TTMI - Earnings call transcript Q4 2018

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Operator

Good day, and welcome to the TTM Technologies Q4 2018 Earnings Call. At this time, I'd like to turn the conference over to Sameer Desai, Senior Director of Corporate Development and Investor Relations. Please go ahead sir.

Sameer Desai

Great. Thank you.

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 Commission. most and report Form one materially recent due including the other from and XX-K the Exchange more annual risks uncertainties, differ Securities filings factors could to Actual forward-looking or explained and with in on are These expectations assumptions statements management's forward-looking based this and as on of date presentation. of the TTM or as future except does as events these not a take any whether circumstances other required any obligation by to publicly statements information, or revise law. update result new of of TTM, XX-K, be on and Please the reports X-K, in XX-Q, the which filings. may on refer regarding Company's may to disclosures Form Form found registration the the statement risks SEC S-X other affect that

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

Thomas Edman

quarter our financial our QX CFO, Schull, an follow strategy, including and XXXX overview you, guidance. of of business and fiscal a call. will from of XXXX with fourth for results. us the quarter Todd I'll review Thank followed joining for QX our our and afternoon, conference fourth quarter Sameer. year Good you a thank by our with highlights our performance begin XXXX discussion

to your We the will questions. then call open

achieved achieved the record I an $X.XX, in for XXXX Company. year revenues delivering for the We and foremost, highest of TTM an during thank EPS to in would level XXXX history and excellent year Technologies. fiscal First like of our employees the

Anaren fourth of a We of the Despite our markets end guidance. acquisition earnings above end per of we in in high original of non-GAAP critical also softening delivered differentiation $X.XX, closed during year, the quarter, the strategy. the step representing share Incorporated forward the our course

cellular, While for continue to in our excellence weakening focused continued behalf generation. flow particularly remain and on we forecast demand our of reflects QX on customers operational cash will

over many past XXXX the the strong elements of strategy of results several years. we've Our validated the communicated TTM

of grow end diversification reduce helped First, our revenues year volatility in challenging of markets. end our the quarterly Company one and in to was markets our what total a

end computing aerospace and difficult Specifically, cellular medical, growth offset defense, in and market. end in industrial our the instrumentation, markets helped the conditions to and

automotive XXXX. continue path to see hybrid the XXXX, due weakness, view PCB $XX of we one, connectivity. Second, vehicles; and number PCB adoption $XX content in the increasing expected We two, technologies. adoption three, per in end number and aerospace and to number safety advanced content infotainment; grow increased driver from Notwithstanding increasing and on growth Estimates number of the driving and growth, vehicle defense automotive vehicle four, and are in towards end global driving; key of XXXX $XX in markets. market autonomous advanced demand by we differentiation electric a up our four content core megatrends as electronics to automotive near-term

revenues. to remains robust In radar, in XX% the that our In further our for won by Of the area, We future designs of winning are automotive to XXXX rigid-flex in advanced XXX vehicle. and of the automotive proud $XXX we further for well ramp. this customer amount design bodes from currently enhanced has XXX our up XX Designs in PCBs Some the to hybrid the revenues includes revenues. fourth revenue, XX future of QX. bringing XXXX trends continues Further, employees' and the over defense employ market XX ADAS-related the XXXX. in HDI the to electronics innovation before well per XX% new there of above year-on-year automotive also acquisition. will tremendous engagement of years. TTM, automotive activity electric which begins to which well be year Because and in quarter, technology for won vehicles were total industry. fourth product designs in contribute been I'm aerospace quarter, a efforts in XX Anaren compared the grew which

critical XX% organic broad The has for in of aerospace leveraged addition and differentiation satellite Anaren radar which step technology, will XG substantial and record result end presence and of supporting Anaren's a The represents aerospace programs. over increase components portions wireless future the a increased This our market the enhanced strength XXXX team's another of the revenues Anaren our of market. the these defense greatly a strategy. high-growth on and our defense the and focus components. in our our adoption focus level. lead base grew addressable new in also on market to build-to-print of are design-to-specification across acquisition in achieving defense XXXX, Our requirements major customer is

in before, design customers mentioned the addition with engage value us I've of allowing Anaren cycle. moves in earlier to TTM As the chain, the higher up

Our designed to deliver customers on their rely meet solution to TTM RF needs. can a now completely

Now I'd to our review like end markets.

total XXXX compared and QX XXXX. market sales For in of represented sales XX% of sales of TTM, quarter fourth QX and aerospace to XX% end the defense XX%

acquisition, end fourth $XXX to in XX% versus quarter. the record year-over-year contribution Total the backlog was In new in we addition the program a at million, organically $XXX QX the QX. grew million Anaren from of

from total in about represent sales. to We of market this expect sales end XX% QX our

quarter XX% programs. expect XXXX. high quarter for growth compares and as fourth basis a due and of during In the benefited QX, In of increased TTM for to accounted the the of For reached segment to fourth of spending quarter stages defense of be the where revenue. in outpace year-over-year record we new development, XX% early the defense expect in core we full sales revenue continue third of XX% X% to a Anaren to of Dollar robust up for increased aerospace and XX% XXXX, we to This multiple XX% down sales inclusion this of XXXX to Networking/communications market of while were XX% on were wireless year-on-year. enjoyed XXXX. XG TTM revenues year, revenue projections and from X%. organically demand

year-over-year full X% inclusion of For Anaren. networking/communications due to grew the year, the

year-ago X% the With softness early ramp Automotive to of third XXXX. this be to XX% quarter quarter activity of expect sales sales represented the longer-term than XX% the were the and phases Automotive X% China market to with growth. in expected XG down particularly and of fourth compared during of in we in global line total and forecast in quarter in XX% expected weaker of to sales QX due demand, the Europe. in during XXXX year-over-year XXXX,

in XX% of automotive to QX. sales contribute expect total We

market to in QX XX% from revenue of softness XX% and XXXX. due phone cellular of be in market unit in declined the China offset customers. X% Europe softer the the XX% PCB to longer-term in to than and to demand. X% quarter accounted year, decline below of we For expect in end forecast automotive full our fourth for content. units QX gains cellular The more XXXX was of weaker-than-expected ordering reflecting volume sales The ongoing sequential X% XXXX, In as and primarily more compared in growth, conservative

to sales as We in X% in cellular expect digests first of built represent quarter inventory the quarter. fourth the QX market

contributed forecast and demand Due XX% total in to in The third top a customers. The XXXX, managed medical/industrial/instrumentation end the customers industrial quarter this XX% of of X% XXXX. of X%. sales market from softer quarter some XX% to market from XXXX, the inventory and and quarter to full-year in we year-ago medical For fourth the slowing of in compared strength the market. the reduced cellular quarter in below our declined XX% be expect start to came our cellular as smartphone longer-term

to For in semiconductor industrial of this offset strength the test XX% partially segment, the by market in weakness due segments. to medical first quarter, the and we be revenues expect

data center full the grow number development the in customers. Sales significant due XX% line new the quarter grew XX% We fourth compared new and saw total market third of driven with MI&I X% laptops. the and with year-over-year momentum activities XX% year, of in represented strength XX%, by sales For of to QX In business we growth driven customers in and from XXXX. in revenue XX% high-end expect to a XXXX, forecast XXXX to by top be the customers. primarily our by in with year-on-year in X% of computing/storage/peripherals quarter servers to growth end

expect revenues and approximately We high-end driven market with tablets. by end laptops to growth XX% of first this quarter in represent sales

full And expected X% high-end to we the For of customers. be end period due in center digestion XXXX to a computing we saw data centers. growth the our grew data server XX% for growth across year, to below as expect market X%

details some Next the I'll from quarter. fourth cover

XX% includes year-over-year of XX% and the QX. subsystems During in revenue. market. and were decline This driven substrate our accounted technology sequential XX% in cellular quarter, and quarter HDI, year-ago advanced in Company's for which softness rigid-flex, end approximately approximately to business, our RF the The components, and the by compares

XX% for advanced full-year XXXX. technology accounted the in approximately XX% For versus XXXX,

opportunities will year-ago due our Capacity engagement markets. We QX advanced end QX. are continuing and to pursue the XX% new of sequential markets. our design in Asia leverage year-over-year XX% increase activities compared in and to customer Pacific declines XX% The in and technology softness capabilities new several to in commercial utilization were was that in quarter in business

the North levels markets overall in capacity A&D quarter XX% our in was and end compared and computing in to drive in in Our utilization as North strong utilization year-ago QX to continue America QX XX% America. XX%

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

sales accounted of quarter and in XX% the QX. in quarter XX% Our fourth in for the largest year-ago XX% versus customer

was XXXX, XX% For our largest XX% customer fiscal sales versus XXXX. in of

compared of end to XXXX. At the was XX-day $XXX.X year last end For customers five $XXX.X million quarter QX. XX% the million and cancellations XX% the in fourth of end versus to million subject $XXX.X QX, were of of fiscal is which at backlog the at XXXX, revenues our our top

December X.XX ratio ending Our PCB XXst. three for book-to-bill months the was

market, costs As we in advanced we at mobile utilization always TTM, in our particular impact expect the phone order these further while we the act time, look on the to to continue demand mitigate reduce forward cycles. advanced technology ramp weakness base. demand At the we facilities same for softening focus customer will rates QX, in preparing cellular technology cellular to At to next effect our work of facilities. diversify the in market to

steps rollout, technology the on medical, we of technologies discipline to diversification, differentiation XG will and into such demand advanced In printed new due longer-term, boards addition, customers. increasingly advanced for and investors designs as circuits. all the our networking/communications. and to taking off miniaturization, These the will longer the and of facilities denser operational require advanced pay for which focus ongoing with will anticipating In other markets term, our are TTM, automotive, chipset our our markets advanced circuit prepare strategic demand technologies industrial coming

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

Todd Schull

year. for in of quarter. Non-GAAP EBITDA in the was EBITDA the $X.XX in million, Cash Adjusted in up in $XXX.X good $XXX Non-GAAP was margin for year from was was Revenue EPS the a X% the afternoon, X.X%. the quarter a Tom, up for everyone. the the year for some the flow from quarter. operating was the XXXX. Thanks $XXX.X was the Non-GAAP margin Non-GAAP year million highlights at $X.XX point XXXX. million in million XX.X% quarter in operations operating $XXX.X $X.XX, was record was the and and from record, million. up $XXX.X EPS and out $X.XX of for quarter. XXXX. billion, Revenue quarter. I'll from the year Adjusted was

of addition, or in debt B that fourth acquisition Loan February now on of paid $XXX incurred In April to Xst total XX% XXXX, on Anaren. and quarter Anaren repaid Term have $XX million of our the we of additional of million down in we this principal of approximately a the purchase million year. additional we the $XX Since

million $XX.X million the by to income XXXX aerospace in net of the and quarter markets, income third quarter million revenue net fourth GAAP partially basis, of of quarter was declines quarter automotive XXXX $XX.X the compared million sales For million XXXX quarter, was decrease in defense, of to in net cellular operating compared XXXX computing fourth in in XXXX quarter in or a fourth to XXXX. due $XX.X fourth of year the million in medical/industrial/instrumentation per per million per $XX $XXX.X of end core $XXX share markets. diluted $XX.X of GAAP quarter $XXX.X were and and the net Anaren the quarter to of million. On compared the third the XXXX. last share. to of in diluted third for $X.XX sales inclusion $X.XX our million compares fourth share end and offset diluted growth sales the year-over-year was $X.XX The fourth or or and This the in $XX and and of quarter

focus million. of the our remainder financial non-GAAP of will release performance. a income comments tax allowance $XX.X valuation net The my GAAP Our on of reflects

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

and the partially non-operational net our million X.X% through the addition in compared of sales exclude XX.X% fourth expense quarter provide sales or fourth $XX.X X.X% end X.X% Fourth was net XXXX. to in the XXXX our the information enable and of quarter million or or and marketing a compensation $XX a was quarter ago quarter. in $XX was were non-GAAP our $XX.X year expense insight sales in million such third management into the quarter or and of year-over-year we million and addition net of Company's the in financial net gross Anaren expenses to of changes the market. G&A as by $XX.X same see of in the compared due decrease partially Gross performance. eyes investors the Company ongoing or previous of XX.X% third in to selling to net to volumes release of better in tax present margin in lower quarter quarter to A&D Selling was sales marketing and the in allowance. the a or offset valuation $XX Additionally, growth tax financial We of of in incentive sales due primarily The net quarter XX.X% million the of X.X% expense. in of end ago margin year-over-year expense market, cellular offset X% fourth G&A the the sales and and by The Anaren, X.X% versus year quarter. increases X. million to this reduced

margin term last was Our $XX.X acquisition XXXX. the last expense quarter an to interest the Anaren million the third in $X.X quarter year XX.X% This compares to rates. of same quarter, quarter operating QX from was and associated and Interest the with the same of the in XX.X%. XX.X% year million higher third due incremental increase in in loans

brought the million net gain. million approximately per share. quarter, of Government This last a in incentives $X.XX $X.X total compares year. exchange loss $X.X million of or the to $X.X gain we foreign During QX recorded to

effective ago. Our down in the fourth was quarter, X.X% from year tax XX.X% rate a

million per year, $X.XX per diluted in cash share. equivalents EBITDA fourth operations $XX.X sales for rate $XXX.X million. quarter income For third fourth spending was and $XXX.X our EBITDA was million or the for XXXX the versus XX.X% the net of and XX.X%. $XX.X $X.XX of in adjusted $XX.X to sales. quarter million quarter million Net million XX.X% of Cash was Depreciation XX.X% $XXX.X the million per million the at net quarter, fourth year. quarter. the income quarter million quarter net from was This compared was $XXX.X or sales. million $XXX.X the or of totaled fourth or of million compares was last tax the to Fourth XXXX the of the $X.XX quarter EBITDA fourth for quarter third end was quarter $XXX.X net full third versus of flow $XX Adjusted quarter of net same diluted in net or adjusted In income fourth $XXX million. capital share. or XXXX Cash $XX.X share quarter effective

would like quarter. the for to first I Now guidance our turn to

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

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

earnings our QX growth partially facilities, ASC on end includes year. revenue standard. of The based expect of This We $X.XX and is a share gross in the share. EPS profit by and reduction the of end revenue Anaren shares. reported estimated our quarter EPS share respectively, non-GAAP to million be approximately a in range in acquisition decline in $X.X of certain year-over-year count first new This million, $X.XX and reflecting of an to per compares diluted impact volumes networking/communications million diluted to $X.XX recognition and guidance and in forecast the of cellular defense automotive-focused offset due and market XXX, per XXX $X.X to market. the decreased aerospace in last diluted of The is EPS

share future dilutive can securities convertible Our based which guidance as such with our options but shares bonds, includes and count price. associated RSUs, stock our on change no

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

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

We expect million. to interest $XX.X expense total about

additional financial our XX%. between offer estimate following your information. in models, tax we you effective and To we be rate assist to XX% Finally, the developing

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

Yield remarks. February our JP That in Finance announce I'd participating concludes prepared be that to for Miami line Jessica? the now we'd And Conference questions. in XX. like and Morgan Leverage to High like the we'll open Global Finally, on

Operator

[Operator with go Matt first Instructions] We'll questioner Stifel. to Sheerin our

Matt Sheerin

have business. a on I cellular multi-part the question

So down down you you're you're XX-plus XX% it it's after percent. sequentially guiding grow. Tom, you're still The like sounds that talked about growing basically market, - I market. below know, to going And

do double sort just the down math you for digits you're of year. the seasonality, If least looking on at

mean see look that think market how here? how year terms at is tell Or you your customer, of to top So do out? that you early with you - do seasonality too playing I this in

Thomas Edman

the that's cycle we our say has phones, disappointing Yes, to our and down would the And I impacted. thanks Matt. and it's of generation going Obviously as for this I been sell-through likely wind most QX think impact QX.

course, Of the inventories in is in at that Chinese to good through don't that Year. QX, forecast what a always worked we after up hope hard and but get we're always really flat until and we QX New look get to

the far really to predict. ramp as too goes, As next it's early

would As and expect we that can as - third we get very ramp for is cycle, and fourth quarter actively and into that you the you I ramp. quarter what tell have prototyping positioning

process And so far it's in following. what terms we're a relatively standard or process of predictable

Matt Sheerin

with where been at if the in terms in do customer, It all? any numbers your share you lot. than of look top a bit you're your more there wondering seems to shifts? Because your or has that at share mix, that any products to others just little and I a with I'm shifts other suppliers, if share And just everybody's the have down are mean relative severe

Thomas Edman

Yes.

of shifts size. share no So

what always hard on it's - be the comment might think to others I seeing.

computing. we be QX. phones up do in is we see and and you QX what there an of other what as between allocation what we certainly that PCB was we're mentioned, work - looks what operations is then the in in we as see And to computing strong - usually in and think terms I

of and we there. And we when there's programs share, at impact allocation So products look across look an across types. sort

I think we're position a in much strong very still there.

Matt Sheerin

And segment. just lastly on that

it And adapting one to your those out, advanced medical are close frame business. like adding you? pointed longer as Tom, than those a advance. automotive talked, because a you Or is markets other technologies lot to is you down talking technologies? for As and time technology How the of also two end that? Are like we about year things cellular

Thomas Edman

Yes.

ramped have - been facilities. that - is And has is And have we so of actually one been technology advanced towards parts the actually of more can So Small demanding less are in facilities that of terms you areas. facilities but gearing if qualification already we've some markets. over those admittedly of automotive we applications terms process volumes say those more one there have very - have And large those really and the what other are two in I active factor of shifted that requirements. applications think the in infotainment form the into already or those about technologies. miniaturization Those side, advanced applications, in ramping. particularly type critical

And still - there so shipping we ramping. but we're are volumes small, gradually

for forward, you as a increase regular do I of the gradual would look those look so markets. volume in at terms of as And other out but this facilities we

Matt Sheerin

it But is be sounds just core at just which mean year you're Okay. obviously. to come leverage I like in for going back, until much this cellular of your least negative underutilized volumes business there

Okay. very Alright. much. Thanks

Thomas Edman

Yes.

Matt, I specific, is I QX, the be think that think taken. think point well to your QX I

higher think will a QX. be and with into of facilities that I will much ramp utilization be advanced QX the technology a back QX,

Operator

William Stein We'll SunTrust. Instructions] next with go [Operator to

William Stein

every it's sort of cadence, that that I'm think I shift your every the three demand from they years, maybe you in of up sure driving. of not customer Tom, winds has technology couple largest

for that please? was was ASPs years? I year, dynamic refresh It from I instead market Can yields last the lower not. you XXXX the it time XXXX that on a makes I similar typically of my maybe had one you changes those Maybe these was higher, memory think XXXX. it transitions. technology in think temporarily of XXXX better. that one end of drives think Is and sort

Thomas Edman

the has requirements. careful past do terms of lines think - about significant it in always to spacing transitions most Yes Yes more into to But and it's and if future. the PCB sure. the well, with of you so project technology,

So circuit requirements. density

were from that we the years shift look XXXX, that but And in of was terms four today the lines think us the another then into XX is XX micron technology, that we shift Density and of and in pretty High what about which about magnitude is lines where - lines significant and three, And less had a technology towards us into micron, move micron period a standpoint substrate advanced that a micron, which at the into later territory window And terms down much state spacing. moved in roadmap are is XX had we time spacing in in XXXX, significant And of a like in Interconnect process pretty we PCBs. where so if XX you lines in if you there was XXXX and will gives spacing. spacing requirements. brought

seeing course of and the on as a course yields working we going significant as we're What get-go, a technology area of from that a during below of circuit shift, start we're in we shift terms more the you look requirements good where XXXX, micron area. news anticipate a also actually well critical circuit similar of where phone see in significant a XX with are, technology the yield this then a is challenges The the driven those at well. ramp. on to not territory like And XG-enabled how very yes, new be much have there not printed the can generation usually by get that the shifts PCB significant we you we're is significant think ASP you're I focus. until shift, facility will use in chipsets our working boards. into I but we expecting There go technology would with next So this maximize with right. closely where year improve of substrate of move becomes right course, that, of

William Stein

of - providing other couple on a be full broader exactly like least this let's at from be you the you. you say me I thinking but go one that? low - year, your you're what guidance let's QX to the this at has it the QX through say suppliers. Would the we bottom sort calling as cycle, recovery not Thank about you not of a you, where but Would feels semiconductor are We've to question maybe least the business? heard for of point. for guidance have And like count year? pace mean, as Maybe

Thomas Edman

where think some automotive that same work are seem we're to sequentially our our other a we up. I center And looking networking/communications you And our in about - we're very But end our have and of certainly And at pauses, markets cellular where course been this actually at in better situation of on in through it if here. we think we've data if QX customers balance inventory short-term and terms situations. have - the see of impacted markets, end forecast. to look think spending the and That's I look the market. you indicator. think decent automotive. interesting I a going inventory where dependent seeing case I talked is I seen inventory guidance, service

encouraging seen haven't XG I've expecting. the early ramp. networking of really And we hand, other so the on seen And strength stages were we that

take anyway. continue that to to dynamics to up continued and that here some be we I QX And players of that ramp service number with you spoke and through medical/industrial/instrumentation interesting on going market, ramp I And sort So would there's - continuing there XG as pick expect in into pace. that has good QX for of market in or nice - that strong think growth there's nice protection different us, space a prospects. also diversity I where market about, assist a the strong

And working with would be tariff be we've and good we think the dynamics happens the see biggest situation trends advanced some out, working macroeconomic wild really customer to with what see the a say, on look beyond we'd impact the how I is So impacts nice life macroeconomic out. China in I situation. itself But Will, that that our an help. here some there terms get we're that There's our what card is then out that shakes certainly has that to as I certainly think that as us, got can macroeconomic seems out to very inventory into That worked issues of with And love growth. But out. is overall technologies. situation.

Operator

[Operator Instructions] Um with Macquarie. Maynard We'll go to

Maynard Um

gets any color think making great growth you in that what the of of do I of guess we slight in stimulus are still put - And macro the that current If then, all takes terms was for together, and it year? a sort year environment? on for you do revenue assumptions is you the That XXXX - is a puts XXXX. think it

Thomas Edman

Yes.

growth I year-on-year as I forecast look look year, these year. a TTM think this as as markets, had and about year, and last think grow in I how we we provided that so, we And you, to as at last put digit those look about the would like rate think certainly at we markets, together to you think we you looking you grew end again, at X% and as area. that mid-single you're and different

terms associated predicated I pointed that on growth we're what with I think we're as terms we're in neighborhood what - of markets. out of in And together, macroeconomics that's each forecasts end seeing, think these put - see the if today in you of somewhere the you we somewhere growth.

Maynard Um

this I material that's we about I've how starting side, parts the calendar people small should XG the around the be? base on some just are about revenues if the wondering assemblies, cells, And Is XG? time then revenues just different in I'm QX. it in about meaningful same more there? in? the you And talk mean parts be backplane thinking could from meaningful more that talk can Is stations? in you what heard

Thomas Edman

couple of pointers you give on me this. let so a Yes

We in the on different is to us of space networking/communications are of that three components Anaren. aspects - in business One the this. we actually terms play came wireless side from over

antenna. the stations that base that over in to we're content business, a you're conservative, we're of areas. business looking other - there X we XG As it believe required as opportunity why think And wireless least for at business the more that's at both antennas I was look signal the seeing million to size. into came in strength and piece strength content XG. times XG approximately And the come at about importantly density initially given TTM, We of the of the opportunity. than $XX our that's more component And carry our looking at

components. wireless that's So

other and go our that printed into The primarily of backplane business. pieces the boards station assemblies base the are side circuit two

cycle, into I think is from fourth slowly. have third gradually up base appropriate think the been you're and we And XG - thinking late of in lengthier start XQ when probably what XG, give and your be stations that, areas ramp the bit then little shipments to more for expect requirements. areas you will go been pick size But those doing if I feel the - volume both customers. networking/communications. do to fourth hearing others with of We've you ramping density XQ signal-carrying and forecast the about back given a about again a quarter in you the to of initial

of in we feel the a to peaked But moving business which networking/communications out. build to at low that slower point a you at of climbing cycles. of and XX% cycle XX% longer give up it business - the that revenue And we business about XG about peak the telecom of in time. a from as the constitutes really at our as portion one-third to a So

that feel gives for a So hopefully you it.

Maynard Um

did primary fundamental? sequentially? or little a you that just talk Just driver? the auto being side, on up What's is there And inventory about the something refreshing then

Thomas Edman

as earlier, mentioned tie to for growth, hard really given say that and hard Yes, moderate it's to that. to trend a is and forecast Maynard, that question, I I sequential a is good - And it's it's this - don't- because hard. the

just and of inventories through more little see I We'll real it's develops. bit solid this how a think working demand. anything more if it's

we're mentioned, XX% advanced up the about we very I the from, if for moved year As to XX% historically. excited the full up year were in last you to And the remember that range fact that's XX%. mix technology

on. revenue. that us that area for we're year now the grow in a our percent some of early to an going XX% that's to volume certainly shift focus ADAS in continue exciting to for as technologies and goal development to So to the a develops, - particularly us, content an continue be as move vehicle And advanced we'll automotive in That's to that now closer that's on autonomous in our then the again, used significant sensor RF work start area. as the that's up is area of

Maynard Um

can lastly full just the housekeeping And the we side, on then and why rate year? think tax should is you talk the about increasing how about year-over-year

Todd Schull

Todd. is This

year, aerospace more business consistent we pattern. which got out for been about Tom's that of has strong earnings So U.S. of the generating mix and were than that's more as historical how the actually all this business and the profits our better through our geographic defense And favorable, means maybe with comment year the of and went us. we

law of we about quite got a ago. into headlines but year. to weeks, year foreign had mix be the the how GILTI looking by we're a us favorable that new But started new be many recently next a as going we less like that favorable - benefits profits the we've come the of law based go tax apply guess you then tax of I as that Yes, of thinking that here we was some we and in. optimism, published of if how last And well provisions less at Also mix year, the terms little as year, that provisions. had on geography Most additional that a we're to the well you as regulations year made will our law. of about have on that proposed this tends regarding kicks comments credit impacts in that end bit had as seeing next the in So originally companies the NOLs by we more are profit into sheltered tax had. credit couple to regulations to as tax the out conservative than anticipated

into playing what's the mix. really that's So

Operator

take Research. your We'll with question Fox now Steven Cross from

Steven Fox

working early comfortable say, can you first that going then a capital also we've given versus, capital inventories levels the the into and the seem given on to what be help with seems flows working of capital give year? corrections in does guess lower inventory with I on working like And you're the you then of cash said this part us follow year could years be And have in capacity XXXX? a now. year spending than look I this given secondly, seen how How all in previous forward, up. it lot some have I mean

Thomas Edman

the was I other and CapEx. couple flow cash just was One questions then So think there.

me of take of let so one slight CapEx, million a them in in that the a looking million transaction. cash a we're in cash meaning more procurement So terms always $XXX time. dollars million at is That decline $XXX this year CapEx. There's at CapEx the in lag CapEx. to leads

year off year. of this paying still we're some CapEx So last the from

with as with the spending on that go which based X% of close watch number. we the do what to a suggest turn the related we the that to worse capacity that's or we we'll related, are Our time. that is procurement actual and further that takes right year that's that number amount the have in or X% the be replacement - would for anticipated, I've conversations us range. it's during have the And But to that that year trends that somewhat ability gets you. call is If all initial during Tom quoted we And and the turn A economy kind for X% through monitor less we softens new shared it's in that have will making but CapEx of than number expectations the our these fact the you're range that and in something that have have than revenue of year. - the fair the consistent reduce flexible.

flow you're cash observe that quarter your out of Regarding should to squeezing turns your working right be cash you the capital. when some down question,

bases Now dollars. we year's from QX. cash strong actually bit operations recall, that And somehow QX last And tough little of Last had brought year year. last in $XXX-some-odd-million cash a this though flow forth we flow as a pretty have terms from did a on our QX. you QX of very was strong to year or borrowed similar phenomena

modeling, actually we're negative normal we're more million. expecting think I of This year $XX kind a we about do as QX. our

We deliver have for working through year go to course we cycles. the improvement pick cash we capital, represent the up later expect a we'll do some positive quarter-to-quarter. year-over-year. in a it through then which the would have then pretty If little to we pretty the then our But choppiness watch kind of the over flow strong We the that year, of tend will go some quarter, as be we'll significant numbers. And traditional in year. use

and in in So good looking face was million good this the a certainly $XXX as economy challenges pretty from XXXX, a of as of we long in the there. somewhere cash hangs even around some to number delivered number. have operations flow that We're year

Steven Fox

how piece business, sense business grow or directionally Thanks. with how grow, And business I sales might break some and you on you us give a the sense at then not in it you XXXX for your the in did out. expectations? can satisfied guys And Anaren relative But look know don't to margin of you I just XXXX? the for you are when what know, that don't

Thomas Edman

QX Approximately million sure. $XX Anaren Yes revenue. - in on so approximately the was in range

getting it's on Anaren integrated aerospace If think what it's you the as talk commercial doing it's it into calls, more piece, the about more Todd defense. difficult both - and because on separately and side before and separate has now mentioned on and to so we're about

year, the can will into as here opportunity the as because synergies at are those on add to you of think opportunities that programs forward, in. But and a for takes they for piece an on in to revenue looking that terms the play look be imagine it as we significant while aerospace these of will what I most build been next Anaren, we've revenue. revenue defense program side side working RF we're - to on of

we on and revenue these the together as And came we've piece. On been we've we've in side, pleased positively. again, impact - mentioned, a side that I to really go number really both We automotive on here we with business XG started - the been Company. commercial performances. the networking customers the new as with there very synergy efforts of a the And start saw as working we as forward, again short-term are the

we allowed go about from really until for I engagement say our an would But customers synergies. profit there. year what and and really been can Anaren. build to with opportunities you, revenue open think pleased I pleased do not our been those us impact It's impact Steve, how from culture customers. overall really next Anaren our business So revenues we've just to and relatively with start up an tremendously on will standpoint from that and We've small with impact those deepen with

with So addition the Anaren could more team pleased TTM. the of not be brought what has Anaren and to

Operator

We'll with your Investors. now from Venturino Federated question Tony take

Tony Venturino

that? a should you I auto I then it how I up. you have comments, and those given the design I prepared lead think And the wins. roughly in Tom, coming think How have year-over-year long about follow design talked you that about to years? XX% about we the think should fact growing over times was your mean revenue into wins transitioning

Thomas Edman

Yes. Sure.

to it's metric at. one understand So look and I

wins, will, - months look generally at for to program window. XX some we XX-month if ramp. you take a XX In it beyond cases program can stretch it months to As takes even that

the as again of course to to last the during impact go XX time that our ramps you from months about we XX talking the of months start we're see when revenues would win. year, So out

together we're And that which as so prior, have the if XX% you're about XXXX starting seeing were those so the we to advanced obviously impact, would think business in was shift the we that technology XXXX that time with XXXX, are when wins coming just course, year frame gained about talking in of - Viasystems. we're

here trying dividends the as that the and of wins with next course to year. growth and late to a pay So is now what you that see to the starting us. year head will do then this we're And those through are what we picture into we drive give into

Tony Venturino

Was represented of even about how about XXX your of in share? think what of that does of Essentially, - market should think kind I opportunity? it overall way? that then in in it terms that And the terms kind

Thomas Edman

As we think XXX about the wins.

Yes. Okay.

So, yes.

different me advanced because we characterize, let here. about work So - have technologies if that you think just

cockpit So technologies in the seven there a there's are And tied and interconnect requirements. miniaturization advanced players that product our to portion infotainment there's primarily density that to inside high share in approximately used the six market. of -

share. so we building that And market of are terms a position in into

think years business are can about the that you to imagine that of rapidly as course we last the the three portion years. share, a If you RF. RF of over that's one been for been And go-to's of two building primary the has here

RF. so incumbent if And will on position there we have you a stronger

take what three that a players. our whole a the player together to then in So if or universe you significant a you but of share give four thing exactly RF hard XXX is characterization XXX, is, HCI to

Tony Venturino

on you then comment And MII. another had

there. I Have the growth the how spending Is about You we pretty it top should think top maybe there, the broad think or driving a know top about about and you business. that? quantified and top the top customers portion you talked XX%? XX% How it's customers because of customers

Thomas Edman

Yes exactly.

you there medical seeing into split. a a bit of on Clearly those. we're is, the relatively But as said a business contribution here that. longer-term split relatively But but more good itself a have instrumentation than think a split the of larger piece. you is - little overall have is industrial strength between between than what of if and and instrumentation about little pretty well business side. less And well think bit So we're evenly of we if about climate, medical industrial in the weaker is trends, we terms heading

of to of that concentration, business. In customer to and pretty large less fragmented terms a are customers then going in customer significant base than yes, piece well but largest, the - XX% XX% major constitute large - a any not that pretty for XX%,

Tony Venturino

maybe then last for one And Todd.

think have about February. paid sorry reduction? allocation term we - down guys future loan $XX your in capital of debt or this should and million quarter How another You

Todd Schull

Sure.

use net we flow - it after as made up focused pretty the trying leverage against ratio level Our We've drive we comfortable as about debt it to on us that flow and we've focus generation is focus then our that cash we're free acquisition. commitment. to X.X down various down at post-acquisition available. been the that now streamlined, public that that acquisition throughout options chunks X.X cash our commitment then is and very in ratio and to to spiked becomes quickly down. gives the debt practical driving Obviously drive the flow with and we're our then point. as consider to apply year we're cash And to But a that

Operator

at like closing no call I'd are It Edman Tom time. appears to remarks. additional over there for this questions or to the back any further turn

Thomas Edman

that points Thank by you. Yes, to close summarizing earlier. we've of just made the some

First, fourth we softening revenues And our achieved and we record quarter, earnings solid end markets. for despite the for non-GAAP delivered earnings. year,

our the of drivers Second, by growth of as well we to excited very much. synergies to And course, Thank last discipline. while execute and we are really year, like the are to year, facing long-term differentiation employees as a challenging And revenue are our your contribution for start many of that I'd core for investors continue your rising you thank our well Anaren. support. again we customers on of our and finally, continued strategies our from integration diversification,

Operator

Thank today's participation. for you call. your This concludes

disconnect. now may You

TTM (TTMI) 6 Feb 192018 Q4 Earnings call transcript