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

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8-K - FORM 8-K - TTM TECHNOLOGIES INC	d529175d8k.htm

TTM Technologies, Inc., Q4’17

Contact:

Sameer Desai,

Senior Director, Corporate Development

& Investor Relations

Sameer.desai@ttmtech.com

714-327-3050

Exhibit 99.1

TTM Technologies, Inc. Reports Fiscal Fourth Quarter and Fiscal 2017 Results

Revenues and Operating Profits Exceed Expectations

COSTA MESA, CA – February 7th, 2018 – TTM Technologies, Inc. (NASDAQ:TTMI), a leading global printed circuit board (“PCB”) manufacturer, today reported results for the fourth quarter of fiscal 2017, which ended January 1st, 2018.

Fourth Quarter 2017 Highlights

–

Net sales were $739.3 million

–

GAAP net income attributable to stockholders was $49.2 million, or $0.40 per diluted share

–

Non-GAAP net income attributable to stockholders was $61.2 million, or $0.57 per diluted share

–

Adjusted EBITDA was $121.7 million

–

Cash flow from operations a record high of $152.7 million

–

Signed definitive agreement to acquire Anaren, Inc.

Fourth Quarter 2017 Financial Results

Net sales for the fourth quarter of 2017 were $739.3 million, compared to $706.5 million in the fourth quarter of 2016 and $668.8 million in the third quarter of 2017.

GAAP operating income for the fourth quarter of 2017 was $71.0 million, compared to $69.6 million in the fourth quarter of 2016 and $44.1 million in the third quarter of 2017.

GAAP net income attributable to stockholders for the fourth quarter of 2017 was $49.2 million, or $0.40 per diluted share. This compares to a GAAP net loss attributable to stockholders of $2.0 million, or $0.02 per share, in the fourth quarter of 2016 and a GAAP net income of $21.5 million, or $0.19 per diluted share, in the third quarter of 2017.

On a non-GAAP basis, net income attributable to stockholders for the fourth quarter of 2017 was $61.2 million, or $0.57 per diluted share. This compares to non-GAAP net income attributable to stockholders of $59.8 million, or $0.58 per diluted share, for the fourth quarter of 2016 and $33.4 million, or $0.32 per diluted share, in the third quarter of 2017.

Adjusted EBITDA for the fourth quarter of 2017 was $121.7 million, or 16.5 percent of net sales, compared to adjusted EBITDA of $128.5 million, or 18.2 percent of net sales, for the fourth quarter of 2016 and $85.7 million, or 12.9 percent of net sales, for the third quarter of 2017.

“TTM delivered the fifth consecutive quarter of year on year organic growth with revenues and operating performance that significantly exceeded expectations” said Tom Edman, CEO of TTM. “On a year over year basis, the fastest growth in the fourth quarter came from the cellular and the aerospace and defense end markets. This drove cash flow from operations to a record high of $152.7 million in the quarter.”

Full Year 2017 Financial Results

Net sales for fiscal year 2017 increased to $2.7 billion from $2.5 billion in fiscal year 2016, a 4.9% increase year over year.

GAAP operating income for fiscal year 2017 was $212.8 million, an increase from GAAP operating income of $173.5 million in fiscal year 2016.

GAAP net income attributable to stockholders for fiscal year 2017 was $124.2 million, or $1.04 per diluted share, compared to GAAP net income attributable to stockholders of $34.9 million, or $0.34 per diluted share, for fiscal year 2016.

TTM Technologies, Inc., Q4’17

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 2017 was $167.1 million, or $1.57 per diluted share. This compares to fiscal year 2016 non-GAAP net income attributable to stockholders of $142.3 million, or $1.40 per diluted share.

Adjusted EBITDA for fiscal year 2017 was $388.6 million, or 14.6 percent of net sales, compared to $395.4 million, or 15.6 percent of net sales, for fiscal year 2016.

“2017 continued to validate TTM’s strategy of diversification, differentiation and discipline. We saw solid organic growth in the aerospace and defense, cellular and computing end markets that more than offset the decline in the networking and communications end markets,” continued Edman. “I would like to thank our employees for their tremendous efforts to achieve these results for the year 2017.”

“In the first quarter of 2018, we face short term seasonal challenges in our consumer oriented cellular and computing end markets, but remain optimistic for full year growth in nearly all 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 2018, TTM estimates that revenue will be in the range of $610 million to $660 million, and non-GAAP net income attributable to stockholders will be in the range of $0.22 to $0.28 per diluted share.

To Access the Live Webcast/Conference Call

TTM will host a conference call and webcast to discuss fourth quarter 2017 results and first quarter 2018 outlook on Wednesday, February 7th, 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 800-239-9838 or international 323-794-2551 (ID 5818058). 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.

TTM Technologies, Inc., Q4’17

Contact:

Sameer Desai,

Senior Director, Corporate Development

& Investor Relations

Sameer.desai@ttmtech.com

714-327-3050

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.

With respect to the Company’s outlook for non-GAAP net income attributable to stockholders 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 attributable to stockholders 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 attributable to stockholders per diluted share calculated and presented in accordance with GAAP. Accordingly, a reconciliation of non-GAAP net income attributable to stockholders 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)


	Fourth Quarter						Third Quarter			Full Year
	2017			2016			2017			2017			2016
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

Net sales	$	739,349		$	706,534		$	666,814		$	2,658,592		$	2,533,359
Cost of goods sold		607,488			573,689			569,980			2,229,011			2,109,744

Gross profit		131,861			132,845			96,834			429,581			423,615


Operating expenses:
Selling and marketing		17,081			16,848			16,269			65,856			66,366
General and administrative		37,764			38,998			30,018			128,489			148,719
Amortization of definite-lived intangibles		5,907			6,407			5,905			23,634			24,252
Restructuring charges		65			946			100			1,190			8,951
Impairment of long-lived assets		—			—			—			—			3,346
(Gain)/loss on sale of assets		—			—			452			(2,348	)		(1,472	)

Total operating expenses		60,817			63,199			52,744			216,821			250,162


Operating income		71,044			69,646			44,090			212,760			173,453

Interest expense		(13,782	)		(15,267	)		(13,598	)		(53,898	)		(76,008	)
Loss on extinguishment of debt		—			(47,767	)		(768	)		(769	)		(47,767	)
Other, net		(3,617	)		8,994			(6,984	)		(18,135	)		17,324


Income before income taxes		53,645			15,606			22,740			139,958			67,002
Income tax provision		(4,329	)		(17,416	)		(1,205	)		(15,231	)		(31,427	)


Net income (loss)	$	49,316		$	(1,810	)	$	21,535		$	124,727		$	35,575

Net income attributable to noncontrolling interest		(105	)		(195	)		(82	)		(513	)		(714	)

Net income (loss) attributable to stockholders	$	49,211		$	(2,005	)	$	21,453		$	124,214		$	34,861


Earnings (loss) per share attributable to stockholders:
Basic	$	0.48		$	(0.02	)	$	0.21		$	1.22		$	0.35
Diluted	$	0.40		$	(0.02	)	$	0.19		$	1.04		$	0.34

Weighted-average shares used in computing per share amounts:
Basic		101,817			100,365			101,814			101,580			100,099
Diluted		133,170			100,365			131,596			132,476			101,482

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

Net income attributable to stockholders	$	49,211					$	21,453		$	124,214
Add back items: interest expense, net of tax		3,508						3,469			13,803

Adjusted net income attributable to stockholders	$	52,719					$	24,922		$	138,017

Weighted-average shares outstanding		101,817						101,814			101,580
Dilutive effect of convertible debt		25,939						25,939			25,940
Dilutive effect of warrants		2,938						2,151			2,799
Dilutive effect of performance-based stock units, restricted stock units & stock options		2,476						1,692			2,157

Diluted shares		133,170						131,596			132,476

Earnings per share attributable to stockholders:
Basic	$	0.48					$	0.21		$	1.22
Diluted	$	0.40					$	0.19		$	1.04

SELECTED BALANCE SHEET DATA
	January 1, 2018			January 2, 2017
Cash and cash equivalents, including restricted cash	$	409,326		$	256,277
Accounts and notes receivable, net		483,903			432,788
Inventories		294,588			269,212
Total current assets		1,221,307			1,012,841
Property, plant and equipment, net		1,056,845			966,638
Other non-current assets		503,730			520,597
Total assets		2,781,882			2,500,076

Short-term debt, including current portion of long-term debt	$	4,578		$	110,652
Accounts payable		438,990			371,610
Total current liabilities		720,356			689,065
Debt, net of discount		975,479			909,030
Total long-term liabilities		1,050,146			981,886
Total equity		1,011,380			829,125
Total liabilities and equity		2,781,882			2,500,076


SUPPLEMENTAL DATA
	Fourth Quarter						Third Quarter			Full Year
	2017			2016			2017			2017			2016
Gross margin		17.8	%		18.8	%		14.5	%		16.2	%		16.7	%
Operating margin		9.6	%		9.9	%		6.6	%		8.0	%		6.8	%

End Market Breakdown:
	Fourth Quarter						Third Quarter
	2017			2016			2017
Aerospace/Defense		15	%		14	%		16	%
Automotive		18	%		19	%		20	%
Cellular Phone		27	%		19	%		17	%
Computing/Storage/Peripherals		10	%		12	%		14	%
Medical/Industrial/Instrumentation		12	%		13	%		14	%
Networking/Communications		17	%		21	%		17	%
Other		1	%		2	%		2	%

Stock-based Compensation:
	Fourth Quarter						Third Quarter
	2017			2016			2017
Amount included in:
Cost of goods sold	$	613		$	469		$	606
Selling and marketing	$	450			305			369
General and administrative		3,921			2,426			3,703

Total stock-based compensation expense	$	4,984		$	3,200		$	4,678


Operating Segment Data:

	Fourth Quarter						Third Quarter
Net sales:		2017			2016			2017

PCB	$	688,572		$	654,379		$	609,742
E-M Solutions		54,899			55,332			60,620
Corporate		—			—			—

Total sales		743,471			709,711			670,362
Inter-segment sales		(4,122	)		(3,177	)		(3,548	)

Total net sales	$	739,349		$	706,534		$	666,814

Operating segment income:

PCB	$	100,352		$	95,208		$	70,443
E-M Solutions		2,799			3,029			2,870
Corporate		(26,200	)		(22,184	)		(23,318	)

Total operating segment income		76,951			76,053			49,995
Amortization of definite-lived intangibles		(5,907	)		(6,407	)		(5,905	)

Total operating income		71,044			69,646			44,090
Total other expense		(17,399	)		(54,040	)		(21,350	)

Income before income taxes	$	53,645		$	15,606		$	22,740


RECONCILIATIONS¹
	Fourth Quarter						Third Quarter			Full Year
	2017			2016			2017			2017			2016
Non-GAAP gross profit reconciliation²:
GAAP gross profit	$	131,861		$	132,845		$	96,834		$	429,581		$	423,615
Add back item:
Stock-based compensation		613			469			606			2,252			1,630

Non-GAAP gross profit	$	132,474		$	133,314		$	97,440		$	431,833		$	425,245

Non-GAAP gross margin		17.9	%		18.9	%		14.6	%		16.2	%		16.8	%
Non-GAAP operating income reconciliation³:
GAAP operating income	$	71,044		$	69,646		$	44,090		$	212,760		$	173,453
Add back items:
Amortization of definite-lived intangibles		5,907			6,407			5,905			23,634			24,252
Stock-based compensation		4,984			3,200			4,678			18,290			11,090
(Gain)/loss on sale of assets		—			—			452			(2,348	)		(1,472	)
Impairments, restructuring, acquisition-related, and other charges		2,331			1,725			100			3,556			14,569

Non-GAAP operating income	$	84,266		$	80,978		$	55,225		$	255,892		$	221,892

Non-GAAP operating margin		11.4	%		11.5	%		8.3	%		9.6	%		8.8	%
Non-GAAP net income and EPS attributable to stockholders reconciliation⁴:
GAAP net income (loss) attributable to stockholders	$	49,211		$	(2,005	)	$	21,453		$	124,214		$	34,861
Add back items:
Amortization of definite-lived intangibles		5,907			6,407			5,905			23,634			24,252
Stock-based compensation		4,984			3,200			4,678			18,290			11,090
Non-cash interest expense		3,017			2,697			2,699			11,069			19,180
(Gain)/loss on sale of assets		—			—			452			(2,348	)		(1,472	)
Loss on extinguishment of debt		—			47,767			768			769			47,767
Impairments, restructuring, acquisition-related, and other charges		2,331			1,725			100			3,556			14,569
Income taxes⁵		(4,204	)		49			(2,643	)		(12,059	)		(7,987	)

Non-GAAP net income attributable to stockholders	$	61,246		$	59,840		$	33,412		$	167,125		$	142,260

Non-GAAP earnings per diluted share attributable to stockholders	$	0.57		$	0.58		$	0.32		$	1.57		$	1.40
Non-GAAP diluted number of shares⁶:
Diluted shares		133,170			102,563			131,596			132,476			101,482
Dilutive effect of convertible debt		(25,939	)		—			(25,939	)		(25,940	)		—

Non-GAAP diluted number of shares		107,231			102,563			105,657			106,536			101,482

Adjusted EBITDA reconciliation⁷:
GAAP net income (loss)	$	49,316		$	(1,810	)	$	21,535		$	124,727		$	35,575
Add back items:
Income tax provision (benefit)		4,329			17,416			1,205			15,231			31,427
Interest expense		13,782			15,267			13,598			53,898			76,008
Amortization of definite-lived intangibles		5,907			6,407			5,905			23,634			24,252
Depreciation expense		41,090			38,539			37,496			150,809			156,229
Stock-based compensation		4,984			3,200			4,678			18,290			11,090
(Gain)/loss on sale of assets		—			—			452			(2,348	)		(1,472	)
Loss on extinguishment of debt		—			47,767			768			769			47,767
Impairments, restructuring, acquisition-related, and other charges		2,331			1,725			100			3,556			14,569

Adjusted EBITDA	$	121,739		$	128,511		$	85,737		$	388,566		$	395,445

Adjusted EBITDA margin		16.5	%		18.2	%		12.9	%		14.6	%		15.6	%
Free cash flow reconciliation:
Operating cash flow		152,691			97,650			71,366			332,755			298,336
Capital expenditures, net		(32,209	)		(20,501	)		(22,877	)		(124,090	)		(81,498	)

Free cash flow	$	120,482		$	77,149		$	48,489		$	208,665		$	216,838

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.

³ Non-GAAP operating income and operating margin measures exclude amortization of intangibles, stock-based compensation expense, gain on sale of assets, 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, 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, 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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