TTMI - Earnings call transcript Q3 2017

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Operator

Good day and welcome to the TTM Technologies Inc. Q3 Earnings Call. At this time, I would like now to turn the conference over to Sameer Desai, Senior Director of Investor Relations. Please go ahead.

Sameer Desai

Thanks.

of I forward-looking to of outlook. statements Securities Reform started, today's everyone the get related Litigation contains statements call within Act we would future remind like that Private to Before TTM's including business XXXX, the meaning results our these statements Exchange most and Report Form one materially recent due including the our from and XX-K with and more Annual Commission. risks uncertainties differ the other factors could to Actual forward-looking or explained Securities filings in on forward-looking of expectations the These based assumptions and management's statements on this are as of date presentation. any TTM other does or of not or to undertake a information, statements, new obligation circumstances, these except any whether result as revise of as events update required future publicly law. by disclosures TTM may full Company's and the risks Please other the XX-Q, in found S-X filings. refer which be on statement regarding affect Form reports XX-K, the SEC registration X-K, our that the Form may on to

in also with I available included Chief Officer. press EBITDA. non-GAAP measures GAAP to Edman, We to over and Tom a the will call Tom. presented now non-GAAP such measures you was on considered GAAP we to Please prepared ahead, of measures in substitute direct filed TTM's turn Executive not Company's Such to like which as the reconciliation the TTM's as for and release and would certain website be the go www.ttm.com. is SEC measures at the financial call with should accordance discuss on this adjusted

Thomas Edman

flow business XXXX our Schull, overview XXXX our conference will a begin for quarter followed QX guidance. from metrics, for afternoon you third joining review third with cash strategy, QX balance key quarter our Sameer. a an the CFO, highlights sheet with financial Good XXXX and Todd and quarter, you, of performance discussion of certain follow Thank results. I’ll including by us and of our thank call. our

representing questions. your organic was growth. the the quarter call guidance million, We above of then Revenue fourth to midpoint $XXX.X year-on-year, quarter of for will open the X% consecutive the growing year-over-year and

this In the history highest company. third in the addition, quarter was of the revenue

We non-GAAP would of negatively above approximately foreign high quarter. was have with impacted the the results of Absent $X.XX to we solid our also guidance. dollar. operating for exchange expectations EPS exceeded $X.XX, of our the by Non-GAAP due demonstrated this loss weakening U.S. end of operating impact, non-cash income

third elements past The over results strategy the of quarter we’ve the year. of validated communicated many the

On year-over-year the defense record our achieved our market. the in a First, of diversification to particular Of of offsetting the aerospace difficult backlog some program basis, end-markets communications grew most end-markets more networking we quarterly volatility. than note, in reduce helped end-market. and and conditions

PCB content $XX by in advanced with XXXX content previous connectivity. grow These vehicle forecasters upwards stated in the forecast as been We the content, increasing well three, key one, content technologies. vehicles, a electric vehicle of growth, driver safety market and four Second, due to per recently have market In and $XX as core we adoption infotainment in to automotive that advanced trends autonomous growing electronics mega two, see number increasing increased of hybrid expected driving, to to number XXXX. to growth four, adoption have $XX from continues be the $XX automotive XXXX, revised and calls, number by XXXX. driving

of well per PCBs hybrid electric currently vehicles over Some $XXX vehicle. and employ

parity significantly vehicles following of volumes up price to of hybrid only with expects increase and engines global production make electric as early – combustion XXXX. traditional forecast today, as While automotive unit X%

to engineering trucks. the strong engagement. area electric of autonomous represent and our Both positioned of have for these vehicles a take development Additionally, focus growth HDI. announced both as Cummins in and used and are long uniquely or already the LIDAR adoption, mega driving. content and advantage the Daimler high-density has RF and states customer electric recently early or in that TTM history trends vehicles is automotive interconnect a radio radar safety technologies such technologies and due applied currently frequency industry the to leadership, TTM which autonomous in advanced focus to is of being of our on RF technology systems

and radar in for we applications. radar, strong autonomous evolves XX solutions which on is the an additional LIDAR from information both As with XX better sensor looking provide LIDAR sonar seeing to radar will proven provide. be [ph] surrounding and the gigahertz, are market technology also cameras, in activity Like gigahertz customers to are for the we ADAS used conjunction driving environment.

five We are of in LIDAR the require customers LIDAR used X both including to X Most X X products in to autonomous per HDI vehicles. consisting board, unit commercial to and stage LIDAR in technology. future be units vehicle, will new LIDAR who to with prototyping with applications qualification for rigid-flex each PCB X

our our were on comment quarter we the third of this to was we ramp in impact a start results like seasonal that said seeing normal slower in quarter. products, which our to year market. Last I'd Cellular cellular Finally,

are saw expected. We better execution we stronger pleased to demand than we report and that

projected. As result, revenues our cellular for X% I'd plants an like that the X% a year quarter. decline the year we in on grew focused to market cellular versus excellent had congratulate

assembled in an of XX% XX% driven of of growth like increased product vehicle X%, the quarter review We third our to electric during year of to XXXX. year XX% compared quarter during acceleration the over demand solution. for total from and the market. saw year in by QX to quarter second sales area our XXXX, ago the sales sales I'd represented Now Automotive end of

the largely the of continue end growth contribute our EM compared XX% to to particularly and of of in The segment We by launch year of third cellular growth of expect and sales on of in driven cellular revenue saw phone. automotive QX XXXX. QX quarter, revenue year XX% XXXX the in in solution to year new of We over sales. X% in market fourth XX% expect total for year XX% accounted quarter, phone

over to Networking XX% of product. the communications expect to as from XXXX. fourth quarter expect revenue sales XX% of represent of to of we for QX, quarter during QX In of XXXX and networking QX the compared a We to cellular revenue. quarter aerospace new Sales declined in which a over market. of basis strength Program compares represented we third partially third offset sales telecom second and larger the continue in third This XXXX. to market XXXX $XXX solid segment be these XX% relatively basis, accounted total TTM. backlog a The saw level this for seasonal of we market, growth $XXX weakness driven last XX% XX% quarter, by XX% sales, eat On year to quarter sales, demand year launch of our million XX% record is on from XX% of XXXX. and largely and year in the rose year million the quarter of stronger of X% to defense sales from by defense in due of customer. the

XXXX in total XX% of We XX% in in expect sales storage XXXX. sales computing the to of third compared second in to total quarter end market XX% quarter end market the in the peripherals QX of represent total and XX% of sales QX of represented our from Sales sale. this about

end adoption saw XX% high on growth from the year year growth in data advanced the of For of third over row, a increased well sector. technologies as we applications, quarter in in laptops, as PCB in strength semiconductor center

XX% our larger customers. expect XX% and industrial XXXX. We in XX% from of XX% our approximately We X% of ago year year instrumentation the of of market in compared to the end growth to over represent sales. total The sales second revenues contributed quarter grow saw the year quarter in quarter in due some medical industrial computing a third fourth quarter to sales

We fourth expect approximately sales to end the in sales this quarter. of for represent XX% market

third some quarter. Next, I'll cover the details from

includes and approximately the the quarter our revenue. in approximately year substrate advanced HDI, for which During technology was year XX% our over the and to accounted cellular This and QX. market. ago company's in end XX% sequential rigid-flex by The and business, growth of computing year driven compares XX% quarter,

We are compared year Asia-Pacific was quarter XX% in to QX in opportunities Capacity ago our utilization market. technology XX% customer new that new will and engagement leverage the business and continuing XX% in increase QX. in activities to in pursue advanced design capabilities

the utilization overall capacity was ago in quarter in Our XX% QX. North year and America in XX% compared QX XX% to in

quarter top of contributed ago XXXX. customers XX% in second XXXX third the XX% Our in of quarter X of the XX% compared total the in and quarter sales year to

the Tesla. Our quarter Huawei Cisco, OEM were during and customers top Bosch, in Apple, order five alphabetical

at and quarter ago day to $XXX.X compared quarter QX, cancellations is the At end sales the for accounted end customer the $XXX.X the quarter backlog the second and in largest XX% of year Our of at subject XX% quarter million in versus million XX the our third year. year XX% which this in last QX. of third end to was million the $XXX.X of of

Our book to ending operating end of third benefits following results our X We we X.XX In demonstrated Xnd. October in ratio our for strength quarter bill PCB market the months was delivered defense better our solid results the aerospace operational of computing in summary, diversified mix, QX. achieved execution. focus growth from results about strong continue and to expected the We market, and future TTM. markets than our positive remain registered automotive see optimistic in cellular on and

third financial Now, quarter. Todd performance will the our for review Todd?

Todd Schull

operating solid in good afternoon quarter and had QX. a We Tom Thanks, everyone.

the me due grew was the resulting the summarize exchange notwithstanding represents year expectations. of million Chinese in negative of Non-GAAP the highlights. per quarter. of cents just versus third Revenue of and X% high time was the Let margin to the operating over loss, million midpoint unrealized the for a share dollar the in quarter $X.X of currency. foreign the all of primarily non-cash Non-GAAP couple EPS impact X.X%, $X.XX $X.XX quarter year U.S. $XXX.X third exceeding an at third from depreciation guidance,

refinancing, of points high of impact, this of B X/X $X The with basis of a On debt. interest high net of range. to $XXX which we percent the a X $X.XX completed and bps. in replaced transaction details. term of a million $XX.X our generated cash end XXX with the term reduce by interest this plus above million a had XXX loan fixing we million We while an debt guided [ph] expense And the plus our adjusted with was an LIBOR week bond to portion EBITDA. of yield effect a fixed last LIBOR rate EPS rate whereby interest million was annually, loan rate our B $XXX Excluding

$XXX.X computing, $XXX.X our of revenue second and million. XXXX $XXX.X third to For defense sales compares The diluted to share the comments end lower in or across most and to million of share compared our a on as our year. revenue compared in diluted third net the in my the quarter million year. second or $XX.X in and increase And aerospace income per $XX.X for quarter or net third in net income per over quarter XXXX. were year basis, year per performance. million, in $X.XX quarter will growth automotive the to our Remainder sales million, the markets, compared quarter this financial quarter, non-GAAP of communications $XX.X second of sales the last was offset end operating $XX.X XXXX of This million $XX.X quarter net million the quarter for this third of of quarter was in on of by end million led by $X.XX networking the markets, of focus partially and GAAP year $XX.X market. share. third of million last XXXX was $X.XX third GAAP diluted year On

cost, excludes expense associated costs, expenses, extinguishment the tax performance of or items. as these non-cash infrequent other as restructuring and acquisition non-GAAP items Our items, debt certain well impact unusual related

due performance. our through Additionally, the and impact insight to management tax Gross provide third third we a compared the and tax the in mentioned non-cash sales in year the X.X% $XX.X the XXXX reclassification discrete higher the ongoing in was of of year previous I change certain mechanical seasonal second in The business costs enable retroactive $XX.X products, just third company's sales, quarter coupled into or in revenues or and year XX.X% increase better slower over cellular Selling transition, the also in that in compared second same the to ramp quarter normal was quarter. we XXXX. to in G&A in of in was of or amount solutions sequential investors marketing discussed exclude present level. financial marketing the dynamics and from seek But changes XX.X% margin the the decrease the quarter margin start as year as with net the non-GAAP and million the eyes a million quarter mix The in segment. a in COGS of due have expense decrease of fourteen towards sales to changes non-operational X.X% year into earnings technology was of cellular financial well to in law in net our quarter items. company our to information XX.X% our to We our of and The increased was sales call. of electro of to expense. net from $XX.X X.X% due and over expense sales the million the ago revenue gross

the G&A as sales to in year or reclassification net $XX.X to over decrease million as year net or $XX.X a lower The was or certain of expense well same into $XX.X percentage quarter. as the compared largely X.X% in G&A and spending. quarter G&A sales million quarter was the sales, X.X% sales a of of net X.X% year due previous ago COGS Third million cost and in from of

a QX second U.S. last year appreciation same this to second margin last year. due from million quarter. X.X% our X.X%, R&D due million QX to the Chinese as loss in year. $X.X of $X other decline last over to our was compares We XXXX million of repricing primarily and in was million dynamics the the the of cellular loss quarter prior repayment. The in year recorded year the $XX.X in foreign in compared quarter same to in $X.X X.X% net and expense debt, the Our of this Interest was X.X% I operating The well the during earlier business. net as noted versus quarter, was debt dollar the decrease quarter due gain in in exchange the of the income QX QX in a year

the Our effective quarter, tax quarter XX% year. was last third in XX% was rate it same the in

net or of third net or second for net was Adjusted per the million of quarter $XX.X million the income third earlier. in a and quarter and $X.XX million net In foreign was in share. EBITDA decline business Third third compares of $XX.X adjusted diluted million income This with non-economic our million of due $XXX.X or $X.XX income XXXX XXXX of second $XX.X swing year adjusted quarter sales. $X.X The diluted quarter the net quarter or was expense $X.XX the quarter XX.X% XXXX EBITDA EBITDA sales. over compared $XX.X $XX.X was per per million exchange the or net million share. noted to or share XX.X% dynamics cellular of non-cash, diluted XX.X% sales year

XXXX in $XXX.X in the XX.X% quarter to the quarter. compared was quarter million mix. the margin market. changes $XXX.X in from income of of and year to third million expense our compared The segment The million second the Moving this $XXX.X million $XX.X year the automotive $XX.X over to in performance. the quarter third sales year such mechanical due an due SG&A the over timing on flow quarter third from to the variety quarter. and in second of of with XXXX up third quarter the up compared in the a decrease XX.X% in electro quarter second operating sales million factors, segments $XX.X second and The quarter quarter, a end to in directly in Corporate and of net these segment quarter and to million a million Gross segment in second were our noted XX.X% segment of XXXX. this to had payments. electro either and earlier in as sequential changes million income year million last The quarter. the in was $X.X revenue year million associated do year the X.X% We product in third in quarter for segment same year the is XXXX. over The XX.X% million Gross the XXXX, experienced compared sales quarter. $XX.X PCB not in quarter, same had the XXXX. in was margin of year of margins second fluctuations quarter ago and million was margin million solution $XXX.X same XX.X% ago in gross gross quarter quarter million in operating in increase product in was quarter and increase $X.X primarily year The second $XX.X Cash of $X.X was quarter. $XX.X $XX.X in $XX.X our same in third in the for to year third in quarter solutions The from customer quarter segments PCB - sequentially to comments. third of million year quarter quarter my the operations was quarter $XX.X and the and net due $XX.X million same last third segments mechanical year the ago the of the second versus million in the last

totalled and days third in last equivalents year. remain fundamental Depreciation spending operating less consistent the million. $XXX.X the the was Cash for versus quarter. million second million Our cash of day cash $XX.X the quarter million end metrics quarter the capital days, cash at quarter was and net one at $XXX.X however, cycle XX than third for $XX.X

the for fourth quarter. guidance to Now turn our I'd like to

the in million. range of We to the to $XXX of million expect $XXX be total quarter revenue XXXX fourth for

was last $XXX point, our fourth a As quarter million. reference year revenue

of week the based QX earnings about foreign week added as XX $X.XX or of diluted EPS $X.XX This per non-economic operating reported per to XXX non-GAAP income share about be included of range forecast $X.XX a Also, and XX is a The in and compares in EPS year $X.XX $XX EPS. expect non-cash, of to our million approximately In share extra will weeks. of $X.XX exchange count XXXX, to a per share quarter. of have an was that XXXX shares. This QX gains. diluted which XXXX revenue share. other reminder, QX million diluted million on $X.X We

share RSUs, roughly X.X options dilutive bonds, security, dilution Our future convertible shares as million dilution with a and as from stock is guidance such of price. well which includes as our count associated our function

As would for outstanding during dollar increase every million quarter, share a the $XX.XX increase price X.X the reminder, in average approximately by shares our above shares.

that revenue expect will quarter. X.X% of SG&A fourth expense the in We be about

offer We expect $XX we developing interest financial be to expense XX% to the we rate assist models, million our and To total you following effective tax estimate additional and in between about XX%. information. your

to of $X $XX and depreciation record million. of of expect We approximately $X approximately we stock interest the will million, comp about expense million intangibles quarter about expense amortization of estimate during be million, fourth $X expense non-cash

announce City we That we'd our Needham Xth will line to January Susana? the remarks. I'd prepared Growth Francisco participating like that XXth And now questions, San be like on Finally, York to conference the and Barclays New December in in in for on open XXXX. conference the technology concludes

Operator

go Research]. question take Instructions] from we Please [Cross first Stephen [Operator ahead. Fox can And you. our Thank

Your line open. is

Stephen Fox

afternoon. Good Thanks.

on was question First automotive.

in to of talk mix? mix of affected now to it terms can a how. things you like that's vehicles just what the chargers So the continue a year? backlog how and large the new. more growth be gross you you next It in auto about your like that negative growth you there that in seems that can that's [ph] and course from have Is little customer driven about And going also been to generally electric like the forward, would margins type talk bit expect

Thomas Edman

Okay. Yeah.

Steve. - So me Tom question the Thanks for way. by is this let the

on front. me customer Let the with start me the situation let

that they new five were that doesn't you just were the to fact on list, think is all, customers quarter. Tesla a customer I top on the top at was in that's X referring this mean is - the that means our last it

with an correct trends. investors about was PCB projections NTI see overall expected. here look at use areas So this And at forward, autonomous driven. with XXXX. that again end content they per a our terms was demand to then are term $XX content a spoke that came is we the as perspective. PCB And forecast I we vehicles positive content [ph] driving the not Certainly - we those vehicle at of for be longer the positive vehicle had was see focused their the thought this that the where HDI, as Bismarck. areas But that We’ll TTM leads of that was that the that $XX Bismarck by in and let dense for certainly where supported data you're and electric in other that fact out are from content actually point - mega Overall, continuing electronics electric vehicles. to on of circuitry we than That's well move by did continuing, looking And year that's that was a standpoint. very capability, on. higher me trends some boards. demands were we We we those as RF of earlier. are encouraged from a And announcement, Certainly course, encouraging. in talked very standard

the catching think up forecasters now I are reality. the with

a growth. you then just reminder, look as growth So you end X% at we know, at still bodes of to automotive. for to well the be year that as expecting you this high X% a growth our if are for rate projected And if

- there. So again good backdrop nice

Stephen Fox

is though, clear of is correct? that be your related an vehicle then market there That's out helpful. business And electromechanical demand electric just to

Thomas Edman

absolutely. Yes,

electric China non-China. a the piece well and and as nice electric so by of that as PCB broad customers vehicle both definitely automotive brush And piece vehicle electric overall vehicles at we customers, impacted business our solutions has like and in look EM

Stephen Fox

talk bit And about up, further just cell little phone follow a market. could if then the seasonality in it. you Got a as

little it's lines, us obviously, this customer implications just would your So a does that beyond could with as it large seasonality year quarter in it half? first may terms any have to of off you out, you have And that be like is expected this quarter you you in different different share pointed you but ramps, cetera how went same this can confirm forward? and along of yield terms the your own past going that et

Thomas Edman

– the Yeah, me second of part the I think start question. with let

in In terms and of to of to here the it on had December will focusing performance, heads on is expect to has into yield years the for we start fact, than mid better the we we in improvement yield output forecasted the fourth that, third our we ramp, did What much later we the years until - recent moved into And really here work quarter, can sell-through capabilities. X We're our down get is more be go terms we as in late. our saw timeframe. by continuing a the forecast glimpse similarity maximizing quarter. as the We're very did in encouraged the yield the were what output start quarter. we than in yield last as in not remember several yield we past as And the that say quarter years, ramp That reported what ago. third in later curve that you up that encompass itself expected. did ramp quarter. similar than Therefore iPhone with I

that, started into you can expected and this what estimate, of of next certainly point over point And year, case that bit so that QX. only right know, how the and it demand The later to is year. sort it's that is a little iPhone into than difficult similar sort did now start you say I even data I can into point in - X carries carried - QX we to

how we'll cycle out year. see this Now that carries

Stephen Fox

Great. Thank much. very you

Thomas Edman

you, Steve. Thank

Operator

Thank Matt [Stifel]. next you. ahead. We Please go to go Sheerin can

open. is line Your

Matt Sheerin

afternoon. Good Yes, thanks.

a too. cellular year But plus you favor regarding last over levels, mix your point? smartphone question you your know profitability improving year I be to following issues. about and margins at had other Just margins margins, these go you will revenue and on at somewhat be look the XX% right, yields able and up operating implies year. expect it business in if to at do of should there lot get improving operating had talked things Steve's you guidance some that be to you down and But

Thomas Edman

Yes.

So remind and again you line, were the I'd year other favorable. know also $X.XX you last all and that had - FX also below of we [ph] that this

several year years. as of that haven't the at yield - operating than about on curve, in there's technology to we question large the line and this we're but a a move and specific steep starting means last look you fact in transition a as cellular here, transition. later talked So then and course, it's no we're in a the we're technology we bit We've little

moving we that the Todd you forward, making with know, more Absolutely there. operating bringing our then [ph] become that technology. foresee that continuing node this improve as progress We're that's to we as profitability. profit, margin. We're with quarter. curve. technology in And yield cover it while we up And going AMSAT very operating comfortable this anticipating good that new the again I work So overall let and progress continue improving critical will fourth

Todd Schull

just would I that. add to Yeah,

end look and you or networking year communications are the year have kind when is we're conditions markets. of Matt, primarily in our and a that’s market softer focused revenue softer So few we market over thing that in other battling plants this year those end

of year than they have did challenge And a so this a more last they obviously bit year.

market year. condition The there Tom major profitability as well transition Those that and talking market are things end – better the model yields. progressing So as factors. this are technology those we’re two network our in how and about different was through communications,

of going into that changes be those we year the as have still average operating for course, ramp. And quarter a QX know our our the tends will model target of year. to future. operating Now, seasonal We best of the the our a margin because XX%, of

be would of - that not itself to it but We're about. that is just it it challenges expect have average. getting better, climbed we business naturally that we model this above the capable these you two there would So the talked expectation year, be above as we through certainly

Matt Sheerin

do you of volumes XG let the for in really couple to will terms and both in communications networking the your there get are sort of the dovetailing some just you going and know cost it me we're and things that year Thank or years. at things that. comments the Okay. facilities there or that? if you've XG declines you weakness, But of And or QX. between like a lowering like of talked out in over you're coms networking and sort moving flat structure segment do are together I this on for be can and your - sense that more in you year where know point, looks about of playing a worse know the I on not middle cost not bottom

Todd Schull

Yes, encouragement little bit this the telecom I’ll albeit is actually. side so that start of say and I'd a with

you the that's come seeing last think about news telecom from seeing telecom it. business bouncing of quarter, good that this we standpoint the side bottom characterize our I and know I talked in a along sequentially telecom On sort of quarter, least side of last up at and

to and expect means, - by know, that any improvement. see think know, you expect come a major telecom You now hit - I in to a coming be where that starting XXXX - some certainly said into will we've do hit we're don't bottom to mix next that shift I relative our not prototyping year. - you before be standpoint hitting into prototype XG we to until not really from I've XG. with And XXXX. really But hitting as starting volume know I see play

we've was the It I and were this come as more networking of by On where seen surprised spending little you enterprise phenomenon. I the down. we a side term related still short I'd that a know, is just view say softness.

are They're by data think there I longer positive. term the traffic. driven trends

should provider service I to networking think that's strengthen. going Certainly equipment. drive the demand

our and help help customers in will that TTM. forward turn Going enable, will that

temporary So of again side, on as the networking more situation. a view I it

we Matt, China In instrumentation shift there footprint industrial part towards MII requirements the the our how already the side. volume on to side, responding, were and we terms good news on of track are medical of is

path. that - that We have on

that And and path. We requirements that for us be China. our continue facilities one in production. for our volume be U.S. in will our footprint. involved pilot of and support X then plants really will networking area into communications And prototyping that that That's volume with where taking there. more direction, footprint our more on And we're leave really to very was this

Matt Sheerin

Okay. very much. Thank you

Todd Schull

Thank you.

Operator

to Sean & you. we [Needham Hannan go And Thank next go Company] Please ahead.

line is Your open.

Sean Hannan

Yeah. Thanks here folk. questions the for taking

quick you if yield around come it's - going just So yield to is the back a to be wanted certainly as through that a Tom work steep really topic. see you I acknowledge this this curve year.

to you could able normalized hit that know point and to down some try where of being we're be confidence on target at March like a that? of accomplish is the yields an say level you there better able folks Is more a understand little further now greater into Just quarter, perhaps opportunity or there path. something the

Thomas Edman

think making to that - to take out, certainly ahead climb and a well. confidence. into that of up past, we'll can we of become pop ATI ahead we’ve we in question with that just over transition as of - it, all same gained critical as here. the terms Yeah, know course advanced first bit and to are technology, of but case that's saw the more we've as technology year know, we the cycle a has it you technology we’ll And plan of transition, the the that's that we've too thing where news kind of comfortable next commercialize got be you initiating where - confidence from now taken good as year TTM the clients bit starting critical so say quite I certainly a one and curve little and - you through in then of see I the here early as We're it's going quarter that ramp, we that Sean, is there no happened our and step think a

Sean Hannan

to hear. great That’s

think into into little new that want longer get might into of here? of share Clearly you're within of and or terms you could the medical, visibility and that feels if performance times business have at just segments programs for efforts. could designs how you those so and this you then see little getting going bit some segment us into there be separately, Okay. in earlier, going I that And of that there wins you there, group, lead would mentioned strong activity those how one we that some on where playing are a lumped also of a markets sense some hoping industrial, the bit to viewpoints the a cadence with point grouping, feel of prior based

Thomas Edman

what a I seeing some of in capital a at you that's is at the Yes, has instrumentation know, semiconductor area the that strong. about QX, that in The equipment certainly little you has you we're there. we saw here, is an it's under a so area been improvement dynamic drivers you're when industrial. as MI&I to look an industrial been very segment, strength also we're as point of right softness an example, strength good demand bit quarter, little area very been the quite we see But out and fluctuation, mixed a bit different of balance the you seeing know, a and MI&I last you think know, as where and

to and now we really in well that what of the you that of some forward. with number of in we're is carry one very customers that the in design, The there the that seeing North engineering company. say come service and our a support, instrumentation And do expect excited a strength in market - know, of answers back have I it answer medical why about back If from down-hole grow bit. side, for volume their those and with happened. volume North to range into half we because as That's just customer to a decide and America large we America. it's see And breadth start as terms to growth. for that initial that that that very very up carrying kind can would start start they pilot that medical support, them onshore, they areas has this customers and area, keep to we're that we year as of prototyping We are volume also little forecast been up positive, have in able to where into

really for its a exciting us So area. very

an feel think the area that X% that And medical it's the I got end solution too. on forecasters we've the has X% of growing that projecting. been right again industry area we high the to are

the you gives that – MI&I. that’s So of breakdown a

Sean Hannan

I performance time? that - an step some think thought should we for opportunity is a And to would Is that opportunity the point as an segment be in able aggregate, for about we me That's in helpful. it fair very at if ‘XX logic the that and into to have here. acceleration move that incorrect if as tell have seem me back you on and this

Thomas Edman

the where industrial fair with of you relatively first the I from, half think weak the when that's on being thought, you because we're know think this year front. year coming about especially

you is that to by X% looking better see much Bismarck. being level that moving for ’XX, you from at that in I'd about know, moving feel projected and If the that start towards up X% we it certainly - point back

Sean Hannan

That's great. Thanks much. so

Thomas Edman

you. Thank

Operator

Instructions] [Operator our next Please you. ahead. Coster Paul go question take can We from Thank [JPMorgan].

Your line open. is

Paul Chong

is Paul on This taking thanks. my question. Coster. for Chong Thanks Hi,

So did say on revenue? in of hear XQ, ramp you you I XX% lower correctly, the did

Thomas Edman

Yes, you did Paul.

Paul Chong

Okay.

segment. higher or your record in driven? maybe a So that probably Is would unit function that of on be that highest, more ASPs

Thomas Edman

Yes.

I have pre- a in significant of to be system right, is shift know. as also story. way statement different the been that The technology higher production a costs transition air to generally a So the there think, with [ph] going it would - acquisition revenues, ASP drive post-acquisition your change Good think drives like would one - you and is in this, ASP higher so

and that an And But ASP really so so there. about does become we're - yield that of focused. where story performance all it more

Paul Chong

Okay.

for XQ from your So were really actually because here. rates the in year - they're that ramp on margins decline up like year gross look is utilization they

So occur? is that technology transition

Todd Schull

here Yeah, big skill We're and know, correct. we're you know ways set ourselves. to we that grows mentioned grows it improve we as our Tom you not third say quarter, pleased room and We're change developing it that's it through need earlier week. kidding go. a going improve. exceeded and technology our in We're expectations to with to we that the every but to There's still have

some goals and towards high have ourselves we're we driving set So for that.

Paul Chong

you beyond the leverage Okay. maybe And know, with expertise can opportunity expand we Android expect to Apple, platform? then your and materially in attempt

Todd Schull

move is there So the and XX their customers line basic. to - lines technology itself allows narrow to to micron spacing move our and below

enablement customers density build and component the terms product that it So right, or to allows of and you populate thinner, our to in lighter circuitry density. think about component density increase

in in and customers customers So characteristic end market. to course area different is the attractive it's of other that other cellular to and attractive certainly

know I end capability the So being this identity advanced our would is adoption. interconnect look as for you well. know, our and looking you robust question markets will rate at I always how the How how long-term. that - as be And that that critical of customers the the does would across to is enables circuitry the say is what technology becomes similar it

passed will know adoption be you there customers. forward going will course by so our of And number that be a rate and they'll that qualifications determine - of

Paul Chong

to about to How growth that we high single aerospace year hitting last term, track then year. the on looks digits you expect this segment a in what there? like they're and And should you're you. Got it ‘XX the especially me Thank longer tough the fiscal drive think segment you. for question is, in comp from as fiscal

Todd Schull

with ‘XX. the fiscal budget year certainly Started budget up from X% the the backdrop, out DOD Paul. Sure. Thanks, request is

and there, surveillance Congress climate concentrated think to particular core also about terms that little about strength. communication RF armed areas perspective that, to from you certainly going favorable play of spending the technology. around modernization more in a to if very be support areas. comes in areas think have our I of bit into forces. positive, is from is And TTM important then talk where as And a in a TTM very we

from overall digital to that generally and cable looking circuitry spacing requirements customers rigid density as increasing at into moving As accommodate demand modernizing design. wire look our flex, at - analog connection order HCI looking of in to improve to leads at older again a platforms, their kind increasing requirements flex and customers

So those with modernization. aspects that are positive all come

specific programs programs of at we've - breadth backdrop that here a there's involved and So this we're point nice in. XX got that and favorable over program programs

right of programs, in moving the direction. So are breadth nice that programs a

- end and a with so then I'll just comment. And

evidence being at I the overall of backlog momentum million further provides record program think $XXX levels the there.

support and encouraged So about segment we're the in aerospace customers very the defense we can that provide end markets. here our

Paul Chong

Thank Great. you much. very

Todd Schull

Thank you.

Operator

further And it back additional questions closing appears turn can or this to over I you. any have no it we for at time. you Thank remarks. speakers

Thomas Edman

delivered the solid of that third in earlier. points I'll revenue income by we above quarter a Sure. key We few operating We of the close XXXX. expectations. summarizing and made results delivered

I'd and employees, Our like performance to good-bye. and for our you your the Thank and to improve operating our financial customers in our thank support. continued to coming is investors continue quarters. our goal

Operator

a today's And this and you and disconnect for everyone at Thank have does great your conclude call. may time day. participation any you

TTM (TTMI) 1 Nov 172017 Q3 Earnings call transcript