TTMI TTM Technologies Inc

TTM Technologies, Inc. (NASDAQ:TTMI), a leading global printed circuit board (“PCB”) manufacturer, today reported results for the fourth quarter of fiscal 2016, which ended January 2nd, 2017. 

Fourth Quarter 2016 Highlights

• Net sales were $706.5 million
• GAAP net loss attributable to stockholders was $2.0 million, or $0.02 per share, which included a pre-tax charge of $47.8 million for debt extinguishment
• Non-GAAP net income attributable to stockholders was $59.8 million, or $0.58 per diluted share
• Adjusted EBITDA was $128.5 million

Fourth Quarter 2016 Financial Results Net sales for the fourth quarter of 2016 were $706.5 million, compared to $668.9 million in the fourth quarter of 2015 and $641.7 million in the third quarter of 2016.

GAAP operating income for the fourth quarter of 2016 was $69.6 million, compared to $36.5 million in the fourth quarter of 2015 and $50.2 million in the third quarter of 2016. 

GAAP net loss attributable to stockholders for the fourth quarter of 2016 was $2.0 million, or $0.02 per share.  This compares to a GAAP net income attributable to stockholders of $9.5 million, or $0.09 per diluted share, in the fourth quarter of 2015 and $25.6 million, or $0.23 per diluted share, in the third quarter of 2016.  The fourth quarter GAAP net loss includes a pre-tax charge of $47.8 million due to the early extinguishment of debt.

On a non-GAAP basis, net income attributable to stockholders for the fourth quarter of 2016 was $59.8 million, or $0.58 per diluted share.  This compares to non-GAAP net income attributable to stockholders of $31.5 million, or $0.31 per diluted share, for the fourth quarter of 2015 and $40.1 million, or $0.39 per diluted share, in the third quarter of 2016.

Adjusted EBITDA for the fourth quarter of 2016 was $128.5 million, or 18.2 percent of net sales, compared to adjusted EBITDA of $95.8 million, or 14.3 percent of net sales, for the fourth quarter of 2015 and $102.2 million, or 15.9 percent of net sales, for the third quarter of 2016.

“Our fourth quarter revenues exceeded the high end of our guidance and our profitability was better than our forecast,” said Tom Edman, CEO of TTM.  “On a year over year basis, most end markets grew, with the fastest growth coming from the cellular and automotive end markets.  This drove substantial operating income leverage in the business resulting in the highest non-GAAP EPS in the history of the company.”

Full Year 2016 Financial Results Net sales for fiscal year 2016 increased to $2.5 billion from $2.1 billion in fiscal year 2015.

GAAP operating income for fiscal year 2016 was $173.5 million, an increase from GAAP operating income of $61.3 million in fiscal year 2015.

GAAP net income attributable to stockholders for fiscal year 2016 was $34.9 million, or $0.34 per diluted share, compared to GAAP net loss attributable to stockholders of $25.9 million, or $0.28 per share, for fiscal year 2015. 

On a non-GAAP basis, net income attributable to stockholders for fiscal year 2016 was $142.3 million, or $1.40 per diluted share. This compares to fiscal year 2015 non-GAAP net income attributable to stockholders of $81.1 million, or $0.87 per diluted share.

Adjusted EBITDA for fiscal year 2016 was $395.4 million, or 15.6 percent of net sales, compared to $285.7 million, or 13.6 percent of net sales, for fiscal year 2015.  

"2016 was the year that validated TTM’s strategy of diversification, differentiation and discipline.  We saw solid growth in the automotive and aerospace and defense end markets that partially offset the declines in the cellular and networking and communications end markets.  Due to disciplined execution of synergies and cost controls, we generated $217 million in free cash flow and repaid approximately $218 million of our debt, allowing us to achieve a net debt to EBITDA ratio of less than 2.0 well ahead of our original timeline," continued Edman.  “I would like to thank our employees for their tremendous efforts to achieve these results for the year 2016 as we created a new “One TTM” resulting from the combination of Viasystems and TTM Technologies.”

“In 2017, we are looking forward to year on year growth in many of our end markets driven by megatrends such as growing automotive electronic content, increased aerospace and defense procurement, and upgrades in cellular phones.”

Business Outlook For the first quarter of 2017, TTM estimates that revenue will be in the range of $595 million to $635 million, and non-GAAP net income attributable to stockholders will be in the range of $0.25 to $0.31 per diluted share.

To Access the Live Webcast/Conference CallTTM will host a conference call and webcast to discuss fourth quarter 2016 results and first quarter 2017 outlook on Wednesday, February 8th, 2017, 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 888-278-8459 or international 913-312-1495 (ID 6391150).  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 leading global printed circuit board manufacturer, focusing on quick-turn and volume production of 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, 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)
						Fourth Quarter								Third Quarter				Full Year
							2016				2015				2016				2016				2015
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
	Net sales					$	706,534			$	668,874			$	641,720			$	2,533,359			$	2,095,488
	Cost of goods sold						573,689				560,604				532,158				2,109,744				1,785,351
	Gross profit						132,845				108,270				109,562				423,615				310,137
	Operating expenses:
		Selling and marketing					16,848				17,963				15,643				66,366				57,361
		General and administrative					38,998				41,654				35,641				148,719				167,109
		Amortization of definite-lived intangibles					6,407				6,683				5,949				24,252				18,888
		Restructuring charges					946				5,429				2,103				8,951				7,941
		Impairment of long-lived assets					-				-				-				3,346				-
		Gain on sale of assets					-				-				-				(1,472	)			(2,504	)
			Total operating expenses				63,199				71,729				59,336				250,162				248,795
	Operating income						69,646				36,541				50,226				173,453				61,342
	Interest expense						(15,267	)			(20,208	)			(18,873	)			(76,008	)			(59,753	)
	Loss on extinguishment of debt						(47,767	)			-				-				(47,767	)			(802	)
	Other, net						8,994				3,925				3,930				17,324				8,189
	Income before income taxes						15,606				20,258				35,283				67,002				8,976
	Income tax provision						(17,416	)			(10,601	)			(9,513	)			(31,427	)			(34,594	)
	Net income (loss)					$	(1,810	)		$	9,657			$	25,770			$	35,575			$	(25,618	)
	Net income attributable to noncontrolling interest						(195	)			(136	)			(188	)			(714	)			(264	)
	Net income (loss) attributable to stockholders					$	(2,005	)		$	9,521			$	25,582			$	34,861			$	(25,882	)
	Earnings (loss) per share attributable to stockholders:
		Basic				$	(0.02	)		$	0.10			$	0.26			$	0.35			$	(0.28	)
		Diluted				$	(0.02	)		$	0.09			$	0.23			$	0.34			$	(0.28	)
	Weighted-average shares used in computing per share amounts:
		Basic					100,365				99,134				100,245				100,099				92,675
		Diluted					100,365				126,329				127,645				101,482				92,675
	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			$	25,582
		Add back items: interest expense, net of tax									2,009				3,321
	Adjusted net income attributable to stockholders									$	11,530			$	28,903
	Weighted-average shares outstanding										99,134				100,245
	Dilutive effect of convertible debt										25,940				25,940
	Dilutive effect of performance-based stock units, restricted stock units and stock options										1,255				1,460
	Diluted shares										126,329				127,645
	Earnings per share attributable to stockholders:
		Basic								$	0.10			$	0.26
		Diluted								$	0.09			$	0.23
SELECTED BALANCE SHEET DATA
						January 2, 2017				December 28, 2015
	Cash and cash equivalents, including restricted cash					$	256,277			$	262,630
	Accounts and notes receivable, net						432,596				454,001
	Inventories						269,212				268,923
	Total current assets						1,012,841				1,022,520
	Property, plant and equipment, net						966,638				1,103,067
	Other non-current assets						520,597				514,546
	Total assets						2,500,076				2,640,133
	Short-term debt, including current portion of long-term debt					$	110,652			$	157,375
	Accounts payable						355,774				347,916
	Total current liabilities						689,065				744,994
	Debt, net of discount						909,030				1,013,411
	Total long-term liabilities						981,886				1,068,470
	Total equity						829,125				826,669
	Total liabilities and equity						2,500,076				2,640,133
SUPPLEMENTAL DATA
						Fourth Quarter								Third Quarter				Full Year
							2016				2015				2016				2016				2015
	Gross margin						18.8	%			16.2	%			17.1	%			16.7	%			14.8	%
	Operating margin						9.9	%			5.5	%			7.8	%			6.8	%			2.9	%
	End Market Breakdown:
						Fourth Quarter								Third Quarter
							2016				2015				2016
		Aerospace/Defense					14	%			13	%			15	%
		Automotive					19	%			18	%			19	%
		Cellular Phone					19	%			18	%			17	%
		Computing/Storage/Peripherals					12	%			12	%			12	%
		Medical/Industrial/Instrumentation					13	%			13	%			14	%
		Networking/Communications					21	%			23	%			21	%
		Other					2	%			3	%			2	%
	Stock-based Compensation:
						Fourth Quarter								Third Quarter
							2016				2015				2016
		Amount included in:
			Cost of goods sold			$	469			$	327			$	412
			Selling and marketing			$	305				301				268
			General and administrative				2,426				2,007				2,119
			Total stock-based compensation expense			$	3,200			$	2,635			$	2,799
	Operating Segment Data:
						Fourth Quarter								Third Quarter
		Net sales:					2016				2015				2016
		PCB				$	654,379			$	611,045			$	598,656
		E-M Solutions					55,332				61,021				46,246
		Corporate					-				-				-
			Total sales				709,711				672,066				644,902
		Inter-segment sales					(3,177	)			(3,192	)			(3,182	)
			Total net sales			$	706,534			$	668,874			$	641,720
		Operating segment income:
		PCB				$	95,208			$	66,320			$	75,501
		E-M Solutions					3,029				2,612				1,421
		Corporate					(22,184	)			(25,708	)			(20,747	)
			Total operating segment income				76,053				43,224				56,175
		Amortization of definite-lived intangibles					(6,407	)			(6,683	)			(5,949	)
			Total operating income				69,646				36,541				50,226
		Total other expense					(54,040	)			(16,283	)			(14,943	)
		Income before income taxes				$	15,606			$	20,258			$	35,283
RECONCILIATIONS1
						Fourth Quarter								Third Quarter				Full Year
							2016				2015				2016				2016				2015
	Non-GAAP gross profit reconciliation2:
		GAAP gross profit				$	132,845			$	108,270			$	109,562			$	423,615			$	310,137
		Add back item:
			Inventory markup				-				598				-				-				16,220
			Stock-based compensation				469				327				412				1,630				1,117
		Non-GAAP gross profit				$	133,314			$	109,195			$	109,974			$	425,245			$	327,474
		Non-GAAP gross margin					18.9	%			16.3	%			17.1	%			16.8	%			15.6	%
	Non-GAAP operating income reconciliation3:
		GAAP operating income				$	69,646			$	36,541			$	50,226			$	173,453			$	61,342
		Add back items:
			Amortization of definite-lived intangibles				6,407				6,683				5,949				24,252				18,888
			Stock-based compensation				3,200				2,635				2,799				11,090				9,661
			Gain on sale of assets				-				-				-				(1,472	)			(2,504	)
			Acquisition-related costs				195				1,521				197				1,688				34,448
			Inventory markup				-				598				-				-				16,220
			Impairments, restructuring, and other charges				1,530				5,429				2,103				12,881				7,941
		Non-GAAP operating income				$	80,978			$	53,407			$	61,274			$	221,892			$	145,996
		Non-GAAP operating margin					11.5	%			8.0	%			9.5	%			8.8	%			7.0	%
	Non-GAAP net income and EPS attributable to stockholders reconciliation4:
		GAAP net income (loss) attributable to stockholders				$	(2,005	)		$	9,521			$	25,582			$	34,861			$	(25,882	)
		Add back items:
			Amortization of definite-lived intangibles				6,407				6,683				5,949				24,252				18,888
			Stock-based compensation				3,200				2,635				2,799				11,090				9,661
			Non-cash interest expense				2,697				4,893				4,721				19,180				15,626
			Gain on sale of assets				-				-				-				(1,472	)			(2,504	)
			Acquisition-related costs				195				1,521				197				1,688				34,448
			Inventory markup				-				598				-				-				16,220
			Loss on extinguishment of debt				47,767				-				-				47,767				802
			Impairments, restructuring and other charges				1,530				5,429				2,103				12,881				7,941
			Income taxes				49				247				(1,208	)			(7,987	)			5,869
		Non-GAAP net income attributable to stockholders				$	59,840			$	31,527			$	40,143			$	142,260			$	81,069
		Non-GAAP earnings per diluted share attributable to stockholders				$	0.58			$	0.31			$	0.39			$	1.40			$	0.87
	Non-GAAP diluted number of shares5:
		Diluted shares					102,563				126,329				127,645				101,482				93,640
		Dilutive effect of convertible debt					-				(25,940	)			(25,940	)			-				-
		Non-GAAP diluted number of shares					102,563				100,389				101,705				101,482				93,640
	Adjusted EBITDA reconciliation6:
		GAAP net income (loss)				$	(1,810	)		$	9,657			$	25,770			$	35,575			$	(25,618	)
		Add back items:
			Income tax provision (benefit)				17,416				10,601				9,513				31,427				34,594
			Interest expense				15,267				20,208				18,873				76,008				59,753
			Amortization of definite-lived intangibles				6,407				6,683				5,949				24,252				18,888
			Depreciation expense				38,539				39,105				37,006				156,229				133,508
			Stock-based compensation				3,200				2,635				2,799				11,090				9,661
			Gain on sale of assets				-				-				-				(1,472	)			(2,504	)
			Acquisition-related costs				195				1,521				197				1,688				34,448
			Inventory markup				-				-				-				-				14,200
			Loss on extinguishment of debt				47,767				-				-				47,767				802
			Impairments, restructuring and other charges				1,530				5,429				2,103				12,881				7,941
		Adjusted EBITDA				$	128,511			$	95,839			$	102,210			$	395,445			$	285,673
		Adjusted EBITDA margin					18.2	%			14.3	%			15.9	%			15.6	%			13.6	%
	Free cash flow reconciliation:
		Operating cash flow					97,650				139,829				102,737				298,336				237,462
		Add back items:
			Payment of accreted interest on convertible sr. notes				-				-				-				-				8,730
			Payment of acquisition-related costs				869				1,522				11				3,895				36,210
		Adjusted operating cash flow					98,519				141,351				102,748				302,231				282,402
		Capital expenditures, net					(22,619	)			(22,967	)			(24,221	)			(85,139	)			(99,718	)
		Free cash flow				$	75,900			$	118,384			$	78,527			$	217,092			$	182,684
	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 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