TTM TECHNOLOGIES INC - FORM 8-K - EX-99.1

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8-K - FORM 8-K - TTM TECHNOLOGIES INC	d598651d8k.htm

Exhibit 99.1


TTM Technologies, Inc., Q2’18				Contact:
				Sameer Desai,
				Senior Director, Corporate
				Development & Investor Relations
				Sameer.desai@ttmtech.com
				714-327-3050

TTM Technologies, Inc. Reports Fiscal Second Quarter 2018 Results

COSTA MESA, CA – August 1st, 2018 – TTM Technologies, Inc. (NASDAQ:TTMI), a leading global printed circuit board (“PCB”) manufacturer, today reported results for the second quarter of fiscal 2018, which ended July 2nd, 2018. The financial results provided below for the second quarter include a partial quarter contribution from the acquisition of Anaren, Inc. (“Anaren”), which was completed on April 18^th, 2018.

Second Quarter 2018 Highlights

Net sales were $716.9 million

GAAP net income was $84.0 million, or $0.65 per diluted share

Non-GAAP net income was $52.3 million, or $0.48 per diluted share

Completed the acquisition of Anaren, Inc.

Cash flow from operations of $55.6 million

Second Quarter 2018 Financial Results

Net sales for the second quarter of 2018 were $716.9 million, compared to $627.2 million in the second quarter of 2017 and $663.6 million in the first quarter of 2018.

GAAP operating income for the second quarter of 2018 was $31.7 million, compared to $45.1 million in the second quarter of 2017 and $30.0 million in the first quarter of 2018.

GAAP net income for the second quarter of 2018 was $84.0 million, or $0.65 per diluted share. This compares to $20.6 million, or $0.18 per diluted share, in the second quarter of 2017 and $10.1 million, or $0.09 per diluted share, in the first quarter of 2018. The current quarter results reflect the release of a tax valuation allowance of $74.6 million.

On a non-GAAP basis, net income for the second quarter of 2018 was $52.3 million, or $0.48 per diluted share. This compares to non-GAAP net income of $33.3 million, or $0.31 per diluted share, for the second quarter of 2017 and $28.0 million, or $0.26 per diluted share, in the first quarter of 2018.

Adjusted EBITDA for the second quarter of 2018 was $115.9 million, or 16.2 percent of net sales, compared to adjusted EBITDA of $85.5 million, or 13.6 percent of net sales, for the second quarter of 2017 and $83.2 million, or 12.5 percent of net sales, for the first quarter of 2018.

“In the second quarter, TTM delivered strong results.” said Tom Edman, CEO of TTM. “We were pleased to see solid year over year growth from the aerospace and defense, automotive, computing and medical/industrial/instrumentation end markets that more than offset weakness in our cellular end market. Further, Anaren’s contribution in the quarter was better than forecasted. Longer term, Anaren’s deep RF expertise will strengthen TTM’s ability to engage with customers at the design stage in order to provide more value added solutions.”

Business Outlook

For the third quarter of 2018 TTM estimates that revenue will be in the range of $730 million to $770 million, and non-GAAP net income will be in the range of $0.41 to $0.47 per diluted share.


TTM Technologies, Inc., Q2’18				Contact:
				Sameer Desai,
				Senior Director, Corporate
				Development & Investor Relations
				Sameer.desai@ttmtech.com
				714-327-3050

To Access the Live Webcast/Conference Call

TTM will host a conference call and webcast to discuss second quarter 2018 results and third quarter 2018 outlook on Wednesday, August 1st, 2018, 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 800-289-0438 or international 323-794-2423 (ID 2502044). 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 high-frequency radio frequency (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.


TTM Technologies, Inc., Q2’18				Contact:
				Sameer Desai,
				Senior Director, Corporate
				Development & Investor Relations
				Sameer.desai@ttmtech.com
				714-327-3050

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 such 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 such 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)


	Second Quarter						First Quarter			First Two Quarters
	2018			2017			2018			2018			2017
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
Net sales	$	716,887		$	627,182		$	663,582		$	1,380,469		$	1,252,429
Cost of goods sold		600,747			531,315			574,904			1,175,651			1,051,543


Gross profit		116,140			95,867			88,678			204,818			200,886


Operating expenses:
Selling and marketing		18,619			15,851			17,628			36,247			32,506
General and administrative		45,721			29,885			34,127			79,848			60,707
Amortization of definite-lived intangibles		19,489			5,910			5,861			25,350			11,822
Restructuring charges		577			416			1,061			1,638			1,025
(Gain)/loss on sale of assets		—			(1,251	)		—			—			(2,800	)

Total operating expenses		84,406			50,811			58,677			143,083			103,260

Operating income		31,734			45,056			30,001			61,735			97,626

Interest expense		(20,453	)		(12,922	)		(13,747	)		(34,200	)		(26,518	)
Other, net		6,178			(5,825	)		(1,107	)		5,071			(7,535	)


Income before income taxes		17,459			26,309			15,147			32,606			63,573
Income tax (provision) / benefit		66,545			(5,558	)		(5,050	)		61,495			(9,697	)


Net income	$	84,004		$	20,751		$	10,097		$	94,101		$	53,876


Net income attributable to noncontrolling interest		—			(160	)		—			—			(326	)

Net income attributable to stockholders	$	84,004		$	20,591		$	10,097		$	94,101		$	53,550


Earnings per share attributable to stockholders:
Basic	$	0.81		$	0.20		$	0.10		$	0.91		$	0.53
Diluted	$	0.65		$	0.18		$	0.09		$	0.75		$	0.46

Weighted-average shares used in computing per share amounts:
Basic		103,553			101,756			102,508			103,030			101,344
Diluted		134,721			133,224			107,517			134,088			132,073

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

Net income attributable to stockholders	$	84,004		$	20,591		$	94,101		$	53,550
Add back items: interest expense, net of tax		3,587			3,432			7,135			6,826

Adjusted net income attributable to stockholders	$	87,591		$	24,023		$	101,236		$	60,376

Weighted-average shares outstanding		103,553			101,756			103,030			101,344
Dilutive effect of convertible debt		25,938			25,940			25,938			25,940
Dilutive effect of warrants		3,854			3,924			3,517			3,054
Dilutive effect of performance-based stock units, restricted stock units & stock options		1,376			1,604			1,603			1,735

Diluted shares		134,721			133,224			134,088			132,073

Earnings per share attributable to stockholders:
Basic	$	0.81		$	0.20		$	0.91		$	0.53
Diluted	$	0.65		$	0.18		$	0.75		$	0.46

SELECTED BALANCE SHEET DATA

	July 2, 2018			January 1, 2018
Cash and cash equivalents, including restricted cash	$	204,100		$	409,326
Accounts and notes receivable, net		541,587			483,903
Contract assets		300,717			—
Inventories		121,285			294,588
Total current assets		1,202,639			1,221,307
Property, plant and equipment, net		1,072,578			1,056,845
Other non-current assets		1,203,715			503,730
Total assets		3,478,932			2,781,882

Short-term debt, including current portion of long-term debt	$	40,729		$	4,578
Accounts payable		448,455			497,455
Total current liabilities		689,276			720,356
Debt, net of discount		1,555,425			975,479
Total long-term liabilities		1,648,363			1,050,146
Total equity		1,141,293			1,011,380
Total liabilities and equity		3,478,932			2,781,882

SUPPLEMENTAL DATA


	Second Quarter						First Quarter			First Two Quarters
	2018			2017			2018			2018			2017
Gross margin		16.2	%		15.3	%		13.4	%		14.8	%		16.0	%
Operating margin		4.4	%		7.2	%		4.5	%		4.5	%		7.8	%

End Market Breakdown:


	Second Quarter						First Quarter
	2018			2017			2018
Aerospace/Defense		24	%		17	%		18	%
Automotive		19	%		20	%		20	%
Cellular Phone		8	%		13	%		15	%
Computing/Storage/Peripherals		15	%		14	%		12	%
Medical/Industrial/Instrumentation		14	%		15	%		15	%
Networking/Communications		17	%		20	%		16	%
Other		3	%		1	%		4	%

Stock-based Compensation:


	Second Quarter				First Quarter
	2018		2017		2018
Amount included in:
Cost of goods sold	$	829	$	639	$	529
Selling and marketing		545		386		374
General and administrative		4,493		3,975		2,719

Total stock-based compensation expense	$	5,867	$	5,000	$	3,622

Operating Segment Data:


	Second Quarter						First Quarter
	2018			2017			2018
Net sales:
PCB	$	596,461		$	576,566		$	619,329
Anaren		62,011			—			—
E-M Solutions		61,842			52,898			47,151
Corporate		—			—			—

Total sales		720,314			629,464			666,480
Inter-segment sales		(3,427	)		(2,282	)		(2,898	)

Total net sales	$	716,887		$	627,182		$	663,582


Operating segment income:
PCB	$	68,028		$	69,435		$	63,464
Anaren		12,936			—			—
E-M Solutions		2,496			2,689			40
Corporate		(32,237	)		(21,158	)		(27,642	)

Total operating segment income		51,223			50,966			35,862
Amortization of definite-lived intangibles		(19,489	)		(5,910	)		(5,861	)

Total operating income		31,734			45,056			30,001
Total other expense		(14,275	)		(18,747	)		(14,854	)

Income before income taxes	$	17,459		$	26,309		$	15,147

RECONCILIATIONS¹


	Second Quarter						First Quarter			First Two Quarters
	2018			2017			2018			2018			2017
Non-GAAP gross profit reconciliation²:
GAAP gross profit	$	116,140		$	95,867		$	88,678		$	204,818		$	200,886
Add back item:
Inventory markup		4,900			—			—			4,900			—
Stock-based compensation		829			639			529			1,358			1,033

Non-GAAP gross profit	$	121,869		$	96,506		$	89,207		$	211,076		$	201,919

Non-GAAP gross margin		17.0	%		15.4	%		13.4	%		15.3	%		16.1	%

Non-GAAP operating income reconciliation³:
GAAP operating income	$	31,734		$	45,056		$	30,001		$	61,735		$	97,626
Add back items:
Amortization of definite-lived intangibles		19,489			5,910			5,861			25,350			11,822
Stock-based compensation		5,867			5,000			3,622			9,489			8,628
(Gain)/loss on sale of assets		—			(1,251	)		—			—			(2,800	)
Inventory markup		4,900			—			—			4,900			—
Impairments, restructuring, acquisition-related, and other charges		7,429			417			5,034			12,463			1,126

Non-GAAP operating income	$	69,419		$	55,132		$	44,518		$	113,937		$	116,402

Non-GAAP operating margin		9.7	%		8.8	%		6.7	%		8.3	%		9.3	%

Non-GAAP net income and EPS attributable to stockholders reconciliation⁴:
GAAP net income attributable to stockholders	$	84,004		$	20,591		$	10,097		$	94,101		$	53,550
Add back items:
Amortization of definite-lived intangibles		19,489			5,910			5,861			25,350			11,822
Stock-based compensation		5,867			5,000			3,622			9,489			8,628
Non-cash interest expense		3,353			2,726			3,054			6,407			5,353
(Gain)/loss on sale of assets		—			(1,251	)		—			—			(2,800	)
Inventory markup		4,900			—			—			4,900			—
Impairments, restructuring, acquisition-related, and other charges		7,742			417			5,263			13,005			1,126
Income taxes⁵		(73,073	)		(119	)		108			(72,965	)		(5,212	)

Non-GAAP net income attributable to stockholders	$	52,282		$	33,274		$	28,005		$	80,287		$	72,467

Non-GAAP earnings per diluted share attributable to stockholders	$	0.48		$	0.31		$	0.26		$	0.74		$	0.68

Non-GAAP diluted number of shares⁶:
Diluted shares		134,721			133,224			107,517			134,088			132,073
Dilutive effect of convertible debt		(25,938	)		(25,940	)		—			(25,938	)		(25,940	)

Non-GAAP diluted number of shares		108,783			107,284			107,517			108,150			106,133


Adjusted EBITDA reconciliation⁷:
GAAP net income	$	84,004		$	20,751		$	10,097		$	94,101		$	53,876
Add back items:
Income tax provision (benefit)		(66,545	)		5,558			5,050			(61,495	)		9,697
Interest expense		20,453			12,922			13,747			34,200			26,518
Amortization of definite-lived intangibles		19,489			5,910			5,861			25,350			11,822
Depreciation expense		40,298			36,146			39,775			80,073			72,223
Stock-based compensation		5,867			5,000			3,622			9,489			8,628
(Gain)/loss on sale of assets		—			(1,251	)		—			—			(2,800	)
Inventory markup		4,900			—			—			4,900			—
Impairments, restructuring, acquisition-related, and other charges		7,429			417			5,034			12,463			1,126

Adjusted EBITDA	$	115,895		$	85,453		$	83,186		$	199,081		$	181,090

Adjusted EBITDA margin		16.2	%		13.6	%		12.5	%		14.4	%		14.5	%

Free cash flow reconciliation:
Operating cash flow		55,639			59,114			(14,261	)		41,378			108,698
Capital expenditures, net		(38,948	)		(45,626	)		(42,139	)		(81,087	)		(69,004	)

Free cash flow	$	16,691		$	13,488		$	(56,400	)	$	(39,709	)	$	39,694

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	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 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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