November 5, 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 September 28, 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 November 2, 2020: 106,741,736

TABLE OF CONTENTS

		Page
PART I: FINANCIAL INFORMATION		3
Item 1. Financial Statements (unaudited)		3
Consolidated Condensed Balance Sheets as of September 28, 2020 and December 30, 2019		3
Consolidated Condensed Statements of Operations for the quarter and three quarters ended September 28, 2020 and September 30, 2019		4
Consolidated Condensed Statements of Comprehensive (Loss) Income for the quarter and three quarters ended September 28, 2020 and September 30, 2019		5
Consolidated Condensed Statements of Stockholders' Equity for the three quarters ended September 28, 2020 and September 30, 2019		6
Consolidated Condensed Statements of Cash Flows for the three quarters ended September 28, 2020 and September 30, 2019		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		32
Item 4. Controls and Procedures		34
PART II: OTHER INFORMATION		35
Item 1. Legal Proceedings		35
Item 1A. Risk Factors		35
Item 6. Exhibits		51
SIGNATURES		52

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

TTM TECHNOLOGIES, INC.

Consolidated Condensed Balance Sheets

As of September 28, 2020 and December 30, 2019

	As of
	September 28,			December 30,
	2020			2019
	(Unaudited)
	(In thousands, except par value)
ASSETS
Current assets:
Cash and cash equivalents	$	413,310		$	379,818
Restricted cash		249,975			—
Accounts receivable, net		374,971			503,598
Contract assets		281,663			254,600
Inventories		127,588			113,753
Current assets held for sale		—			67,572
Prepaid expenses and other current assets		38,670			23,343
Total current assets		1,486,177			1,342,684
Property, plant and equipment, net		654,837			678,201
Operating lease right-of-use assets		22,993			22,173
Goodwill		637,324			706,524
Definite-lived intangibles, net		292,280			325,680
Non-current assets held for sale		—			425,597
Deposits and other non-current assets		54,803			60,074
Total assets	$	3,148,414		$	3,560,933

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt, including current portion of long-term debt	$	249,975		$	249,975
Accounts payable		341,505			329,866
Contract liabilities		2,999			3,838
Accrued salaries, wages and benefits		77,525			85,114
Current liabilities held for sale		—			185,391
Other current liabilities		115,318			92,482
Total current liabilities		787,322			946,666
Long-term debt, net of discount and issuance costs		840,023			1,225,962
Operating lease liabilities		15,885			15,413
Non-current liabilities held for sale		—			1,530
Other long-term liabilities		105,881			92,325
Total long-term liabilities		961,789			1,335,230
Commitments and contingencies (Note 14)
Equity:
Common stock, $0.001 par value; 300,000 shares authorized, 106,742 and 105,510 shares issued and outstanding as of September 28, 2020 and December 30, 2019, respectively		107			106
Additional paid-in capital		826,859			814,708
Retained earnings		612,884			474,309
Accumulated other comprehensive loss		(40,547	)		(10,086	)
Total stockholders’ equity		1,399,303			1,279,037
Total liabilities and stockholders' equity	$	3,148,414		$	3,560,933

See accompanying notes to consolidated condensed financial statements.

TTM TECHNOLOGIES, INC.

Consolidated Condensed Statements of Operations

For the Quarter and Three Quarters Ended September 28, 2020 and September 30, 2019

	Quarter Ended						Three Quarters Ended
	September 28,			September 30,			September 28,			September 30,
	2020			2019			2020			2019
	(Unaudited)
	(In thousands, except per share data)
Net sales	$	513,576		$	534,173		$	1,581,520		$	1,597,495
Cost of goods sold		424,298			448,915			1,310,470			1,320,563
Gross profit		89,278			85,258			271,050			276,932
Operating expenses:
Selling and marketing		15,895			17,153			48,033			51,611
General and administrative		29,086			33,116			110,476			95,267
Research and development		5,223			4,358			15,166			13,570
Amortization of definite-lived intangibles		10,126			9,500			29,249			36,245
Impairment of goodwill		69,200			—			69,200			—
Total operating expenses		129,530			64,127			272,124			196,693
Operating (loss) income		(40,252	)		21,131			(1,074	)		80,239
Other (expense) income:
Interest expense		(20,204	)		(20,423	)		(58,557	)		(62,111	)
Other, net		(2,316	)		5,875			641			8,525
Total other expense, net		(22,520	)		(14,548	)		(57,916	)		(53,586	)
(Loss) income from continuing operations before income taxes		(62,772	)		6,583			(58,990	)		26,653
Income tax benefit (provision)		1,300			(4,190	)		3,644			(5,529	)
Net (loss) income from continuing operations		(61,472	)		2,393			(55,346	)		21,124
Income (loss) from discontinued operations, net of income taxes		20,021			13,477			193,921			(5,082	)
Net (loss) income	$	(41,451	)	$	15,870		$	138,575		$	16,042

(Loss) earnings per share:
Basic (loss) earnings per share from continuing operations	$	(0.58	)	$	0.02		$	(0.52	)	$	0.20
Basic earnings (loss) per share from discontinued operations		0.19			0.13			1.83			(0.05	)
Basic (loss) earnings per share	$	(0.39	)	$	0.15		$	1.31		$	0.15

Diluted (loss) earnings per share from continuing operations	$	(0.58	)	$	0.02		$	(0.52	)	$	0.20
Diluted earnings (loss) per share from discontinued operations		0.19			0.13			1.83			(0.05	)
Diluted (loss) earnings per share	$	(0.39	)	$	0.15		$	1.31		$	0.15

See accompanying notes to consolidated condensed financial statements.

TTM TECHNOLOGIES, INC.

Consolidated Condensed Statements of Comprehensive (Loss) Income

For the Quarter and Three Quarters Ended September 28, 2020 and September 30, 2019

	Quarter Ended						Three Quarters Ended
	September 28,			September 30,			September 28,			September 30,
	2020			2019			2020			2019
	(Unaudited)
	(In thousands)
Net (loss) income	$	(41,451	)	$	15,870		$	138,575		$	16,042
Other comprehensive income (loss), net of tax:
Pension obligation adjustments, net		(17	)		(23	)		4			(4	)
Reclassification adjustment for foreign currency translation		(346	)		—			(346	)		—
Derecognition of foreign currency translation adjustments due to sale of Mobility business unit		—			—			(27,341	)		—
Foreign currency translation adjustments, net		1,049			(954	)		778			(925	)
Derecognition of unrealized losses on cash flow hedge due to sale of Mobility business unit		—			—			384			—
Net unrealized losses on cash flow hedges:
Unrealized loss on effective cash flow hedges during the period, net		(655	)		(1,833	)		(8,667	)		(8,164	)
Loss realized in the statement of operations, net		2,098			554			4,727			1,128
Net		1,443			(1,279	)		(3,940	)		(7,036	)
Other comprehensive income (loss), net of tax		2,129			(2,256	)		(30,461	)		(7,965	)
Comprehensive (loss) income, net of tax	$	(39,322	)	$	13,614		$	108,114		$	8,077

See accompanying notes to consolidated condensed financial statements.

TTM TECHNOLOGIES, INC.

Consolidated Condensed Statements of Stockholders’ Equity

For the Three Quarters Ended September 28, 2020

	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		—		—		—			181,200			—			181,200
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		$	654,335		$	(42,676	)	$	1,433,955
Net loss		—		—		—			(41,451	)		—			(41,451	)
Other comprehensive income		—		—		—			—			2,129			2,129
Exercise of stock options		20		—		191			—			—

Form: 10-Q

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