November 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 September 30, 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)

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 November 1, 2019: 105,493,763

TABLE OF CONTENTS

		Page
PART I: FINANCIAL INFORMATION		3
Item 1. Financial Statements (unaudited)		3
Consolidated Condensed Balance Sheets as of September 30, 2019 and December 31, 2018		3
Consolidated Condensed Statements of Operations for the quarter and three quarters ended September 30, 2019 and October 1, 2018		4
Consolidated Condensed Statements of Comprehensive Income (Loss) for the quarter and three quarters ended September 30, 2019 and October 1, 2018		5
Consolidated Condensed Statements of Stockholders' Equity for the three quarters ended September 30, 2019 and October 1, 2018		6
Consolidated Condensed Statements of Cash Flows for the three quarters ended September 30, 2019 and October 1, 2018		8
Notes to Consolidated Condensed Financial Statements		9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		26
Item 3. Quantitative and Qualitative Disclosures About Market Risk		31
Item 4. Controls and Procedures		33
PART II: OTHER INFORMATION		34
Item 1. Legal Proceedings		34
Item 1A. Risk Factors		34
Item 6. Exhibits		53
SIGNATURES		54

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

TTM TECHNOLOGIES, INC.

Consolidated Condensed Balance Sheets

	As of			As of
	September 30,			December 31,
	2019			2018
	(Unaudited)
	(In thousands, except par value)
ASSETS
Current assets:
Cash and cash equivalents	$	316,589		$	256,360
Accounts receivable, net		529,942			523,165
Contract assets		268,542			287,741
Inventories		126,324			109,377
Prepaid expenses and other current assets		36,438			30,271
Total current assets		1,277,835			1,206,914
Property, plant and equipment, net		1,027,868			1,052,024
Operating lease right-of-use assets		23,670			—
Goodwill		767,045			767,045
Definite-lived intangibles, net		334,116			375,923
Deposits and other non-current assets		67,824			55,597
	$	3,498,358		$	3,457,503
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt, including current portion of long-term debt	$	—		$	30,000
Accounts payable		470,233			431,288
Contract liabilities		2,747			3,220
Accrued salaries, wages and benefits		82,576			94,950
Other		111,117			113,756
Total current liabilities		666,673			673,214
Long-term debt, net of discount and issuance costs		1,472,578			1,462,425
Operating lease liabilities		16,727			—
Other long-term liabilities		95,027			94,777
Total long-term liabilities		1,584,332			1,557,202
Commitments and contingencies (Note 14)
Equity:
Common stock, $0.001 par value; 300,000 shares authorized, 105,493 and 103,687 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively		105			104
Additional paid-in capital		810,083			797,895
Retained earnings		449,050			433,008
Accumulated other comprehensive loss		(11,885	)		(3,920	)
Total stockholders’ equity		1,247,353			1,227,087
	$	3,498,358		$	3,457,503

See accompanying notes to consolidated condensed financial statements.

TTM TECHNOLOGIES, INC.

Consolidated Condensed Statements of Operations

For the Quarter and Three Quarters Ended September 30, 2019 and October 1, 2018

	Quarter Ended						Three Quarters Ended
	September 30,			October 1,			September 30,			October 1,
	2019			2018			2019			2018
	(Unaudited)
	(In thousands, except per share data)
Net sales	$	716,817		$	755,837		$	1,970,055		$	2,136,306
Cost of goods sold		612,983			626,253			1,692,921			1,801,904
Gross profit		103,834			129,584			277,134			334,402
Operating expenses:
Selling and marketing		18,400			18,533			55,168			54,780
General and administrative		38,898			39,892			113,003			121,378
Amortization of definite-lived intangibles		10,175			16,609			38,268			41,959
Total operating expenses		67,473			75,034			206,439			218,117
Operating income		36,361			54,550			70,695			116,285
Other income (expense):
Interest expense		(20,568	)		(22,225	)		(63,127	)		(56,425	)
Other, net		8,126			2,213			12,217			7,284
Total other expense, net		(12,442	)		(20,012	)		(50,910	)		(49,141	)
Income before income taxes		23,919			34,538			19,785			67,144
Income tax (provision) benefit		(8,049	)		(7,537	)		(3,743	)		53,958
Net income	$	15,870		$	27,001		$	16,042		$	121,102

Earnings per share:
Basic earnings per share	$	0.15		$	0.26		$	0.15		$	1.17
Diluted earnings per share	$	0.14		$	0.22		$	0.15		$	0.98

See accompanying notes to consolidated condensed financial statements.

TTM TECHNOLOGIES, INC.

Consolidated Condensed Statements of Comprehensive Income (Loss)

For the Quarter and Three Quarters Ended September 30, 2019 and October 1, 2018

	Quarter Ended						Three Quarters Ended
	September 30,			October 1,			September 30,			October 1,
	2019			2018			2019			2018
	(Unaudited)
	(In thousands)
Net income	$	15,870		$	27,001		$	16,042		$	121,102
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments, net		(954	)		(1,248	)		(925	)		(2,327	)
Pension obligation adjustments, net		(23	)		—			(4	)		—
Net unrealized (losses) gains on cash flow hedges:
Unrealized (loss) gain on effective cash flow hedges during the period, net		(1,833	)		1,641			(8,164	)		(104	)
Loss realized in the statement of operations		554			764			1,128			1,147
Net		(1,279	)		2,405			(7,036	)		1,043
Other comprehensive (loss) income, net of tax		(2,256	)		1,157			(7,965	)		(1,284	)
Comprehensive income, net of tax	$	13,614		$	28,158		$	8,077		$	119,818

See accompanying notes to consolidated condensed financial statements.

TTM TECHNOLOGIES, INC.

Consolidated Condensed Statements of Stockholders’ Equity

For the Three Quarters Ended September 30, 2019

	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
Net income		—		—		—			15,870			—			15,870
Other comprehensive loss		—		—		—			—			(2,256	)		(2,256	)
Issuance of common stock for restricted stock units		2		—		—			—			—			—
Stock-based compensation		—		—		4,662			—			—			4,662
Balance, September 30, 2019		105,493	$	105	$	810,083		$	449,050		$	(11,885	)	$	1,247,353

See accompanying notes to consolidated condensed financial statements.

TTM TECHNOLOGIES, INC.

Consolidated Condensed Statements of Stockholders’ Equity

For the Three Quarters Ended October 1, 2018

	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		—

Form: 10-Q

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