TTMI - Earnings call transcript Q3 2024

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Operator

Good afternoon, and thank you for standing by. Welcome to the Third Quarter 2024 TTM Technologies Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today, Wednesday, October 30, 2024. Sameer Desai, TTM Vice President of Corporate Development and Investor Relations will now review the TTM's disclosure statement.

Sameer Desai

Thank you.

Before we get started, I would like to remind everyone that today's call contains forward-looking statements, including statements related to TTM's future business outlook. with materially risks forward-looking risk you and provide information. our differ one due factors to could Exchange based in more and on represent or uncertainties, filings and review. These results forward-looking from we management's statements these to we Commission, statements Actual which Securities expectations encourage assumptions the including available the currently information, any future obligation of undertake or does any to result publicly of or law. a not except new forward-looking these circumstances, revise events, statements, other by as whether TTM update required

non-GAAP on also measures, measures will between reconciliations discuss direct as measures We refer Executive available company's investors.ttm.com. a on Relations is go be non-GAAP Tom will we accordance and this presented GAAP not We've which Chief as our Such call a Edman, turn we over call included you TTM's ahead, posted to certain with EBITDA. to in Please the and for of the and at slide the prepared on financial the also release, the adjusted substitute that measures considered such website call. I should will in GAAP, to TTM's that website Tom. now Officer. Investor earnings during deck section

Thomas Edman

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

the we latter X.XX, the offset X.XX at from second Overall, for program market, consecutive for our growth partially update. X billion. I and our would margin work revenues representing markets, guided performance and support quarter's demand on to your growth was by quarter. favorable quarter, to a defense due would TTM end operational delivered be industrial, instrumentation We center transform on hard an being have by results. quarter defense above backlog to bill are be A&D the driven to and year-on-year on now strong like Generative continues AI. The less with provide consecutive record of will We thank presentation the and revenues strong, bill strength quarter posted the a and more third and the which book outstanding were differentiated. XX% year-over-year to of earnings summarized XXXX, approximately and declines was end now the of to is operating for contributions I employees of execution. Revenues our their these range, then mix, revenues, financial excellent In the of data medical, delivered open results Demand cyclical was our to our automotive TTM's quarter computing to to website. journey of business questions. Highlights call to from strategic and in $X.XX Slide of book the the aerospace and third the in TTM like due of higher midpoint markets. in company a and aerospace the

to the aerospace a key in and years, our to product the our emphasized to market. Over past particularly has TTM defense consistently is that the add customers, solutions several that value strategy part deliver of we

printed in overall. of than circuit less of our the end Telephonics, revenues strategic contributing aerospace transactions products result aerospace over XX% of are boards through and acquisitions integrated a now generated As electronic defense engineered XX% and Anaren the from and defense and in market with

this operations have operating teams and margins. We defense steadily and strategy improved have our been against as executing aerospace

automated highly is supporting customers strategy differentiation new is medical as new customers state-of-the-art in Penang, Malaysia manufacturing networking in in PCB our industrial center and end Another important our such This end to of facility commercial element and instrumentation. investment markets. facility markets our service Malaysia a data in computing,

to in you also through production volume our X registered ramp. I'd to momentum manage ongoing our of production update make profitability. and gain board close we plan and third We manufacturing further qualifications. facility and We continue our ramping audits progress continue we improve manufacturing printed our customer consolidation plant the customer quarter quarter previously fourth Malaysia to as revenues focus We the total utilization, in like operational expect to facilities revenue on in announced circuit order the to small performance, as footprint.

Anaheim XXXX, remaining facilities. the TTM's and of and During closed into California Clara, Kong course and PCB in consolidated manufacturing Hong Santa were operations

continue to transferred the at facilities. production parts receiving We for ramp

have Elizabeth in are quarters. order complete, to facilities facilities also TTM will After North plans X plans facilities total smaller consolidation We over New This non-PCB integrated to X York these will operate consolidation of the City, electronics XX next consolidate occur a Huntington, worldwide. and Carolina into existing in efficiencies. improve

providing to defense HDI technology our specialized for national like construction technology would through lead I expand security increasing announcement in market on in the increase Ultra circuit on you Finally, new capability reduced the to campus. York of for and This new existing PCBs a printed for New facility to PCBs. significant advanced intent immediately with of our the previous adjacent Syracuse, support facility technology update of times production, our focus aerospace customers high a and requirements capacity domestic will board high

broken for the XXXX. expect We in building production new have ground initial and low-rate

proposed be project, the million $XXX for between X $XXX of As capital improvements range in previously million. announced, we of investment to Phase expect campus wide including the the for

approximately were will both and initial order million on and we lower federal New with milestone this state sources the and event. expenses. This the York, month, investment signing of customers contingencies, and TTM beam Governor We celebrated support $XX present be local to capital building. a state will requirements groundbreaking at other of site the serve at subject of officials the ceremony manufacturing the certain offset receiving the leading from to defense operating and new which executives,

sales of XXXX. are our defense and QX supplemental the in XX% in and market website. sales, tailwind third demand market a The and on like the total the quarter conflicts of result of which positive to sales compared end and in in defense X on to of solid is Page Now review referenced QX budgets XX% XXXX East. Ukraine to market defense represented Middle aerospace The XX% presentation end of our earnings a funding related previous I'd

book third the leading second bookings of ratio of end strong $X.XX approximately record to bill A&D for consecutive a We Our programs. program for billion franchise strong bookings X.XX a and program quarter, of strategic had quarter. ongoing key with alignment the a the quarter backlog at to

During quarter, the for bookings MH-XXR we Ground Environment the and Aerospace Japan significant SPY-X, programs. saw Defense

about total We our our from over to customers in timing, QX deliveries market sales. revenue XX% for to strength aerospace the in Bookings center of quarter and than visibility of market into longer expect growth. Sales commercial provide quarter, third we represented saw sales computing sales a QX. ship in XX% our market good year-on-year to center markets the end This saw in the XX% total building in and from in period XX% QX represent XXXX. of AI XX% customer end products move market in and future from this Generative defense into end time data of second QX some XXXX due applications. the of growth compared to Due data

in instrumentation compared inventory particularly medical, XX% third a areas. was in We industrial, in fourth from second demand the to to and quarter increased market the As purchases of end and market total customers revenues increased DRAM in leading our XX% of the of to the test quarter as represent in expect quarter market, year ongoing of sales our Generative generally we quarter semiconductor The result, normalization, saw medical XX% sales. The industrial this ago year-over-year result contributed drove automated decline XX% AI XXXX. testing equipment. demand end the lower the of and growth in

XX% For The second XX% XXXX. in decline revenues. Automotive year-over-year customers. automotive inventory medical, quarter, of and due was third continued XX% and to to the of we primarily of the the quarter sales represented year sales total the be adjustments of XX% quarter to compared for XXXX end ago industrial, during soft at instrumentation quarter the expect during several fourth market demand

this contribute compares the revenue during to business our to the and in automotive challenged QX as new of recovering to quarter by continues remains of this In XXXX. XXXX of the a in X% growth AI QX, third the XX% products. total be from to due of return as of of saw automotive We accounted near-term. Networking demand expect in in expect This the demand We third to and year-on-year market X% second recover to end of sales certain X% end market related networking X% quarter revenues for revenue customers. quarter we driven XXXX. market

Next, Page cover information from the earnings available of third details I'll on is X This also quarter. presentation. some our

include our year engineered to accounted flex, RF which During the in and compares in products, components ago XX% technology approximately XX% HDI, revenue. of quarter systems and XX% and rigid engineered approximately the and quarter, subsystems advanced for our QX. This

capacity in increase products compared We leverage as QX. will QX started strong business utilization improved new programs to capabilities a engagement other in the advanced engineered in XX% are continuing markets commercial center XX% On rebound. Asia was customer technology year-on-year in opportunities design and markets. PCB and year and basis, new pursue new continues that rates data our ago quarter demand XX% to activities be in Pacific utilization to and to

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

As in for to Asia utilization that because we utilization not the North plating, in facilities tend are areas occur core Pacific, outside bottlenecks as mix, process a use high meaningful of America as figures these which low volume rates. is calculating reminder,

with into end in a is last sales million X top the in $X.XX this QX program which to includes of earlier, was the year. cancellations at the I backlog customer We end increased third defense XX% had of the total record our QX, to at and from our hubs, to compared in third year. And total XX-day of billion and $XXX.X $X.XX quarter. At as year compared aerospace of backlog, sales XX% the XX% XXXX customer mentioned quarter quarter the end at subject contributed to million the $XXX.X QX of our XXXX. third shipments X of of of billion customers the over quarter end last Our of

overall X.XX ended X for September months XX. book to the ratio Our bill was

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

Daniel Boehle

posted presentation our I on Thanks, for financial release in the the included were Tom, on that distributed Slide website. results afternoon, quarter are our everyone. and X will of third good earnings summarized press and review the today

impairment XXXX of per goodwill quarter, declines $XX.X performance. third GAAP center related or the net aerospace on third million of compared of $XX.X of and partially the $XXX.X diluted in the operating for GAAP markets, quarter $X.XX focus For our million, or markets. GAAP in and end defense our in of segment. On increase The XXXX remainder million, $XXX.X third of share. a automotive, per our loss component the million as due loss net the $X.XX by third to was million, the quarter third non-GAAP and quarter medical, inclusive for share. The to a to offset XXXX basis, RF&S growth was to quarter quarter net million of for diluted of XXXX. comments GAAP to $XX.X the my income $XX.X data a income sales was third instrumentation million, were industrial, financial XXXX year-over-year will in This of compared negative charge computing $XX compares operating end

execution. Selling infrequent items and related through quarter property, periods. Gross to intangibles, third sale non-GAAP Our excludes financial of to present the costs, other or the and of X.X% in was the stock XXXX. third particularly facilitate non-GAAP prior net million, and versus expense the higher and $XX.X operational items. end management of ago. to due XX% the amortization data in margin non-cash investors goodwill, year quarter, compares this the gains or aerospace sales, a costs, performance computed improved market, unusual [ or X.X% with compensation, to and We net quarter expectations was center in volume, to and company eyes million defense enable information see was expense increase third of of impairment such in $XX.X comparisons marketing certain on sales as and The M&A year-on-year ] XX.X% and of sales restructuring of

$X.X of net $X.X sales net of of the was sales, same net the and XXXX, was research $XX.X million or or expense X% a of in X.X% compared the X.X% year. G&A quarter ago. In quarter million quarter in sales net development or quarter year compared Third $XX.X X.X% million, or million, to of sales third same to last

operating was year. $XX.X of last the A XX.X%. compared basis Our quarter quarter third expense from million last margin the quarter XXXX was XX.X% XXX year. Interest to third $X.X XXXX same same of the in points million in increase in quarter in

incentives interest the significant in net third our impact or million $XX.X the to $X.XX impact totaling million translation was a of year primarily local devaluation local from current same quarter loss income driven XXXX, the quarter. currency U.S. in or of a quarter. Government foreign and $XX.X EPS the the line, in foreign compares unrealized a loss net During was from $X.X resulted the current last and experienced third sheets This to which by $X.XX gain exchange quarter losses of the EPS million balance gain million into a foreign functional impact a currency, in $X exchange in dollar Malaysia of income negative there of operating current quarter year. in compared below currencies XXXX. The the China to million $X.X against exchange positive

Our was of This $X.X compares of $X.X last effective expense the third in quarter, year. in same expense resulting X.X% rate million quarter in tax a million. XX.X% to tax the a or of tax rate

of the quarter sales. Depreciation spending of quarter net $X.XX $XX.X the XX.X% or $XX.X of net to quarter or $XX.X $XX.X million, quarter was XX.X% was $XX.X third Third share. Adjusted EBITDA XXXX million, compares per with EBITDA net of sales, The $X.XX third quarter adjusted or third diluted per compared net quarter of XXXX million, was This million. income XXXX net for $XX.X for million. the for share. XXXX diluted income or was million, capital

net flow equivalents cash million $XX.X for Our operations million. cash of $XXX.X in XXXX the was third of XXXX of end XX.X% the quarter at the from quarter third of and sales. Cash totaled

divided debt Xx. of last our EBITDA low range of by below end X.Xx months net Our to the XX was X.Xx, targeted

guidance net be facility. The the and to awards. turn fourth with share, $X.XX range the range dilutive count operating the be to million for We for of fourth of share is up I for Now will in million to approximately based $XXX EPS the million, on of non-GAAP quarter. the starting sales quarter outstanding $X.XX is which of forecast in options diluted project XXX of to other diluted to our inclusive shares, $XXX associated XXXX costs includes stock stock our Penang which effect of earnings and

fourth We X.X% be about of expect sales sales. SG&A quarter, of net and X.X% to in the be to net about expense R&D

approximately expect be million. million, $X.X expense interest of of $X.X We $X.X income we record interest to effective expect approximately of $XX.X approximately million million, XX%. Further, interest of of non-cash and and compensation intangibles amortization million. $X.X expense our expense approximately rate depreciation of We approximately tax will $XX.X million, of XX% estimate approximately and between Stock-based

that the participating Conference in X. That I'd on November to Chicago announce December Beach and BofA December Raton Transportation in remarks. concludes Boca in on UBS be prepared Finance like Midwest the Industrials Conference we Stifel one-on-one Conference Finally, on Leveraged our will X, in the Global Palm and X,

questions. for to Operator? open Now the line we'd like

Operator

Instructions] [Operator William come Our will Securities. first Stein Truist from with question

William Stein

of we with outlook. this to remind to to little I not I anyway. of recent remember ask is these you make get I in that in haven't think result hedge my impact -- the a least really accustomed because, a impact? this it Can in past, quarter sort do this you Can us, the at in good as sort Congrats one-time bit? explain we normalized want meaningful that on this heard out? the are a company for maybe understand this of and just guys companies, effect an with sort should I of sure not way of while things the back unhedged you a exchange this with I and episodically foreign whole not the about about us the first this about dealing where result FX talk look result at Or I way,

Daniel Boehle

for latter, impact This unhedged. non-cash our Yes, a Will. It's Dan. the is from The Thanks it's translation question. it's effects on the sheet. -- unrealized balance

So balance we because sheet Asia have Malaysia. significant we has up. increased obviously that The in have building or Malaysian year-over-year balances both China and now

third the of dollar change in versus a a U.S. we those of dollar because had and devaluation U.S. So interest currencies. quarter rate the significant just

question. So your it'd be to latter the

William Stein

feed it was number. of looks stronger earnings a the than operationally, like non-GAAP sort quite nominal the So bit

think I I get So that.

Daniel Boehle

Yes.

William Stein

us -- well, other result new review the drag of or you wanted on in with to as was several on in in a expected company question I been anticipate ask it issue of what execution the One last then call you the I a the -- a influence big QX recall trending break-even the that to there this out Was really next yes, building Can facility that's your new with how Penang. your Penang? was P&L. as bigger? meaningful effect and smaller, -- timing the the over the and is about the push quarters? you And the from

Daniel Boehle

consistent pretty Sure, Will. quarters drag last on our about at margins. Yes, points XXX couple the it's been of operating basis

start and previously, of last drag as now it's expect So level in middle significant to expect said up and this We'll fourth ramp and next reach the we've quarter seeing revenue break-even do QX quarter. year. and QX we we consistent been the same of in

William Stein

quarter? correct? said previously, was ] Indiscernible last what And that's the That note [ you

Daniel Boehle

Right. last That's we quarter. said what

Thomas Edman

bit going. revenues. is Penang to I to exactly Will. registering how additional color right, on Tom. comment last you a insignificant point. is Pretty just wanted it give And as They're at are little this that's about quarter, much we spoke of Yes. we This

buildup standpoint, making And a those climb. From of into of revenue next We're as progress, Dan revenues. we through said, expecting the we're quarter, year, qualification a and a Next there and steepening qualifications. go progress QX change. in no we should really QX audits steady see as

high and chain reinforce from facility enforce base. interest or opportunity that So is there still resiliency, given the the customer the very remains to supply interest in customer to

that So of really terms of facility in no characterization the shift perspective. from

William Stein

in. all today -- it you Is that, holding year. squeeze mean can margins that drag -- gets should break-even I interpret to bps at the if higher year or facility what now mid more because it's one The quite break-even not does then effectively be next way by bps XXX the drag? that Just sequel are even that will it's still a a mean from does XXX it we

Daniel Boehle

No. that -- XXX And that's so giving X then -- that's At back, at get headwind you'd I've a break-even that points. you if the basis XXX you that's so quarterly been look drag. but

the get the little start going bit have X third headwind of a above still quarter and quarters it to that that. seeing the half you're X of year to you'll get So and you'll second then

mid-teen -- as margins operating get mid-single in ramp. expect We to that full business ultimately we

X So ramp we that as number you'll the of in year. second somewhere half the see between in up

going by at at X the you're you'll It that But quarterly to be an So that, next will quarter. -- you'll third annual slight year you by at all on the drag. when -- slightly a year, negative full not get be for of back basis, back. still for be look basis,

Operator

And Sheerin Matt our with question next comes Stifel. from

Matthew Sheerin

what significant computing that strength concentration customers is center question revenue of the in how customers or remind like Could now you and percentage your segment? AI from us there on that And customer segment. data the there seeing you're related? in are there, A like many and the in hyperscale Yes.

Thomas Edman

center hyperscalers of the about that this AI. related course big end point and to is Generative of yes, XX% the computing there market is So, at data primarily driver

customers, in is side From if start market, terms still customers. boards. So still in customer in X the it's and were terms of Matt where looking in building at major world been a of you the semiconductor primarily you at steadily we know of The that's improving still there. It's hyperscalers as significantly looking of balance leadership from of mix the of the historically. we who's number have diversity or that really involved X standpoint up you're

end So have presence going our markets, our some actively we across to work you're to base. always trying extend concentration there relatively high are to a that but versus of other

Matthew Sheerin

see orders Yes. And of there. in into terms you push that the other in QX, raised there outs talked which some about Tom, why guide is you we cover have, several quarter-to-quarter you your of do visibility already volatility and that seeing suppliers terms

you could or into do talk So visibility look the quarters into firm than year, as you couple of about have or you that? like less first next more

Thomas Edman

Yes.

then guided looks for QX visibility the as So we've us and certainly well. as QX solid

gets to that difficult difficult to Beyond more forecast. --

So drive expenditures solid end good to firm this that strength beyond backdrop signals, the project demand harder in QX again, really But point, like and of terms QX. capital and the into in occurring would looks looks Generative terms shape Matt. in QX goes really market we're still it in of of at obviously, demand then we're that's And very through AI, significantly, in innovation terms that that.

Matthew Sheerin

and And regarding Syracuse. question expansion the a then in just

terms margins of a year? that you're Or of of is story fiscal will there it of sort impact anything to any in terms financial timetable be next terms ramp or to 'XX in more and going the of when In start there, really thing?

Daniel Boehle

Yes, fiscal that's mostly XXXX.

the little year, online but next facility impact. late have And really year. building very very year the Next won't in we'll it be P&L until

bit slowly. You'll it. ramp of start little that That's depreciation. We'll for really seeing up be a

Operator

Michael the comes question Securities. from next with Crawford B. And Riley

Michael Crawford

Chippewa in was fire acquisition I where ago? Can if had technology facility was years you in a about with you X there iX this think got impact, August? talk your your any, advanced you Falls center at what

Thomas Edman

Sure, Mike. Yes.

material advanced for at think not main just or would that board had close circuit was impacted. -- that It was we occurred was facility, was -- is announced really have fire later. production our on -- was impact there which in back were -- Falls were impact our since and center in base our Sunday. It there no in Chippewa we've I XXXX, building a built a we it I actually, We day by was. it production. facility, technology So all. Adjacent which if was The guess We printed it.

impact material whatsoever. no So

Michael Crawford

that And in kind then, a guessing I'm Excellent. outlook didn't vertical? wins be expect number, if for given have auto weak revival your some in then that But lot you lifetime remains Okay. that have market program appreciated. the period. booked end And of value you of that'd that when we might

Thomas Edman

Sure. Yes.

characterized you that state be flux innovation around So continues because of in but of this China largely EV EVs in at fact the market. well. it China, is OEM a there, point Market the a market to that EV particularly the situation

Western impacted OEM Tier turn the and Xs. has that so certainly base World the customer And in

let So that have of at terms programs let are programs that relatively been significant that they've programs let, in to technology as they've or less looked out. new those And turbulence requirements. been out programs reluctant interest given to

where are where $XX like about be. we program that terms we of not certainly won we'd to So is million value, in this last quarter,

not is about I that this is think we're of market from really this expecting quarter, a standpoint, not lot and, the dealing mentioned one think and where a with I commercial I turbulence market think, It growth. a is of $XXX year-to-date we're last that personally million. market representative TTM I expectation a we're at

a next be think, will well. challenging as year year I

turning our end and as commercial corner are up. market which market instrumentation is markets, medical, data our really we pick see beyond that networking, to also seeing influenced see to the to other continuing instrumentation even look in of AI. good to being industrial, such starting really now portion center the significant If be Good by you that growth, a to

So say near-term. again, here automotive the in at is we will I'm growth the hesitant that see one this to market where point

Michael Crawford

Maybe question for final just this further me point. one

been this and wins I so then the wins last of $XXX lifetime ought that something year So going do $XXX million prior volume were be production might million believe those like into wins now if even to go it's automotive lower have value next those some that at in potentially programs than time? prior million year, $XXX or program into maybe X production in years the and are still envisioned

Thomas Edman

great Yes. point. No, that's a

the There we've the where in particularly So We're wins have a going to things really significant are those into past content pick that is space. are going years, Mike. of and focus in there. up those on, you but couple of programs the we think few and full had production, programs programs go I EV there see spectrum our a most

one were they in cases think date aggressive than slipped. and ramp other less the is some schedules I production the the has record of of

go So of recalibrate what It's they the ramp programs seeing scale they're that. how on they those out demand, just -- what will at they of a well. terms based certainly, of quickly question as potential production. customers moving But around programs the timing to as in are there by far and majority those of

Operator

comes [Operator with Jim Instructions] Our next from Needham Ricchiuti & question Company.

Chris Grenga

observed I in first the anticipate going Chris guess my would the aerospace for is at you on the that on Grenga industry moment? impact from any or Jim. This do have are you commercial strikes be,

Thomas Edman

So, question. great

if business look that's commercial a so for start, our accounting Just total X% of at looking ties to revenue, at you company to XX% aerospace. that A&D about revenue, of only

of company. relatively, total less if total at so X% than look And about company you revenues

in So our huge has built It's been With Carolina. to XXX content be exposure not XXX. program tends there. not a affected. The heavier the with South that said,

the that not that this overall, other in you seen continued year-on-year anticipation, news. What good go XX% have areas longer. if much for quarter-on-quarter. last XX% may on But up strike as that approximately XXX represents about the down we build, look that's were too quarter as So still revenues and year-on-year, I well think it's

part what revenue. So happens relatively there. again, insignificant company the of of that's we'll our see But extent visibility

Chris Grenga

Syracuse just and And the CapEx the to net state to the expansion, that's contributions? for the federal number you figure the cited, -- of million the range, clarify million $XXX $XXX

Thomas Edman

million federal does contribution. that that not include No, $XX

So that's pre contribution. that

Operator

to turn like at to the no Tom for showing this Edman closing time. now am further call would I back over questions remarks. I

Thomas Edman

you very much. Thank

in Just we of few wanted reiterate points the the a that made to call.

performance improved mix. delivered ongoing wanted we revenues, that highlight to margin and higher operating favorable First, strong the improvement And driven I execution. by operational really was in

Second, we million. $XX.X at flow from operations cash generated a healthy

sheet net to We ratio solid a balance also maintained of leverage debt X.Xx. a EBITDA with

Syracuse. And continue facilities your on customers our new much. in our investors of make in I to initiatives we Penang, like support. to employees, foremost first Goodbye. closing, Third, as such very for and strategic our progress you our thank all and would and Thank in continued

Operator

call. you for conference today's Thank concludes participating. This

You may now disconnect.

TTM (TTMI) 30 Oct 242024 Q3 Earnings call transcript