August 6, 2020 - 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 June 29, 2020

☐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 August 3, 2020: 106,725,174

TABLE OF CONTENTS

		Page
PART I: FINANCIAL INFORMATION		3
Item 1. Financial Statements (unaudited)		3
Consolidated Condensed Balance Sheets as of June 29, 2020 and December 30, 2019		3
Consolidated Condensed Statements of Operations for the quarter and two quarters ended June 29, 2020 and July 1, 2019		4
Consolidated Condensed Statements of Comprehensive Income (Loss) for the quarter and two quarters ended June 29, 2020 and July 1, 2019		5
Consolidated Condensed Statements of Stockholders' Equity for the two quarters ended June 29, 2020 and July 1, 2019		6
Consolidated Condensed Statements of Cash Flows for the two quarters ended June 29, 2020 and July 1, 2019		7
Notes to Consolidated Condensed Financial Statements		8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		23
Item 3. Quantitative and Qualitative Disclosures About Market Risk		28
Item 4. Controls and Procedures		30
PART II: OTHER INFORMATION		31
Item 1. Legal Proceedings		31
Item 1A. Risk Factors		31
Item 6. Exhibits		50
SIGNATURES		51

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

TTM TECHNOLOGIES, INC.

Consolidated Condensed Balance Sheets

	As of
	June 29,			December 30,
	2020			2019
	(Unaudited)
	(In thousands, except par value)
ASSETS
Current assets:
Cash and cash equivalents	$	694,668		$	379,818
Accounts receivable, net		414,329			503,598
Contract assets		287,281			254,600
Inventories		122,847			113,753
Current assets held for sale		—			67,572
Receivable from Purchaser of the Mobility business unit		314,585			—
Prepaid expenses and other current assets		38,202			23,343
Total current assets		1,871,912			1,342,684
Property, plant and equipment, net		660,866			678,201
Operating lease right-of-use assets		21,993			22,173
Goodwill		706,524			706,524
Definite-lived intangibles, net		303,790			325,680
Non-current assets held for sale		—			425,597
Deposits and other non-current assets		29,586			60,074
	$	3,594,671		$	3,560,933
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt, including current portion of long-term debt	$	649,975		$	249,975
Accounts payable		351,819			329,866
Contract liabilities		3,140			3,838
Accrued salaries, wages and benefits		79,424			85,114
Current liabilities held for sale		—			185,391
Other current liabilities		113,099			92,482
Total current liabilities		1,197,457			946,666
Long-term debt, net of discount and issuance costs		832,834			1,225,962
Operating lease liabilities		15,015			15,413
Non-current liabilities held for sale		—			1,530
Other long-term liabilities		103,800			92,325
Total long-term liabilities		951,649			1,335,230
Commitments and contingencies (Note 14)
Equity:
Common stock, $0.001 par value; 300,000 shares authorized, 106,701 and 105,510 shares issued and outstanding as of June 29, 2020 and December 30, 2019, respectively		107			106
Additional paid-in capital		822,189			814,708
Retained earnings		665,945			474,309
Accumulated other comprehensive loss		(42,676	)		(10,086	)
Total stockholders’ equity		1,445,565			1,279,037
	$	3,594,671		$	3,560,933

See accompanying notes to consolidated condensed financial statements.

TTM TECHNOLOGIES, INC.

Consolidated Condensed Statements of Operations

For the Quarter and Two Quarters Ended June 29, 2020 and July 1, 2019

	Quarter Ended						Two Quarters Ended
	June 29,			July 1,			June 29,			July 1,
	2020			2019			2020			2019
	(Unaudited)
	(In thousands, except per share data)
Net sales	$	570,298		$	526,877		$	1,067,944		$	1,063,322
Cost of goods sold		469,868			434,029			886,172			871,648
Gross profit		100,430			92,848			181,772			191,674
Operating expenses:
Selling and marketing		15,969			16,898			32,138			34,458
General and administrative		46,723			31,869			81,390			62,151
Research and development		5,181			4,496			9,943			9,212
Amortization of definite-lived intangibles		9,561			10,593			19,123			26,745
Total operating expenses		77,434			63,856			142,594			132,566
Operating income		22,996			28,992			39,178			59,108
Other (expense) income:
Interest expense		(18,572	)		(20,553	)		(38,353	)		(41,688	)
Other, net		455			3,007			2,957			2,650
Total other expense, net		(18,117	)		(17,546	)		(35,396	)		(39,038	)
Income from continuing operations before income taxes		4,879			11,446			3,782			20,070
Income tax benefit (provision)		4,467			1,047			2,344			(1,339	)
Net income from continuing operations		9,346			12,493			6,126			18,731
Income (loss) from discontinued operations, net of income taxes		183,464			(9,069	)		185,510			(18,559	)
Net income	$	192,810		$	3,424		$	191,636		$	172

Earnings per share:
Basic earnings per share from continuing operations	$	0.09		$	0.12		$	0.06		$	0.18
Basic earnings (loss) per share from discontinued operations		1.72			(0.09	)		1.75			(0.18	)
Basic earnings per share	$	1.81		$	0.03			1.81		$	—

Diluted earnings per share from continuing operations	$	0.09		$	0.12		$	0.06		$	0.18
Diluted earnings (loss) per share from discontinued operations		1.70			(0.09	)		1.72			(0.18	)
Diluted earnings per share	$	1.79		$	0.03			1.78		$	—

See accompanying notes to consolidated condensed financial statements.

TTM TECHNOLOGIES, INC.

Consolidated Condensed Statements of Comprehensive Income (Loss)

For the Quarter and Two Quarters Ended June 29, 2020 and July 1, 2019

	Quarter Ended						Two Quarters Ended
	June 29,			July 1,			June 29,			July 1,
	2020			2019			2020			2019
	(Unaudited)
	(In thousands)
Net income	$	192,810		$	3,424		$	191,636		$	172
Other comprehensive income (loss), net of tax:
Pension obligation adjustments, net		(6	)		—			21			19
Derecognition of foreign currency translation adjustments due to sale of Mobility business unit		(27,341	)		—			(27,341	)		—
Foreign currency translation adjustments, net		96			(601	)		(271	)		29
Derecognition of unrealized losses on cash flow hedge due to sale of Mobility business unit		384			—			384			—
Net unrealized losses on cash flow hedges:
Unrealized loss on effective cash flow hedges during the period, net		(1,994	)		(4,503	)		(8,012	)		(6,331	)
Loss realized in the statement of operations, net		1,769			296			2,629			574
Net		(225	)		(4,207	)		(5,383	)		(5,757	)
Other comprehensive loss, net of tax		(27,092	)		(4,808	)		(32,590	)		(5,709	)
Comprehensive income (loss), net of tax	$	165,718		$	(1,384	)	$	159,046		$	(5,537	)

See accompanying notes to consolidated condensed financial statements.

TTM TECHNOLOGIES, INC.

Consolidated Condensed Statements of Stockholders’ Equity

For the Two Quarters Ended June 29, 2020 and July 1, 2019

	Common Stock				Additional Paid-In			Retained			Accumulated Other Comprehensive			Total Stockholders'
	Shares		Amount		Capital			Earnings			Loss			Equity
	(Unaudited)
	(In thousands)
Balance, December 30, 2019		105,510	$	106	$	814,708		$	474,309		$	(10,086	)	$	1,279,037
Net loss		—		—		—			(1,174	)		—			(1,174	)
Other comprehensive loss		—		—		—			—			(5,498	)		(5,498	)
Issuance of common stock for performance-based restricted stock units		187		—		—			—			—			—
Issuance of common stock for restricted stock units		520		—		—			—			—			—
Stock-based compensation		—		—		4,835			—			—			4,835
Balance, March 30, 2020		106,217	$	106	$	819,543		$	473,135		$	(15,584	)	$	1,277,200
Net income		—		—		—			192,810			—			192,810
Other comprehensive loss		—		—		—			—			(27,092	)		(27,092	)
Issuance of common stock for restricted stock units		484		1		(1	)		—			—			—
Stock-based compensation		—		—		2,647			—			—			2,647
Balance, June 29, 2020		106,701	$	107	$	822,189		$	665,945		$	(42,676	)	$	1,445,565

	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		—

Form: 10-Q

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