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

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8-K - FORM 8-K - TTM TECHNOLOGIES INC	d330320d8k.htm

Exhibit 99.1


TTM Technologies, Inc., Q4’16				Contact:
				Sameer Desai,
				Senior Director, Corporate Development & Investor Relations
				sameer.desai@ttmtech.com
				714-327-3050

TTM Technologies, Inc. Reports Fourth Quarter and Fiscal Year 2016 Results

Broad Based Growth Drives Results Ahead of Guidance Delivering Record Revenues

COSTA MESA, CA – February 8th, 2017 – 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.


TTM Technologies, Inc., Q4’16				Contact:
				Sameer Desai,
				Senior Director, Corporate Development & Investor Relations
				sameer.desai@ttmtech.com
				714-327-3050

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 Call

TTM 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 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. 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


TTM Technologies, Inc., Q4’16				Contact:
				Sameer Desai,
				Senior Director, Corporate Development & Investor Relations
				sameer.desai@ttmtech.com
				714-327-3050

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.

- 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
	2016			2015			2016
Net sales:
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.

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