TTM Technologies, Inc. Reports Fiscal Third Quarter 2023 Results

SANTA ANA, Calif., Nov. 01, 2023 (GLOBE NEWSWIRE) -- TTM Technologies, Inc. (NASDAQ: TTMI), a leading global manufacturer of technology solutions including mission systems, radio frequency (“RF”) components and RF microwave/microelectronic assemblies, and printed circuit boards (“PCB”), today reported results for the third quarter fiscal 2023, which ended on October 2, 2023.  

Third Quarter 2023 Highlights

• Net sales were $572.6 million
• GAAP net loss of $37.1 million, or ($0.36) per diluted share, inclusive of a goodwill impairment charge of $44.1 million
• Non-GAAP net income was $44.9 million, or $0.43 per diluted share
• Cash flow from operations was $58.9 million
• Repurchased 1 million shares of common stock for $14.6 million at an average price of $14.33 per share
  

Third Quarter 2023 GAAP Financial Results

Net sales for the third quarter of 2023 were $572.6 million, compared to $671.1 million in the third quarter of 2022.

GAAP operating loss for the third quarter of 2023 was $10.2 million, inclusive of a $44.1 million goodwill impairment charge related to the RF&S Components segment. This compares to GAAP operating income of $49.8 million in the third quarter of 2022.

GAAP net loss for the third quarter of 2023 was $37.1 million, or ($0.36) per diluted share, compared to GAAP net income of $43.5 million, or $0.42 per diluted share in the third quarter of 2022.

Third Quarter 2023 Non-GAAP Financial Results
        
On a non-GAAP basis, net income for the third quarter of 2023 was $44.9 million, or $0.43 per diluted share. This compares to non-GAAP net income of $57.9 million, or $0.56 per diluted share, for the third quarter of 2022.

Adjusted EBITDA in the third quarter of 2023 was $84.1 million, or 14.7% of sales compared to adjusted EBITDA of $102.5 million, or 15.3% of sales for the third quarter of 2022.

“Our Non-GAAP EPS was well above the guided range as a result of improved execution, particularly in our North America region and strength in our Data Center Computing end market,” said Tom Edman, CEO of TTM. “In addition, cash flow from operations was a healthy 10.3% of revenue enabling us to repurchase stock while maintaining a solid balance sheet with a net leverage ratio of 1.5x,” concluded Mr. Edman.

Business Outlook

For the fourth quarter of 2023, TTM estimates that revenues will be in the range of $550 million to $590 million, and non-GAAP net income will be in the range of $0.34 to $0.40 per diluted share.

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 has not been provided because the Company is unable to provide such reconciliation without unreasonable effort. For the same reasons, TTM is unable to address the probable significance of the information.

Live Webcast/Conference Call
TTM will host a conference call and webcast to discuss third quarter 2023 results and the fourth quarter 2023 outlook on Wednesday, November 1st, 2023, at 10:00 a.m. Eastern Time (7:00 a.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. third 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 will also be simulcast on the company’s website, and can be accessed by clicking on the link TTM Technologies, Inc. third quarter fiscal year 2023 webcast. The webcast will remain accessible for one week following the live event.

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. third quarter fiscal year 2023 webcast.

About TTM
TTM Technologies, Inc. is a leading global manufacturer of technology solutions including mission systems, RF components/RF microwave/microelectronic assemblies, 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-Q 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
To supplement our consolidated condensed financial statements presented on a GAAP basis, 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 reconciliations below 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.

Contact:
Sameer Desai,
Vice President, Corporate Development & Investor Relations
[e-mail]
714-327-3050

TTM TECHNOLOGIES, INC.
Selected Unaudited Financial Information
(In thousands, except per share data)
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS						Third Quarter								First Three Quarters
							2023				2022				2023				2022
	Net sales					$	572,582			$	671,080			$	1,663,528			$	1,877,890
	Cost of goods sold						459,312				542,513				1,365,628				1,541,327
	Gross profit						113,270				128,567				297,900				336,563
	Operating expenses:
		Selling and marketing					18,763				19,824				58,245				55,653
		General and administrative					38,916				40,743				111,829				121,863
		Research and development					6,173				7,322				19,682				18,110
		Amortization of definite-lived intangibles					11,429				10,273				37,245				26,822
		Restructuring charges					4,091				627				19,061				1,267
		Impairment of goodwill					44,100				-				44,100				-
			Total operating expenses				123,472				78,789				290,162				223,715
	Operating (loss) income						(10,202	)			49,778				7,738				112,848
	Interest expense						(10,101	)			(10,939	)			(34,751	)			(33,011	)
	Loss on extinguishment of debt						-				-				(1,154	)			-
	Gain on sale of subsidiary						-				-				1,270				-
	Other, net						3,044				10,324				9,310				19,932
	(Loss) income before income taxes						(17,259	)			49,163				(17,587	)			99,769
	Income tax provision						(19,807	)			(5,635	)			(18,469	)			(11,203	)
	Net (loss) income					$	(37,066	)		$	43,528			$	(36,056	)		$	88,566
	(Loss) earnings per share:
		Basic				$	(0.36	)		$	0.43			$	(0.35	)		$	0.87
		Diluted					(0.36	)			0.42				(0.35	)			0.85
	Weighted-average shares used in computing per share amounts:
		Basic					103,510				102,196				102,873				102,016
		Diluted					103,510				103,720				102,873				103,738
	Reconciliation of the denominator used to calculate basic earnings per share and diluted earnings per share:
	Weighted-average shares outstanding						103,510				102,196				102,873				102,016
	Dilutive effect of warrants						-				-				-				2
	Dilutive effect of performance-based stock units, restricted stock units & stock options						-				1,524				-				1,720
	Diluted shares						103,510				103,720				102,873				103,738

SELECTED BALANCE SHEET DATA						October 2, 2023		January 2, 2023
	Cash and cash equivalents, including restricted cash					$ 408,331		$ 402,749
	Accounts and notes receivable, net					390,902		473,225
	Receivable from sale of SH E-MS property					6,554		69,240
	Contract assets					304,279		335,788
	Inventories					206,176		170,639
	Total current assets					1,353,236		1,493,056
	Property, plant and equipment, net					808,371		724,204
	Operating lease right of use asset					89,290		18,862
	Other non-current assets					1,015,605		1,087,482
	Total assets					3,266,502		3,323,604
	Short-term debt, including current portion of long-term debt					$ 2,625		$ 50,000
	Accounts payable					336,070		361,788
	Total current liabilities					688,286		761,325
	Debt, net of discount					864,824		879,407
	Total long-term liabilities					1,077,102		1,026,700
	Total equity					1,501,114		1,535,579
	Total liabilities and equity					3,266,502		3,323,604

SUPPLEMENTAL DATA				Third Quarter								First Three Quarters
					2023				2022			2023			2022
	Gross margin				19.8	%			19.2	%		17.9	%		17.9	%
	Operating margin				(1.8	)%			7.4	%		0.5	%		6.0	%
	End Market Breakdown:
				Third Quarter
					2023				2022
		Aerospace and Defense			45	%			38	%
		Automotive			15	%			15	%
		Data Center Computing			17	%			14	%
		Medical/Industrial/Instrumentation			16	%			19	%
		Networking			7	%			14	%
	Stock-based Compensation:
				Third Quarter
		Amount included in:			2023				2022
			Cost of goods sold	$	2,212			$	1,699
			Selling and marketing		888				762
			General and administrative		2,958				2,685
			Research and development		309				324
			Total stock-based compensation expense	$	6,367			$	5,470
	Operating Segment Data:
				Third Quarter
		Net sales:			2023				2022
		PCB*		$	563,676			$	657,175
		RF&S Components			8,906				13,905
			Total net sales	$	572,582			$	671,080
		Operating segment income:
		PCB*		$	82,868			$	89,868
		RF&S Components			(41,441	)			5,984
		Corporate & Other*			(37,865	)			(34,417	)
			Total operating segment income		3,562				61,435
		Amortization of definite-lived intangibles			(13,764	)			(11,657	)
			Total operating (loss) income		(10,202	)			49,778
			Total other expense		(7,057	)			(615	)
		(Loss) income before income taxes		$	(17,259	)		$	49,163
		* Amended for Telephonics integration

RECONCILIATIONS1						Third Quarter								First Three Quarters
							2023				2022				2023				2022
	Non-GAAP gross profit reconciliation2:
		GAAP gross profit				$	113,270			$	128,567			$	297,900			$	336,563
		Add back item:
			Amortization of definite-lived intangibles				2,335				1,384				10,566				4,151
			Accelerated depreciation associated with plant closures				725				19				3,374				124
			Stock-based compensation				2,212				1,699				5,371				4,147
			Unrealized loss (gain) on commodity hedge				770				385				(491	)			4,192
			Purchase accounting related inventory markup				-				248				327				248
		Non-GAAP gross profit				$	119,312			$	132,302			$	317,047			$	349,425
		Non-GAAP gross margin					20.8	%			19.7	%			19.1	%			18.6	%
	Non-GAAP operating income reconciliation3:
		GAAP operating (loss) income				$	(10,202	)		$	49,778			$	7,738			$	112,848
		Add back items:
			Amortization of definite-lived intangibles				13,764				11,657				47,811				30,973
			Accelerated depreciation associated with plant closures				725				19				3,374				124
			Stock-based compensation				6,367				5,470				16,728				14,131
			Loss (gain) on sale of assets				111				-				(104	)			-
			Unrealized loss (gain) on commodity hedge				770				385				(491	)			4,192
			Purchase accounting related inventory markup				-				248				327				248
			Impairment, restructuring, acquisition-related and other charges				46,356				655				61,948				12,805
		Non-GAAP operating income				$	57,891			$	68,212			$	137,331			$	175,321
		Non-GAAP operating margin					10.1	%			10.2	%			8.3	%			9.3	%
	Non-GAAP net income and EPS reconciliation4:
		GAAP net (loss) income				$	(37,066	)		$	43,528			$	(36,056	)		$	88,566
		Add back items:
			Amortization of definite-lived intangibles				13,764				11,657				47,811				30,973
			Accelerated depreciation associated with plant closures				725				19				3,374				124
			Stock-based compensation				6,367				5,470				16,728				14,131
			Non-cash interest expense				502				540				1,726				1,609
			Loss (gain) on sale of assets				111				-				(104	)			(827	)
			Change in fair value of warrant liabilities				-				-				-				(99	)
			Loss on extinguishment of debt				-				-				1,154				-
			Gain on sale of subsidiary				-				-				(1,270	)			-
			Unrealized loss (gain) on commodity hedge				770				385				(491	)			4,192
			Purchase accounting related inventory markup				-				248				327				248
			Impairment, restructuring, acquisition-related and other charges				46,356				655				61,948				12,805
			Income taxes5				13,353				(4,586	)			1,427				(13,236	)
		Non-GAAP net income				$	44,882			$	57,916			$	96,574			$	138,486
		Non-GAAP earnings per diluted share				$	0.43			$	0.56			$	0.92			$	1.33
	Non-GAAP diluted number of shares:
		GAAP diluted number of shares					103,510				103,720				102,873				103,738
		Dilutive effect of performance-based stock units, restricted stock units & stock options					1,419				-				1,809				-
		Non-GAAP diluted number of shares					104,929				103,720				104,682				103,738
	Adjusted EBITDA reconciliation6:
		GAAP net (loss) income				$	(37,066	)		$	43,528			$	(36,056	)		$	88,566
		Add back items:
			Income tax provision				19,807				5,635				18,469				11,203
			Interest expense				10,101				10,939				34,751				33,011
			Amortization of definite-lived intangibles				13,764				11,657				47,811				30,973
			Depreciation expense				23,870				24,017				74,060				67,306
			Stock-based compensation				6,367				5,470				16,728				14,131
			Loss (gain) on sale of assets				111				-				(104	)			(827	)
			Change in fair value of warrant liabilities				-				-				-				(99	)
			Loss on extinguishment of debt				-				-				1,154				-
			Gain on sale of subsidiary				-				-				(1,270	)			-
			Unrealized loss (gain) on commodity hedge				770				385				(491	)			4,192
			Purchase accounting related inventory markup				-				248				327				248
			Impairment, restructuring, acquisition-related and other charges				46,356				655				61,948				12,805
		Adjusted EBITDA				$	84,080			$	102,534			$	217,327			$	261,509
		Adjusted EBITDA margin					14.7	%			15.3	%			13.1	%			13.9	%
	Free cash flow reconciliation:
		Operating cash flow				$	58,852			$	80,006			$	139,814			$	195,314
		Capital expenditures, net					(33,659	)			(26,281	)			(113,783	)			(76,095	)
		Free cash flow				$	25,193			$	53,725			$	26,031			$	119,219

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 loss (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, loss (gain) on sale of assets, unrealized loss (gain) on commodity hedge, purchase accounting related inventory markup, impairment of goodwill, 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), loss (gain) on sale of assets, change in fair value of warrant liabilities, loss on extinguishment of debt, gain on sale of subsidiary, unrealized loss (gain) on commodity hedge, purchase accounting related inventory markup, impairment of goodwill, 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 income taxes, interest expense, amortization of intangibles, depreciation, stock-based compensation expense, loss (gain) on sale of assets, change in fair value of warrant liabilities, loss on extinguishment of debt, gain on sale of subsidiary, unrealized loss (gain) on commodity hedge, purchase accounting related inventory markup, impairment of goodwill, 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.