TTM Technologies, Inc. Reports Fiscal First Quarter 2023 Results

TTM Technologies, Inc.

SANTA ANA, Calif., May 03, 2023 (GLOBE NEWSWIRE) -- TTM Technologies, Inc. (NASDAQ: TTMI), a leading global manufacturer of technology solutions including engineered systems, radio frequency (“RF”) components and RF microwave/microelectronic assemblies, and printed circuit boards (“PCB”), today reported results for the first quarter fiscal 2023, which ended on April 3, 2023.  

First Quarter 2023 Highlights

• Net sales were $544.4 million

• GAAP net loss of $5.8 million, or ($0.06) per diluted share

• Non-GAAP net income was $18.6 million, or $0.18 per diluted share

• Operating cash flow of $55.1 million; free cash flow of $24.4 million

• Paid $50 million of Term Loan B

• Completed sale of Shanghai BPA facility

First Quarter 2023 GAAP Financial Results

Net sales for the first quarter of 2023 were $544.4 million, compared to $581.3 million in the first quarter of 2022.

GAAP operating loss for the first quarter of 2023 was $3.5 million compared to GAAP operating income of $25.9 million in the first quarter of 2022.

GAAP net loss for the first quarter of 2023 was $5.8 million, or ($0.06) per diluted share, compared to GAAP net income of $17.2 million, or $0.17 per diluted share in the first quarter of 2022.

First Quarter 2023 Non-GAAP Financial Results
        
On a non-GAAP basis, net income for the first quarter of 2023 was $18.6 million, or $0.18 per diluted share. This compares to non-GAAP net income of $25.3 million, or $0.24 per diluted share, for the first quarter of 2022.

Adjusted EBITDA in the first quarter of 2023 was $58.5 million, or 10.7% of sales compared to adjusted EBITDA of $62.0 million, or 10.7% of sales for the first quarter of 2022.

“Revenues were below the guided range due to demand weakness in our commercial end markets and continued supply chain related challenges in North America which resulted in reduced shipments to our Aerospace and Defense customers,” said Tom Edman, CEO of TTM.   “However, due to favorable mix and cost controls, non-GAAP EPS was within our guided range. In addition, cash flow from operations remained strong at 10.1% of revenues which enabled our Board of Directors to authorize a new $100 million stock repurchase program,” concluded Mr. Edman.

Business Outlook
While demand in the Aerospace and Defense market remains strong, bookings in our commercial end markets have stabilized at a low level given continued customer inventory reductions and weaker end market demand. As a result, TTM estimates that revenue for the second quarter of 2023 will be in the range of $530 million to $570 million, and non-GAAP net income will be in the range of $0.17 to $0.23 per diluted share.

Separately, as a result of the Term Loan B that is maturing in the third quarter of 2024, the company is evaluating options for its refinancing.

Live Webcast/Conference Call
TTM will host a conference call and webcast to discuss first quarter and 2023 results and the second quarter 2023 outlook on Wednesday, May 3rd, 2023 at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time). The conference call will include forward-looking statements.

Access to the conference call is available by clicking on the registration link TTM Technologies, Inc. first quarter fiscal year 2023 conference call. Registering participants will receive dial in information and a unique PIN to join the call. Participants can register at any time up to the start of the conference call.   The conference call also will be webcast on TTM’s website at TTM Technologies, Inc. first quarter fiscal year 2023 webcast.

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 TTM Technologies, Inc. first quarter fiscal year 2023 webcast.

About TTM
TTM Technologies, Inc. is a leading global manufacturer of technology solutions including engineered systems, RF components and RF microwave/microelectronic assemblies, and quick-turn and technologically advanced PCBs. 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
The preliminary financial results included in this press release represent the most current information available to management. The company’s actual results when disclosed in its Form 10-K may differ from these preliminary results as a result of the completion of the company’s financial closing procedures; final adjustments; completion of the review by the company’s independent registered accounting firm; and other developments that may arise between now and the disclosure of the final results. 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 impact of COVID-19, 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 per diluted share, we are unable to predict with reasonable certainty or without unreasonable effort certain items that may affect a comparable measure calculated and presented in accordance with GAAP. Our expected non-GAAP net income 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 per diluted share calculated and presented in accordance with GAAP. Accordingly, a reconciliation of non-GAAP net income per diluted share to a comparable 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)
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS						First Quarter
							2023				2022
	Net sales					$	544,437			$	581,260
	Cost of goods sold						458,314				490,337
	Gross profit						86,123				90,923
	Operating expenses:
	Selling and marketing						21,302				18,272
	General and administrative						35,073				32,770
	Research and development						7,085				5,555
	Amortization of definite-lived intangibles						21,964				8,274
	Restructuring charges						4,167				184
	Total operating expenses						89,591				65,055
	Operating (loss) income						(3,468	)			25,868
	Interest expense						(12,807	)			(11,361	)
	Gain on sale of subsidiary						1,339				-
	Other, net						1,198				1,970
	(Loss) income before income taxes						(13,738	)			16,477
	Income tax benefit						7,924				769
	Net (loss) income					$	(5,814	)		$	17,246
	(Loss) earnings per share:
	Basic					$	(0.06	)		$	0.17
	Diluted						(0.06	)			0.17
	Weighted-average shares used in computing per share amounts:
	Basic						102,381				102,613
	Diluted						102,381				104,304
	Reconciliation of the denominator used to calculate basic earnings per share and diluted earnings per share:
	Weighted-average shares outstanding						102,381				102,613
	Dilutive effect of warrants						-				6
	Dilutive effect of performance-based stock units, restricted stock units & stock options						-				1,685
	Diluted shares						102,381				104,304

SELECTED BALANCE SHEET DATA
						April 3, 2023			January 2, 2023
	Cash and cash equivalents, including restricted cash					$	417,452		$	402,749
	Accounts and notes receivable, net						398,898			473,225
	Receivable from sale of SH E-MS property						34,746			69,240
	Contract assets						316,048			335,788
	Inventories						176,728			170,639
	Total current assets						1,378,103			1,493,056
	Property, plant and equipment, net						714,147			724,204
	Operating lease right of use asset						15,622			18,862
	Other non-current assets						1,068,163			1,087,482
	Total assets						3,176,035			3,323,604
	Short-term debt, including current portion of long-term debt					$	-		$	50,000
	Accounts payable						312,823			361,788
	Total current liabilities						627,751			761,325
	Debt, net of discount						879,993			879,407
	Total long-term liabilities						1,020,550			1,026,700
	Total equity						1,527,734			1,535,579
	Total liabilities and equity						3,176,035			3,323,604

SUPPLEMENTAL DATA
						First Quarter
							2023				2022
	Gross margin						15.8	%			15.6	%
	Operating margin						(0.6	)%			4.5	%
	End Market Breakdown:
						First Quarter
							2023				2022
		Aerospace and Defense					43	%			30	%
		Automotive					17	%			20	%
		Data Center Computing					10	%			16	%
		Medical/Industrial/Instrumentation					19	%			21	%
		Networking					11	%			13	%
	Stock-based Compensation:
						First Quarter
							2023				2022
		Amount included in:
		Cost of goods sold				$	1,662			$	1,276
		Selling and marketing					741				650
		General and administrative					2,562				2,053
		Research and development					275				255
		Total stock-based compensation expense				$	5,240			$	4,234
	Operating Segment Data:
						First Quarter
		Net sales:					2023				2022
		PCB				$	534,111			$	566,070
		RF&S Components					10,326				15,190
		Total net sales				$	544,437			$	581,260
		Operating segment income:
		PCB				$	51,634			$	56,540
		RF&S Components					2,168				5,750
		Corporate & Other					(29,498	)			(26,764	)
		Total operating segment income					24,304				35,526
		Amortization of definite-lived intangibles					(27,772	)			(9,658	)
		Total operating (loss) income					(3,468	)			25,868
		Total other expense					(10,270	)			(9,391	)
		(Loss) income before income taxes				$	(13,738	)		$	16,477

RECONCILIATIONS1						First Quarter
							2023				2022
	Non-GAAP gross profit reconciliation2:
		GAAP gross profit				$	86,123			$	90,923
		Add back item:
		Amortization of definite-lived intangibles					5,808				1,384
		Accelerated depreciation associated with plant closures					1,233				-
		Stock-based compensation					1,662				1,276
		Unrealized gain on commodity hedge					(2,128	)			(1,403	)
		Purchase accounting related inventory markup					163				-
		Non-GAAP gross profit				$	92,861			$	92,180
		Non-GAAP gross margin					17.1	%			15.9	%
	Non-GAAP operating income reconciliation3:
		GAAP operating (loss) income				$	(3,468	)		$	25,868
		Add back items:
		Amortization of definite-lived intangibles					27,772				9,658
		Accelerated depreciation associated with plant closures					1,276				-
		Stock-based compensation					5,240				4,234
		Gain on sale of assets					(173	)			-
		Unrealized gain on commodity hedge					(2,128	)			(1,403	)
		Purchase accounting related inventory markup					163				-
		Restructuring, acquisition-related and other charges					4,668				1,138
		Non-GAAP operating income				$	33,350			$	39,495
		Non-GAAP operating margin					6.1	%			6.8	%
	Non-GAAP net income and EPS reconciliation4:
		GAAP net (loss) income				$	(5,814	)		$	17,246
		Add back items:
		Amortization of definite-lived intangibles					27,772				9,658
		Accelerated depreciation associated with plant closures					1,276				-
		Stock-based compensation					5,240				4,234
		Non-cash interest expense					727				532
		Gain on sale of assets					(173	)			(827	)
		Change in fair value of warrant liabilities					-				(99	)
		Gain on sale of subsidiary					(1,339	)			-
		Unrealized gain on commodity hedge					(2,128	)			(1,403	)
		Purchase accounting related inventory markup					163				-
		Restructuring, acquisition-related and other charges					4,668				1,138
		Income taxes5					(11,744	)			(5,226	)
		Non-GAAP net income				$	18,648			$	25,253
		Non-GAAP earnings per diluted share				$	0.18			$	0.24
	Non-GAAP diluted number of shares:
		GAAP diluted number of shares					102,381				104,304
		Dilutive effect of performance-based stock units, restricted stock units & stock options					1,949				-
		Non-GAAP diluted number of shares					104,330				104,304
	Adjusted EBITDA reconciliation6:
		GAAP net (loss) income				$	(5,814	)		$	17,246
		Add back items:
		Income tax benefit					(7,924	)			(769	)
		Interest expense					12,807				11,361
		Amortization of definite-lived intangibles					27,772				9,658
		Depreciation expense					25,253				21,500
		Stock-based compensation					5,240				4,234
		Gain on sale of assets					(173	)			(827	)
		Change in fair value of warrant liabilities					-				(99	)
		Gain on sale of subsidiary					(1,339	)			-
		Unrealized gain on commodity hedge					(2,128	)			(1,403	)
		Purchase accounting related inventory markup					163				-
		Restructuring, acquisition-related and other charges					4,668				1,138
		Adjusted EBITDA				$	58,525			$	62,039
		Adjusted EBITDA margin					10.7	%			10.7	%
	Free cash flow reconciliation:
		Operating cash flow				$	55,078			$	35,991
		Capital expenditures, net					(30,707	)			(23,420	)
		Free cash flow				$	24,371			$	12,571

	1 This information provides a reconciliation of non-GAAP gross profit, non-GAAP operating income, non-GAAP net income, non-GAAP EPS, and adjusted EBITDA to the financial information in our consolidated condensed statements of operations.
	2 Non-GAAP gross profit and gross margin measures exclude amortization of intangibles, accelerated depreciation associated with plant closures, stock-based compensation expense, unrealized gain on commodity hedge, and purchase accounting related inventory markup.
	3 Non-GAAP operating income and operating margin measures exclude amortization of intangibles, accelerated depreciation associated with plant closures, stock-based compensation expense, gain on sale of assets, unrealized gain on commodity hedge, purchase accounting related inventory markup, restructuring, acquisition-related costs, and other charges.
	4 This information provides non-GAAP net income and non-GAAP EPS, which are non-GAAP financial measures. Management believes that both measures -- which add back amortization of intangibles, accelerated depreciation associated with plant closures, stock-based compensation expense, non-cash interest expense on debt (before consideration of capitalized interest), gain on sale of assets, change in fair value of warrant liabilities, gain on sale of subsidiary, unrealized gain on commodity hedge, purchase accounting related inventory markup, restructuring, acquisition-related costs, 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 Adjusted EBITDA is defined as earnings before interest expense, income taxes, depreciation, amortization of intangibles, stock-based compensation expense, gain on sale of assets, change in fair value of warrant liabilities, gain on sale of subsidiary, unrealized gain on commodity hedge, purchase accounting related inventory markup, restructuring, acquisition-related costs, 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,
Vice President, Corporate Development & Investor Relations
Sameer.desai@ttmtech.com 
714-327-3050