August 7, 2019 - 10-Q: Quarterly report pursuant to Section 13 or 15(d)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-Q

☑QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 1, 2019

☐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)

1665 Scenic Avenue, Suite 250, Costa Mesa, California 92626

(Former address of principal executive offices)

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 ☑

Number of shares of common stock, $0.001 par value, of registrant outstanding at August 5, 2019: 105,492,642

TABLE OF CONTENTS

		Page
PART I: FINANCIAL INFORMATION		3
Item 1. Financial Statements (unaudited)		3
Consolidated Condensed Balance Sheets as of July 1, 2019 and December 31, 2018		3
Consolidated Condensed Statements of Operations for the quarter and two quarters ended July 1, 2019 and July 2, 2018		4
Consolidated Condensed Statements of Comprehensive (Loss) Income for the quarter and two quarters ended July 1, 2019 and July 2, 2018		5
Consolidated Condensed Statements of Stockholders' Equity for the two quarters ended July 1, 2019 and July 2, 2018		6
Consolidated Condensed Statements of Cash Flows for the two quarters ended July 1, 2019 and July 2, 2018		7
Notes to Consolidated Condensed Financial Statements		8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		24
Item 3. Quantitative and Qualitative Disclosures About Market Risk		30
Item 4. Controls and Procedures		32
PART II: OTHER INFORMATION		32
Item 1. Legal Proceedings		32
Item 1A. Risk Factors		32
Item 6. Exhibits		51
SIGNATURES		52

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

TTM TECHNOLOGIES, INC.

Consolidated Condensed Balance Sheets

	As of			As of
	July 1,			December 31,
	2019			2018
	(Unaudited)
	(In thousands, except par value)
ASSETS
Current assets:
Cash and cash equivalents	$	284,466		$	256,360
Accounts receivable, net		482,740			523,165
Contract assets		261,071			287,741
Inventories		122,149			109,377
Prepaid expenses and other current assets		39,260			30,271
Total current assets		1,189,686			1,206,914
Property, plant and equipment, net		1,037,087			1,052,024
Operating lease right-of-use assets		25,625			—
Goodwill		767,045			767,045
Definite-lived intangibles, net		345,471			375,923
Deposits and other non-current assets		75,199			55,597
	$	3,440,113		$	3,457,503
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt, including current portion of long-term debt	$	—		$	30,000
Accounts payable		432,936			431,288
Contract liabilities		2,386			3,220
Accrued salaries, wages and benefits		81,490			94,950
Other		107,143			113,756
Total current liabilities		623,955			673,214
Long-term debt, net of discount and issuance costs		1,469,270			1,462,425
Operating lease liabilities		18,365			—
Other long-term liabilities		99,446			94,777
Total long-term liabilities		1,587,081			1,557,202
Commitments and contingencies (Note 14)
Equity:
Common stock, $0.001 par value; 300,000 shares authorized, 105,491 and 103,687 shares issued and outstanding at July 1, 2019 and December 31, 2018, respectively		105			104
Additional paid-in capital		805,421			797,895
Retained earnings		433,180			433,008
Accumulated other comprehensive loss		(9,629	)		(3,920	)
Total stockholders’ equity		1,229,077			1,227,087
	$	3,440,113		$	3,457,503

See accompanying notes to consolidated condensed financial statements.

TTM TECHNOLOGIES, INC.

Consolidated Condensed Statements of Operations

For the Quarter and Two Quarters Ended July 1, 2019 and July 2, 2018

	Quarter Ended						Two Quarters Ended
	July 1,			July 2,			July 1,			July 2,
	2019			2018			2019			2018
	(Unaudited)
	(In thousands, except per share data)
Net sales	$	633,038		$	716,887		$	1,253,238		$	1,380,469
Cost of goods sold		548,423			600,747			1,079,938			1,175,651
Gross profit		84,615			116,140			173,300			204,818
Operating expenses:
Selling and marketing		17,867			18,619			36,768			36,247
General and administrative		38,637			46,298			74,105			81,486
Amortization of definite-lived intangibles		11,267			19,489			28,093			25,350
Total operating expenses		67,771			84,406			138,966			143,083
Operating income		16,844			31,734			34,334			61,735
Other income (expense):
Interest expense		(20,871	)		(20,453	)		(42,559	)		(34,200	)
Other, net		4,621			6,178			4,091			5,071
Total other expense, net		(16,250	)		(14,275	)		(38,468	)		(29,129	)
Income (loss) before income taxes		594			17,459			(4,134	)		32,606
Income tax benefit		2,830			66,545			4,306			61,495
Net income	$	3,424		$	84,004		$	172		$	94,101

Earnings per share:
Basic earnings per share	$	0.03		$	0.81		$	0.00		$	0.91
Diluted earnings per share	$	0.03		$	0.65		$	0.00		$	0.75

See accompanying notes to consolidated condensed financial statements.

TTM TECHNOLOGIES, INC.

Consolidated Condensed Statements of Comprehensive (Loss) Income

For the Quarter and Two Quarters Ended July 1, 2019 and July 2, 2018

	Quarter Ended						Two Quarters Ended
	July 1,			July 2,			July 1,			July 2,
	2019			2018			2019			2018
	(Unaudited)
	(In thousands)
Net income	$	3,424		$	84,004		$	172		$	94,101
Other comprehensive loss, net of tax:
Foreign currency translation adjustments, net		(601	)		(1,701	)		29			(1,079	)
Pension obligation adjustments, net		—			—			19			—
Net unrealized losses on cash flow hedges:
Unrealized loss on effective cash flow hedges during the period, net		(4,503	)		(1,739	)		(6,331	)		(1,745	)
Loss realized in the statement of operations		296			342			574			383
Net		(4,207	)		(1,397	)		(5,757	)		(1,362	)
Other comprehensive loss, net of tax		(4,808	)		(3,098	)		(5,709	)		(2,441	)
Comprehensive (loss) income, net of tax	$	(1,384	)	$	80,906		$	(5,537	)	$	91,660

See accompanying notes to consolidated condensed financial statements.

TTM TECHNOLOGIES, INC.

Consolidated Condensed Statements of Stockholders’ Equity

For the Two Quarters Ended July 1, 2019 and July 2, 2018

	Common Stock				Additional Paid-In			Retained			Accumulated Other Comprehensive			Total Stockholders'
	Shares		Amount		Capital			Earnings			Loss			Equity
	(Unaudited)
	(In thousands)
Balance, December 31, 2018		103,687	$	104	$	797,895		$	433,008		$	(3,920	)	$	1,227,087
Net loss		—		—		—			(3,252	)		—			(3,252	)
Other comprehensive loss		—		—		—			—			(901	)		(901	)
Redemption of convertible notes, net		—		—		(1	)		—			—			(1	)
Issuance of common stock for performance-based restricted stock units		694		—		—			—			—			—
Issuance of common stock for restricted stock units		1,040		1		(1	)		—			—			—
Stock-based compensation		—		—		3,926			—			—			3,926
Balance, April 1, 2019		105,421	$	105	$	801,819		$	429,756		$	(4,821	)	$	1,226,859
Net income		—		—		—			3,424			—			3,424
Other comprehensive loss		—		—		—			—			(4,808	)		(4,808	)
Issuance of common stock for restricted stock units		70		—		—			—			—			—
Stock-based compensation		—		—		3,602			—			—			3,602
Balance, July 1, 2019		105,491	$	105	$	805,421		$	433,180		$	(9,629	)	$	1,229,077

	Common Stock				Additional Paid-In			Retained		Accumulated Other Comprehensive			Total Stockholders'
	Shares		Amount		Capital			Earnings		Income			Equity
	(Unaudited)
	(In thousands)
Balance, January 1, 2018		101,820	$	102	$	777,025		$	230,850	$	3,403		$	1,011,380
New revenue standard adjustment		—		—		—			28,574		—			28,574
Net income		—		—		—			10,097		—			10,097
Other comprehensive income		—		—		—			—		657			657
Issuance of common stock for performance-based restricted stock units		521		—		—			—		—			—
Issuance of common stock for restricted stock units		1,104		1		(1	)		—		—			—
Stock-based compensation		—		—		3,622			—		—			3,622
Balance, April 2, 2018		103,445	$	103	$	780,646		$	269,521	$	4,060		$	1,054,330
Net income		—		—		—			84,004		—			84,004
Other comprehensive loss		—		—		—			—		(3,098	)		(3,098	)
Exercise of stock options		20		—		190			—		—			190
Issuance of common stock for restricted stock units		209		1		(1	)		—		—			—
Stock-based compensation		—		—		5,867			—		—			5,867
Balance, July 2, 2018		103,674	$	104	$	786,702		$	353,525	$	962		$	1,141,293

See accompanying notes to consolidated condensed financial statements.

TTM TECHNOLOGIES, INC.

Consolidated Condensed Statements of Cash Flows

For the Two Quarters Ended July 1, 2019 and July 2, 2018

	Two Quarters Ended
	July 1,		July 2,
	2019		2018
	(Unaudited)
	(In thousands)
Cash flows from operating activities:
Net income	$	172	$	94,101
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property, plant and equipment		82,837

Form: 10-Q

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