  share, in the first quarter of 2016.

On a non-GAAP basis, net income attributable to stockholders for the second quarter of 2016 was $28.4 million, or $0.28 per diluted share.  This compares to non-GAAP net income of $14.9 million, or $0.17 per diluted share, for the second quarter of 2015 and $13.9 million, or $0.14 per diluted share, in the first quarter of 2016.

Adjusted EBITDA for the second quarter of 2016 was $90.2 million, or 15 percent of net sales, compared to adjusted EBITDA of $59.7 million, or 13.4 percent of net sales, for the second quarter of 2015 and $74.5 million, or 12.8 percent of net sales, for the first quarter of 2016.

“Our second quarter results reflect continued year on year improvements in revenue and earnings as sales to our customer base in diversified end markets have dampened historical volatility,” said Tom Edman, CEO of TTM.  “Strong operational execution across all of our business units drove non-GAAP earnings well above the high end of our guidance.  A rebound in the cellular and communications end markets more than offset modest declines in the automotive and computing end markets, and our aerospace and defense end market hit a quarterly record in revenues.”

Business Outlook
For the third quarter of 2016, TTM estimates that revenue will be in the range of $620 million to $660 million, and non-GAAP net income will be in the range of $0.29 to $0.35 per diluted share. 

To Access the Live Webcast/Conference Call
TTM will host a conference call and webcast to discuss second quarter 2016 results and third quarter 2016 outlook on Wednesday, July 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 719-325-2491 (ID 7624574).  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, 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)
						Second Quarter								First Quarter				First Two Quarters
							2016				2015				2016				2016				2015
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
	Net sales					$	601,847			$	445,445			$	583,258			$	1,185,105			$	774,609
	Cost of goods sold						504,202				384,255				499,695				1,003,897				661,860
	Gross profit						97,645				61,190				83,563				181,208				112,749
	Operating expenses:
		Selling and marketing					16,569				12,301				17,306				33,875				21,756
		General and administrative					37,931				52,009				36,149				74,080				85,999
		Amortization of definite-lived intangibles					5,949				3,910				5,947				11,896				5,784
		Restructuring charges					3,989				30				1,913				5,902				509
		Impairment of long-lived assets					–				–				3,346				3,346				–
		Gain on sale of assets					(1,472	)			–				–				(1,472	)			(2,504	)
			Total operating expenses				62,966				68,250				64,661				127,627				111,544
	Operating income (loss)						34,679				(7,060	)			18,902				53,581				1,205
	Interest expense						(20,084	)			(12,778	)			(21,784	)			(41,868	)			(18,543	)
	Loss on extinguishment of debt						–				(802	)			–				–				(802	)
	Other, net						3,191				681				1,209				4,400				266
	Income (loss) before income taxes						17,786				(19,959	)			(1,673	)			16,113				(17,874	)
	Income tax (provision) benefit						979				(16,624	)			(5,477	)			(4,498	)			(15,263	)
	Net income (loss)					$	18,765			$	(36,583	)		$	(7,150	)		$	11,615			$	(33,137	)
	Net income attributable to noncontrolling interest						(217	)			(29	)			(114	)			(331	)			(29	)
	Net income (loss) attributable to stockholders					$	18,548			$	(36,612	)		$	(7,264	)		$	11,284			$	(33,166	)
	Earnings (loss) per share attributable to stockholders:
		Basic				$	0.19			$	(0.41	)		$	(0.07	)		$	0.11			$	(0.38	)
		Diluted				$	0.17			$	(0.41	)		$	(0.07	)		$	0.11			$	(0.38	)
	Weighted-average shares used in computing per share amounts:
		Basic					100,170				88,834				99,596				99,883				86,218
		Diluted					126,950				88,834				99,596				100,789				86,218
	Reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share:
	Net income attributable to stockholders					$	18,548
		Add back items: interest expense, net of tax					3,285
	Adjusted net income attributable to stockholders					$	21,833
	Weighted-average shares outstanding						100,170
	Dilutive effect of convertible debt						25,940
	Dilutive effect of performance-based stock units, restricted stock units and stock options						840
	Diluted shares						126,950
	Earnings per share attributable to stockholders:
		Basic				$	0.19
		Diluted				$	0.17
SELECTED BALANCE SHEET DATA
						June 27, 2016				December 28, 2015
	Cash and cash equivalents, including restricted cash					$	216,151			$	262,630
	Accounts and notes receivable, net						424,038				454,001
	Inventories						270,790				268,923
	Total current assets						941,975				1,022,520
	Property, plant and equipment, net						1,047,187				1,103,067
	Other non-current assets						532,625				514,546
	Total assets						2,521,787				2,640,133
	Short-term debt, including current portion of long-term debt					$	80,358			$	157,375
	Accounts payable						334,283				347,916
	Total current liabilities						622,489				744,994
	Debt, net of discount						997,207				1,013,411
	Total long-term liabilities						1,069,574				1,068,470
	Total equity						829,724				826,669
	Total liabilities and equity						2,521,787				2,640,133
SUPPLEMENTAL DATA
						Second Quarter								First Quarter				First Two Quarters
							2016				2015				2016				2016				2015
	Gross margin						16.2	%			13.7	%			14.3	%			15.3	%			14.6	%
	Operating margin						5.8	%			(1.6	)%			3.2	%			4.5	%			0.2	%
	End Market Breakdown:
						Second Quarter								First Quarter
							2016				2015				2016
		Aerospace/Defense					16	%			15	%			15	%
		Automotive					19	%			7	%			21	%
		Cellular Phone					10	%			24	%			9	%
		Computing/Storage/Peripherals					13	%			11	%			13	%
		Medical/Industrial/Instrumentation					16	%			12	%			16	%
		Networking/Communications					25	%			26	%			24	%
		Other					1	%			5	%			2	%
	Stock-based Compensation:
						Second Quarter								First Quarter
							2016				2015				2016
		Amount included in:
			Cost of goods sold			$	429			$	243			$	320
			Selling and marketing				271				269				210
			General and administrative				2,145				1,802				1,716
			Total stock-based compensation expense			$	2,845			$	2,314			$	2,246
	Operating Segment Data:
						Second Quarter								First Quarter
		Net sales:					2016				2015				2016
		PCB				$	563,574			$	417,901			$	529,945
		E-M Solutions					40,427				28,514				56,478
		Corporate					–				–				–
			Total sales				604,001				446,415				586,423
		Inter-segment sales					(2,154	)			(970	)			(3,165	)
			Total net sales			$	601,847			$	445,445			$	583,258
		Operating segment income:
		PCB				$	64,970			$	30,456			$	49,367
		E-M Solutions					(153	)			(110	)			387
		Corporate					(24,189	)			(33,496	)			(24,905	)
			Total operating segment income				40,628				(3,150	)			24,849
		Amortization of definite-lived intangibles					(5,949	)			(3,910	)			(5,947	)
			Total operating income				34,679				(7,060	)			18,902
		Total other expense					(16,893	)			(12,899	)			(20,575	)
		Income before income taxes				$	17,786			$	(19,959	)		$	(1,673	)
RECONCILIATIONS1
						Second Quarter								First Quarter				First Two Quarters
							2016				2015				2016				2016				2015
	Non-GAAP gross profit reconciliation2:
		GAAP gross profit				$	97,645			$	61,190			$	83,563			$	181,208			$	112,749
		Add back item:
			Inventory markup				–				7,408				–				–				7,408
			Stock-based compensation				429				243				320				749				468
		Non-GAAP gross profit				$	98,074			$	68,841			$	83,883			$	181,957			$	120,625
		Non-GAAP gross margin					16.3	%			15.5	%			14.4	%			15.4	%			15.6	%
	Non-GAAP operating income reconciliation3:
		GAAP operating income (loss)				$	34,679			$	(7,060	)		$	18,902			$	53,581			$	1,205
		Add back items:
			Amortization of definite-lived intangibles				5,949				3,910				5,947				11,896				5,784
			Stock-based compensation				2,845				2,314				2,246				5,091				4,354
			Gain on sale of assets				(1,472	)			–				–				(1,472	)			(2,504	)
			Acquisition-related costs				605				22,627				691				1,296				30,862
			Inventory markup				–				7,408				–				–				7,408
			Impairments and restructuring charges				3,989				30				5,259				9,248				509
		Non-GAAP operating income				$	46,595			$	29,229			$	33,045			$	79,640			$	47,618
		Non-GAAP operating margin					7.7	%			6.6	%			5.7	%			6.7	%			6.1	%
	Non-GAAP net income and EPS attributable to stockholders reconciliation4:
		GAAP net income (loss) attributable to stockholders				$	18,548			$	(36,612	)		$	(7,264	)		$	11,284			$	(33,166	)
		Add back items:
			Amortization of definite-lived intangibles				5,949				3,910				5,947				11,896				5,784
			Stock-based compensation				2,845				2,314				2,246				5,091				4,354
			Non-cash interest expense				5,608				3,289				6,154				11,762				5,914
			Gain on sale of assets				(1,472	)			–				–				(1,472	)			(2,504	)
			Acquisition-related costs				605				22,627				691				1,296				30,862
			Inventory markup				–				7,408				–				–				7,408
			Impairments, restructuring and other charges				3,989				832				5,259				9,248				1,311
			Income taxes				(7,649	)			11,110				821				(6,828	)			5,744
		Non-GAAP net income attributable to stockholders				$	28,423			$	14,878			$	13,854			$	42,277			$	25,707
		Non-GAAP earnings per diluted share attributable to stockholders				$	0.28			$	0.17			$	0.14			$	0.42			$	0.29
	Non-GAAP diluted number of shares5:
		Diluted shares					126,950				89,864				99,596				126,730				87,164
		Dilutive effect of convertible debt					(25,940	)			–				–				(25,940	)			–
		Non-GAAP diluted number of shares					101,010				89,864				99,596				100,790				87,164
	Adjusted EBITDA reconciliation6:
		GAAP net income (loss)				$	18,765			$	(36,583	)		$	(7,150	)		$	11,615			$	(33,137	)
		Add back items:
			Income tax provision (benefit)				(979	)			16,624				5,477				4,498				15,263
			Interest expense				20,084				12,778				21,784				41,868				18,543
			Amortization of definite-lived intangibles				5,949				3,910				5,947				11,896				5,784
			Depreciation expense				40,457				29,776				40,227				80,684				54,312
			Stock-based compensation				2,845				2,314				2,246				5,091				4,354
			Gain on sale of assets				(1,472	)			–				–				(1,472	)			(2,504	)
			Acquisition-related costs				605				22,627				691				1,296				30,862
			Inventory markup				–				7,408				–				–				7,408
			Impairments, restructuring and other charges				3,989				832				5,259				9,248				1,311
		Adjusted EBITDA				$	90,243			$	59,686			$	74,481			$	164,724			$	102,196
		Adjusted EBITDA margin					15.0	%			13.4	%			12.8	%			13.9	%			13.2	%
	Free cash flow reconciliation:
		Operating cash flow					80,057				15,543				17,892				97,949				82,897
		Add back items:
			Payment of accreted interest on convertible sr. notes				–				8,731				–				–				8,731
			Payment of acquisition-related costs				691				23,358				2,324				3,015				28,078
		Adjusted operating cash flow					80,748				47,632				20,216				100,964				119,706
		Capital expenditures, net					(18,183	)			(23,687	)			(20,116	)			(38,299	)			(46,463	)
		Free cash flow				$	62,565			$	23,945			$	100			$	62,665			$	73,243
	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 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.

CONTACT: Contact:
Sameer Desai,
Senior Director, Corporate 
Development & Investor Relations
[email protected] 
714-327-3050