Form: 10-Q

Quarterly report pursuant to Section 13 or 15(d)

May 9, 2023

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

Form 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 3, 2023

Or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to____________

Commission File Number: 0-31285

 

TTM TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

 

DELAWARE

 

91-1033443

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

200 East Sandpointe, Suite 400, Santa Ana, California 92707

(Address of principal executive offices)

(714) 327-3000

(Registrant’s telephone number, including area code)

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value

TTMI

Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of May 4, 2023, there were outstanding 102,585,707 shares of the registrant’s Common Stock, $0.001 par value.

 


 

TABLE OF CONTENTS

 

Page

PART I: FINANCIAL INFORMATION

 

3

Item 1. Financial Statements (unaudited)

 

3

Consolidated Condensed Balance Sheets as of April 3, 2023 and January 2, 2023

 

3

Consolidated Condensed Statements of Operations for the quarters ended April 3, 2023 and April 4, 2022

 

4

Consolidated Condensed Statements of Comprehensive (Loss) Income for the quarters ended April 3, 2023 and April 4, 2022

 

5

Consolidated Condensed Statements of Stockholders' Equity for the quarters ended April 3, 2023 and April 4, 2022

 

6

Consolidated Condensed Statements of Cash Flows for the quarters ended April 3, 2023 and April 4, 2022

 

7

Notes to Consolidated Condensed Financial Statements

 

8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

21

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

26

Item 4. Controls and Procedures

 

28

PART II: OTHER INFORMATION

 

29

Item 1. Legal Proceedings

 

29

Item 1A. Risk Factors

 

29

Item 6. Exhibits

 

45

SIGNATURES

 

46

2


 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

TTM TECHNOLOGIES, INC.

Consolidated Condensed Balance Sheets

As of April 3, 2023 and January 2, 2023

 

 

As of

 

 

 

April 3,

 

 

January 2,

 

 

 

2023

 

 

2023

 

 

 

(Unaudited)

 

 

 

(In thousands, except par value)

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

417,452

 

 

$

402,749

 

Accounts receivable, net

 

 

398,898

 

 

 

473,225

 

Contract assets

 

 

316,048

 

 

 

335,788

 

Inventories

 

 

176,728

 

 

 

170,639

 

Receivable from sale of Shanghai E-MS (SH E-MS) property

 

 

34,746

 

 

 

69,240

 

Prepaid expenses and other current assets

 

 

34,231

 

 

 

41,415

 

Total current assets

 

 

1,378,103

 

 

 

1,493,056

 

Property, plant and equipment, net

 

 

714,147

 

 

 

724,204

 

Operating lease right-of-use assets

 

 

15,622

 

 

 

18,862

 

Goodwill

 

 

746,272

 

 

 

760,437

 

Definite-lived intangibles, net

 

 

270,515

 

 

 

288,037

 

Deposits and other non-current assets

 

 

51,376

 

 

 

39,008

 

Total assets

 

$

3,176,035

 

 

$

3,323,604

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Short-term debt, including current portion of long-term debt

 

$

 

 

$

50,000

 

Accounts payable

 

 

312,823

 

 

 

361,788

 

Contract liabilities

 

 

126,705

 

 

 

103,981

 

Accrued salaries, wages and benefits

 

 

85,729

 

 

 

115,524

 

Other current liabilities

 

 

102,494

 

 

 

130,032

 

Total current liabilities

 

 

627,751

 

 

 

761,325

 

Long-term debt, net of discount and issuance costs

 

 

879,993

 

 

 

879,407

 

Operating lease liabilities

 

 

10,099

 

 

 

12,249

 

Other long-term liabilities

 

 

130,458

 

 

 

135,044

 

Total long-term liabilities

 

 

1,020,550

 

 

 

1,026,700

 

Commitments and contingencies (Note 14)

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

Common stock, $0.001 par value; 300,000 shares authorized; 109,956 and 109,598
   shares issued as of April 3, 2023 and January 2, 2023, respectively;
   
102,586 and 102,228 shares outstanding as of April 3, 2023 and
   January 2, 2023, respectively

 

 

110

 

 

 

110

 

Treasury stock – common stock at cost; 7,370 shares as of April 3, 2023
   and January 2, 2023

 

 

(98,659

)

 

 

(98,659

)

Additional paid-in capital

 

 

863,317

 

 

 

858,077

 

Retained earnings

 

 

795,027

 

 

 

800,841

 

Accumulated other comprehensive loss

 

 

(32,061

)

 

 

(24,790

)

Total stockholders’ equity

 

 

1,527,734

 

 

 

1,535,579

 

Total liabilities and stockholders' equity

 

$

3,176,035

 

 

$

3,323,604

 

 

See accompanying notes to consolidated condensed financial statements.

3


 

TTM TECHNOLOGIES, INC.

Consolidated Condensed Statements of Operations

For the Quarters Ended April 3, 2023 and April 4, 2022

 

 

 

Quarter Ended

 

 

 

April 3,

 

 

April 4,

 

 

 

2023

 

 

2022

 

 

 

(Unaudited)

 

 

 

(In thousands, except per share data)

 

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

 

Other (expense) income:

 

 

 

 

 

 

Interest expense

 

 

(12,807

)

 

 

(11,361

)

Gain on sale of subsidiary

 

 

1,339

 

 

 

 

Other, net

 

 

1,198

 

 

 

1,970

 

Total other expense, net

 

 

(10,270

)

 

 

(9,391

)

(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 (loss) earnings per share

 

$

(0.06

)

 

$

0.17

 

Diluted (loss) earnings per share

 

$

(0.06

)

 

$

0.17

 

 

See accompanying notes to consolidated condensed financial statements.

4


 

TTM TECHNOLOGIES, INC.

Consolidated Condensed Statements of Comprehensive (Loss) Income

For the Quarters Ended April 3, 2023 and April 4, 2022

 

 

 

Quarter Ended

 

 

 

April 3,

 

 

April 4,

 

 

 

2023

 

 

2022

 

 

 

(Unaudited)

 

 

 

(In thousands)

 

Net (loss) income

 

$

(5,814

)

 

$

17,246

 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

Pension obligation adjustments, net

 

 

1

 

 

 

 

Foreign currency translation adjustments

 

 

30

 

 

 

(36

)

Derecognition of foreign currency translation adjustments
     due to sale of subsidiary

 

 

(6,627

)

 

 

 

Net unrealized (loss) gain on cash flow hedges:

 

 

 

 

 

 

Unrealized (loss) gain on effective cash flow hedges during
     the period, net

 

 

(680

)

 

 

153

 

Loss realized in the statement of operations, net

 

 

5

 

 

 

2,034

 

Net

 

 

(675

)

 

 

2,187

 

Other comprehensive (loss) income, net of tax

 

 

(7,271

)

 

 

2,151

 

Comprehensive (loss) income, net of tax

 

$

(13,085

)

 

$

19,397

 

 

See accompanying notes to consolidated condensed financial statements.

5


 

TTM TECHNOLOGIES, INC.

Consolidated Condensed Statements of Stockholders’ Equity

For the Quarters Ended April 3, 2023 and April 4, 2022

 

 

 

Common Stock

 

 

Treasury Stock

 

 

Additional
Paid-In

 

 

Retained

 

 

Accumulated
Other
Comprehensive

 

 

Total
Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Loss

 

 

Equity

 

 

 

(Unaudited)

 

 

 

(In thousands)

 

Balance, January 2, 2023

 

 

109,598

 

 

$

110

 

 

 

(7,370

)

 

$

(98,659

)

 

$

858,077

 

 

$

800,841

 

 

$

(24,790

)

 

$

1,535,579

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,814

)

 

 

 

 

 

(5,814

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,271

)

 

 

(7,271

)

Issuance of common stock for
   performance-based
   restricted stock units

 

 

337

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for
   restricted stock units

 

 

21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,240

 

 

 

 

 

 

 

 

 

5,240

 

Balance, April 3, 2023

 

 

109,956

 

 

$

110

 

 

 

(7,370

)

 

$

(98,659

)

 

$

863,317

 

 

$

795,027

 

 

$

(32,061

)

 

$

1,527,734

 

 

 

 

Common Stock

 

 

Treasury Stock

 

 

Additional
Paid-In

 

 

Retained

 

 

Accumulated
Other
Comprehensive

 

 

Total
Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

(Loss) Income

 

 

Equity

 

 

 

(Unaudited)

 

 

 

(In thousands)

 

Balance, January 3, 2022

 

 

108,194

 

 

$

108

 

 

 

(4,661

)

 

$

(63,807

)

 

$

840,113

 

 

$

706,258

 

 

$

(27,255

)

 

$

1,455,417

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17,246

 

 

 

 

 

 

17,246

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,151

 

 

 

2,151

 

Issuance of common stock for
   performance-based
   restricted stock units

 

 

182

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for
   restricted stock units

 

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Repurchases of common stock

 

 

 

 

 

 

 

 

(2,373

)

 

 

(30,232

)

 

 

 

 

 

 

 

 

 

 

 

(30,232

)

Fair value of warrants
   reclassified to
   warrant liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(987

)

 

 

 

 

 

 

 

 

(987

)

Issuance of common stock
   from warrant exercises

 

 

 

 

 

 

 

 

38

 

 

 

572

 

 

 

(572

)

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,234

 

 

 

 

 

 

 

 

 

4,234

 

Balance, April 4, 2022

 

 

108,383

 

 

$

108

 

 

 

(6,996

)

 

$

(93,467

)

 

$

842,788

 

 

$

723,504

 

 

$

(25,104

)

 

$

1,447,829

 

 

See accompanying notes to consolidated condensed financial statements.

6


 

TTM TECHNOLOGIES, INC.

Consolidated Condensed Statements of Cash Flows

For the Quarters Ended April 3, 2023 and April 4, 2022

 

 

 

Quarter Ended

 

 

April 3, 2023

 

 

April 4, 2022

 

 

 

 

(Unaudited)

 

 

(In thousands)

Cash flows from operating activities:

 

 

 

 

 

 

 

Net (loss) income

 

$

(5,814

)

 

$

17,246

 

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation of property, plant and equipment

 

 

25,253

 

 

 

21,500

 

 

Amortization of definite-lived intangible assets

 

 

27,772

 

 

 

9,658

 

 

Amortization of debt discount and issuance costs

 

 

726

 

 

 

533

 

 

Deferred income taxes

 

 

(1,867

)

 

 

(3,298

)

 

Stock-based compensation

 

 

5,240

 

 

 

4,234

 

 

Gain on sale of subsidiary

 

 

(1,339

)

 

 

 

 

Other

 

 

(1,050

)

 

 

(1,360

)

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable, net

 

 

64,595

 

 

 

(26,085

)

 

Contract assets

 

 

18,591

 

 

 

6,149

 

 

Inventories

 

 

(9,045

)

 

 

(9,731

)

 

Prepaid expenses and other current assets

 

 

1,875

 

 

 

(15,848

)

 

Accounts payable

 

 

(34,578

)

 

 

24,112

 

 

Contract liabilities

 

 

22,724

 

 

 

8,335

 

 

Accrued salaries, wages and benefits

 

 

(29,279

)

 

 

(454

)

 

Other current liabilities

 

 

(28,726

)

 

 

1,000

 

 

Net cash provided by operating activities

 

 

55,078

 

 

 

35,991

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Proceeds from sale of SH E-MS property

 

 

34,733

 

 

 

 

 

Purchase of property, plant and equipment and other assets

 

 

(31,002

)

 

 

(23,445

)

 

Proceeds from sale of property, plant and equipment and other assets

 

 

295

 

 

 

25

 

 

Proceeds from sale of subsidiary, net of cash disposed

 

 

5,601

 

 

 

 

 

Net cash provided by (used in) investing activities

 

 

9,627

 

 

 

(23,420

)

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Repayment of long-term debt borrowings

 

 

(50,000

)

 

 

 

 

Repurchases of common stock

 

 

 

 

 

(30,232

)

 

Cash used to settle warrants

 

 

 

 

 

(887

)

 

Net cash used in financing activities

 

 

(50,000

)

 

 

(31,119

)

 

Effect of foreign currency exchange rates on cash and cash equivalents

 

 

(2

)

 

 

(51

)

 

Net increase (decrease) in cash and cash equivalents

 

 

14,703

 

 

 

(18,599

)

 

Cash and cash equivalents at beginning of period

 

 

402,749

 

 

 

537,678

 

 

Cash and cash equivalents at end of period

 

$

417,452

 

 

$

519,079

 

 

Supplemental cash flow information:

 

 

 

 

 

 

 

Cash paid, net for interest

 

$

19,589

 

 

$

17,563

 

 

Cash paid, net for income taxes

 

 

13,207

 

 

 

3,259

 

 

Supplemental disclosure of noncash investing and financing activities:

 

 

 

 

 

 

 

Property, plant and equipment recorded in accounts payable

 

$

25,418

 

 

$

31,656

 

 

Issuance of common stock for warrant settlement

 

 

 

 

 

589

 

 

 

See accompanying notes to consolidated condensed financial statements.

7


 

TTM TECHNOLOGIES, INC.

Notes to Consolidated Condensed Financial Statements

(Unaudited)

(Dollars and shares in thousands, except per share data)

(1) Nature of Operations and Basis of Presentation

TTM Technologies, Inc. (the Company or TTM) is a leading global manufacturer of technology solutions, including engineered systems, radio frequency (RF) components and RF microwave/microelectronic assemblies, and printed circuit boards (PCB). The Company provides time-to-market and volume production of advanced technology products and offers a one-stop design, engineering, and manufacturing solution to customers. This one-stop design, engineering, and manufacturing solution allows the Company to align technology developments with the diverse needs of the Company’s customers and to enable them to reduce the time required to develop new products and bring them to market.

The Company serves a diversified customer base in various markets throughout the world, including aerospace and defense, data center computing, automotive, medical, industrial and instrumentation related products, as well as networking. The Company’s customers include original equipment manufacturers (OEMs), electronic manufacturing services (EMS) providers, original design manufacturers (ODMs), distributors and government agencies.

The accompanying consolidated condensed financial statements have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) have been condensed or omitted pursuant to such rules and regulations. It is suggested that these consolidated condensed financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s most recent Annual Report on Form 10-K. The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s consolidated condensed financial statements and accompanying notes. Due, in part, to the on-going effects of the coronavirus (COVID-19) global pandemic on the Company and the conflict between Russia and Ukraine, the global economy and financial markets have been volatile, and both the pandemic and conflict has contributed to on-going disruptions in global supply chains, labor shortages, high inflation, and a potential recession, and there is a significant amount of uncertainty about the length and severity of the direct and indirect effects of the pandemic and the conflict. The Company has considered information available to it as of the date of issuance of these financial statements and is not aware of any specific events or circumstances that would require an update to its estimates or judgments, or a revision to the carrying value of its assets or liabilities. The actual results the Company experienced may differ materially and adversely from its estimates. The Company uses a 52/53 week fiscal calendar with the fourth quarter ending on the Monday nearest December 31.

Recently Adopted and Issued Accounting Standards

Recently Adopted Accounting Standards

In September 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2022-04, Liabilities - Supplier Finance Programs (Topic 450-50): Disclosure of Supplier Finance Program Obligations, that requires entities that use supplier finance programs in connection with the purchase of goods and services to disclose the key terms of the programs and information about obligations outstanding at the end of the reporting period, including a rollforward of those obligations. The guidance does not affect the recognition, measurement or financial statement presentation of supplier finance program obligations. The amendments are effective for all entities for fiscal years beginning after December 15, 2022 on a retrospective basis, including interim periods within those fiscal years, except for the requirement to disclose rollforward information, which is effective prospectively for fiscal years beginning after December 15, 2023. The Company adopted ASU 2022-04 as of