TTMI TTM Technologies Inc

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 21, 2015

 

 

TTM TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		0-31285		91-1033443
(State or other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

1665 Scenic Avenue, Suite 250 Costa Mesa, California		92626
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (714) 327-3000

(Former name or former address if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 7.01.

Regulation FD Disclosure.

Beginning on April 21, 2015, executives of TTM Technologies, Inc. (the “Company”) will present information about the Company, including the information described in the slides furnished as Exhibit 99.1 to this Current Report on Form 8-K, to various potential lenders in connection with the proposed financing arrangements related to the Company’s proposed acquisition of Viasystems Group, Inc. (“Viasystems”).

The information in this Current Report (including the exhibit) is furnished pursuant to Item 7.01 and shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. This Current Report will not be deemed an admission as to the materiality of any information in this Current Report that is required to be disclosed solely by Regulation FD.

The Company does not have, and expressly disclaims, any obligation to release publicly any updates or any changes in its expectations or any change in events, conditions, or circumstances on which any forward-looking statement is based.

 

Item 9.01.

Financial Statements and Exhibits.

 

(d)

Exhibits.

 

Exhibit No.		Description
99.1		Slides presented to potential lenders, dated April 21, 2015

 

Forward-Looking Statements

Certain statements in this communication may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The Company cautions you that such statements are simply predictions and actual events or results may differ materially. These statements reflect the Company’s current expectations, and the Company 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 Company statements will not be realized. Further, these statements involve risks and uncertainties, many of which are beyond the Company’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, the ability of the Company and Viasystems to consummate the proposed Merger and realize anticipated synergies, demand for the Company’s products, market pressures on prices of the Company’s products, warranty claims, changes in product mix, contemplated significant capital expenditures and related financing requirements, and the Company’s dependence upon a small number of customers. Additional factors that may cause results to differ materially from those described in the forward-looking statements are set forth in the Annual Report on Form 10-K of the Company for the year ended December 29, 2014, which was filed with the SEC on February 27, 2015, under the heading “Item 1A. Risk Factors” and in the Company’s other filings made with the SEC available at the SEC’s website at www.sec.gov.

The Company does not undertake any obligation to update any such forward-looking statements to reflect any new information, subsequent events or circumstances, or otherwise, except as may be required by law.

Use of Non-GAAP Financial Measures

In addition to the financial statements presented in accordance with U.S. GAAP, TTM and Viasystems use certain non-GAAP financial measures, including “adjusted EBITDA.” The companies present non-GAAP financial information to enable investors to see each company through the eyes of management and to provide better insight into its ongoing financial performance.

Adjusted EBITDA is defined by TTM as earnings before interest expense, income taxes, depreciation, amortization of intangibles, stock-based compensation expense, gain on sale of assets, asset impairments, restructuring, costs related to acquisitions, and other charges. Adjusted EBITDA is

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defined by Viasystems as earnings before interest expense, income taxes, depreciation and amortization, stock-based compensation, restructuring and impairment charges, costs relating to acquisitions and equity registrations, and other non-recurring items. Adjusted EBITDA is not a recognized financial measure under U.S. GAAP, and it does not purport to be an alternative to operating income or an indicator of operating performance. Adjusted EBITDA is presented to enhance an understanding of operating results and is not intended to represent cash flows or results of operations. The Boards of Directors, lenders, and management of TTM and Viasystems use adjusted EBITDA primarily as an additional measure of operating performance for matters including executive compensation and competitor comparisons. The use of this non-GAAP measure provides an indication of each company’s ability to service debt, and management considers it an appropriate measure to use because of the companies’ leveraged positions.

Adjusted EBITDA has certain material limitations, primarily due to the exclusion of certain amounts that are material to each company’s consolidated results of operations, such as interest expense, income tax expense, and depreciation and amortization. In addition, adjusted EBITDA may differ from the adjusted EBITDA calculations reported by other companies in the industry, limiting its usefulness as a comparative measure.

The companies use adjusted EBITDA to provide meaningful supplemental information regarding operating performance and profitability by excluding from EBITDA certain items that each company believes are not indicative of its ongoing operating results or will not impact future operating cash flows, which include stock-based compensation expense, gain on sale of assets, asset impairments, restructuring, costs related to acquisitions, and other charges.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: April 21, 2015				TTM TECHNOLOGIES, INC.
				By:		/s/ Todd B. Schull
						Todd B. Schull
						Executive Vice President, Chief Financial Officer, Treasurer and Secretary

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EXHIBIT INDEX

 

Exhibit No.		Description
99.1		Slides presented to potential lenders, dated April 21, 2015

Exhibit 99.1

 

Lenders’ Presentation

April 2015

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Transaction and earnings update

• Timing: acquisition expected to close in Q2 2015 after regulatory approvals

• TTM and Viasystems have continued to perform well with strong Q4 2014:

• TTM Q4 2014 update:

– Net sales up 7% Y-o-Y and up 13% sequentially

– Adj. EBITDA up 4% Y-o-Y and up 39% sequentially 1

– Capex declined by $3mm and cash increased by $30mm compared to Q3 2014

• Viasystems Q4 2014 update:

– Net sales up 2% Y-o-Y and up 3% sequentially

– Adj. EBITDA1 up 2% Y-o-Y and up 8% sequentially 1

– Capex declined by $23mm and cash increased by $17mm compared to Q4 2013

• Q1 2015 guidance: TTM expects to be on the high end of previously disclosed guidance

– Net sales of approximately $329mm vs. $292mm in Q1 2014

– Non-GAAP earnings of approximately $0.13 vs. $0.01 in Q1 20142

– Adj. EBITDA of approximately $42mm vs. $29mm in Q1 20142

• Debt financing update: current financing structure of $775mm 1st lien term loan B and $175mm 2nd lien term loan to result in lower pro forma leverage profile of less than 3.4x

– TTM and Viasystems have generated cash and have paid down debt

1 Please refer to Adjusted EBITDA reconciliation in Appendix

2 Reconciliation of Q1 non-GAAP data is not available without unreasonable efforts and thus has not been included herein in compliance with applicable regulations

6

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Overview of TTM end markets

Core supplier to a wide range of high-end networking products

4G LTE network build out in China

Increasing IP traffic fueling infrastructure spend by service providers

Focus on rapidly growing smart phone segment

Growing business with leading and emerging smart phone manufacturers

Growth in emerging economies

Age and fuel economy driving airline fleet replacement

Defense modernization continues to drive key programs and product development

Approved defense budget restores some visibility and ordering

Significant penetration in tablet segment

Growth in mobile devices and tablets driving PCB complexity

Increasing demand for cloud services driving infrastructure products

Emerging use of advanced technologies in medical segment

Medical – MRI and ultrasound imaging, fluid analysis, laser surgery, patient monitoring

Instrumentation – semiconductor test equipment, network analyzers, GPS

Industrial – power grid controls, robotics, sensors

Growing supplier to automotive and transportation markets

Select consumer products (media devices, cameras)

Networking / Communications Medical / Industrial / InstrumentationNetworking / Communications

Cellular Phone

Aerospace / Defense

Computing / Storage / Peripherals

Other1

2013 PCB TAM

2013 SAM

$4.7

$3.5 $9.6 $2.7 $1.1 $1.8

($ billions) 33% 9%

6%% of TTM’s 2014 net sales

Aerospace / Defense

Source: TTM filings, Prismark Partners and TTM estimates

Note: Total Available Market (“TAM”) represents end-market demand as a whole. Serviceable Available Market (“SAM”) represents those customers within the TAM that TTM can specifically target using existing sales channels

1 Other includes consumer, automotive and transportation markets

11

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Overview of Viasystems end markets

Extended parts approval process

Stringent quality standards

Significant scale required by volume production

Increasing data / voice / video volume

$189

$151

Source: Prismark; Viasystems provided

1 Sales breakdown between Industrial & Medical unavailable. Industrial & Medical combined comprised 24% of Viasystems’ 2014 net sales ($ billions)

% of Viasystems’ 2014 sales

33%

17%

Server / Data Storage

Enterprise datacenter spending demand

New datacom customers

$104

15%

Industrial

Demand for alternative energy

Opportunity in the automated test equipment market

New customers and cross-selling opportunities

$129

24%1

Medical

Development of increasingly complex medical devices

$96

24%1

Military / Aerospace

Cross-selling opportunities

China production in aerospace

$128

Source: Prismark; Viasystems provided

1 Sales breakdown between Industrial & Medical unavailable. Industrial & Medical combined comprised 24% of Viasystems’ 2014 net sales

13

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Increases end market diversification

2014 net sales by end market1

 

17 Aerospace/ Defense 13% Automotive 17% Cellular Phone 12% Computing/ Storage/ Peripherals 11% Medical/ Industrial/ Instrumentation 16%

Networking/

 

Communications

 

29% Other 2%

 

Aerospace/

 

Defense

 

11% Automotive 33% Computing/ Storage/ Peripherals 7% Medical/ Industrial/ Instrumentation 24% Networking/ Communications 25%

 

Aerospace/

 

Defense

 

16%

 

Automotive

 

3%

Cellular Phone

 

23%

 

Computing/

 

Storage/

 

Peripherals

 

13% Medical/ Industrial/ Instrumentation 9% Networking/ Communications 33% Other (mostly Consumer) 3%

 

Note: TTM and Viasystems end market breakdown reclassified for illustrative purposes

 

1 Viasystems end market categorization was developed by TTM based on information obtained during the due diligence process. See Slide 12 for historical Viasystems presentation of end markets

Combination reduces impact of seasonality

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7 Generates significant cost savings opportunities

Expected cost savings of $55 million annualized run rate within 12 months following consummation of the merger 1 Cost savings

$mm %

Labor2

Non-labor2

Plant operating efficiencies

Rationalizing overlapping functional areas and shared services

Salesforce realignment

Maximize overhead efficiencies

Avoid duplicative efforts

Service provider contract rationalization

Optimize manufacturing resources

Align assets to maximize efficiency

$22 40%

$20 36%

$13 24%

$55 100%

TOTAL:

1 Costs to achieve estimated at $26mm

2 Excludes labor and/or non-labor savings from any plant operating efficiencies

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TTM Q4 2014 earnings highlights and Q1 2015 guidance

Q4 2014 highlights

($ millions) Net sales

Y-o-Y % growth

Adj. EBITDA1

Y-o-Y % growth

Capex Cash

Q1 2015 guidance

($ millions except EPS) Net sales

Y-o-Y % growth

Adj. EBITDA2

Y-o-Y % growth

Non-GAAP earnings2,3

Y-o-Y % growth

1

2013 Q4

$366.1 58.4 23.1

Q3 $345.3

2.0%

43.6

3.0%

29.5

2014

Q4 $390.9

6.8%

60.5

3.6%

26.2

• Strong net sales

• Adj. EBITDA improvement

• Controlled capex

• Strong cash flow generation

Q1 2014A $291.9

$29.1

$0.01

Previous guidance Q1 2015E $310.0 - 330.0

Not provided

$0.06 - 0.12

New guidance Q1 2015E $329

12.7% $42

44.3%

$0.13

1300%

• New estimates suggest a

~$13mm Y-o-Y improvement in TTM adj. EBITDA

1 Please refer to adjusted EBITDA reconciliation in Appendix; 2 Reconciliation of Q1 non-GAAP data is not available without unreasonable efforts and thus have not been included herein in compliance with applicable regulations; 3 Per diluted share

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Capital expenditure breakdown

FY2012

FY2013

FY2014

Total: $120mm2 Total: $109mm

Total: $65mm

48%

52% 58%

42%

All other capex

Capacity additions / special projects1 Total: $140mm 57% 43% Total: $103mm

All other capex

Investments in advanced technology 41% 59%

Total: $110mm

All other capex

Investments in advanced technology All other capex

Investments in advanced technology

 

All other capex Capacity additions / special projects1 All other capex Capacity additions / special projects1 1 Viasystems special projects include $54mm for 2012 and $23mm for 2013 primarily related to Zhongshan PRC capacity expansion to accept transfer of HZ operation after 3Q12 closure, Guangzhou PRC recovery from 3Q12 fire and Anaheim, CA factory relocation; 2Pro forma for DDi acquisition which includes $11mm of DDi capex during Jan-May 2012; Source: TTM & Viasystems filings; Capex % breakdown provided by TTM & Viasystems

 

49% 51% For FY2014, cash flow capex was $110mm while actual purchases of capex were $70mm

For TTM, there is a 12 – 18 month lag between the procurement (receipt of equipment) and the actual cash flow of capex

TTM will continue to invest in advanced technology, although, not to the extent of FY2012 and FY2013. For FY2015, total cash flow capex is expected to be $100mm of which $45mm is for advanced technology. For FY2015, procurement capex is expected to be $70mm of which $22mm will be investments in advanced technology

Excludes Viasystems capex projections for FY2015

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Sources & uses and pro forma capitalization

Sources & uses ($ millions)

Sources TTM cash Viasystems cash

Equity component of Merger consideration U.S. ABL Facility Asia ABL Facility 1st Lien Term Loan B Facility 2nd Lien Term Loan Facility

$179 72 115 79 0 775 175

$1,396

Uses

Merger consideration1 $362 Repayment of existing Viaystems debt 610 Call premium and accrued interest on Viasystems 2019 notes2 59 Refinance existing TTM debt and accrued interest 275 Refinance existing TTM convertible senior notes due May 2015 32 Estimated fees & expenses3 58

$1,396

1 The equity portion of the Merger Consideration and Merger Consideration were calculated using a stock price of $7.53 as of December 31, 2014; 2Assumes call premium and accrued interest date of May 1, 2015 settlement date (accrued interest calculated from November 1, 2014 through May 1, 2015) 3 Includes legal, accounting, rating agency, financing and other fees and expenses

Existing and pro forma capitalization ($ millions)

Cash & Cash Equivalents

Existing Chinese $90mm RC due Mar-2016 Existing Chinese term loan due Sep-2016 U.S. ABL Facility Asia ABL Facility 1st Lien Term Loan B Facility

Total 1st lien secured debt

Net 1st lien secured debt 2nd Lien Term Loan Facility

Total secured debt

Net secured debt

Existing uncommitted Chinese RC due Dec-2014 Existing 1.75% convert. senior notes due Dec-2020 Existing 3.25% convert. senior notes due May-2015

Total debt

Net debt

Noncontrolling interest Total stockholders equity2 Book capitalization FY 2014 Pro forma Adj. EBITDA1

Actual Pro forma % of pro forma xAdj. EBITDA

1

Dec-14 Dec-14 book cap. w/ cost savings $279 $100

0 - 274 -

- 79

- 0

- 775

274 854 40.4% 2.4x

(5) 754 35.7% 2.1x

- 175

274 1,029 48.7% 2.8x

(5) 929 44.0% 2.6x

0 0 250 250

32 -

556 1,279 60.5% 3.5x

277 1,179 55.8% 3.3x

- 4 0.2% 0.0x 715 831 39.3% 2.3x 1,272 2,114 100.0% 5.8x $362

1 Assumes run rate $55mm of annualized cost savings and excludes costs to achieve such cost savings and taxes. Tax impact expected to be minimal due to existing NOLs. Assumes FY2014 TTM and Viasystems Adjusted EBITDA of $166mm and $141mm, respectively; 2 Pro forma book equity is adjusted for $115mm equity issuance

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