TTM Technologies(US:TTMI)2020-08-06 20:06Financial Performance - Total net sales increased by $43.4 million, or 8.2%, to $570.3 million for Q2 2020 from $526.9 million for Q2 2019, primarily driven by a $53.1 million increase in the PCB segment [121]. - The PCB reportable segment's gross margin increased to 20.3% for Q2 2020 from 19.6% for Q2 2019, while the E-M Solutions segment's gross margin decreased to (1.1%) from 7.3% [123][124]. - The company reported a net income from continuing operations of 1.6% for Q2 2020, down from 2.4% in Q2 2019 [120]. - Overall gross margin decreased to 17.0% for the first two quarters of 2020 from 18.0% for the same period in 2019 [125]. - The company experienced a decrease in net income from continuing operations of $12.6 million, resulting in $6.1 million for the first two quarters of 2020 [138]. Customer and Market Dynamics - Sales to the ten largest customers accounted for 36% of net sales for Q2 2020, down from 40% in Q2 2019, reflecting a diversification in customer base [108]. - The E-M Solutions segment saw a net sales reduction of $9.7 million, or 16.2%, to $50.2 million for Q2 2020, primarily due to lower demand in Automotive and Medical/Industrial markets [121]. - The company serves approximately 1,200 customers across various markets, including aerospace, defense, automotive, and medical sectors [105]. Operational Efficiency - Capacity utilization in Asia PCB facilities rose to 70% for Q2 2020 compared to 60% for Q2 2019, indicating improved production efficiency [126]. - Selling and marketing expenses decreased to $16.0 million for Q2 2020, representing 2.8% of net sales, down from 3.2% in Q2 2019, attributed to reduced travel expenses due to COVID-19 [127]. - Selling and marketing expenses decreased by $2.4 million to $32.1 million for the first two quarters of 2020, representing 3.0% of net sales compared to 3.2% in the same period of 2019 [128]. - General and administrative expenses increased by $19.2 million to $81.4 million for the first two quarters of 2020, accounting for 7.6% of net sales, up from 5.8% in the same period of 2019 [130]. Cash Flow and Debt Management - Cash flow provided by operating activities for continuing operations was $107.4 million for the first two quarters of 2020, down from $120.3 million in the same period of 2019 [138]. - As of June 29, 2020, the company had cash and cash equivalents of approximately $694.7 million, with $389.4 million held by foreign subsidiaries [141]. - Outstanding debt as of June 29, 2020, was $1,482.8 million, including $798.0 million of Term Loan debt due September 2024 [144]. - The company anticipates net capital expenditures and asset acquisitions in the range of $100.0 million to $110.0 million for 2020 [141]. Tax and Interest Rate Exposure - The effective tax benefit increased by $3.6 million to $2.3 million for the first two quarters of 2020, compared to a tax expense of $1.3 million in the same period of 2019 [134]. - The company is exposed to interest rate risk, with approximately 68.3% of total debt based on fixed rates as of June 29, 2020 [156]. - The average interest payout rate for interest rate swaps was 2.84%, with an interest payout amount of $5,741,000 and an average interest received rate of 1.10%, resulting in an interest received amount of $2,224,000 [162]. - The total amount of US$ fixed rate debt is $624,975,000, with a weighted average interest rate of 4.08% [161]. Foreign Exchange Management - As of June 29, 2020, the notional amount of foreign exchange contracts was approximately $1.4 million, down from $2.0 million as of December 30, 2019 [159]. - The estimated fair value of foreign currency forward contracts resulted in a net liability of $3,000 as of June 29, 2020, compared to a net liability of $2,000 as of December 30, 2019 [160]. - The company designated certain foreign exchange contracts as cash flow hedges to manage foreign currency risks [159]. - The company’s foreign subsidiaries may enter into forward exchange contracts to manage foreign currency risks related to machinery purchases [159].