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TTM Technologies, Inc. Reports Fiscal Fourth Quarter and 2019 Results

SANTA ANA, Calif., Feb. 05, 2020 (GLOBE NEWSWIRE) -- TTM Technologies, Inc. (TTMI), a leading global printed circuit board (“PCB”) and radio frequency (“RF”) components manufacturer, today reported results for the fourth quarter of fiscal 2019, which ended on December 30, 2019.

Fourth Quarter 2019 Highlights

  • Net sales were $719.3 million
  • GAAP net income was $25.3 million, or $0.21 per diluted share
  • Non-GAAP net income was $43.9 million, or $0.41 per diluted share, inclusive of $0.03 foreign exchange losses
  • Cash flow from operations of $130.1 million

Fourth Quarter 2019 Financial Results
Net sales for the fourth quarter of 2019 were $719.3 million, compared to $711.0 million in the fourth quarter of 2018 and $716.8 million in the third quarter of 2019.

GAAP operating income for the fourth quarter of 2019 was $49.4 million, compared to $42.8 million in the fourth quarter of 2018 and $36.4 million in the third quarter of 2019. 

GAAP net income for the fourth quarter of 2019 was $25.3 million, or $0.21 per diluted share.  This compares to income of $52.5 million, or $0.42 per diluted share in the fourth quarter of 2018, and $15.9 million, or $0.14 per diluted share, in the third quarter of 2019.  The fourth quarter of 2018 results reflect the release of a tax valuation allowance of $43.6 million. 
                                                                                                                                            
On a non-GAAP basis, net income for the fourth quarter of 2019 was $43.9 million, or $0.41 per diluted share. This compares to non-GAAP net income of $55.0 million, or $0.52 per diluted share, for the fourth quarter of 2018 and $38.9 million, or $0.37 per diluted share, in the third quarter of 2019.

Adjusted EBITDA for the fourth quarter of 2019 was $111.3 million, or 15.5 percent of net sales, compared to adjusted EBITDA of $117.4 million, or 16.5 percent of net sales, for the fourth quarter of 2018 and $103.5 million, or 14.4 percent of net sales, for the third quarter of 2019.

“For the fourth quarter, TTM continued to generate strong cash flow and delivered revenue and earnings above the previously guided range,” said Tom Edman, CEO of TTM.  “The year over year growth we experienced in the aerospace and defense, cellular and computing end markets offset weakness in our other commercial end markets.”

Full Year 2019 Financial Results
Net sales for fiscal year 2019 decreased to $2.69 billion from $2.85 billion in fiscal year 2018, a 5.5% decrease.

GAAP operating income for fiscal year 2019 was $120.1 million, a decrease from GAAP operating income of $159.1 million in fiscal year 2018.

GAAP net income for fiscal year 2019 was $41.3 million, or $0.39 per diluted share, compared to GAAP net income of $173.6 million, or $1.38 per diluted share, for fiscal year 2018.  The 2018 results reflect the release of a tax valuation allowance of $118.2 million. 

On a non-GAAP basis, net income for fiscal year 2019 was $120.5 million, or $1.13 per diluted share. This compares to fiscal year 2018 non-GAAP net income of $190.4 million, or $1.76 per diluted share.

Adjusted EBITDA for fiscal year 2019 was $376.2 million, or 14.0 percent of net sales, compared to $438.8 million, or 15.4 percent of net sales, for fiscal year 2018. 

"In 2019, we finished with strong results in Q4 and made progress on our strategy of diversification, differentiation and discipline.  Specifically, we acquired differentiating technology with an important asset purchase from i3 Technologies, which enables us to manufacture products that require finer lines and smaller spacing for our aerospace and defense and commercial end markets broadening our technology offerings in North America.  In addition, in early January, we announced the sale of our more seasonal and generally more volatile mobility business," continued Edman.  “Finally, our financial discipline allowed us to generate significant year over year growth in cash flow despite year over year declines in revenues and profits.”

Business Outlook
Typically, in the first calendar quarter of every year, our China based factories are shut down over the Lunar New Year holiday.  This year, due to government restrictions from the coronavirus. the shutdown has been extended approximately nine days to February 10th.  Assuming our factories in the PRC can resume production on February 10th, TTM estimates that revenue for the first quarter of 2020 will be in the range of $580 million to $620 million, and non-GAAP net income will be in the range of $0.05 to $0.11 per diluted share, which includes approximately $0.09 negative impact from the additional nine days of closure. If the government extends the factory shutdown beyond February 10th, our financial results would be further negatively impacted.

To Access the Live Webcast/Conference Call
TTM will host a conference call and webcast to discuss fourth quarter 2019 results and the first quarter 2020 outlook on Wednesday, February 5, 2020, 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 800-367-2403 or international 334-777-6978 (ID 6010319).  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 as well as a global designer and manufacturer of RF and microwave components and assemblies. 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.

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)
                             
                             
            Fourth Quarter   Third Quarter   Full Year
            2019   2018   2019   2019   2018
                             
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS                    
                             
  Net sales     $   719,253   $   710,955   $   716,817   $   2,689,308   $   2,847,261
  Cost of goods sold     594,704     588,323     612,983     2,287,625     2,390,227
                             
  Gross profit     124,549     122,632     103,834     401,683     457,034
                             
  Operating expenses:                    
    Selling and marketing     18,843     18,533     18,400     74,011     73,313
    General and administrative     43,535     39,615     38,845     152,096     159,437
    Amortization of definite-lived intangibles     10,206     17,722     10,175     48,474     59,681
    Restructuring charges     2,539     3,962     53     6,981     5,518
      Total operating expenses     75,123     79,832     67,473     281,562     297,949
                             
  Operating income     49,426     42,800     36,361     120,121     159,085
                             
  Interest expense     (20,107)     (22,533)     (20,568)     (83,234)     (78,958)
  Other, net       (2,920)     2,357     8,126     9,297     9,641
                             
  Income before income taxes     26,399     22,624     23,919     46,184     89,768
  Income tax (provision) / benefit     (1,140)     29,858     (8,049)     (4,883)     83,816
                             
  Net income   $   25,259   $   52,482   $   15,870   $   41,301   $   173,584
                             
  Earnings per share:                    
    Basic     $   0.24   $   0.51   $   0.15   $   0.39   $   1.68
    Diluted     $   0.21   $   0.42   $   0.14   $   0.39   $   1.38
                             
  Weighted-average shares used in computing per share amounts:                    
    Basic       105,502     103,683     105,492     105,195     103,355
    Diluted       133,073     131,533     132,412     106,332     134,036
                             
                             
  Reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share:            
                             
  Net income   $   25,259   $   52,482   $   15,870       $   173,584
    Add back items: interest expense, net of tax     2,825     3,030     2,836         11,906
  Adjusted net income   $   28,084   $   55,512   $   18,706       $   185,490
  Weighted-average shares outstanding     105,502     103,683     105,492         103,355
  Dilutive effect of convertible debt     25,938     25,939     25,938         25,939
  Dilutive effect of warrants     -      -      -          3,065
  Dilutive effect of performance-based stock units, restricted stock units & stock options     1,633     1,911     982         1,677
  Diluted shares     133,073     131,533     132,412         134,036
  Earnings per share:                    
    Basic     $   0.24   $   0.51   $   0.15       $   1.68
    Diluted     $   0.21   $   0.42   $   0.14       $   1.38
                             
                             
SELECTED BALANCE SHEET DATA                     
            December 30, 2019   December 31, 2018            
  Cash and cash equivalents, including restricted cash   $   400,154   $   256,360            
  Accounts and notes receivable, net     503,664     523,165            
  Contract assets     288,235     287,741            
  Inventories       122,019     109,377            
  Total current assets     1,342,684     1,206,914            
  Property, plant and equipment, net     1,022,929     1,052,024            
  Operating lease right of use asset     24,156     -             
  Other non-current assets     1,171,164     1,198,565            
  Total assets     3,560,933     3,457,503            
                             
  Short-term debt, including current portion of long-term debt   $   249,975   $   30,000            
  Accounts payable     483,566     431,288            
  Total current liabilities     946,666     673,214            
  Debt, net of discount     1,225,962     1,462,425            
  Total long-term liabilities     1,335,230     1,557,202            
  Total equity     1,279,037     1,227,087            
  Total liabilities and equity     3,560,933     3,457,503            
                             
SUPPLEMENTAL DATA                    
            Fourth Quarter   Third Quarter   Full Year
            2019   2018   2019   2019   2018
  Gross margin   17.3%   17.2%   14.5%   14.9%   16.1%
  Operating margin   6.9%   6.0%   5.1%   4.5%   5.6%
                             
  End Market Breakdown:                    
            Fourth Quarter   Third Quarter        
            2019   2018*   2019        
                             
    Aerospace/Defense   26%   23%   24%        
    Automotive   14%   16%   17%        
    Cellular Phone   16%   14%   19%        
    Computing/Storage/Peripherals   14%   13%   12%        
    Medical/Industrial/Instrumentation   13%   14%   13%        
    Networking/Communications   15%   18%   13%        
    Other     2%   2%   2%        
    * Amended for Anaren integration                    
                             
  Stock-based Compensation:                    
            Fourth Quarter   Third Quarter        
            2019   2018   2019        
    Amount included in:                    
      Cost of goods sold   $   942   $   766   $   941        
      Selling and marketing     518     525     593        
      General and administrative     3,166     4,442     3,128        
      Total stock-based compensation expense   $   4,626   $   5,733   $   4,662        
                             
                             
  Operating Segment Data:                    
            Fourth Quarter   Third Quarter        
     Net sales:    2019   2018   2019        
     PCB      $   671,928   $   653,482   $   649,104        
     E-M Solutions      47,325     57,473     67,713        
       Total net sales    $   719,253   $   710,955   $   716,817        
                             
     Operating segment income:                     
     PCB      $   93,447   $   87,201   $   73,230        
     E-M Solutions      1,841     3,364     3,236        
     Corporate      (34,373)     (28,863)     (28,750)        
       Total operating segment income      60,915     61,702     47,716        
     Amortization of definite-lived intangibles      (11,489)     (18,902)     (11,355)        
       Total operating income      49,426     42,800     36,361        
     Total other expense      (23,027)     (20,176)     (12,442)        
     Income before income taxes    $   26,399   $   22,624   $   23,919        
                             
RECONCILIATIONS1                    
            Fourth Quarter   Third Quarter   Full Year
            2019   2018   2019   2019   2018
  Non-GAAP gross profit reconciliation2:                    
    GAAP gross profit   $   124,549   $   122,632   $   103,834   $   401,683   $   457,034
    Add back item:                    
      Inventory markup     -      -      -      -      4,900
      Amortization of definite-lived intangibles     1,283     1,180     1,180     4,822     3,345
      Stock-based compensation     942     766     941     3,158     2,898
    Non-GAAP gross profit   $   126,774   $   124,578   $   105,955   $   409,663   $   468,177
    Non-GAAP gross margin   17.6%   17.5%   14.8%   15.2%   16.4%
                             
  Non-GAAP operating income reconciliation3:                    
    GAAP operating income   $   49,426   $   42,800   $   36,361   $   120,121   $   159,085
    Add back items:                    
      Amortization of definite-lived intangibles     11,489     18,902     11,355     53,296     63,026
      Stock-based compensation     4,626     5,733     4,662     16,816     20,681
      (Gain) on sale of assets     (66)     -      -      (66)     - 
      Inventory markup     -      -      -      -      4,900
      Restructuring, acquisition-related, and other charges     6,856     6,104     1,573     13,883     18,797
    Non-GAAP operating income   $   72,331   $   73,539   $   53,951   $   204,050   $   266,489
    Non-GAAP operating margin   10.1%   10.3%   7.5%   7.6%   9.4%
                             
  Non-GAAP net income and EPS reconciliation4:                    
    GAAP net income   $   25,259   $   52,482   $   15,870   $   41,301   $   173,584
    Add back items:                    
      Amortization of definite-lived intangibles     11,489     18,902     11,355     53,296     63,026
      Stock-based compensation     4,626     5,733     4,662     16,816     20,681
      Non-cash interest expense     3,501     4,384     3,452     14,288     14,783
      (Gain) on sale of assets     (186)     -      (251)     (3,743)     - 
      Inventory markup     -      -      -      -      4,900
      Restructuring, acquisition-related, and other charges     6,856     6,104     1,573     13,883     19,339
      Income taxes5     (7,623)     (32,614)     2,237     (15,325)     (105,916)
    Non-GAAP net income   $   43,922   $   54,991   $   38,898   $   120,516   $   190,397
    Non-GAAP earnings per diluted share   $   0.41   $   0.52   $   0.37   $   1.13   $   1.76
                             
  Non-GAAP diluted number of shares6:                    
    Diluted shares     133,073     131,533     132,412     106,332     134,036
    Dilutive effect of convertible debt     (25,938)     (25,939)     (25,938)     -     (25,939)
    Non-GAAP diluted number of shares     107,135     105,594     106,474     106,332     108,097
                             
  Adjusted EBITDA reconciliation7:                    
    GAAP net income   $   25,259   $   52,482   $   15,870   $   41,301   $   173,584
    Add back items:                    
      Income tax provision (benefit)     1,140     (29,858)     8,049     4,883     (83,816)
      Interest expense     20,107     22,533     20,568     83,234     78,958
      Amortization of definite-lived intangibles     11,489     18,902     11,355     53,296     63,026
      Depreciation expense     42,018     41,543     41,719     166,574     162,708
      Stock-based compensation     4,626     5,733     4,662     16,816     20,681
      (Gain) on sale of assets     (186)     -      (251)     (3,743)     - 
      Inventory markup     -      -      -      -      4,900
      Restructuring, acquisition-related, and other charges     6,856     6,104     1,573     13,883     18,797
    Adjusted EBITDA   $   111,309   $   117,439   $   103,545   $   376,244   $   438,838
    Adjusted EBITDA margin   15.5%   16.5%   14.4%   14.0%   15.4%
                             
  Free cash flow reconciliation:                    
    Operating cash flow     130,148     151,768     58,742     311,937     273,138
    Capital expenditures, net     (46,982)     (33,671)     (25,803)     (135,972)     (149,796)
    Free cash flow   $   83,166   $   118,097   $   32,939   $   175,965   $   123,342
                             
  1 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.
                             
  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, restructuring and other charges.
                             
  4 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, 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, 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 a forecasted annual GAAP tax rate.
                             
  6 Non-GAAP diluted number of shares used in computing non-GAAP earnings per share 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, 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:
Sameer Desai,
Senior Director, Corporate
Development & Investor Relations
Sameer.desai@ttmtech.com 
714-327-3050