TTMI - Earnings call transcript Q1 2020

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Operator

Good day, everyone and ladies and gentlemen, thank you for standing by. Welcome to the TTM Technologies First Quarter 2020 Financial Results Conference Call. [Operator Instructions] Following the presentation, the conference will open for questions. [Operator Instructions] As a reminder, this conference is being recorded today, April 29, 2020.

Sameer Desai, TTM's Senior Director of Corporate Development and Investor Relations will now review TTM's disclosure statement.

Sameer Desai

Sarah. Thanks,

of started, forward-looking to of Commission. risks outlook. statements Securities Reform our get today's and everyone could the Actual materially Exchange would most related Litigation Securities contains statements call within Act results I we report Form future XX-K remind like that more recent filings Private to forward-looking Before TTM's including business XXXX, the including with the and to one statements annual differ uncertainties, due factors other the these or from and explained in on meaning

a registration based as These on or of except forward-looking update may that undertake in TTM, events circumstances, future to statements refer assumptions by XX-K, management's new SEC and are Please does filings. Forms the obligation XX-Q, on the required this any on disclosures revise of be any the information, presentation. risks regarding not the result the TTM other as company's which as or statement date found of publicly reports and these to expectations Form whether other may S-X affect law. X-K, statements

on discuss also such adjusted be call with Such certain the on non-GAAP as available measures we not substitute financial direct considered presented is measures measures should for a release, accordance press in company's this which in website EBITDA. to non-GAAP as SEC the will and was We prepared included and and GAAP with measures you to of at the GAAP filed the www.ttm.com. reconciliation TTM's

TTM's Chief ahead, Please to turn the I over Tom. will Tom go call like Officer. now Edman, to Executive –

Tom Edman

safe for earnings are of myself you quarter and thank hope and this us unprecedented our are your first for and These all conference Thank you, XXXX healthy. The Sameer. respective of Good and call. homes Todd that and ones three in that for Sameer, I are loved times our call. you joining afternoon us

quarter a COVID-XX with first how results. of of on our of overview and an XXXX performance by and including by with has XXXX I'll the follow begin followed Todd CFO a review guidance. strategy, QX our impacted discussion our financial will an business from our business, update our our Schull, QX quarter highlights

open your questions. then call the will We to

that am of first pleased of the following did Year, above as government I mandated plants job our shutdown. to the revenues range, non-GAAP a the despite great TTM Chinese midpoint following generated down China the EPS production shut quarter report manufacturing and extended in guided XXXX, up the operations above of our ramping New

have In our essential we concerns. presently employee TTM addition, American supply as The products. COVID-XX created are as and challenges, emergence has pandemic programs, of macroeconomic the North governments uncertainty, medical operational deemed infrastructure, products and manufacturing communications of defense and operating all plants

I organize have am XXXX, split employees of them China, than of challenge Asia Since proactive the end situational leadership to the of measures immediately the and Asia XX,XXX we between America risen the to extremely signs North safeguard TTM how established with of an earliest in team the and more employees. the proud during employees, majority based At our to Pacific. contributed TTM pandemic. had outbreak

American America, Asia-Pacific implemented from from our where best spread in home. TTM facilities practices we work North virus the practices employees North include After to our Such possible facilities.

areas masks from for sterilization, in of travel employees as all spread the impacted temperature to and the globally our regular a visitors, employees We have facilities and facilities, all other mandatory have disease through our restricted business mandatory our regimen we checks measures. employees protect local quarantine facility implemented procedures returning and for in international the and such from incoming

worldwide. Our to to the facilities employees of safety and contribute Asia order our in masks team even began producing

who for have America, of As COVID-XX appropriate attention. in are receiving and yesterday, have tested we medical employees positive North had XX

In individuals contact at by close quarantine in our all tracing are leadership team situational the to have contact which the in North and six immediately using workforce been involved taken. each the by America they that alerting of team who member, on work responded cases, review area also with sterilizing measures these our the infected sites shifts

As a our to we on preventative result of events cases in had this measures manufacturing in minimal Asia-Pacific time, these place, had our have operations At zero stringent impact have facilities. date.

level for us In of coordinate and established have our we terms corporate to with communications at communications, task employees. a the customers

from each we right provide employees, transparency plant and and human day, updates. who we our any can to daily on resources level of absent employees. monthly contacts our personnel we to the our hall a given is town so have employee, For biweekly provide assurance email by that I hosted from

a continue to who In situation human incentive would like second to extraordinary work efforts recognize and organization of these our efforts. the at teams, leadership means I our thanking we in of to as management, the our employees plants. resources have also an operations bonus come implemented quarter,

like addition, to In of employee family are to each has week has been who or member the COVID who out to off or time needs who employee, due COVID paid office exposed for one granting exhibiting we symptoms. an be been of to flu exposure

these safety for established unused are to feel first. also COVID employees and employees their in the PTO to our We to sacrifice the TTM the We measures need can have our who of additional PTO take grant where put that for are recognize reasons. of to of right employees bank those a PTO

strategic our have short consortium a markets $XXX unit exposure reported Moving cycle product onto XX we an markets, reducing of to transaction and us of for a which closed on ago, longer Mobility and was announced previously our allowing consumer to Chinese the enterprise divestiture. been This business volatility. focus to days million. seasonal AKMMeadville, cycle prone to value that historically we Mobility the divestiture

an than closing of approximately receivable receivable the million. closing of earlier period of China surety lower accounts lower for accounts receivable. not The We consideration was Accounts to $XXX outweighed of expected transaction. four $XX million were that did facilities the than macroeconomic due disclosed a the uncertainty and certain manufacturing felt during include previously

are expected proceeds receipt debt to we The we plan to and as protocols proceeds million, to company. another transferring $XXX which four invest to months reduce related will Net out three China. follow be of in take use the of funds to

focus have off transaction we for customers. investors can addition, in exercise This August expect bank that with we receive differentiation TTM, on we term, by the if will we our our dollars, that diversification, In guarantees do it receive long and X. U.S. discipline, pay funds not our and aligns strategic and to

PCB release discusses the of E-M unit backplane business facilities and will two support our operations a in of the manufacturing absorbing press Shenzhen. backplane Finally, place our our unit. at the The Shanghai operating Shanghai it other Solutions to E-MS restructuring with consists while facilities, business Solutions their into Shanghai in facility, transition The issued and that wind we TTM E-M and as take down leaving and customers Shanghai be will complete during suppliers. just Chinese operations. E-MS one Shenzhen we ceasing XXXX, three through being

industrial a in strategic instrumentation had higher $X.X products Shanghai particular Commercial sub-assemblies. move the million For Shenzhen and medical, decision. for RF and The margin $XXX.X been Solutions primarily non-GAAP and margin end such communications components revenue in and plants income, operating automotive, in assembly as this and E-M have PCBs, markets. based XXXX, networking, business. led to is rationale on and focus always The and on million services this factors differentiated lower TTMs increasing following the

of further us of supply expropriate and Number U.S. virus. the between Shanghai occupies. land the of in China, non-industrial tensions one, of directly of demand COVID-XX Shanghai two, and area JiaDing uses. has other E-MS District the the product earmarked the market town has into our on U.S. the end chain their following by impact negative the to the customers intent as is recent much E-MS for the Red trade disruptions three, business our the business Number Nan This the the had imported Xiang by a weekend was it Number E-MS advised

profit to not also competitors did Number is which friction our continued another core footprint, reduce four, adequately given PCB positive five, manufacturing China. larger compete transaction TTM's business. lower scale global does finally, and then footprints. trade sufficient with had have and China margins And the Number the the business between business US with returns the

the as as to be to transition reasons. our this possible was as painless make financial are but that determined decision for well strategic, as customers, made We needed a for

reported include market end end like to business the unit. continue to disclosures review I'd All markets. Now, historical our Mobility

Our the the up unit, includes The business disclosures E-MS still of date QX the market revenues. results Mobility the forecast closing for sale. contain all of of end segment to

posted to website. excluding comparisons to please the of appendix our Presentation forma pro refer these For Investor segments, our

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

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

We revenues solid in to quarter. backlog ago million, $XXX compared our in and A&D XX% the business, continue $XXX QX to to growing up with year growth see A&D program year-on-year million

XXXX. XX% program in stands industrial Patriot and quarter Ongoing sales XX% Tier the as first our in new Raytheon's an upgrade strong quarter, Lower Missile program, strength total market for instrumentation of medical in the booking a The and result fourth alignment the Missile of system of Air which ago Defense XX% quarter LTAMDS for is our to and a the end and of contributed Program. compared year key

weakness strength in E-MS segment. customers was customers in our by that in instrumentation offset our We industrial saw our

XX% be expect XX% and market first patient demand the of ventilators. first medical revenue equipment for to communications of in For revenue we to monitoring to second This increase of due quarter, of XXXX. the the Networking this during XXXX. XXXX the compares quarter revenues, and devices XX% of accounted XX% quarter such quarter fourth for of primarily in as

also and stations conflict. for Huawei, than sold base of in the PCBs a Year-on-year impacted for and customers to facilities U.S. which Chinese were XG networking extended production telecom due COVID-XX. shut at offset our were trade result in the networking by down segment, declines our production wireless components China growth by to customers, limitations impacted more by as E-MS made Sales was of

first infrastructure be center peripherals the QX demand Sales strength XX% saw quarter our quarter, and for In data in QX, semiconductor sales and networking we of of of in fourth in expect of increases. compared XX% in equipment computing the XX% this revenue XXXX customers. segment total XXXX. to represented in to XX% XG end market the as We and storage

the The laptop revenues unit XX% in in revenues and divestiture. QX were included business are mobility approximately and tablet computing of

sales, three included. are weeks We market approximately quarter end as expect revenues XX% tablet of to represent sales of and this in only second laptop

during XX% of as XX% XX% and to year-over-year XXXX. demand first sales during declined the represented in government as reduced quarter Europe compared particularly resulting and the of sales fourth the sales to in XXXX, China, the shut Automotive weakness, due total in production ago mandated year well Automotive days China. of from quarter down quarter

Approximately was XX% in the decline segment. of due to the weakness year-on-year E-MS

in XX% XX% weakness of in phone The We of expect QX with for total demand X% in contribute market QX global automotive quarter, is and ongoing accounted to XX% expected. to compared XXXX XXXX. revenue the in sales QX of first in end of cellular

to expect We only revenues revenues as weeks X% mobility in cellular of three of are represent included. QX

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

year XX% technology subsystems revenue. accounted the XX% and business, substrate, RF This approximately advanced HDI, which compares our quarter, company's XX% and the for rigid-flex, ago includes to QX. our components in in approximately of quarter and During

due The in effects end and and were combined computing markets. changes cellular our sequential year-over-year to

are new new in capabilities design customer increase pursue markets. leverage that engagement We and advanced our to opportunities will business technology continuing activities

the compared utilization of largely New quarter and Asia to Capacity and in the recovery Pacific to in impact XX% the due Year QX, year QX. extended during XX% in February, slow in shutdown was period XX% ago Chinese

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

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

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

first QX, end is year which the of end at of XX-day our last of the million million $XXX.X quarter the million, compared the At QX. to $XXX.X subject to cancellations backlog, and $XXX.X was at end

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

Their to like I'd continuing and conclude innovation for the particularly critical contribute by appreciated employees our inspiring our customers. by our of customers medical our TTM to to in industry. these times mission thanking are again for efforts during

for strategic strengthen While the long TTM taking we we are uncertainty to term. facing from short-term COVID-XX, the are right moves

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

Todd Schull

Thanks, Tom and good afternoon, everyone.

TTM the As business earlier, of on unit. the Mobility of its mentioned announced April Tom XX, closing sale

information, operation. TTM's as will GAAP issued the the business unit the discuss a and disclosure results the we TTM's unit the comparison of the the guidance, non-GAAP The Solutions is Electro prior Mobility included results business previously facilitate that such, Mobility discontinued of periods results business E-MS have reflects financial in reported. to Mechanical unit results of As I or also business includes which unit. the To also

of revenue quarter, GAAP in $XXX.X growth million first medical, and $XXX.X our to and networking declines and decrease end due year-over-year $XXX.X sales end and partially was and continuing first million industrial communications offset The defense the net by the from our XXXX. in in markets, automotive in quarter instrumentation and markets. in aerospace operations were fourth XXXX compared the For quarter to million of

for of of first $XX.X income XXXX was fourth $XX.X from compared to operations the million quarter XXXX first quarter million million, and quarter operating of in XXXX. $XX.X continuing the GAAP in the

a net in This of On in $X.X XXXX. $X.XX net from quarter share quarter first million compares diluted last year first and operations XXXX to continuing the $X.XX or basis, income of fourth in $X.X diluted from GAAP the $X.X loss of or per operations diluted per the of share share. or quarter $X.XX million continuing per million was

comments focus our performance. The will remainder my non-GAAP of financial on

see with present related but and company non-GAAP the non-cash management enable prior Our items. to comparison our includes certain facilitate Mobility performance restructuring eyes in non-GAAP to periods. excludes items financial investors unusual through business expectations and to costs, the or divested infrequent unit, information of M&A We other expense costs,

declines and quarter, computing million defense, and net The compared markets. in markets, net end decrease the XXXX automotive partially first to to growth was communications, in in revenue million, compared by fourth quarter For and cellular networking sales of $XXX.X of were our and $XXX.X $XXX.X aerospace XXXX due first the to year-over-year offset sales quarter in and million. our end

the in margin XXXX primarily due in XX.X% to was changes decline of was earlier, gross mobility the the to quarter compared quarter in largely XXXX. margins revenue first of offset which performance fourth Gross noted in our the XX.X% XX.X%, quarter plan. first by year-over-year was in The in and improved

million Selling or X.X% sales was a or $XX.X quarter $XX.X and or fourth of of the net sales marketing versus million the X% ago X.X% first year in net expense in sales and million net $XX.X quarter. of

was the million or X.X% sales, quarter of quarter. First in X% or net $XX.X previous quarter million to sales $XX compared and of expense G&A same year of $XX.X X.X% million net or net in ago sales the a

the in revenues understand of in may R&D year X.X% making expenses to R&D million the and or the first million in are previous X.X% investments out are or was $X.X that X.X% million $X.X breaking so we ago to In of better of we quarter. quarter ourselves. Starting the or revenues, $X.X – quarter you compared of XXXX, XXXX, differentiate

was XX.X% last from the in Our to quarter in year of expense in compares and X.X% due rates a quarter, $XX.X quarter was of operating first XXXX. $X.X year This million same lower margin last X.X%. the in the Interest and to interest repayments. the debt same fourth quarter decrease million QX

to compares of EPS. approximately to of During the $X.X last in EPS approximately incentives EPS year or $X increased XXXX. or $X.XX of $X.X million a $X.XX of of million foreign $X.XX of QX million a This quarter, recorded gain approximately Government QX $X.X of million and or exchange the loss we in gains. loss

rate was in XX% the Our tax effective quarter. first

$XX.X share. was compared $XX.X or quarter net Adjusted sales, XX.X% the per million or $XX.X $X.XX million This million quarter diluted fourth income adjusted XX.X% to XXXX for compared per million XXXX quarter of EBITDA diluted first and net quarter $X.XX income million or income EBITDA the of share or was $XX.X per net share. XXXX, quarter first of net $X.XX first diluted $XX.X net or of First sales. with of

In $XXX.X the million net was sales. of or fourth EBITDA adjusted XX.X% quarter,

versus and in million million positions year. same Our first $XX.X remained in $XX.X quarter quarter from the Cash flow liquidity the was balance strong. sheet operations last

net leverage to ratio Our X.X times. debt improved

of million of approximately Mobility a cash our Cash the the quarter sale business. including were end deposit and of at $XXX.X XXXX $XX to related first equivalents the million,

liquidity a undrawn we deposit, an million this $XXX balance under Excluding ABL just have of with cash ample $XXX million. of capacity

a as $XX Net Mobility additional X for and million. $XX.X million And reminder, of months. quarter from in Mobility by million. receivable capital collections was quarter plants from our million the the Depreciation was to accounts related we'll receiving three $XXX approximately for four $XX.X August net be months the four proceeds the next an spending first over sale

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

Looking revenue may quarter end within well production. in of supply we our million. to second COVID-XX that as the $XXX $XXX Taking own XXXX for this market ahead, we of demand into million cause inefficiencies disruptions, believe account, to range as chain weakness, be total the expect

on expect earnings that of This on based share EPS the date count date the of of We a XX, up first $X.XX any in quarter. of this The the per weeks approximately the range to be is of back had the diluted guidance shares. $X.XX business forecast we million to diluted to XXX.X the share. non-GAAP three on Mobility April closing includes so

such our a convertible securities and associated dilutive stock bonds, as but no future shares includes our of guidance is count which share function Our options RSUs, with price.

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

expense SG&A of expect approximately second R&D and that the be X% revenue quarter We be in X.X% revenue. about will of to

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

XX% estimate effective be tax XX%. and between our we Finally, to rate

models, information. additional in your following financial you the we assist developing To offer

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

expect including incur as our Business costs, plants in like next we two closed asset Unit. write-downs over of approximately $XX XX we expenditures to Solutions months and million approximately be million other earlier costs. announced Additionally, for this Mechanical cash the as months severance restructuring things XX will Electro today, to we amount, expect $XX Of

Conference the virtually and June Finally, on Technology Cross like Communications we and be May Insight X. Stifel and Needham announce Consumer May the on on that XX, X the and I'd Media Global Conference the Media participating JPMorgan Technology will Conference on Sector to XX, in Baird June Global Technology Conference

That prepared questions. concludes for we'd and now, remarks to the Sarah? line our like open

Operator

Thank you. Instructions] will And question. we our [Operator take first

Unidentified Analyst

Yes. Can you hear me?

Tom Edman

Yes.

Unidentified Analyst

of you've first Well, testing your all, safe. taken steps I from safely I'm hear positive recovering hope the all and to everybody keep from proactive COVID-XX glad XX employees to about Great.

So, seeing chain talking about you do surmountable year? And for your are secondly, thank then in the just What the you of bottlenecks chain particular you're the how you see of challenges disruptions rest And the around? rolling they through supply are and that. areas facing. supply

Tom Edman

Mike, That Sure was thing. Okay. right?

Unidentified Analyst

Yes.

Tom Edman

me, me of Mike. thank comments question. you and the the for answer all, Maybe address part let Hi, so first first your the – – your let on of –

now back of of the is of in had the actually at instances work. and folks out is in and of – all So one are one out recovering tested North America, on hospital that – out the XX employees negative has the but hospital we, we've are COVID-XX

the we really – to and hopeful hospital, that. at be employee glad – is this that are stable And So seems recovering to got in recovering see point. the

this. very, that this protection So spend for of our TTM, a you and take we seriously. very lot is employees one – is it for number that. time job Obviously, we very, the of on We thank

your comments So, I there. appreciate

uncomfortable so very – we safety, way for been at our be at those As One, disruptions potentially two work. and are really to of there on we policies the will coming importance into the with QX, who employees our look with areas. just employee have are continue forgiving

job of very have instances good we've this. think managing some of I that, actually we So, done a

Asia We over North it's in our are the full generally of Pacific, XX% in complement we America employees. of have and – employees place

doing good we're a managing that. of So, job I think

the that if and take the conscious properly recognizing manufacturing improve, that are that safety of I need the taking instance the account to to about employees – an area we're need think into and also think to we be to, measures to has very in of do continued we have as but have QX. sterilize COVID we have so an we

either way needed On the chain meet to, some we've or our had to several production needs. able we're to to-date, side, instances shut down of supply who still inefficient because of in not suppliers

done chain organization good this Our primarily to-date, of America. a very has of coming mitigating out supply job materials North

the that shutdowns and in relatively short. been experienced we've so instances have the few And

know never climate. your you again, in So what way come can this

managed careful, date very we're So, well. but to been has

Unidentified Analyst

that a you, Thank should one might their [indiscernible] reduction in other kind ask or to chain in be I'll Tom. customers be parts bottlenecks demand supply of question. any your more, business. related What disruptions of seen

Tom Edman

to you difficult are – this look automotive, demand. guidance, that right for if weak are now that especially the then affected us being If and juncture are by aerospace, at very markets our QX are, these which Very, at markets at markets, determine. look that we have

markets and increasingly whether industrial, experiencing computing networking communications. strength, A&D, So, certainly climate really related. are supply it's instrumentation, not improving chain we medical, where The more

responding those I emerge, When shortages computing – computing, there COVID. cross of continuing so restraints – can with pockets with because it's spike are think supply I has areas to on challenge expect overall. dealing of spikes been but a I the even there or requirements medical comes to, of the see you A&D comment center the it would mission markets, again When data on of into and top semiconductor, think that commercial on can start I as you supply just demand of shortages, in understands short-term side, the to where those is base I the certainly importance some whether think we're that,

jump may customers be but hypothesis, and as areas clear then those challenges, in try they they those view it and experiencing certain may, again be are on as solve that the course, areas our to shortages is changing and this of it's regularly. this is like one, situation my the on a to not where So, I'd

Unidentified Analyst

Okay. very thank much. you Great. Well

Tom Edman

you. Thank

Operator

next And we our question. will go to

Jim Ricchiuti

Needham. Ricchiuti Jim with

Tom Edman

Jim. Hi,

Jim Ricchiuti

How are you?

Tom Edman

ahead. Go Good.

Jim Ricchiuti

amount it, the Good if because and near bigger seem some automotive, it looks doesn't hear. fewer of like weakness to demand days at maybe I was I the because you're – cited year-over-year production it suggesting QX weakness fair and you bottom Question in term think you're you component that correctly, like heard on a was down was a a it like this improvement least area? in anticipating in it looks demand

Tom Edman

Yes.

approximately with I'm year takes going how utilization I Chinese Europe, the that, just before low pandemic. challenges a in my depressed I've the really but, really So, our thought combination preface get, in can but to really we and relatively the return. and Year demand it throughout this wrong. thought a so by where extended a – little saying, QX, to had to for I unfortunately, was employees or having show It's you I bottomed New are ago, comments said was said employee a February out ability experiencing we

of constraints, automotive but the our and better. down Asia so board and soft. across – that in demand China our commercial addition, certainly in was to produce constrain demand, European markets, ability way demand was What March did product course, very much in

seeing coming are flat, see from up quarter, we a now but you're we March what that's up, moving maybe bit right because this relatively into little fast-forwarding April. sequentially, So, into

production longer. the constraints have don't We any

I demand at able The you and in weakening, So, flip side again, into slight very see flat, we improvement out up, weak the of little would maybe get certainly North we're seeing, environment, in and that we China least but America production an are say to automotive. bit relatively situation. improvement, of in overall a just our together – kind that but is the put this hubs slight

Jim Ricchiuti

you process sounds other about Follow-up doing what the environment it here sheet, question, divestment look this just balance and think business taking the we like going the guys, debt? about should now you you might much going and do complete maybe forward? potential on some the – in? work just wondering, portfolio Just especially down least to on the And back, what's guys you side. capital it some are given step we're at Is pay pretty – here? how forward, I'm maybe deployment expand think growth Is are thought we it wondering in. areas to that at What should how strengthen

Tom Edman

Sure, and Todd position. I'll we're turn have, it then you so if to but balance with our the pleased overall I'll very answer, start at, look we sheet complete to

even As we flow challenges in improve Todd We've debt mentioned, the to positive. been cash – from leverage an standpoint, ratio. with operating of QX, were our still able

sale. progress funds we making for there mobility we are the strong further with arriving So, from China will a have and the very balance sheet, which of course strengthen

there if on obligations pipeline right that a comes work finally, capital. capital along. work to of have will will it to And fulfill. and have level that then continue to regular opportunity If to And our yes, right capital, maintain on we then, we deploying to that then will the work. working we working strategically, when we So need the comes again continue pipeline to of and a we continue effort M&A opportunity that's our

So, for your us. of comment. are sort Todd three those priorities

Todd Schull

side. a two we cash and fight just on certainly short-term so take ABLs, or specifics punch available Yes. that I got on our million in continue little of the $XXX mentioned fight on capacity a bit of sheet. we've I the could got strong We've to our balance supplement sense. would about that

short-term. we're So, pretty pretty, comfortable

sale mobility in the of coming with term the business. from Longer proceeds the

but – as M&A term would in down We but the to right business, reinvest it we something have of We now, required certain the the we absence obligations. pipeline, says, the in pay always be can to use actionable evaluate we're loan. Tom

powder, the that future in pay balance of in you if give will near-term will the a here even our us further, dry reduce our down sheet $XXX million which and So, us of expectation loan, flexibility. the really about gives is by that basically term leverage lot will strength would, help that

would opportunity somehow a we a we action in business strategic terms reinvesting into that as And whether how on or it If continue the to to the of in M&A deploy flow it to returning position that out shareholders. we like, generate business, have cash, cash take it's to of find we be that. options

we'll on term, down and sale short-term the further options So debt but table, to from we ourselves strengthen on pay use sheet. just the balance immediate mobility the all see short-term sale collect and our the the are good the the as of proceeds in that we – even in

Jim Ricchiuti

Thank it. Got you.

Tom Edman

Thanks, Jim.

Operator

we question. will to our go next And

Steve Fox

have comps year seems versus a you business can aerospace, Hi. but gross guess, Steve a It held the It's defense are the have a walk of well Thanks. a few margin little that through must extremely of they talk Good helped more about comparison, phone and bit gross they your down. ago, can Fox. weeks margin there? just like you you bit production the and just sort easy given customers afternoon. with lost waterfall cell I little up

Todd Schull

Steve? So, I assume you're referring to year-over-year,

Steve Fox

sorry. Yes. I'm Yes,

Todd Schull

year a difficult to particularly business moving versus parts. you've was That's was in a relatively XX.X% business really, business, of ago. better The last. We money Gross got this in ago, and very Remember quarter straits. flat couple compared actually much a year cellular margin very, lost the that fine. mobility Okay. right mobility XX.X% the year

There of network some offset the particularly other and really that helped on seeing mobility were So of but a the through of were performance other year the are very to end markets both and profit automotive, communications we business. some takes, to in that from a helped markets, that and end puts ago down and out hurt mitigate minor that's from the significantly challenges of big us but picture. able upside and those better we're some that that standpoint, the

Steve Fox

point? next seeing Okay. And is all disruptions in expectations types behaving of tougher about helpful. the That's not sort just the in these your bigger during for unusual this notorious Can talk given quarters. slightly and of whether period. picture then competition anything few you Tom, and PCB industry you're The for well line, at demand

Tom Edman

Yes.

One I so we know clearly industry. really question. enjoy moving number comment areas our TTM's what for two where that direction areas, of we working about, the the a moving we've strategy. from differentiated of as From we that is me on the on view – with been itself into years, you areas PCB and think commoditized differentiation yes, The that – perspective, the been thrust really threats. a is So away I are talk strategic PCB that's a where in as let

the on of terms depth we've effectively PCB Anaren you that of the capability acquisition. top building adding with We've built by RF subsystems on in built engineering by if will, that components, and the the that

position long-term So, again deep and of of if very position that A&D are in feel parsing and we out, good we world, you these course, start programs solid. the a then A&D programs number so a have very very, critical very

networking complex more market, you a competition but communications, very more of at board look requirements. commercial If sure, commercial there,

wishes reach we the I've customers – before, move and footprint a where are the know MII customers, very point the of said and our our gone field capabilities our they've Asia footprint. in their capabilities where what, I have if customer, there you beyond into to our a because the they but know even where moved crossover Asia high volumes medical, plays this to If our most of global and that's and in of you

an we go very again, the we we builds area let us with that that the to global more footprint. do. business in that will area. do are that It's there, We complex really the work development differentiate specifically And computing, all technologies business tied that our about then

you positions can't – have confident area with a right world, that moving in I the out these we that of And we've E-MS. can technologies, then that I for didn't what not here is Steve, tell got right it's we our markets. I and that am perfect with obviously We're but strategically TTM. move So differentiation one the see the

not competition the Asia. was footprint very And move challenging in all a was The while you but differentiation, think as if well, there, mobility [different] there of play. a about technology play our global technology,

gives in So, no We're you comfortable right the we position happens. that matter what answer. hopefully that here, an are

Steve Fox

feel helpful. better. a That's Yes. really lot Makes Thanks. me

Tom Edman

Steve. Thanks,

Operator

our go question. next we'll to And

Will Stein

for my Stein taking Will question. here. Hi. Thanks

call concerns our strong something the book-to-bill in of safety ordering a you any had You people or stock customers quarter. And have if double I pretty wonder, some what ordering or this Any any in extending defense? backlog color on sort helpful. of Is similar on going is that the sort to Thanks. that. aerospace, of or more of be the would this

Tom Edman

Yes. of Sure, year-on-year with a Will. was strong Mobility. book-to-bill, that And especially yeah, portion I agree a

part quarter, had Mobility of the Mobility business TTM. as So we – into remember, as the we went

on it the far and was compare year-on-year terms going bookings, stronger So, into quarter. of – in a certainly

you're aerospace big the So the piece a the Certainly, then, bookings in piece And a toward was I the of would helped. right, yes, of bookings there that factor swing have the coming that's quarter. defense. and end there and medical is that say it, other

of time for see revenue which the number play usually – here then usually that's medical unusual over that that that usually be kind several out playing quarters, terms of world – shorter a medical you span. bookings of we'll don't A in is – out in is visibility

little there. of So, bookings. activity any, booking particular a in bit haven't the any with seen double the unusual They

We portion the haven't that, sold as certainly went bookings seen but we a away business. cancellations, of of Mobility those

Will Stein

to minute. explicitly or sure walk I this I at Is is, want just exit is or anything if I'm all Maybe two, what there restructuring a then business? is in quarters. for can understand number just is just there E-MS I that it is away And helpful. make that one it – an was into protracted like sell I look there sure it over stated. dig if of is is the this a to not That's that exit this just business? sort but situations? a the of or think of anything left And

Tom Edman

for question. the So, thanks well yes,

So, the our will three Asia. the be operations facility restructuring solutions. will backplane And that into we folded in is announced our of effectively will one closed. which remain, be end that in the three we had Two facilities

small on revenue. the keep business we if million-ish of, order relatively that will So, you think about $XX

but to onto small, tied communications. relatively So, networking that be mainly holding we'll business

next, plant the winding in instances. if operations care of the a The other taking be two, through of have the in the think both you time down, course down shut of we'll year, terms about horizon customer different two obligations locations but

year, the cleanup that And so point, certainly have, shutdown we you being by be we end should the have at know have that the with mode. completed and obligations of our customers and full

residual then is we land. an the value in E-MS actually where Shanghai of what land there – own you facility potentially. our own a From the in is own will, value, assets, of there equipment the And value equipment course, if we we the where there

these certainly able So, is there be that that conditions to point. this at there out value in count but to outstanding – on that's difficult

Will Stein

on, to mean you. clarification, this one pile just guidance Thank non-GAAP in disc if but to I the the Maybe stage it or don't does ops? I can, does go

Todd Schull

Yes.

Let me that will to fulfill in $XX continue. the To restructuring I to that to run and costs process, extra Well that as provide quarters the take will we say. two just in try our are the over clarify, business that customer obligations months the respect. tried million place included the guidance the It specific roughly let's over next as XX on to indicated, quarters, three months. it is carve XX few next guidance there those out extent we the Tom our will was to

will of be our our the I will our revenue that be up our and don't company situation, gradual the ongoing profit wind so it'll lot a from a complete part downs. standpoint show it of that cliff we – severance But A people guidance is ongoing think roll-off and is from related, as complete reflected over gradually it. as think that I time. work we in

Will Stein

much. very Thank you

Tom Edman

Thank Will you,

Operator

And we'll take our next question.

Paul Chung

JPMorgan. with Hi, guys. It's Paul Chung

couple ones. So, quick

business. Mobility the on Just

or in vertical, your or insights see is a or that then these you benefits ahead do there During And follow-up. during the I of occurs there any view? the quick of you benefits stay that loss another vertical exit trends have of innovation kind provides that in

Tom Edman

The get technologies way of in that that what requirements and to are think to much we're to to we're are level. our terms semiconductor look really the a Paul. trend spacing, in micron. between businesses the when XX of and XX it cellular about they're talked – to we move we to this we've other some is the driven spacing like very, at below and Thanks, helped frankly the lines and there, XX the to lines moving lines close seeing but very XX has looking as most in seeing our narrower smaller adopted microns. phone And Sure. so business capacity us spacing requirements are past, simple and the What at and we sheer and above micron towards

XX and then the capabilities will in and with acquired technologies we've technology that, like micron that and the mSAP our some micron area. type PCB that iX to have or XX in in kind know-how acquisition substrate We facility. retained help And of us we that have area, that the

that iX service demand the that forward have from that is to what are But to smaller We those. in with needs. capacity the capability resident certainly can we extent those and invest today there requirements. very, inherited So and we go very small

in where we sit technology. So, pretty comfortable

Paul Chung

to what's your the million], timeframe hitting cash on that. XX% in to now kind portfolio $XXX your of comfortable are for [$XXX product Thanks markets And to end any you the XX% to to of targets kind time? flow Thanks operating with hit of the goals mix of or kind just of changes then your expect and these slides we free to margin over of should million, targets your and guys. kind see

Todd Schull

to Tom, you try? want me

Tom Edman

take at was going to shot that. let Yes. you a I

Todd Schull

Right.

gears, We've hiccups year, a obviously our obviously, right. the hear is objectives all if really particularly will of stated the commercial you the and couple markets but we last putting we toward a the of cellular, as XXXX. you're commercial So had at are And in challenges. virus Those marching in markets terms Paul, look that. having wrench are

we'll storm forward. We and the weather will move

all that We going of we've announced changes and certainly beneficial. plant the closures the be divestiture the with some to are

We that are exiting, margin help toward lower will goal. this us certainly and businesses

help. need stronger. to as revenue a a We far need a get we little As specific the timeline, do economy little

some on years is still but two this but to years, very to of We ability underlying topline see year are the if it need a do real. say recover So and specific and business need year, put there, little achieve to we to still to those need We we very to hard a those it's right us and stronger economy support last to it, get now. just economy our the target. feel tough, the the little date

Paul Chung

Okay. Great. Thanks Good guys. luck.

Tom Edman

Thanks, Paul.

Operator

next question. our we'll And take

Matt Sheerin

trending you're you've Sheerin And your the in the now or been XX% of with from supply Matt parts other It's the two take, chain, when line modeling of but know that market sales quarters, I question Hi. flat, three or relatively down give automotive another or guiding Yes. last terms market, production below in just reduction Stifel. regarding in sequentially cuts.

Tom So, may differences why little maybe be geographic business, be and bit I'm helpful, exposure would trying earlier and more there, a the breakdown figure than out that others? the of that's to recover China you're the seeing

Tom Edman

– a as we real terms running was, In quarter. able revenue. couple will One February were generally get of had in to covered first with the actually in the full pretty going We're first that impact well. as in being in we of on. turn February. lost March, it you revenue a if so we it the – out, yes, really So, production remember, there low on again, product were our production is, behind you Matt, And production – we is things quarter, in when get but,

had factor, we back So, that of capability. into now we're production course, full

starting So, now really more deal with we're demand. true to

quarter. there factor in of weak down, lesser if little between but our And North the North way really felt China you extent, but Europe, still Europe. a particularly that feeling in markets, was weakness is China, down was We bit America. sort hadn't second America first in China, The them yes, down. you think about substantially split China not We equally were

into Europe is now seeing little China really relatively we're second quarter, go what As sequentially, bit America weaken, we strengthen remaining a North the soft.

relatively again So, look The days. difference flat if actually produce the leads just is quarter start that to at the slight biggest that and up seeing production we're it's to in what up the there you ability a quarter. slight to throughout the and

Matt Sheerin

orders of from bookings Okay. North customers, And Europe big changes in in you or have America. seen terms any particularly or yet

Tom Edman

Europe really, North really. not – and not not, so

operation. think very, course with is of as to sure that Yes. have And back Tier's want as our know plan get levels. that generally into – to they it's you customers make very, inventory I the the Xs, right

and little Europe a soft we inventory cases, improvement So, still to and say replenish in areas, North in in there bit of, America very need some China. some bit hey, is overall but I'd a of in little

Matt Sheerin

area dig helpful. networking about service That's where talk little then maybe where network communications in providers a XG side? in the – then the you the you enterprise And there, your end on markets Okay. talked terms deeper about of weakness, could also versus and

Tom Edman

do the production was enterprise, side first networking factor. weak have Networking so the we Again, quarter. in overall Yes.

much of we for down that – again, February were in period. that So shut

move as end of to we looking So an I particularly of network that And markets, starting see we're go, continued into on some and. but weak the side. highlighted, the improvement, see inside at was networking, and second we better That particular in quarter. the improvement we toward particularly end the actually as the has if quarter telecom And enterprise. in as did enterprise start has to first you quarter again in the a on climate revenues, impact

the seeing second we're where quarter. that's So, improvement in now

Matt Sheerin

Alright. Okay. Thanks Fine. the time. for

Tom Edman

Thank you.

Operator

this And queued have questions at no time. we further

Tom for So, to any back remarks. turn Edman conference over or I'd to additional the closing like

Tom Edman

critical points Thank earlier. I made you, close the of just summarizing, Sarah. to by some I'd like

taking and highest while our we measures will proactive And take priority. to to employees is are of continue customers. to our our First, the our continue safety health support employees, and we safeguard

Second, extended shutdowns the Chinese we of guided delivered range, our earnings above facilities. despite

our announced fits improve will which margin of well and profile. and we of unit, Mobility closed strategies seen we reduce our with E-MS differentiation, have our the very which sale we And the core historically Third, of the will business unit, diversification, the business fourth, our restructuring discipline. business in volatility, performance

your navigate and to continued thank with business safe please like challenges our support just you. for all in here employees Thank of would stay associated you. our I with environment, this much. customers our we and you COVID-XX. particularly closing, investors Goodbye In Thank our employees our as very and

Operator

And that conference call. Thanks for does today’s us. everyone joining conclude

disconnect. now may You

TTM (TTMI) 30 Apr 202020 Q1 Earnings call transcript