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TTM Technologies, Inc
THE 7TH ANNUAL TECHNOLOGY CONFERENCE
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Safe Harbor Provision
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During the course of this presentation, we will make projections or other forward-looking statements regarding future events or the future financial performance of the Company. We wish to caution you that such statements reflect only our current expectations, and that actual events or results may differ materially.
We refer you to the risk factors and cautionary language contained in the documents that the Company files from time to time with the Securities and Exchange Commission, specifically the Company’s most recent S-3 Registration Statement and Form 10-K. Such documents contain and identify important factors that could cause the actual results to differ materially from those contained in our projections or forward-looking statements. We undertake no obligation to update such projections or such forward-looking statements in the future.
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Kent Alder
President
and
Chief Executive Officer
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Company Overview
TTM is a leading provider of time-critical and technologically complex printed circuit boards to the world’s leading electronic equipment designers and manufacturers
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• “Pure Play” printed circuit board (PCB) manufacturer
• Focused on time (24 hrs to 10 days) & technology service segments
• Three integrated, mission-focused production facilities:
• Santa Ana, CA
• Redmond, WA
• Chippewa Falls, WI
• $58.9 million in 1Q 2005 sales
• 1,736 employees
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Investment Highlights
Focused Strategy & Leading Market Position
• Leader in most attractive PCB segments – time & technology
• Mission-focused facilities – speed, flexibility and technology
Demonstrated Execution Excellence
• Strong relationships with leading OEM and EMS customers
• Proven ability to integrate acquisitions
• Cross-selling efforts leading to success
Industry Leading Financial Performance
• Profitable business model across cycle
• Strong balance sheet
Market Leadership. . .Focus. . . Execution. . . Performance
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Attractiveness of
Time & Technology Strategy
Growth
• Early access to new customers with high-growth potential
• Key supplier to high-growth programs within market leaders
• Critical service for new product introduction across multiple industries
Limited Competition
• Difficult business model to replicate
• Significant technology expertise and investment required
• Quick-turn, high-mix production subject to less competition
Performance
• Time & technology focus allows premium pricing
• Leads to superior margins and profitability
Consistent Strategic Focus Driving Growth and Profitability
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Industry Dynamics and
Key Success Factors
Current Industry Dynamics | | Key Success Factors |
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• Continued outlook for relatively stable industry conditions | | • Capacity in place for complex products and short lead times |
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• High volume, low-mix, low-technology production transitioning to Asia | | • Focus on quick-turn, high-mix and technology limits foreign competition |
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• Significant consolidation of North American capacity | | • Well-capitalized firms with targeted strategy gaining share |
TTM is Positioned to Capitalize on Industry Trends
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PCB Competitive Landscape
| | • | Asian focus |
| | | |
| | • | Competitive markets |
Panel Volume (lots) | | | | | | | |
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High (> 1,000) | | • PCs • Computer peripherals • Automotive • Consumer electronics | | • Cell phones • Advanced PDAs • Power supplies | | • Limited product application | |
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Medium (100 < 1,000) | | • PCs • Computer peripherals | | • Low-end servers • High-end computers | | • High-end servers • Telecom infrastructure • High-end networking | TTM focus |
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Low (< 100) | | • Misc. industrial equipment • Low-end aerospace/defense | | • Semicap equipment • Medical equipment • Aerospace/defense • Instrumentation • Industrial equipment | | • Specialized communications • High-end aerospace/defense | |
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| | Quick-Turn | |
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| | 0-8 layers, | | 9-15 layers, | | 16+ layers, | |
| | standard materials | | standard materials | | exotic materials | |
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| | | | Technology Level | | | |
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North American
PCB Market Overview
• $5.7 billion North American PCB market in 2004
• Total number of PCB manufacturers has been reduced by approximately 50%
• 950 companies in 1992 to fewer than 500 in 2004
• 30 – 40% of PCB capacity has been removed since 2000 peak
• Only 7 PCB fabricators with greater than $100 million in 2004 revenue
“Pure Play” Independent | | Conglomerates | | Integrated EMS | |
• TTM | | • Tyco | | • DDi | |
• Merix | | | | • EIT | |
• Photocircuits | | | | • Sanmina-SCI | |
TTM Benefiting from Ongoing Industry Consolidation
Source: Henderson Ventures; N.T. Information Ltd. (Dr. Hayao Nakahara). Excludes companies focused on flex circuits.
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TTM’s Strategy
| Customers / End Markets • Diverse base of industry leading customers • Early access to emerging customers and niche end-markets • Global sales reach | |
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Technology • High performance, technologically complex PCBs • Advanced manufacturing processes & technology expertise | Industry Leading Execution and Financial Results | Time • Dedicated ultra-short lead time capability (<24 hours available) • Dedicated, highly flexible, ramp-to-volume production in <10 days |
• Industry leading avg. layer count of 20+ at Chippewa Falls facility | Strong Long-Term Outlook | • High-mix complex technology production with standard delivery |
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| Financial Strength • Focus on operational excellence • Superior asset management and strong balance sheet • Successful integration of opportunistic acquisitions | |
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Facility Specialization Strategy
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Mission-Focused Facilities – Speed, Flexibility and Technology
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Price by Delivery Time
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Quick-Turn Revenue (10 days or less)
• ~20% 2004
• ~21% 1Q 2005
Quick-Turn Service Allows Premium Pricing
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Revenue By Layer Count
Percentage of Revenue
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Avg. Layer Count
1Q 2005 = 16.1
2000 = 8.3
Continuing to Upgrade Technological Capabilities
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Global Sales Reach
| | TTM Shipments | | | | | | | |
| | by Geography | | | | Technical | | Inventory | |
| | 1Q 2005 | | Sales | | Support | | Hub | |
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Europe | | 12 | % | 3 | | 1 | | 1 | |
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Asia & ROW | | 18 | % | 5 | | 1 | | 2 | |
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North America | | 70 | % | 83 | | 11 | | 4 | |
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Total | | | | 91 | | 13 | | 7 | |
Integrated Direct and Rep Network Driving Incremental Sales
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Customer Concentration
Percentage of Revenue
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Increased Exposure to End Market Leaders
*Pro forma for the acquisition of Power Circuits, which occurred in July 1999.
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Revenue Chain
1Q 2005 - % of total production revenues
End Markets
Enterprise I/T | | High-End Computing 26% | | Networking / Comms 49% | | 52% | |
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Telecom Service Provider | | | | 23% | |
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Other End Markets | | Indust./Med. - 14% Peripherals - 5% Handheld/Other - 6% | | 25% | |
Customers
Top OEM
Customers
• Cisco
• General Electric
• Hewlett-Packard
• IBM
• Juniper
EMS
Providers - 70%
• Benchmark
• Celestica
• Jabil
• Plexus
• Solectron
• Others
Shipped OEM-direct
30%
TTM Technologies
Enterprise IT Spending Primary End Market Driver
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Key Customers by
End Market
Percentage of Revenue by End Market – 1Q 2005
Networking & Communications | | 49 | % | [LOGO] | |
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High-End Computing | | 26 | % | [LOGO] | |
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Industrial & Medical | | 14 | % | [LOGO] | |
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Computer Peripherals | | 5 | % | [LOGO] | |
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Handheld & Other | | 6 | % | [LOGO] | |
Leading Positions with Industry Leaders. . .
Approximately 550 Active Customers
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Compelling
Growth Opportunities
• One-stop manufacturing solution with numerous cross-selling opportunities
• Quick-turn capabilities for attracting emerging high-growth customers
• Leadership in technology and advanced manufacturing processes
• Capacity available through low risk, low cost expansion plan
• Successful track record of completing and integrating acquisitions
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Stacey Peterson
Chief Financial Officer
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Annual Sales
Sales ($mm)
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Quarterly Sales
Sales ($mm)
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Annual EBITDA* and
EBITDA* Margin
[CHART]
* Please see Appendix for EBITDA reconciliation. EBITDA means earnings before interest expense (including amortization of debt issuance costs), income taxes, depreciation and amortization.
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Quarterly EBITDA* and
EBITDA* Margin
[CHART]
* Please see Appendix for EBITDA reconciliation. EBITDA means earnings before interest expense (including amortization of debt issuance costs), income taxes, depreciation and amortization.
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Quarterly Results and
Estimates
($mm, except per share data)
| | 2004 | | 2005 | |
| | 1Q | | 2Q | | 3Q | | 4Q | | 1Q | | 2QE | |
Sales | | $ | 57.7 | | $ | 61.6 | | $ | 62.2 | | $ | 59.2 | | $ | 58.9 | | $ | 58.0-$61.0 | |
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Gross Profit | | 17.3 | | 19.1 | | 17.6 | | 14.6 | | 13.5 | | | |
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% Margin | | 30 | % | 31 | % | 28 | % | 25 | % | 23 | % | | |
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Operating Income* | | 10.7 | | 11.4 | | 12.1 | | 8.9 | | 7.5 | | | |
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GAAP Diluted EPS | | $ | 0.15 | | $ | 0.17 | | $ | 0.19 | | $ | 0.16 | ** | $ | 0.11 | | $ | 0.10-$0.12 | |
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Operating Cash Flow | | $ | 7.5 | | $ | 14.1 | | $ | 17.8 | | $ | 9.4 | | $ | 5.5 | | | |
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Inventory Turns | | 17 | x | 17 | x | 21 | x | 21 | x | 19 | x | | |
Guidance Remains Solid
*Earnings before interest expense (including amortization of debt issuance costs), income taxes and amortization.
**Excluding reversal of deferred tax asset, diluted EPS would have been $0.14
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Capitalization
($mm)
| | 12/31/03 | | 12/31/04 | | 04/04/05 | |
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Cash & ST Investments | | $ | 31.7 | | $ | 58.5 | | $ | 61.9 | |
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Net Cash | | 23.9 | | 58.5 | | 61.9 | |
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Total Shareholders’ Equity | | 178.3 | | 211.6 | | 217.1 | |
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Total Capitalization | | 186.1 | | 211.6 | | 217.1 | |
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Well-Capitalized for Future Growth
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Conclusion
• Solid industry fundamentals
• Focused strategy and strong market position
• Demonstrated execution excellence
• Industry leading financial performance
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Annual EBITDA
Reconciliation
| | 1998 | | 1999 | | 2000 | | 2001 | | 2002 | | 2003 | | 2004 | |
| | | | | | | | | | | | | | | |
Net Income (loss) | | $ | 8.4 | | $ | (0.2 | ) | $ | 28.1 | | $ | 11.0 | | $ | 1.6 | | $ | 7.4 | | $ | 28.3 | |
Add back items: | | | | | | | | | | | | | | | |
Income taxes | | — | | — | | (5.0 | ) | 6.2 | | (2.3 | ) | 3.9 | | 13.2 | |
Interest expense | | 0.9 | | 10.4 | | 12.2 | | 2.6 | | 1.1 | | 0.6 | | 0.4 | |
Amortization of debt issuance costs | | 0.1 | | 0.8 | | 0.7 | | 0.1 | | 0.1 | | 0.1 | | 0.2 | |
Depreciation of property, plant, and equipment | | 3.0 | | 3.6 | | 5.5 | | 8.3 | | 8.8 | | 7.8 | | 8.2 | |
Amortization of intangibles | | — | | 2.2 | | 4.8 | | 4.8 | | 1.2 | | 1.3 | | 1.3 | |
Total Add back items | | 4.0 | | 17.1 | | 18.2 | | 22.0 | | 8.9 | | 13.7 | | 23.3 | |
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EBITDA | | 12.4 | | 16.8 | | 46.3 | | 33.0 | | 10.5 | | 21.1 | | 51.6 | |
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Quarterly EBITDA
Reconciliation
| | 2003 | | 2004 | | 2005 | |
| | 1 Q | | 2 Q | | 3 Q | | 4 Q | | 1 Q | | 2 Q | | 3 Q | | 4 Q | | 1 Q | |
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Net Income (loss) | | $ | (0.2 | ) | $ | 0.4 | | $ | 2.5 | | $ | 4.7 | | $ | 6.5 | | $ | 6.9 | | $ | 8.0 | | $ | 6.9 | | $ | 4.5 | |
Add back items: | | | | | | | | | | | | | | | | | | | |
Income taxes | | (0.4 | ) | 0.2 | | 1.4 | | 2.8 | | 3.9 | | 4.1 | | 3.6 | | 1.6 | | 2.7 | |
Interest expense | | 0.2 | | 0.2 | | 0.1 | | 0.1 | | 0.1 | | 0.1 | | 0.1 | | 0.1 | | 0.1 | |
Amortization of debt issuance costs | | 0.0 | | 0.0 | | 0.0 | | 0.0 | | 0.0 | | 0.0 | | 0.1 | | 0.0 | | 0.0 | |
Depreciation of property, plant, and equipment | | 1.9 | | 2.0 | | 1.9 | | 2.0 | | 2.0 | | 2.1 | | 2.1 | | 2.1 | | 2.1 | |
Amortization of intangibles | | 0.3 | | 0.3 | | 0.3 | | 0.3 | | 0.3 | | 0.3 | | 0.3 | | 0.3 | | 0.3 | |
Total Add back items | | 2.0 | | 2.7 | | 3.7 | | 5.2 | | 6.3 | | 6.6 | | 6.2 | | 4.1 | | 5.2 | |
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EBITDA | | 1.8 | | 3.1 | | 6.2 | | 9.9 | | 12.8 | | 13.5 | | 14.2 | | 11.0 | | 9.7 | |
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