Indigestion at TTM: Fool by Numbers

On Feb. 15, quick-turnaround electronics component manufacturer TTM Technologies (Nasdaq: TTMI  ) released earnings for the fourth quarter ended Dec. 31.

• This period includes two months of operations from the printed circuit board division of Tyco (NYSE: TYC  ) , which TTM acquired last fall. It's an immediate shot in the arm, revenue-wise, but the margins took a severe hit.
• Part of the margin letdown results from direct acquisition costs, but the Tyco group always worked in some lower-margin fields than what TTM is used to, such as backplane assembly. TTM's operational discipline should rub off on the new addition over time, but this was a rough quarter.
• It's not as bad as it looks at first glance, though. The year-ago quarter included an unusual $0.31 per-share gain from a revaluation of the company's tax assets. On the other hand, there was a higher than usual tax provision this quarter -- more than 45% of pre-tax income -- to account for higher than expected tax rates for some of the acquired operations.

(Figures in millions, except per-share data)

Income Statement Highlights

	Q4 2006	Q4 2005	Change
Sales	$144.3	$63.1	128.5%
Net Profit	$4.9	$19.0	(74.2%)
EPS	$0.12	$0.46	(73.9%)
Diluted Shares	42.4	41.8	1.4%

Get back to basics with a look at the income statement.

Margin Checkup

	Q4 2006	Q4 2005	Change*
Gross Margin	18.9%	23.8%	(5.0)
Operating Margin	7.8%	17.5%	(9.8)
Net Margin	3.4%	30.2%	(26.8)

*Expressed in percentage points

Margins are the earnings engine. See how they work.

Management Effectiveness

	Q4 2006	Q4 2005	Change*
Return on Assets	4.5%	28.9%	(24.4)
Return on Equity	6.9%	32.5%	(25.6)

*Expressed in percentage points

See how management puts its financial tools to work.

Balance Sheet Highlights

Assets	Q4 2006	Q4 2005	Change
Cash + ST Invest.	$70.7	$82.4	(14.2%)
Accounts Rec.	$125.7	$38.6	225.4%
Inventory	$67.0	$12.6	433.0%

Liabilities	Q4 2006	Q4 2005	Change
Accounts Payable	$40.0	$11.3	253.8%
Long-Term Debt	$141.5	$0.0	N/A

Learn the ways of the balance sheet.

Cash Flow Highlights

We didn't get a cash flow statement this time. Curses!

Find out why Fools always follow the money.

Cash Conversion Checkup

	Q4 2006	Q4 2005	Change
Days in Inventory	31.5	22.8	8.7
Days in Receivables	53.3	55.6	(2.2)
Days Payables Outstanding	20.7	19.7	1.0
Cash Conversion Cycle	64.1	58.7	5.5

Read up on cash conversion metrics.

Related companies:

• Merix (Nasdaq: MERX  )
• Sanmina-SCI (Nasdaq: SANM  )
• Eltek (Nasdaq: ELTK  )
• DDi (Nasdaq: DDIC  )

Related Foolishness:

• TTM: Excellence Undiscovered
• Tyco Teeters: Fool by Numbers
• Sanmina-SCI Sizzles: Fool by Numbers

TTM is a Motley Fool Stock Advisor selection. See why our CEO Tom Gardner liked this stock enough to make it one of his elite picks with a free 30-day trial.

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.

At the time of publication, Fool contributor Anders Bylund had no position in any company mentioned. Fool rules are here.