TTM Technologies, Inc. Reports Fourth Quarter and Full Year 2007 Results
SANTA ANA, CA - February 7, 2008 - TTM Technologies, Inc. (Nasdaq: TTMI),
North America's largest printed circuit board (PCB) manufacturer, today reported
results for the fourth quarter of 2007, ended December 31, 2007.
Financial & Operational Highlights TTM reported strong results for the fourth quarter,
with sequential improvement in all financial metrics.
Fiscal year 2007 net sales improved 81% over 2006 net sales.
Fourth quarter 2007 gross margin of 20.7% increased 150 basis points over third
quarter gross margins.
Fourth quarter 2007 net income improved 44% over third quarter 2007 net income.
The Company continued to pay down debt associated with the Printed Circuit Group
(PCG) acquisition, ahead of schedule. TTM paid down $24 million in debt during the
fourth quarter, reducing the debt balance to $85 million.
Fourth Quarter 2007 Financial Results
Commenting on the Company's results, Kent Alder, President and CEO of TTM, noted,
"We delivered a solid performance in the fourth quarter, fueled by strong demand
for our high tech manufacturing services, as well as from our Aerospace/Defense
customers. Against a backdrop of challenging macroeconomic conditions, fourth quarter
revenue, gross and operating margins and earnings per share all grew significantly
over the third quarter. This is a testament to our improving operating efficiencies
and clearly validates our ability to execute." Alder added, "Our growth strategy
is working, and we will continue to strengthen our capabilities and enhance our
leadership position in the industry."
Fourth quarter net sales of $167.5 million improved sequentially over third quarter
net sales of $163.1 million, primarily due to continued strength in the PCB market.
Fourth quarter gross margin of 20.7 percent increased over third quarter gross margin
of 19.2 percent.
Selling and marketing expense for the fourth quarter was $7.6 million, representing
4.5 percent of sales. This compares to third quarter selling and marketing expense
of $7.1 million, representing 4.4 percent of sales. The increase in selling and
marketing expense was largely due to higher commissions on higher revenue.
General and administrative expense, including amortization of intangibles, for the
fourth quarter was $9.5 million, representing 5.7 percent of sales. This compares
to third quarter general and administrative expense, including amortization of intangibles,
of $9.0 million, representing 5.5 percent of sales. The increase in general and
administrative expense was primarily due to higher compensation expense, including
a larger bonus accrual due to better fourth quarter performance.
TTM posted operating income of $17.6 million for the fourth quarter, an increase
of almost 16 percent over third quarter operating income of $15.2 million.
Fourth quarter net income of $11.8 million, or $0.28 per diluted share, increased
44% over third quarter net income of $8.2 million, or $0.19 per diluted share. Fourth
quarter earnings per share was affected by a reduction in income tax expense arising
from a decrease in the valuation allowance on the Company's state deferred income
tax asset. Strong consistent earnings performance from California makes it more
likely that the Company will utilize its deferred tax asset. This reduction in valuation
allowance of approximately $2.7 million added $0.04 to diluted earnings per share,
increasing our earnings from a solid $0.24 to $0.28 in the fourth quarter.
EBITDA (earnings before interest, taxes, depreciation and amortization) for the
fourth quarter was $24.4 million, or 14.5 percent of sales, compared with third
quarter EBITDA of $22.2 million, or 13.6 percent of sales. (A reconciliation of
this non-GAAP measure is provided after the GAAP financial statements accompanying
this press release.)
Fourth Quarter Segment Information - PCB Manufacturing and Backplane Assembly TTM
Technologies reports two operating segments, which are PCB Manufacturing and Backplane
For the PCB Manufacturing segment, fourth quarter net sales (before excluding inter-company
sales) were $147.5 million, compared with $140.5 million in the third quarter. Fourth
quarter operating segment income (before amortization of intangibles) was $17.1
million, compared with $13.9 million in the third quarter.
For the Backplane Assembly segment, fourth quarter net sales (before excluding inter-company
sales) were $27.9 million, compared with $30.7 million in the third quarter. Fourth
quarter operating segment income (before amortization of intangibles) was $1.5 million,
compared with $2.3 million in the third quarter.
"PCB manufacturing continued its strong contribution to the quarter's results, attributable
to our Aerospace/Defense customers as well as strong demand for our high tech manufacturing
services," said Alder. "Net sales in our Backplane Assembly segment were down for
the quarter due to a deferral of certain orders from the fourth quarter to the first
quarter of fiscal 2008." Alder continued, "We have shipped some of the deferred
orders in January, and we expect a stronger revenue contribution from the Backplane
Assembly segment in the first quarter of 2008."
Cash and short-term investments at the end of the fourth quarter totaled $18.7 million,
compared with $27.3 million at the end of the third quarter. This decrease in cash
is attributable to debt reduction.
In the fourth quarter of 2007, TTM continued to pay down debt associated with the
PCG acquisition significantly ahead of schedule. During the quarter, the Company
reduced debt by $24 million, reducing the debt balance to $85 million at the end
of the year.
Full Year 2007 Financial Results
Net sales for 2007 were $669.5 million. This compares to 2006 net sales of $369.3
million, which included two months of operations from the PCG acquisition. Net income
decreased to $34.7 million, or $0.81 per diluted share, in 2007, compared to $35.0
million, or $0.83 per diluted share, in 2006. The decline in net income was due
to softer market conditions in 2007 as well as significantly higher interest expense
due to the debt issued to finance the PCG acquisition. Net interest expense was
$10.4 million higher and amortization of intangibles was $2.3 million higher in
2007 compared to 2006.
First Quarter Fiscal Year 2008 Forecast
For the first quarter of 2008, TTM estimates revenues in a range of $168 million
to $176 million and earnings in a range of $0.20 to $0.25 per diluted share.
"Although current macroeconomic conditions are challenging, our market conditions
remain stable, and we expect continued strength in the Aerospace / Defense market,
high tech, and quick turn," said Alder. "We saw sequential improvement in our financial
results in the fourth quarter, and we are confident in our ability to execute in
the first quarter of 2008 as end demand trends remain relatively firm."
To Access the Live Web Cast/Conference Call
The company will host a conference call to discuss the third quarter results and
fourth quarter outlook on February 7, 2008, at 4:30 p.m. Eastern Standard Time (1:30
p.m. Pacific Standard Time).
To listen to the live web cast, log on to the TTM Technologies website at http://www.ttmtech.com.
To access the live conference call, dial 303-262-2142 or 800-240-4186.
To Access a Replay of the Web Cast
A digital replay will be available on TTM Technologies' website at http://www.ttmtech.com
and will remain accessible for one week following the live event.
A telephone replay also will be available beginning two hours after the conclusion
of the conference call until February 12, 2008. You may access the telephone replay
by dialing 303-590-3000 or 800-405-2236 and entering confirmation code 11106357#.
Safe Harbor Statement
This release contains forward-looking statements that relate to future events or
performance. These statements reflect the company's current expectations, and the
company 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 company statements will not be realized. Furthermore,
readers are cautioned that these statements involve risks and uncertainties, many
of which are beyond the company'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 company's dependence upon the electronics industry,
the company's dependence upon a small number of customers, general economic conditions
and specific conditions in the markets TTM addresses, the unpredictability of and
potential fluctuation in future revenues and operating results, increased competition
from low-cost foreign manufacturers and other "Risk Factors" set forth in the company's
most recent SEC filings.