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TTM (TTMI)

Participants
Sameer Desai Senior Director of Corporate Development and Investor Relations
Tom Edman Chief Executive Officer
Todd Schull Chief Financial Officer
Matt Sheerin Stifel
William Stein Truist Securities
Steven Fox Fox Advisors
Jim Ricchiuti Needham & Company
Paul Coster JPMorgan
Christian Schwab Craig Hallum Capital Group
Mike Crawford B. Riley
Call transcript
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Operator

Good afternoon, ladies and gentlemen. Thank you for standing by, and welcome to the TTM Technologies Fourth Quarter 2020 Financial Results Conference Call.

During today’s presentation, all parties will be in listen-only mode.

Following the presentation, the conference will open for questions. [Operator Instructions] As a reminder, this conference is being recorded today February 3, 2021. Director TTM’s Development disclosure Senior will Investor TTM’s review now statement. Desai, of and Corporate Relations Sameer

Sameer Desai

All right. Thank you.

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

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

Tom Edman

you, times. of us QX COVID-XX for Thank challenging safe hope conference for Good our that, and strategy quarter has And be call. an business you begin fourth and fourth XXXX our quarter CFO with continue I and thank followed These update your our to impacted performance families highlights with business all and our our Sameer. review follow quarter I’ll Schull, how results. XXXX you healthy. by then on a financial from are of joining a guidance. QX our an will discussion XXXX of Todd and the of overview our afternoon,

range. while automotive telecom in markets growth All medical, end industrial the instrumentation and markets above to the EPS pleased of We non-GAAP midpoint revenues your will end fourth the to performed was the year-on-year above then end call by the report and TTM better in offset questions. open and generated than am networking markets. that in and weakness and quarter XXXX, guidance of guidance guided defense the I

unprecedented $XXX The to In proud extremely operational I has strong how to addition, despite due and costs operational employees of created production extra overcame TTM macroeconomic concerns. excellent am and COVID-XX. COVID-XX continued have execution, employee uncertainty, to in formidable and the EBITDA performance, at worked that inefficiencies, from this difficulties, pandemic deliver net operations ratio bond like cash settled challenges repaid convertible shareholders, solid environment. with to no of QX, also drove million debt end of X.X dilution our the we I’d and QX. flow our to to highlight

shareholder value strengthening sheet. additional to share increase program repurchase of our an tool million Finally, we announced a the balance following $XXX as

and in COVID-XX mobility us a Chinese with X% enabled the XXXX, of full year and of cash strong closed headwinds and sale year with future. solid excluding and the businesses, grew vested from million the leverage, was TTM currency. operations along business flow position from strengthening putting to for $XXX.X the the us profitability Full the reduce debt For despite repay

would to cash update a to key on A improving transform with is strategy add more more like less our that be be an business on I will provide long-term capabilities Next, are TTM investors flow be cyclical margins. to over offerings stable believe growth, internally and both and our will of to through rewarded strategy. that complementary and We differentiated. strong and our part current to products acquisitions. performance journey time

balance as a our on strong needs. further forward, you like I update the to COVID pursue to to position support in also our organic investment sheet Looking situation. acquisitions is as well would

are XXXX, For the production. of of America has in plants recent majority continue impact population managed And COVID-XX we to expect have seen our occurring our COVID through XXXX. employee cases. the America. holiday manufacturing minor to where of of combination with this surge our Since of located, we in relatively increase many COVID into within locations a the are season infections weather North and colder Currently, created condition cases these regions or we an in also North

of testing number have While inefficiencies. causing is infected after that many in and returned those a which quarantine of to still being were protocols. employees following production quarantine, work some cleared We

conduct team tracing, work effected in rapid were quarantine areas. to addition testing, deep and in who to members, We cleaning individuals with continue contact to close contact infected

of than might and communications, our such had in continue on our checks, have without these transparency as place operations have less worldwide. also preventative internal of events facilities distancing temperature extensive precautions. impact our We communications, masking, measures Because these case been the and stringent other and in the proper culture measures

our end All mobility December. the markets. healthy the with Now production market end unit to plants like review exclude EMS two I’d disclosures historical and business in

in end of refer of XX% which on of fourth both QX of quarter quarter QX details XX% The defense presentation, are X sales more our disclosures, market and sales of earnings please market XXXX. represented our and end press fourth Pages our total to posted website. For sales earnings on compared to aerospace and XXXX X and release XX%

of from backlog this A&D We end with million an XX% program total AESA ongoing record of solid our the expect fighter market. strong in surveillance market $XXX the more result missiles, and bookings for segment sales. We of program Army, for revenues compared to saw and defense bookings a than in programs. A&D in commercial our key We Navy transportable systems; to sales radar. weakness a the franchise ballistic is Raytheon’s in jets significant beam for to against high to program strategic Strength Slide scalable radar represent agile F-XXX record up saw as as quarter a the defense for $XXX quarter. with F-XX radar alignment protect of Spanish about of Lockheed variant Growth QX and million X% X, growth U.S. market in well ago aerospace the QX Northrop upgrade end in LRDR offset year-on-year year the frigate;

programs. year, bipartisan high pleased could XXXX and budget high multiple defense the from For demand aerospace going NDAA increased defense a see were support, and and spending stable stay record full law passed new the for X% reached level defense forward. with benefited as at into suggests We increased TTM which to the a

projections growth to XXXX, market Given X% we broader defense we budget our X% be business. growth. outperform to expect In our solid expect defense line the program by alignment, to with of side in would of driven

ago in total XX% which We XXXX. of We year contribute quarter expect during the was A&D Automotive the our XXXX, the in of affect third commercial represented XX% and automotive in to portion, growth and be down in sales QX XX% fourth XX% total of grew in of the the market sales sales XX%. quarter of aerospace XX% quarter almost following XXXX. growth XXXX year-on-year QX. to to of compared sequentially to during returned XX% Automotive

market XX% as the second and to XXXX, supply year, demand For of end automotive in compared COVID-XX XXXX. year. year, half XX% the automotive of was the XX% by in followed half recovery a were affected our the in advanced the declined first by of In full technology both

XX% full start, the the due design year, value with compared the year a million in X% expect industrial to $XXX above medical end The $XXX forecast wins X%. market the XX% sales the stronger to instrumentation XX% quarter be For to lifetime total contributed our in in to million, XXXX, and to In of market longer-term ago in of quarter, of compared we fourth XXXX. quarter anticipated the we won of XXXX. third

to be market this of revenues. expect XX% we quarter, first the For

customers expect We of around using our AMI&I year, networking grew the XX% build revenue of third compares automated XX% in to due our segment market In above fourth to full growth test of and strengthened XG communications and the requirements strengthen QX, to of XG X this for the during of of expect fourth XX% for strength instrumentation This to particularly relative applied of systems XX% customers the forecast printed XX% the extraordinary and line for in quarter emergency XXXX. demand in saw XXXX In ventilators revenue the boards the segments trend of equipment as quarter For specifically segment medical quarter XXXX. following the circuit uncertainty to the to to the of temporarily. end below timing moderated treatment in ramp as accounted due we builds be we China. to X% pause X% revenue, these of telecom primarily Phase and strength compared monitoring be XXXX, XXXX. Networking see COVID-XX. the patient well

communications the X%. For declined full year, networking

in the This XXXX, XXXX the the early in anticipated our declines quarter forecast followed the sales third in grow, infrastructure complimented We of year-on-year ramp to networking. XX% computing peripherals up be customers expect term in the was market center of growth year, this market growth of of X% storage semiconductor by our fourth X% customers. as back the represented total market by in XX% to in in end offset below from the data of soft due to of half XXXX. in QX quarter needs year-on-year in XG longer modest end to part Sales X% compared of start growth the and a but year, the

We market approximately of to first XX% expect revenues in this represent end sales. quarter

X%, our full driven growth. XXXX, For of data be X% the saw customers. expect data center growth growth and computing market to end center In X% we across above by forecasted primarily the semiconductor year, we grew to as

I’ll Note mobility exclude also some our on Next plants EMS business the the Page operations following details This closed. and earnings we that two cover of that unit presentation. quarter. the all is fourth of information X metrics the from available

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

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

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

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

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

faced TTM for was continuing PCB areas innovation Their these efforts conclude particularly our the for XX. ratio to our three customers. customers to I’d defense times months by employees our essential like in of to like Our critical ending December thanking again by critical are mission during contribute and appreciated inspiring with to book-to-bill support our result and X.XX and and the we the currency we Despite positive concerted challenges strategic better also moves our long-term. We’ve TTM a efforts strengthen and employees performed of than COVID-XX operational and the as our market our will customers. taken industries. direct in excellence related that business medical XXXX, expected for diversification engage

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

Todd Schull

afternoon, good everyone. and Tom, Thanks,

unit. mentioned XXXX TTM in sale its the mobility of closing Tom business the As announced of earlier,

the of disclosure as mobility operation. results the TTM’s such discontinued a GAAP As business reflects unit

both will financial excludes and call, continuing businesses reported. and information. X operations. appendix in non-GAAP have I included discuss which GAAP mobility business we the this is business unit. results results The During the of information, non-GAAP E-MS the the for unit refer additional the on also details schedule Page investor exited presentation contain earnings our our of and to Please presentation this still of earnings

markets networking in telecom fourth operations quarter, our sales quarter industrial the and medical, $XXX.X the were declines with particularly net of was The roughly in end our in defense revenue excuse was end instrumentation to was me, coming closed. growth plant, partially offset million year-over-year compared aerospace For million automotive, a from fourth and to have which XXXX. $XXX.X decrease continuing due third in – of from the by this E-MS decline competing This the markets. and we

performance. plants Excluding of net quarter continuing operations comments of quarter down will my the two a of the $X.XX of continuing share. $XX.X GAAP or XXXX. quarter $XX.X from $X.XX fourth on million was million focus GAAP remainder revenues fourth fourth income compared diluted from net quarter income $XX.X share were for of being the in the XXXX impact shut our income financial of per our a in million of to operating or operations This The E-MS X.X% diluted per the income compares was GAAP of non-GAAP $XX basis, last XXXX down, the operating million fourth year. On in year-on-year. to

and Our tax prior and items. non-GAAP items, through or margin the unusual expense our in related associated gross of eyes $XX.X in to costs, or Gross other compares million expense or XX.X% G&A We in China-based net to lower unit, year-over-year net exchange ago versus restructuring mobility Selling marketing and X.X% related periods. present foreign million quarter quarter revenues. of management comparison a sales to of non-GAAP headwinds, XXXX. and million in net ago. quarter year compared X.X% M&A performance a information compared certain quarter. and the the labor expectations same fourth sales excludes sales QX Fourth items X.XX% $XX.X net of which million COVID-XX $X.X non-routine the the XXXX, net of $X.X or of The inefficiencies, revenue, ago. company was XX.X% business enable of with quarter fourth in quarter due was year the sales X.XX% $XX non-cash our to This to expense facilitate investors X.X% was see year and increased costs. million decrease or or to million X.X% financial divested $XX.X was margin or R&D infrequent costs to the in fourth in In was

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

approximately a recorded we During $X.X foreign year. compares the of reduced of loss last of losses. of or EPS. to Government to $X.XX incentives EPS exchange QX net million quarter, $X.X the $X.X $X.XX loss in approximately million million This or of

quarter $XX.X share. a negative Our XXXX tax year due the $XX.X of was quarter rate million net fourth change tax net effective million in sales the with or or million. fourth XX% per Adjusted million $XX.X $X.XX for million a XX.X% XX% quarter share. was for $XX.X full sales. or net quarter compares for XX% diluted fourth to quarter EBITDA the in non-GAAP quarter or XXXX compared to adjusted fourth $XX.X to fourth from was capital was Fourth quarter income of rate was Net income spending $XX.X of the X%. per diluted million. net $X.XX Depreciation the This EBITDA of

fourth was quarter at operations quarter remain times. This the XX. – end XX is net very or million. the the quarter, bond the $XX.X paid X.X in revenue. million our cash million months me, excuse Cash balance Our the This EBITDA positions we divided our of XXXX liquidity on after convertible strong. number from of Cash fourth by equivalents was and of cash settle were cash and flow sheet last debt $XXX.X $XXX fourth XX.X% December number end to at

During upgrade the Moody’s quarter, from BAX. two-notch we to also received a

announced mentioned share Tom today As repurchase $XXX we in his million two-year comments, the program.

for but we increase shareholder more value. continue tools our be performance, utilize have can value, cash will generating our we to our to in start as shareholder the becomes M&A still transform consistent strategy. company, both – will that believe priority As we its company allocation we modified capital increasing

to our for like I’d quarter. to Now, the first turn guidance

Looking believe chain challenges, XXXX first mind, that total the continue million our market to million. ahead, own in to with disruption, as we $XXX be in revenue end estimate the quarter demand inefficiencies may cause COVID-XX we well production. With supply as for of range $XXX of this to

count expect forecast is approximately to We the on to non-GAAP share. share The diluted a per earnings million diluted in be $X.XX shares. EPS range of XXX $X.XX of based

RSUs, Our We will X.X% the with revenue. to that of associated share quarter spend about expect and in be we R&D as shares be guidance count warrants. first no securities such revenue SG&A includes of our and options believe dilutive about but X%

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

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

our to Leveraged the Networking open be February the Industrial Truist Yield questions. on and for the like that & prepared X; now participating Tolari? Conference on X. the I’d Defense we’ll Conference Technology to & and High on announce line March Aerospace virtually Conference I’d March Finally, in remarks Services and Morgan Finance JP X; and That Cowen concludes like

Operator

Matt [Operator Instructions] Sheerin move take to Stifel. question We’ll with our from first

Matt Sheerin

to ask guidance. question Yes. a the regarding forward Thank you. I afternoon. Good wanted

going like modest be So down on backing into the gross sequentially margin looks number, revenue to decline. it that’s

calls on hearing logistics a costs costs, costs. figure spend that trying and there lot drivers lot – that. copper on materials the of of other what you know I’m and So things. are a incremental costs, out conference I these are we’re there that to supply know I

So you’re the headwinds are in there next cost two? quarter any seeing or that

Todd Schull

Well, are or year-over-year, you Matt? going sequentially to

Matt Sheerin

it year-over-year, looks like you’re Well, sequentially, sequentially. –

Todd Schull

Okay, sequentially.

compared at QX on driving is looking What’s really that sequentially line. margin our obviously gross observe margins, you’re bit. would the down us be little to look we So revenues for it, when sequentially and slightly, that at to QX down a right our

Asia, New we lot QX, a we of goes Now that in plants that. until closed New through for challenged with you holiday also headwind. bit in comes to Chinese to strengthening the the a it’s work although, as modest two bit the Year currency, a have business, production from And is stronger away then And from we pay, which in we challenge be that there’s have increase – to profit But that have with sequentially that that of bigger QX a E-MS pay we day, year-over-year, revenue and Chinese little a course, watch Chinese we Year in which continue that have where QX. of headwind. is every which didn’t of obviously what completed a

So that really those us. issues are three big are the affecting

was the I in QX, sequentially, challenging similar to pretty think the we QX. be COVID issue in expected

not a So sequentially. really variant that’s

Matt Sheerin

COVID affected employees been in of Okay. seeing? you of the and that that on the point metric maybe a terms have headwind that perhaps with And number basis could the on issue, quantify you’re cost that, associated

Todd Schull

we when be to be the have the did we part And were you you amount pronounced department to is challenges in precautionary direct things very costs have that information. the the proving Tom anything expect things but overtime you to on have sick, terms terms it of and or plants to its But costs, Tom, cleaning we see Direct that Those work might Well, like out-of-pocket quarantine difficult I’ll are a certainly avoid production that? was challenge down production masks production could like schedule. a can What’s that to additional significant getting you for to quantification that do, labor extra the kind let impact comment we to are or is as add our that, QX. up regards day have of which in quantify bigger relatively a and QX. to sickness employee – want there’s open, the in of us efficiency. in expenses our measure inefficiencies, more modest. people a to much substantial were inefficiencies referring to keep of one in although some

Tom Edman

couple I the things. would past. of is add inefficiency, talked Matt, a Yes. other One about in the we’ve just this

tiger are structure, plants North a teams around particularly our we other potential our they’re – of with have will in dealing challenges new complexities We technology. because America, when We in products, plants. from smaller, bring

a clearly, impact from very Todd with that lot management. hands-on with been doing production kind from also but goes talked difficult we’ve assistance. of organizing And impact on Obviously, and COVID that involvement, presented on We quantify, the have that of that, to total about, from into that also inefficiency yield production. an situation an

course terms The impacted labor about pandemic. has other of to COVID XX% piece our this labor date by in force been of of the force, during

see we mid-November, what incidents starting So bit December starting others saw We be of cases have seen is and in there. mid-January. to I off in uptick little real into caring tail a may a think through

We’re encouraged being very careful. we’re also that, but by

Given event like happened every to leads it seems what of influx here, has another cases. social

we’re we’re that. it’s that very on so a case down started bit, is to not but the to see counting And come nice –

Matt Sheerin

Thanks Very helpful. much. Okay. very

Tom Edman

Matt. you, Thank

Operator

with Stein William to next move Truist Securities. We’ll

William Stein

and Congrats buyback on questions. good Thanks new the announcement. results taking the for my

way, wondering the COVID in is QX results QX I’m either any restricting revenue if in or the outlook. First, your

Tom Edman

different had on on yes, operations. in in impact and on in jump imbalance that than production. impacted we really and Todd impact go causes more impact it’s hit And may facilities yields, definitely, And an can the North the have again, you will as It’s Yes, of forecast just that. be quarter, and other, I an that our it. Will. that’s into QX. sales, just impact sales productivity that And America – standpoint production in difficult QX, total – but in to on from the an

overall impacts revenue. and production absolutely that therefore So

William Stein

follow-on what much been you to COVID on what by you’re to impact put aside, being the own boards? being quantify the I’m from table. the question your have also the affected if you is have But do able but going might to he either I’ll your how like if chips get to ask shortfall margin think potential perspective any think customers left putting on another, you’ve revenue you shortages didn’t way business for have or the of to degree not ask do

Tom Edman

so in Yes, significant if defense, commercial is that we’re quantify. production of again, terms QX difficult soft. Sure. aerospace that in inability aerospace to I example, What also revenue, tell of look is is, piece a impact and on as of is can piece you being an out. to you But it at relatively of flat. get A our course,

quarters. bookings you what a of It in lay so grew we yes, would be talked the and to aerospace in if end, course, rate X% on last about impact out more that how defense range, was in we high COVID towards there. area, – X% that. And significant and growth the being that between where course, about normal also, X%. is year, There’s clearly, COVID having an of pretty yes, But situation think

think, affected seen by automotive. had relates not edges, that is, the running be What to they’re everyone shortages, you has been but else shortages I’d of on how us. along it really And the shipments our reading we’ve chip of customers a business, and terms into other impact I large In two to tell course, we’ve about you’re referring impacting components. with how shortages, Will, on yes,

start to to have, the that’s the And still as is watching situation at an more thrilled I carefully. to that particularly the impact see chain but pools. continuing to we’re pools, terms through hubs see monitor in hub bookings all automotive, coming of of would to impacted so that supply hub would they but those are eventually far see expect trickle of good, inventory out in so We if we going in

So so on. something far watching but again, good, our to what we’re eyes that’s so keep

William Stein

you. Thank Okay.

Tom Edman

Thank you.

Operator

next move Steven Fox Advisors. We’ll to Fox,

Steven Fox

Good Thanks. afternoon.

uptick First percent detail question, auto revenues big of little into to if your could more on technologies. you curious the was tied a the advanced bit go in I

said You from went to XX%. it XX%

then So end what I advanced driving was what and follow-up. a And technologies at applications. had

Tom Edman

driving needs, components HDI other And the Sure. factor, Yes. infotainment HDI. and for impact center that’s but predominantly, that’s development driving tied more ADAS into bigger and RF miniaturization RF, positively. going and Steve, the factor vehicle and is that’s and a more that’s driver. a of secondary related of need become A more it. to HDI, infotainment autonomous

RF of those areas, else. both but anything So more than

the that of area translating ADAS about revenues. into bookings past some talked So the we’ve in now the in

Steven Fox

hear in beyond but XG, and for maybe your you. I’d get China sort terms XG data just And terms the Understood. for of actual your terms of orders to communications of of I just can expectations specifically networking more area, in then QX of bit about Thank thinking you’re in waiting little feel talk you to center, the sort markets. a data for and love how you’re about center? those guess, still

Tom Edman

Yes.

going at our falls into look to way separate the networking that communications So I’m market. and we XG discussion end

computing center which then to bit talk about end trends, first, our fall and a that I’ll I’ll So little data talk market. into

others are XG coming very last to strong of On It XG, Phase demand side, the saw with government was out Chinese the what revolving Initially, this And the We’ve X of for year, after their their And Chinese situation provide been the and really X. are around, China last to related was to the time the I monitoring definitively, design Year. the it it when the ready would frankly, Huawei Chinese I say Phase be New would X development. we’ll before think New will after be Phase that was questions slated investment. fall year. Huawei, delayed for is to waiting or of networking we communication timing, real start year all Year right equipment. in

So little think, in. comes bit the there’s I that’s where uncertainty a of,

of It uptick. And see is The is in market stations base To they’re which should first to last I frankly a of at the was this the what to pick the year, see that This can are world, then And were what good out that. give it north factors last of small as installed. China. closer calling year, sense least expect rest as a we had XXX,XXX situation, year. very officially, there. forecasters could There be what’s could compared around somewhere where XXX,XXX for what XXX,XXX you that, that. in XXX,XXX. see base stations of from or be the was to other you a think year approximately XXX,XXX half up sort government year Chinese expecting estimates are of I would to forecasts said

I’ve are That’s of XXX,XXX we’re and the that of I some driven the to rest out and to signs XXX,XXX think anywhere North between going Europe of Asia. followed that be seen. of see then starting by forecast initial and America

starting center data encouraging. – than was course requirements which we’d here, phenomenon come the the some that through world China So the that the to of for be in soft. meantime, year. was second is year from a been expected, activity second better end will significant of with expansion is to out of year, us rest that. that’s a for But that, year, I half always volume pull market. to phenomenal equipment. the be driving very be of what networking needs we encouraging. piece data And say which that a is will is of really there, trend would more terms interesting. will off the the waiting we this In standpoint, first we’re why Last In real pointing quarter continue then in which the we’ve along QX further of we’re out of bit what urgent combined see and half expect with

term again, grow looks And demand there needs data of the data longer I help data year. that to are continue will center good, that trends in center standpoint. terms think requirement a QX from this to

So side. on encouraging that

Steven Fox

Great. That’s Thank very you super helpful. much.

Tom Edman

Thank, Steve.

Operator

Next Needham move we’ll & Jim Ricchiuti to Company. with

Jim Ricchiuti

Hi, good afternoon.

or your in talked variability and U.S. your increasing from increase? tied the in that in coming you case some are that seeing could this, elsewhere, be customers it’s or flows to the an orders You where the impact we’re cases just whether think I’m on And of seen having wondering, impact about guys some case you workforce. have the of flows COVID, it’s

Tom Edman

I’m part the you caught not the of sure repeat of all just last Jim. I question? that, Can

Jim Ricchiuti

at the that not variability orders of And I’m from I you who seeing been just breaking COVID, impact any I’m Are its your impact I impacted all if just clearly – coming being curious Hopefully customers mean, yet? regarding up, this. Or themselves I have in – the just if that forecast? had on wondering are you’re and able impact was had you playing of question at the but the workforce. Yes. into that’s to see by was an

Tom Edman

and hear say, it’s to so – defense, would a that. supply has been I where the we again, aerospace we be and as going whole And challenged. as primarily think What chain I

It’s moving supply programs situation, the are around. accommodate moving dynamic, chain. they’re needs pretty but the to customers Our program around

broadly if about far, to pretty so you think just There’s of it good probably that doing I ship. part think shortages, situation the I others and impacted to of – And a allow they’re TTM job component COVID is Jim, component, by continue as certainly this well. to of part allow think, also,

say as overall I very shipments a hard programs it’s to again, they done that to complex this, of quarters. to then separate look out think, these are adjusting handling a I but is adjusting two, and they’re customers us what and so good situation. continue chain supply critical over really several But would job And allowing on they’ve the

Jim Ricchiuti

some more out know several guys – see vaccine should but getting guide out next of quarter, should basis just there we a in QX. I anticipating start fair to gross Is way to of you like, lists beyond be you’re in on seen the the disruption QX over sound the it? think that the as hopefully, this, would about don’t margins, of that we be the coming and you’ve months, it there your there,

Todd Schull

there’s Well, battle. no

and We’re impact COVID our QX its significant employees. terms QX to to of and about a cost carrying you inefficiencies cases our talked in an saw impact ramping Through structure. anchor, those we we’ve in if in that will related on as

holding COVID we North it gets expect world situation that America, yes, Is QX? country control. So we Is the the is COVID the under would as hit situation, to really, gets relieve or better that particularly speculate I a back little I the a certainly us think, think the bit. and on all that that’s doubt while, watch point? that can that vaccine no beyond little news that but there’s we

Jim Ricchiuti

– area. Todd, When in in year did what you did commercial comparisons that last the aerospace the get When hit was the big for easier, area?

Tom Edman

it standpoint, If QX, a QX. so really impacted the us really revenue you think started QX from started in QX, and in then QX

that’s of it’s compare. to year, that through think course the year second going going it’s we’re this until half I be to get we to the a tough so And go when of again,

Jim Ricchiuti

fact just we’re administration see the out last of is question, guys? I’m real in Got American these that terms any for chains of And more benefit initiatives. seeing might it. do in new by reports And have yes, you of that supply that’s a it yes, of and coming wondering, you

Tom Edman

it well-established early. we when predict in together. And we America. is it’s come to early all so think North Yes, that I will look, are how Clearly,

have opportunity. We the

to the have the invest certainly We we continue footprint in. can

at the through what set we to are lot business, by to about our think One are start U.S. areas start it’s our of is you America supply about do you where certainly equipment Jim supply chain, is frankly, will a – supply thinking a insufficient. to a administration the we’re think As whether whether with, it’s infrastructure number There initiatives, few they chain, laminate if is chain. things.

importing with just low type bit moved mix area end volume say simply really others and a we the to associated have a of because, is, I’d So volume quite and second in cost up we we the manufacturer high production U.S. a that. bear

scale back at perhaps come it But and it makes when sound as on and if recognition get sounds this. around execute is does could we’re chain, it scale those into challenges least for be both yes, government would do – And But we’re just there encouraging our infrastructure still even, at our early the supply Yes, watching it very that That’s a to even lots like with requirements to demanded that a want interesting. obviously it they discussions it’s by it’s the a of it then days longer-term. us, like then and that, extent our U.S. and meet base, we need, with customers commercial you’re our by the encouraged looking sense to chain need looking utmost we to customer needs. will the To supply supply U.S. utmost our are so production that for have chain to there needs larger customers. to our starts that those will encourage be in scale the always closely, full the well in customers. as do

it all starts. So that’s where

Jim Ricchiuti

lot. Okay. Thanks a

Tom Edman

Thank you.

Operator

[Operator question Coster we’ll our Instructions] with take next And from Paul JPMorgan.

Paul Coster

seen questions, it’s Are Yes. the just of questions. strikes especially so Thanks a my have in base? this on you – entering call, of must two enlighten moment dozens the but the up some change been in the touched by A of for and We’ve upon, taking sort some mix front. logos auto your really EVs to space, little can new companies be late me first just these that you now, with at perhaps seeing the us. there might customer

Tom Edman

for and I’ll then and broaden – question. it slightly. thank you – the interesting Paul, Yes, I’ll

level. that the but North lot states is have the if of saw our what’s quarter seen good strongest saw to across is to that, you where what then where regionally, strong in Asia what not interesting and we start we be look And in year-on-year customers coming primarily America Asia, – in automotive the the But Europe think to really same at board. and to continued innovation growth we happened EV X we what I suppliers. Tier and on, a in as the the growth, right Asia, that commented certainly fourth has you I year-on-year X after space helped me, growth Tier look attribute we – with the

business business. has helped it’s come that’s And demand consumer think energized their as I their back. really

And feature. so really that’s encouraging a

think internal remember, I in see as would also of you And big from Europe ago if on that the a is consumer transition combustion to it’s where this solid emerge, in well, side, encouraging demand well. year for kind to out dealing growth, transitioned was of go, And engine European adoption, EV was a were starting think the and and demand because diesel. the out more as of the good geography the question we really think yes, that some I diesel. answer certainly more as role but EV playing I

at lot yes, statements me continues of they’re don’t around turning of the very volume but customer and – to with are So these us base. when to seeing because they’re development Tier their be a they we’re different out some get yes, new doing that wrong a work, direct and customers. major look landscape, for they���re them, the there don’t I for work Xs, doing

Paul Coster

supply on will most my more ice And follow-up it. got in controllers then a to perhaps that or auto to technology, you? the constraints, people, COVID micro area segment, not effecting Okay, Silicon, related chip that’s at system really it’s also is but in people the the like really to moment, the whether

Tom Edman

we haven’t a I yes, seen so Paul straight that. bit Yes, not comment on The – we’re is, it answer did yet.

We’re still seeing very strong demand.

quarter. be coming numbers, and see of that’s hub, hub the it going strong our the closely a the and very out us can hubs. watching for we’re out backlog those fourth But which of pool You reflected that of in to really inventories function

I be and closely would that, here but impact it just had will an yes, it watching yet. to hasn’t we’re So there eventually, expect materialized

Paul Coster

much. so Thanks Okay.

Tom Edman

Thank you.

Operator

question with We’ll our next Group. Capital from Schwab Christian Craig Hallum take

Christian Schwab

guidance could as Great I Asia-Pacific. to of in assume that we in when we predictable execution as in an to half production the have from of want environment, wanted gap could your the us? about improve X bridge for you back executing be think something gross the QX particular year. I applied starting If margins optimist, how in to and much and safer environment, Can well up utilization and in If this challenging environment. everything’s into Phase fall as the be this accelerate, we a get vaccines we more

Todd Schull

Sure. we’ve is really talked I’ll about that. take looking revenue a at what mean I happens that what level right. crack of at

that second that quarter half starts see level the strong complexity, our to on the maintained, that key that’s we margins, really we through incremental to use comes result revenue higher and I let’s to income in associated with the in X for operating And going rollout incremental great. When that’s there, And up. we higher auto that be As XX% flow kick it’s that revenue really the good if to have XX% margins a at but through, as complexity, it incremental say, just pick let’s we’re somewhere the at QX, looking XX% of very the it’s constructive. to from with depending ramp China Phase in, our looked pick XX%, but XG us. a a the we

add us They’re plenty in our the which low range, Asia XX% comments of number low. his we when capacity and relatively and so earlier, labor in have through capability. some the low-XXs, utilization flow a revenue. very for And infrastructure, is have Yes, low quoted historically. there’s place we the rich forth, a we but levels on incremental fixed terms have to Tom that in and in are of As so in

yet first of to nice in to And might we bit half good top our at tough but as we those as markets in some effect. be to year quoted improve, keep there wind. level. very it past wins as compares year say, compare remains there, and in medical, some a the a strong, industrial, had was provided, information still end in through on look year through he back the last to if those So excited Tom degree strengthened go a a Tom a end markets going section, lifetime auto this was and half very tough as our of some we flow and very okay, we telecom are of the about robust not we’re and automotive continue excited XXXX or of the mind auto the If be our as have And number. mentioned could year, networking because first – that’s and things telecom XXXX,

here, of. that, a building we’re incremental the lot always costs are good lag we again but if already there’s taken revenue through the fixed pipeline. because So that of a care that’s get And business

markets optimistic that the underutilized a nice that we grow where And revenue we we’re opportunity in as big for facilities in. Asia. various we particularly end look in the we we’re commercial as But in markets through particularly about So are is competing flow in have go. our those we

Christian Schwab

to My question that a there big to with for how quantify has today? business That’s great way you any Great. do Is is answer. second Anaren.

Tom Edman

Well, that real we answer the is think way. it about don’t

like we point been look So you is which aerospace that and about defense to has what what if acquired, I is to with would think integrated our the at business business, I that that, overall overall from when record and levels now reaching acquired backlog backlog an XXXX we’re $XXX the overall backlog range. And in that Anaren we is standpoint. million the obviously,

not look And the of that all of two it, majority you RF is million, $XXX if a in combination companies. the uplift so of at from the of contribution which good but a it space, is direct

Anaren That’s that the I impact. on So really is can probably combination best the to give having. that’s deal the impact the

Christian Schwab

I the materially your Is similar either what still when assume business. than them? we you there combined acquired that mean are high? higher margin were at Should they that to they’re they

Tom Edman

leave thing, – Huawei commercial only of impact But a But and had the it’s on break which did the the only RF&S the an that, side the segment, both out. margins. that, there headwind we that very than yes, side, we obviously similar had So business, profitability. other of which we’ve it’s on revenue on kinds

Christian Schwab

me that And line. gets Okay. punch to the

company. not or if you to it put trading a to itself the be of for envelope integrated too that hidden lion’s the maybe your guys of back by that, it in something multiple ever that business inside exploring and market is what that could at contemplate? Are look you you It if So math, market your be was business, on and share cap.

Tom Edman

– very we’re completely point. we’re this at integrated Yes,

of the in aerospace into printed I the RF So looking at we’re combination. to portion customer when really that yes, integrated the portion, so as to supplying ability But an But capabilities. utilizes flex and may integrated this that’s critical That company point a module, component element other that that is it a spec maybe company full it’s in meet – and where piece an to board really portion the that’s think our as that business, maybe design a the programs, that, and business at the circuit we the program. a certain needs. defense

short – an point. integrated business So at really it is integrated heavily answer this is

Christian Schwab

Thanks, no guys. Great, questions. other

Tom Edman

you. Thank

Operator

from Crawford our final with take We’ll B. question Riley. Mike

Mike Crawford

wins if or majority advanced any value there backlog, is And were continue get to your into your how be might $XXX you. know perhaps balance that the now defense technology million be practical.On cash much in might to quantify fruition? along I Thank but free side, flow from to defense new might design given generate we sheet you that higher some way future, come related asked, the iX your

Tom Edman

business That’s a of example, the how today. if works Mike, great –

in high the So for – printed circuit volume circuit iX dense for facility mix different some RF ways acquired like circuitry the board our our One capability an was low we printed product those substrate supplier component There internal business. miniaturization. need we into essentially with is produce then move to because market. of board, are the capabilities from the as

we’re And so internal an customer.

customers Another way need business, those have is in the that, defense aerospace we that, boards. and that

a module. very We customers that and integrated are assembly have in microelectronics also

into of come And now at component can years longer-term from looking today out five we’re to full how integration those combine three – our capability a So that will of module. into facilities, are do that they’re RF with seeding terms in capability that that would we programs now. board what the fruition

piece today, there if component portion the revenue is for our needs. biggest own So you what overall the internally using at at we’re look that

it’s look If be internal it’s piece. business now, and years at combination business, a of to going and that three very business, an look going and to board then from you different module

kind now development, PCB capability, what TTM the with iX that the organization by brought table. the So element the combine brought and to we with that of Anaren is in and that’s overall bolting the in achieving the

Mike Crawford

my is, get question mix today? from more your model a function it Okay, to or is you that final in thank you. EBITDA are to XX% Then XX% of volume target to where

Todd Schull

but beyond top-line some that, to issues we growth. short-term COVID think in, we I need have through, that obviously we work the have with

there. utilization and run on which are the approximate You volume get facilities annual $X.X need rate an to get talked We’ve pass our your an to can’t oriented levels in and facilities about basis about commercial revenue of XX% up billion.

roughly at now. $X billion We’re

the there growth And some facility, see driving given to footprint. adequately we’re able to be to need we So our for. that’s what utilize current

see we Now that opportunity.

You organically. our look growth mid-single targets digit revenue at of

looking there get the or timeframe levels happen depending what other attainable that slower on in footprint to we can can You the macro Obviously at. for certainly we’re make have believe that we’re it’s or But quicker We things other that capabilities or today. the acquisitions that’s looking and at. things.

Mike Crawford

Great. you. Thank

Tom Edman

you. Thank

Operator

our time. to Edman for – this period final back question-and-answer concludes for I’ll any comments. the our or Mr. turn final That over call additional

Tom Edman

us. thank everyone And for you. joining Thank you

above Just the earnings want challenges. points. to range, COVID-XX revenues despite midpoint, few reiterate the delivered above that’s a and We guided

operations Second, stable our weakness in despite end market has our be markets. a diversification some continuing end allowed to of couple and

settled customers buyback our flow. stock as repaid busy I you and And so We very closing, a much. us. quite brought our leverage down announced for cash solid and employees quarter bond. very generated a a Thank we your continued convertible and to X.X you program, their our we support. Third, our thank and In and also for to like thank result, would

Operator

conclude you does everyone. our Thank for conference participation. today, call That your for all

disconnect. may You now