TTMI TTM Technologies Inc

TTM Technologies, Inc. (Nasdaq:TTMI), a major global printed circuit board (“PCB”) manufacturer, today reported results for the first quarter 2016, which ended March 28, 2016.  Our results include the contribution from the Viasystems Group, Inc. ("Viasystems") acquisition, which was completed on May 31, 2015.

First Quarter 2016 Highlights

• Net sales were $583.3 million
• GAAP net loss attributable to stockholders was $7.3 million, or $0.07 per share
• Non-GAAP net income attributable to stockholders was $13.9 million, or $0.14 per diluted share
• Adjusted EBITDA was $74.5 million

First Quarter 2016 Financial Results Net sales for the first quarter of 2016 were $583.3 million, compared to $329.2 million in the first quarter of 2015 and $668.9 million in the fourth quarter.

GAAP operating income for the first quarter of 2016 was $18.9 million, compared to operating income of $8.3 million in the first quarter of 2015 and $36.5 million in the fourth quarter. 

GAAP net loss attributable to stockholders for the first quarter of 2016 was $7.3 million, or $0.07 per share.  This compares to GAAP net income of $3.4 million, or $0.04 per diluted share, in the first quarter of 2015 and $9.5 million, or $0.09 per diluted share, in the fourth quarter.  The GAAP results were negatively impacted by approximately $6.0 million of expenses related to the acquisition and integration of Viasystems.

On a non-GAAP basis, net income attributable to stockholders for the first quarter of 2016 was $13.9 million, or $0.14 per diluted share.  This compares to non-GAAP net income of $10.8 million, or $0.13 per diluted share, for the first quarter of 2015 and $31.5 million, or $0.31 per diluted share, in the fourth quarter of last year.

Adjusted EBITDA for the first quarter of 2016 was $74.5 million, or 12.8 percent of net sales, compared to adjusted EBITDA of $42.5 million, or 12.9 percent of net sales, for the first quarter of 2015 and $95.8 million, or 14.3 percent of net sales, for the fourth quarter of 2015.

“Our first quarter results marked a solid start to the year and demonstrated the benefits of our diversification initiative,” said Tom Edman, CEO of TTM.  “Strong operational execution across all of our business units drove non-GAAP earnings above the high end of our guidance.  Relative strength in the aerospace and defense, automotive and computing end markets helped offset a softer demand environment in the cellular phone end market.”

“We continue to deliver on our integration milestones and have now implemented or announced actions that represent more than 90% of our $55 million annualized synergy target.  The new market focused business unit structure put in place at the beginning of the year has already begun to yield operational benefits.  We believe a larger and more diverse TTM with focus on key end markets such as Aerospace & Defense and Automotive is an important differentiator in the PCB market,” concluded Mr. Edman.

Business Outlook For the second quarter of 2016, TTM estimates that revenue will be in the range of $580 million to $620 million, and non-GAAP net income will be in the range of $0.16 to $0.22 per diluted share. 

To Access the Live Webcast/Conference CallTTM will host a conference call and webcast to discuss first quarter 2016 results and second quarter 2016 outlook on Wednesday, April 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 719-325-2354 (ID 1413218).  The conference call also will be webcast on TTM’s website at www.ttm.com.

To Access a Replay of the WebcastThe replay of the webcast will remain accessible for one week following the live event on TTM’s website at www.ttm.com.  

About TTMTTM 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, including, the planned plant combinations and closure, 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 MeasuresThis 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)
						First Quarter								Fourth Quarter
							2016				2015				2015
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
	Net sales					$	583,258			$	329,164			$	668,874
	Cost of goods sold						499,695				277,605				560,604
	Gross profit						83,563				51,559				108,270
	Operating expenses:
		Selling and marketing					17,306				9,455				17,963
		General and administrative					36,149				33,990				41,654
		Amortization of definite-lived intangibles					5,947				1,874				6,683
		Restructuring charges					1,913				479				5,429
		Impairment of long-lived assets					3,346				-				-
		Gain on sale of asset					-				(2,504	)			-
			Total operating expenses				64,661				43,294				71,729
	Operating income (loss)						18,902				8,265				36,541
	Interest expense						(21,784	)			(5,765	)			(20,208	)
	Other, net						1,209				(415	)			3,925
	Income (loss) before income taxes						(1,673	)			2,085				20,258
	Income tax (provision) benefit						(5,477	)			1,361				(10,601	)
	Net income (loss)					$	(7,150	)		$	3,446			$	9,657
	Net income attributable to noncontrolling interest						(114	)			-				(136	)
	Net income (loss) attributable to stockholders					$	(7,264	)		$	3,446			$	9,521
	Earnings (loss) per share attributable to stockholders:
		Basic				$	(0.07	)		$	0.04			$	0.10
		Diluted				$	(0.07	)		$	0.04			$	0.09
	Weighted-average shares used in computing per share amounts:
		Basic					99,596				83,603				99,134
		Diluted					99,596				84,465				126,329
	Reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share:
	Net income attributable to stockholders													$	9,521
		Add back items: interest expense, net of tax													2,009
	Adjusted net income attributable to stockholders													$	11,530
	Weighted-average shares outstanding														99,134
	Dilutive effect of convertible debt														25,940
	Dilutive effect of performance-based stock units, restricted stock units and stock options														1,255
	Diluted shares														126,329
	Earnings per share attributable to stockholders:
		Basic												$	0.10
		Diluted												$	0.09
SELECTED BALANCE SHEET DATA
						March 28, 2016				December 28, 2015
	Cash and cash equivalents, including restricted cash					$	183,678			$	262,630
	Accounts and notes receivable, net						431,276				454,001
	Inventories						264,555				268,923
	Total current assets						908,210				1,022,520
	Property, plant and equipment, net						1,075,613				1,103,067
	Other non-current assets						512,009				545,717
	Total assets						2,495,832				2,640,133
	Short-term debt, including current portion of long-term debt					$	80,358			$	157,375
	Accounts payable						308,156				347,916
	Total current liabilities						598,406				744,994
	Debt, net of discount						1,021,866				1,013,411
	Total long-term liabilities						1,079,499				1,068,470
	Total equity						817,927				826,669
	Total liabilities and equity						2,495,832				2,640,133
SUPPLEMENTAL DATA
						First Quarter								Fourth Quarter
							2016				2015				2015
	Gross margin						14.3	%			15.7	%			16.2	%
	Operating margin						3.2	%			2.5	%			5.5	%
	End Market Breakdown:
						First Quarter								Fourth Quarter
							2016				2015				2015
		Aerospace/Defense					15	%			15	%			13	%
		Automotive					21	%			3	%			18	%
		Cellular Phone					9	%			30	%			18	%
		Computing/Storage/Peripherals					13	%			11	%			12	%
		Medical/Industrial/Instrumentation					16	%			9	%			13	%
		Networking/Communications					24	%			29	%			23	%
		Other					2	%			3	%			3	%
	Stock-based Compensation:
						First Quarter								Fourth Quarter
							2016				2015				2015
		Amount included in:
			Cost of goods sold			$	320			$	225			$	327
			Selling and marketing				210				271				301
			General and administrative				1,716				1,544				2,007
			Total stock-based compensation expense			$	2,246			$	2,040			$	2,635
	Operating Segment Data:
						First Quarter								Fourth Quarter
		Net sales:					2016				2015				2015
		PCB				$	529,945			$	310,324			$	611,045
		E-M Solutions					56,478				19,462				61,021
		Corporate					-				-				-
			Total sales				586,423				329,786				672,066
		Inter-segment sales					(3,165	)			(622	)			(3,192	)
			Total net sales			$	583,258			$	329,164			$	668,874
		Operating segment income:
		PCB				$	49,367			$	23,260			$	66,320
		E-M Solutions					387				651				2,612
		Corporate					(24,905	)			(13,772	)			(25,708	)
			Total operating segment income				24,849				10,139				43,224
		Amortization of definite-lived intangibles					(5,947	)			(1,874	)			(6,683	)
			Total operating income				18,902				8,265				36,541
		Total other expense					(20,575	)			(6,180	)			(16,283	)
		Income before income taxes				$	(1,673	)		$	2,085			$	20,258
RECONCILIATIONS1
						First Quarter								Fourth Quarter
							2016				2015				2015
	Non-GAAP gross profit reconciliation2:
		GAAP gross profit				$	83,563			$	51,559			$	108,270
		Add back item:
			Inventory markup and PP&E step up				-				-				598
			Stock-based compensation				320				225				327
		Non-GAAP gross profit				$	83,883			$	51,784			$	109,195
		Non-GAAP gross margin					14.4	%			15.7	%			16.3	%
	Non-GAAP operating income reconciliation3:
		GAAP operating income (loss)				$	18,902			$	8,265			$	36,541
		Add back items:
			Amortization of definite-lived intangibles				5,947				1,874				6,683
			Stock-based compensation				2,246				2,040				2,635
			Gain on sale of asset				-				(2,504	)			-
			Acquisition-related costs				691				8,235				1,521
			Inventory markup and PP&E step up				-				-				598
			Impairments and restructuring charges				5,259				479				5,429
		Non-GAAP operating income				$	33,045			$	18,389			$	53,407
		Non-GAAP operating margin					5.7	%			5.6	%			8.0	%
	Non-GAAP net income and EPS attributable to stockholders reconciliation4:
		GAAP net income (loss) attributable to stockholders				$	(7,264	)		$	3,446			$	9,521
		Add back items:
			Amortization of definite-lived intangibles				5,947				1,874				6,683
			Stock-based compensation				2,246				2,040				2,635
			Non-cash interest expense				6,154				2,625				4,893
			Gain on sale of asset				-				(2,504	)			-
			Acquisition-related costs				691				8,235				1,521
			Inventory markup and PP&E step up				-				-				598
			Impairments, restructuring and other charges				5,259				479				5,429
			Income taxes				821				(5,366	)			247
		Non-GAAP net income attributable to stockholders				$	13,854			$	10,829			$	31,527
		Non-GAAP earnings per diluted share attributable to stockholders				$	0.14			$	0.13			$	0.31
	Non-GAAP diluted number of shares5:
		Diluted shares					99,596				84,465				126,329
		Dilutive effect of convertible debt					-				-				(25,940	)
		Non-GAAP diluted number of shares					99,596				84,465				100,389
	Adjusted EBITDA reconciliation6:
		GAAP net income (loss)				$	(7,150	)		$	3,446			$	9,657
		Add back items:
			Income tax provision (benefit)				5,477				(1,361	)			10,601
			Interest expense				21,784				5,765				20,208
			Amortization of definite-lived intangibles				5,947				1,874				6,683
			Depreciation expense				40,227				24,536				39,105
			Stock-based compensation				2,246				2,040				2,635
			Gain on sale of asset				-				(2,504	)			-
			Acquisition-related costs				691				8,235				1,521
			Impairments, restructuring and other charges				5,259				479				5,429
		Adjusted EBITDA				$	74,481			$	42,510			$	95,839
		Adjusted EBITDA margin					12.8	%			12.9	%			14.3	%
	Free cash flow reconciliation:
		Operating cash flow					17,892				67,354				139,829
		Add back items:
			Payment of acquisition-related costs				2,324				4,720				1,522
		Adjusted operating cash flow					20,216				72,074				141,351
		Capital expenditures, net					(20,116	)			(22,776	)			(22,967	)
		Free cash flow				$	100			$	49,298			$	118,384

 

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, inventory markup and PP&E step up.
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:
Sameer Desai,
Senior Director, Corporate 
Development & Investor Relations
sameer.desai@ttmtech.com 
714-327-3050