TTM Technologies, Inc. Reports Fiscal Third Quarter 2022 Results

TTM Technologies

SANTA ANA, Calif., Nov. 02, 2022 (GLOBE NEWSWIRE) -- TTM Technologies, Inc. (NASDAQ: TTMI), a leading global manufacturer of technology solutions including engineered systems, radio frequency (“RF”) components and RF microwave/microelectronic assemblies, and printed circuit boards (“PCB”), today reported results for the third quarter fiscal 2022, which ended on October 3, 2022 and includes a full quarter’s contribution from the acquisition of Telephonics, which closed at the end of the second quarter of 2022.  

Third Quarter 2022 Highlights

• Net sales were $671.1 million

• GAAP net income of $43.5 million, or $0.42 per diluted share

• Non-GAAP net income was $57.9 million, or $0.56 per diluted share

• Operating cash flow of $80.0 million; free cash flow of $53.7 million

• Net leverage (net debt divided by last twelve months EBITDA) of 1.8x.
  

Third Quarter 2022 GAAP Financial Results

Net sales for the third quarter of 2022 were $671.1 million, compared to $556.8 million in the third quarter of 2021.

GAAP operating income for the third quarter of 2022 was $49.8 million. This compares to GAAP operating income of $32.2 million in the third quarter of 2021.

GAAP net income for the third quarter of 2022 was $43.5 million, or $0.42 per diluted share, compared to GAAP net income of $21.0 million, or $0.19 per diluted share in the third quarter of 2021.  

Third Quarter 2022 Non-GAAP Financial Results

On a non-GAAP basis, net income for the third quarter of 2022 was $57.9 million, or $0.56 per diluted share. This compares to non-GAAP net income of $36.5 million, or $0.34 per diluted share, for the third quarter of 2021.

Adjusted EBITDA in the third quarter of 2022 was $102.5 million compared to adjusted EBITDA of $68.6 million for the third quarter of 2021.

“In the third quarter, TTM delivered solid growth in revenues in-line with the guided range and up significantly year on year as we saw growth across all of our end markets. Our non-GAAP earnings were also up significantly and were well above the high end of the guided range. On a year on year basis, we also saw meaningful improvement in operating margins. Of particular note, we saw strong cash flow in the last quarter and for the last year as we generated $162.1 million in free cash flow over the last twelve months, and reduced our net leverage to 1.8x, below our 2x target,” said Tom Edman, CEO of TTM. “We also saw record bookings of $319.4 million in the Aerospace and Defense end market excluding Telephonics, and $387.8 million including Telephonics. Post acquisition, approximately 40% of our revenues are now from the Aerospace and Defense end market, which positions the company well for any softening that may occur in our commercial markets,” concluded Mr. Edman.

Business Outlook
TTM estimates that revenue for the fourth quarter of 2022 will be in the range of $630 million to $670 million, and non-GAAP net income will be in the range of $0.36 to $0.42 per diluted share.

Live Webcast/Conference Call
TTM will host a conference call and webcast to discuss third quarter 2022 results and the fourth quarter 2022 outlook on Wednesday, November 2nd, 2022 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 800-263-0877 or international 323-794-2094 (ID 2956820). 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 manufacturer of technology solutions including engineered systems, RF components and RF microwave/microelectronic assemblies, and quick-turn and technologically advanced PCBs. 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
The preliminary financial results included in this press release represent the most current information available to management. The company’s actual results when disclosed in its Form 10-K may differ from these preliminary results as a result of the completion of the company’s financial closing procedures; final adjustments; completion of the review by the company’s independent registered accounting firm; and other developments that may arise between now and the disclosure of the final results. 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 impact of COVID-19, 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.

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 a comparable 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 a comparable 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)
						Third Quarter								First Three Quarters
						2022				2021				2022				2021
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
	Net sales					$	671,080			$	556,784			$	1,877,890			$	1,650,599
	Cost of goods sold						542,513				463,605				1,541,327				1,375,910
	Gross profit						128,567				93,179				336,563				274,689
	Operating expenses:
	Selling and marketing						19,824				15,858				55,653				46,745
	General and administrative						40,743				32,146				121,863				91,075
	Research and development						7,322				4,423				18,110				13,075
	Amortization of definite-lived intangibles						10,273				8,274				26,822				26,837
	Restructuring charges						627				243				1,267				4,034
	Total operating expenses						78,789				60,944				223,715				181,766
	Operating income						49,778				32,235				112,848				92,923
	Interest expense						(10,939	)			(11,147	)			(33,011	)			(33,615	)
	Loss on extinguishment of debt						-				-				-				(15,217	)
	Other, net						10,324				2,525				19,932				5,338
	Income before income taxes						49,163				23,613				99,769				49,429
	Income tax provision						(5,635	)			(2,655	)			(11,203	)			(3,402	)
	Net income					$	43,528			$	20,958			$	88,566			$	46,027
	Earnings per share
	Basic					$	0.43			$	0.20			$	0.87			$	0.43
	Diluted						0.42				0.19				0.85				0.42
	Weighted-average shares used in computing per share amounts:
	Basic						102,196				107,098				102,016				106,917
	Diluted						103,720				108,345				103,738				108,839
	Reconciliation of the denominator used to calculate basic earnings per share and diluted earnings per share:
	Weighted-average shares outstanding						102,196				107,098				102,016				106,917
	Dilutive effect of warrants						-				-				2				267
	Dilutive effect of performance-based stock units, restricted stock units & stock options						1,524				1,247				1,720				1,655
	Diluted shares						103,720				108,345				103,738				108,839
SELECTED BALANCE SHEET DATA
						October 3, 2022				January 3, 2022
	Cash and cash equivalents, including restricted cash					$	335,625			$	537,678
	Accounts and notes receivable, net						480,838				386,347
	Contract assets						363,604				324,862
	Inventories						205,370				127,612
	Total current assets						1,439,228				1,407,413
	Property, plant and equipment, net						745,992				665,755
	Operating lease right of use asset						20,464				20,802
	Other non-current assets						1,087,206				931,577
	Total assets						3,292,890				3,025,547
	Accounts payable					$	406,816			$	361,484
	Total current liabilities						742,890				558,148
	Debt, net of discount						929,004				927,818
	Total long-term liabilities						1,027,531				1,011,982
	Total equity						1,522,469				1,455,417
	Total liabilities and equity						3,292,890				3,025,547
SUPPLEMENTAL DATA
						Third Quarter								First Three Quarters
						2022				2021				2022				2021
	Gross margin						19.2	%			16.7	%			17.9	%			16.6	%
	Operating margin						7.4	%			5.8	%			6.0	%			5.6	%
	End Market Breakdown:
						Third Quarter
						2022				2021
	Aerospace and Defense						38	%			31	%
	Automotive						15	%			18	%
	Data Center Computing						14	%			14	%
	Medical/Industrial/Instrumentation						19	%			20	%
	Networking/Communications						14	%			16	%
	Other						0	%			1	%
	Stock-based Compensation:
						Third Quarter
						2022				2021
	Amount included in:
	Cost of goods sold					$	1,699			$	1,284
	Selling and marketing						762				731
	General and administrative						2,685				2,542
	Research and development						324				387
	Total stock-based compensation expense					$	5,470			$	4,944
	Operating Segment Data:
						Third Quarter
	Net sales:					2022				2021
	PCB					$	588,920			$	541,118
	RF&S Components						13,905				15,666
	Other1						68,255				-
	Total net sales					$	671,080			$	556,784
	Operating segment income:
	PCB					$	82,770			$	61,424
	RF&S Components						5,984				6,537
	Corporate & Other1						(27,319	)			(26,068	)
	Total operating segment income						61,435				41,893
	Amortization of definite-lived intangibles						(11,657	)			(9,658	)
	Total operating income						49,778				32,235
	Total other expense						(615	)			(8,622	)
	Income before income taxes					$	49,163			$	23,613
RECONCILIATIONS2
						Third Quarter								First Three Quarters
						2022				2021				2022				2021
	Non-GAAP gross profit reconciliation3:
	GAAP gross profit					$	128,567			$	93,179			$	336,563			$	274,689
	Add back item:
	Amortization of definite-lived intangibles						1,384				1,384				4,151				4,151
	Accelerated depreciation						19				-				124				-
	Stock-based compensation						1,699				1,284				4,147				3,310
	Unrealized loss on commodity hedge						385				164				4,192				65
	Purchase accounting related inventory markup						248				-				248				-
	Restructuring and other charges						-				-				-				254
	Non-GAAP gross profit					$	132,302			$	96,011			$	349,425			$	282,469
	Non-GAAP gross margin						19.7	%			17.2	%			18.6	%			17.1	%
	Non-GAAP operating income reconciliation4:
	GAAP operating income					$	49,778			$	32,235			$	112,848			$	92,923
	Add back items:
	Amortization of definite-lived intangibles						11,657				9,658				30,973				30,988
	Accelerated depreciation						19				-				124				-
	Stock-based compensation						5,470				4,944				14,131				12,503
	Gain on sale of assets						-				-				-				(421	)
	Unrealized loss on commodity hedge						385				164				4,192				65
	Purchase accounting related inventory markup						248				-				248				-
	Restructuring, acquisition-related and other charges						655				699				12,805				4,550
	Non-GAAP operating income					$	68,212			$	47,700			$	175,321			$	140,608
	Non-GAAP operating margin						10.2	%			8.6	%			9.3	%			8.5	%
	Non-GAAP net income and EPS reconciliation5:
	GAAP net income					$	43,528			$	20,958			$	88,566			$	46,027
	Add back items:
	Amortization of definite-lived intangibles						11,657				9,658				30,973				30,988
	Accelerated depreciation						19				-				124				-
	Stock-based compensation						5,470				4,944				14,131				12,503
	Non-cash interest expense						540				540				1,609				1,613
	Gain on sale of assets						-				-				(827	)			(991	)
	Change in fair value of warrant liabilities						-				(2,669	)			(99	)			(3,868	)
	Loss on extinguishment of debt						-				-				-				15,217
	Unrealized loss on commodity hedge						385				164				4,192				65
	Purchase accounting related inventory markup						248				-				248				-
	Restructuring, acquisition-related and other charges						655				699				12,805				4,550
	Income taxes6						(4,586	)			2,246				(13,236	)			(4,263	)
	Non-GAAP net income					$	57,916			$	36,540			$	138,486			$	101,841
	Non-GAAP earnings per diluted share					$	0.56			$	0.34			$	1.33			$	0.94
	Adjusted EBITDA reconciliation7:
	GAAP net income					$	43,528			$	20,958			$	88,566			$	46,027
	Add back items:
	Income tax provision						5,635				2,655				11,203				3,402
	Interest expense						10,939				11,147				33,011				33,615
	Amortization of definite-lived intangibles						11,657				9,658				30,973				30,988
	Depreciation expense						24,017				20,994				67,306				63,711
	Stock-based compensation						5,470				4,944				14,131				12,503
	Gain on sale of assets						-				-				(827	)			(991	)
	Change in fair value of warrant liabilities						-				(2,669	)			(99	)			(3,868	)
	Loss on extinguishment of debt						-				-				-				15,217
	Unrealized loss on commodity hedge						385				164				4,192				65
	Purchase accounting related inventory markup						248				-				248				-
	Restructuring, acquisition-related and other charges						655				699				12,805				4,550
	Adjusted EBITDA					$	102,534			$	68,550			$	261,509			$	205,219
	Adjusted EBITDA margin						15.3	%			12.3	%			13.9	%			12.4	%
	Free cash flow reconciliation:
	Operating cash flow					$	80,006			$	18,599			$	195,314			$	114,263
	Capital expenditures, net						(26,281	)			(19,766	)			(76,095	)			(61,069	)
	Free cash flow					$	53,725			$	(1,167	)		$	119,219			$	53,194
	1 Other represents results from Telephonics and the now closed Shanghai E-MS and Shenzhen facilities.
	2 This information provides a reconciliation of non-GAAP gross profit, non-GAAP operating income, non-GAAP net income, non-GAAP EPS, and adjusted EBITDA to the financial information in our consolidated condensed statements of operations.
	3 Non-GAAP gross profit and gross margin measures exclude amortization of intangibles, accelerated depreciation, stock-based compensation expense, unrealized loss on commodity hedge, purchase accounting related inventory markup, restructuring and other charges.
	4 Non-GAAP operating income and operating margin measures exclude amortization of intangibles, accelerated depreciation, stock-based compensation expense, gain on sale of assets, unrealized loss on commodity hedge, purchase accounting related inventory markup, restructuring, acquisition-related costs, and other charges.
	5 This information provides non-GAAP net income and non-GAAP EPS, which are non-GAAP financial measures. Management believes that both measures -- which add back amortization of intangibles, accelerated depreciation, stock-based compensation expense, non-cash interest expense on debt (before consideration of capitalized interest), gain on sale of assets, change in fair value of warrant liabilities, loss on extinguishment of debt, unrealized loss on commodity hedge, purchase accounting related inventory markup, restructuring, acquisition-related costs, 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.
	6 Income tax adjustments reflect the difference between income taxes based on a non-GAAP tax rate and a forecasted annual GAAP tax rate.
	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, change in fair value of warrant liabilities, loss on extinguishment of debt, unrealized loss on commodity hedge, purchase accounting related inventory markup, restructuring, acquisition-related costs, 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, Vice President, Corporate Development & Investor Relations Sameer.desai@ttmtech.com 714-327-3050