TTM Technologies, Inc. Investor Presentation

Transcription

1 TTM Technologies, Inc. Investor Presentation March 2016

2 Disclaimer Forward-Looking Statements Certain statements in this communication may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements related to TTM s future business outlook. Actual results may differ materially from these forward-looking statements. Such statements relate to a variety of matters, including but not limited to: the operations of the businesses of TTM Technologies, Inc. ( TTM or the Company ). These statements are made on the basis of the current beliefs, expectations and assumptions of the management of TTM regarding future events and are subject to significant risks and uncertainty. Statements regarding our expected performance in the future are forward-looking statements. It is uncertain whether any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do, what impact they will have on the results of operations and financial condition of the Company. These forward-looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those indicated in such forward-looking statements and are set forth in the Company s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q and in the Company s other filings filed with the Securities and Exchange Commission (the SEC ) under the heading Risk Factors and which are available at the SEC s website at TTM does not undertake any obligation to update any of theses statements to reflect any new information, subsequent events or circumstances, or otherwise, except as may be required by law. Use of Non-GAAP Financial Measures In addition to the financial statements presented in accordance with U.S. GAAP, TTM uses certain non-gaap financial measures, including adjusted EBITDA. The companies present non-gaap financial information to enable investors to see each company through the eyes of management and to provide better insight into its ongoing financial performance. Adjusted EBITDA is defined as earnings before interest expense, income taxes, depreciation, amortization of intangibles, stock-based compensation expense, gain on sale of assets, asset impairments, restructuring, costs related to acquisitions, and other charges. For a reconciliation of adjusted EBITDA to net income, please see the appendix at the end of this presentation. Adjusted EBITDA is not a recognized financial measure under U.S. GAAP and does not purport to be an alternative to operating income or an indicator of operating performance. Adjusted EBITDA is presented to enhance an understanding of operating results and is not intended to represent cash flows or results of operations. The use of this non-gaap measure provides an indication of each company s ability to service debt, and management considers it an appropriate measure to use because of the Company s leveraged positions. Adjusted EBITDA has certain material limitations, primarily due to the exclusion of certain amounts that are material to each Company s consolidated results of operations, such as interest expense, income tax expense, and depreciation and amortization. In addition, adjusted EBITDA may differ from the adjusted EBITDA calculations reported by other companies in the industry, limiting its usefulness as a comparative measure. Data Used in This Presentation Due to rounding, numbers presented throughout this and other documents may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures. Third Party Information This presentation has been prepared by the Company and includes information from other sources believed by the Company to be reliable. No representation or warranty, express or implied, is made as to the fairness, accuracy or completeness of any of the opinions and conclusions set forth herein based on such information. This presentation may contain descriptions or summaries of certain documents and agreements, but such descriptions or summaries are qualified in their entirety by reference to the actual documents or agreements. Unless otherwise indicated, the information contained herein speaks only as of the date hereof and is subject to change, completion or amendment without notice. 1

3 TTM Differentiated Leadership Position A leading global PCB manufacturer - $2.6B in Pro-forma revenue in 2015 Acquisition of Viasystems expands end markets and customer base Leader in automotive, aerospace and defense, networking and telecom, and advanced mobile devices Leveraging advanced technology position for new applications in automotive Disciplined integration planning process focused on improving operational execution and delivering $55M in annualized synergies Solid cash flow to delever post-acquisition balance sheet $183 million of free cash flow generated in

4 Global Footprint TTM Facilities Legacy TTM Legacy Viasystems Aerospace / Defense 1 Stafford, CT QTA Custom Assembly 2 Santa Clara, CA 3 San Diego, CA 4 Cleveland, OH 5 Santa Ana, CA 7 Hong Kong, China 1 Anaheim, CA 9 Shanghai, China 10 Stafford Springs, CT 13 Juarez, Mexico High Mix / Low Volume 4 Chippewa Falls, WI 6 Logan, UT Volume Production - Conventional 11 Dongguan, China 8 Zhongshan, China Advanced Technology 8 Shanghai, China 12 Guangzhou, China 5 Denver, CO 2 Milpitas, CA 14 Shanghai, China 11 Forest Grove, OR 9 Guangzhou, China 13 Shanghai, China 6 North Jackson, OH 3 San Jose, CA 15 Shenzhen, China 12 Toronto, Canada 10 Huiyang, China 7 Sterling, VA 3

5 World PCB Outlook $B $80 $70 $60 $50 $40 $30 $20 $10 $0 China SE Asia, S. Korea Japan Americas Europe $2.1 $66.9 $57.4 $2.9 $2.2 $5.0 $40.9 $3.0 $6.6 $23.3 $6.7 $19.5 $10.9 $11.3 $26.1 $33.6 $8.5 $ F Region 2014 ($bn) 2019F ($bn) 14/19F CAGR China $26.1 $ % SE Asia, S. Korea $19.5 $ % Japan $6.6 $5.0 (5.4%) Americas $3.0 $2.9 (0.5%) Europe $2.2 $2.1 (1.5%) World $57.4 $ % Source: Prismark Partners World PCB Report, April 2000, May 2015 The worldwide PCB market is expected to grow approximately 3 percent through 2019 with the majority of growth occurring in Asia ~50% of the world PCB production will be generated from China/HK in

6 Creates a Leading Global Player 2014 Top 10 world PCB manufacturers by revenue ($ millions) $M Top 10 represent ~33% of 2014 total world PCB output 3,500 3,176 3,000 2,500 2,000 1,500 2,539 2,483 2,130 1,562 1,523 1,493 1,414 1,391 1,159 1, Nippon Mektron TTM Zhen Deng Unimicron SEMCO Young Poong Ibiden Sumitomo Tripod Daeduck Note: TTM revenue is pro forma including Viasystems 2014 revenue Source: NT Information, July 2015; Prismark Partners May 2015 A leading supplier to commercial aerospace & defense contractors A major supplier to the high growth automotive end market Core supplier to wide range of high-end networking products addressing increasing bandwidth demands A strong position in advanced mobile device market 5

7 Focused on Growth in Advanced Technology PCB Product Types (% of Total Production Value) 40% World TTM Advanced Technologies 30% 20% 10% 0% Flex 1-2 Sided 4-6 Low 8-16 Mid 18+ High Microvia (HDI) Substrates Rigid-Flex World 15% 14% 25% 11% 2% 13% 15% 5% TTM 1% 5% 22% 24% 15% 25% 2% 6% Source: Prismark Partners, May2015; Company reports FY2014 PCB Technologies Product Examples High Reliability Automotive braking & engine controls, aerospace & defense systems Advanced HDI & Rigid-Flex Automotive infotainment & advanced mobile devices High Layer Count Telecom base stations & networking line cards 6

8 Diversified End Markets - Full Year 2015 Pro Forma Revenue End Market (PCB Growth Rates) SAM $mm CAGR Networking / Communications 22% Other 2% Aerospace & Defense 14% Automotive $2,589 6% - 8% Networking/Communications $5,278 3% - 6% Computing/Storage/Peripherals $5,666 5% - 8% Cellular Phone $6,454 5% - 8% Medical / Industrial / Instrumentation 14% Computing / Storage / Peripherals 13% Automotive 18% Cellular Phones 17% Aerospace/Defense $1,752 2% - 4% Medical/Industrial/Instrument $2,524 4% - 6% Other (Consumer) $3,885 3% - 5% Sources: Prismark Partners May 2015, BPA March 2015, Electronic Outlook Corporation Q3 2015, Company estimates Top 5 OEM Customers (alphabetical order) Alcatel-Lucent 2015 Pro Forma Net Sales $2,602mm Apple Bosch Cisco Huawei Top 5 customers ~34% Pro Forma 2015 Revenue 7

9 New High Growth Automotive End Market Auto shipment (millions units) PCB usage - automotive electronics ($ billions) $3.6 $3.9 $4.1 $4.5 $ Source: NTI & Electronic Outlook Corporation November Advantages of Automotive End Market Strong unit growth forecast Content per vehicle increasing A leader in core automotive requirements Opportunities for TTM s advanced technology RF radar Rigid-Flex HDI Note: Market units for fuel efficiency, safety, informatics applications and ECU. Market value for electronic devices such as semiconductors or connectors. Source: TTM company data, Wards, Anfavea, AEB, JAMA, JAPA, CAAM, SIAM, GAIKINDO, TMT, TSR, Marklines, Gartner, JEITA, Bishop, Citi Research estimates 8

10 Integration Update One TTM focus Executing to customers needs Delivering quick wins for new organization: cross selling, technology opportunities, best practices Optimizing total plant utilization, profitability and customer focus Synergies Target of $55M (annualized) in the first 12 months Implemented $30M of annualized cost savings through Q4 15 Announced the planned closure of three N.A. plants in Sept $16.5M in annual cost savings Announced new global operating model in Dec $10M in annual cost savings Total implemented and announced synergies-to-date: ~$45 million Leverage Announced plan to repay between $70 and $80 million of debt in Q1 16 9

11 Strategic Initiatives Complete integration of Viasystems Continued focus on delivering advanced technology to broad base of customers across diverse end markets Drive operational excellence through global best practice sharing, yield improvement and rapid new product ramps Manage balance sheet for growth and risk - use free cash flow to deleverage the balance sheet 10

12 11 Financial Overview

13 TTM Operating Performance Revenue Gross margin 1 Revenue FY ($mm) Gross profit FY ($mm) Gross margin 16.8% 16.0% 14.8% 15.6% $2,095 $327 $1,349 $1,368 $1,326 $226 $219 $ Adjusted EBITDA 2 Non-GAAP EPS 3 Adj. EBITDA FY ($mm) 14.1% 13.3% 12.5% Adj. EBITDA margin 20.0% 13.6% 15.0% EPS FY ($mm) $191 $181 $166 $ % 5.0% 0.0% $0.85 $0.87 $0.62 $ Adjusted for stock-based compensation expense, inventory markup and PP&E step up 2 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 3 Adjusted for amortization of intangibles, stock-based compensation expense, non-cash interest expense on debt, 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 Note: Refer to reconciliations in Appendix 12

14 TTM Non-GAAP Income Statement ¹ $ Millions (except where noted) Q Q Q Q Q Q Q Q Target Model Legacy TTM $291.9 $297.6 $345.3 $390.9 $329.2 $352.2 $368.8 $381.0 Legacy Viasystems % - 7% Total Revenue Annual Growth Gross Profit % 13.0% 14.3% 17.6% 15.7% 15.5% 15.0% 16.3% Operating Income % 3.0% 3.1% 5.2% 8.9% 5.6% 6.6% 6.9% 8.0% TTM Technologies Net Income % 1.3% 3.2% 5.9% 3.3% 3.3% 3.7% 4.7% Earnings Per Share $0.01 $0.05 $0.13 $0.28 $0.13 $0.17 $0.24 $0.31 ($ per Diluted Share) Adjusted EBITDA % 11.0% 12.6% 15.5% 12.9% 13.4% 13.4% 14.3% Adjusted Operating Cash Flow 46.7 (11.8) % -4.0% 12.7% 13.9% 21.9% 10.7% 3.3% 21.1% Free Cash Flow 17.9 (35.8) (9.0) % -12.0% 4.2% 7.2% 15.0% 5.4% -1.4% 17.7% Leverage Non-GAAP results add back amortization of intangibles, stock-based compensation expense, non-cash interest expense on debt, 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. 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. Adjusted operating cash flow adds back payment of accreted interest on convertible senior notes and payment of acquisition-related costs. 2 Pro forma for Viasystems acquisition 3 Leverage is defined as debt (net of discount) less cash divided by EBITDA 13

15 TTM Balance Sheet Highlights ($ in Millions) December 29, 2014 December 28, 2015 Assets Cash and Cash Equivalents, Including Restricted Cash $279.0 $262.6 Accounts and Notes Receivable, Net Inventories Property, Plant and Equipment, Net ,103.1 All Other Assets Total Assets $1,601.3 $2,671.3 Liabilities and Equity Accounts Payable Convertible Senior Notes, Net Debt, Net of Discount All Other Liabilities Total Liabilities ,844.6 Total Equity Total Liabilities and Equity $1,601.3 $2,

16 Investment Summary Well positioned in high growth segments of the PCB market Viasystems transaction enables opportunities for end market and customer expansion A leader in the automotive, aerospace & defense, networking & telecom and advanced mobile device markets as well as in advanced technology PCBs Strong financial performance in 2015 plus target synergies of $55 million (annualized) in the first 12 months Healthy balance sheet and solid cash flow to fund growth and delever the balance sheet 15

17 Appendix 16

18 TTM Non-GAAP Income Statement¹ $ Millions (except where noted) Legacy TTM $1,348.7 $1,368.2 $1,325.7 $1,431.2 Legacy Viasystems Total Revenue 1, , , ,095.5 Gross Profit % 16.0% 14.8% 15.6% Operating Income % 6.1% 5.3% 7.0% TTM Technologies Net Income % 3.7% 3.0% 3.9% Earnings Per Share ($ per diluted share) Adjusted EBITDA % 13.3% 12.5% 13.6% Adjusted Operating Cash Flow % 7.2% 10.0% 13.5% 1 Non-GAAP results add back amortization of intangibles, stock-based compensation expense, non-cash interest expense, acquisition-related costs, asset impairments, restructuring and other infrequent items as well as the associated tax impact of these items and out of period tax items. Adjusted EBITDA is defined as earnings before interest expense, income taxes, depreciation, amortization of intangibles, stock-based compensation expense, acquisition-related costs, asset impairments, restructuring and other infrequent items. Adjusted operating cash flow adds back payment of accreted interest on convertible senior notes and payment of acquisition-related costs. 17

19 Reconciliations $ Millions (except where noted) Q Q Q Q Q Q Q Q GAAP Gross Profit $38.5 $38.6 $49.1 $68.5 $51.6 $61.2 $89.1 $108.3 Add back items: Inventory markup and PP&E step up Stock-based compensation Non-GAAP Gross Profit GAAP Operating Income (Loss) (7.1) Add back items: Amortization of intangibles Stock-based compensation Gain on sale of assets (2.5) Acquisition-related costs Inventory markup and PP&E step up Impairments and restructuring charges Non-GAAP Operating Income GAAP TTM Technologies Net Income (Loss) (3.8) (3.1) (36.6) (2.2) 9.5 Add back items: Amortization of intangibles Stock-based compensation Non-cash interest expense Gain on sale of assets (2.5) Acquisition-related costs Inventory markup and PP&E step up Impairments, restructuring and other infrequent items Income taxes (2.4) (1.5) (4.8) (1.3) (5.4) 11.1 (0.1) 0.3 Non-GAAP TTM Technologies Net Income Non-GAAP EPS ($ per diluted share) $0.01 $0.05 $0.13 $0.28 $0.13 $0.17 $0.24 $0.31 GAAP Net Income (Loss) (3.8) (3.1) (36.6) (2.1) 9.7 Add back items: Income tax provision (benefit) (1.8) (1.4) Interest expense Amortization of intangibles Depreciation expense Stock-based compensation Gain on sale of assets (2.5) Acquisition-related costs Inventory markup Impairments, restructuring and other infrequent items Adjusted EBITDA Operating Cash Flow 45.4 (11.8) Add back items: Payment of accreted interest on convertible sr. notes Payment of acquisition-related costs Adjusted Operating Cash Flow 46.7 (11.8)

20 Reconciliations $ Millions (except where noted) GAAP Gross Profit $225.0 $217.8 $194.7 $310.1 Add back item: Inventory markup and PP&E step up Stock-based compensation Non-GAAP Gross Profit GAAP Operating Income (Loss) (142.0) Add back items: Amortization of intangibles Stock-based compensation Impairment and restructuring Inventory markup and PP&E step up Other infrequent items - (17.9) Non-GAAP Operating Income GAAP TTM Technologies Net Income (Loss) (174.6) (25.9) Add back items: Amortization of intangibles Stock-based compensation Non-cash interest expense Impairment and restructuring Inventory markup and PP&E step up Other infrequent items 5.5 (7.2) Income tax effects (12.4) (4.4) (10.2) 5.9 Non-GAAP TTM Technologies Net Income Non-GAAP EPS ($ per diluted share) GAAP Net Income (Loss) (181.1) (25.6) Add back items: Income tax provision Interest expense Amortization of intangibles Depreciation expense Stock-based compensation Gain on sale of assets - (17.9) - (2.5) Inventory markup Impairments, restructuring and other infrequent items Adjusted EBITDA Operating Cash Flow Add back items: Payment of accreted interest on convertible senior notes Payment of acquisition-related costs Adjusted Operating Cash Flow