Sameer Desai Vice President, Corporate Development and IR
Tom Edman Chief Executive Officer
Todd Schull Chief Financial Officer
Jim Ricchiuti Needham & Company
Mike Crawford B. Riley Securities
Travis Bucknall Truist Securities
Call transcript
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Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the TTM Technologies First Quarter 2022 Financial Results Conference Call.

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

Following the presentation, the conference will be open for questions. reminder, is a May recorded As XXXX. X, Instructions] this being conference today, [Operator Vice Corporate President Relations TTM’s Desai, Sameer of review disclosure will Development TTM’s statement. now Investor and

Sameer Desai

Thanks, Danielle.

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

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

to TTM’s Executive refer a I now slide during ahead, call Edman, our go like will will Please deck, the have to which Chief we posted website Officer. on Tom turn our also We Tom. call. to over

Tom Edman

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

referenced the then a XXXX, EPS having website. open end that continued despite first We high up we call also our investor Revenues questions. three above and slide is your the the are chain posted were the and performed than supply will operations. on presentation of expected. at non-GAAP delivered quarter’s COVID-XX guidance, revenues quarter in challenging better to guidance environment, impact TTM’s commercial TTM highlights midpoint the year-on-year, labor XX.X% of The of as the the and markets of on end In

ourselves operational North maximizing challenges and job pressures Our including employees labor production, chain customers, did for constraints inflationary despite in our excellent supply ongoing of continued and an headwinds, America.

our this attract employee discussed during through COVID During impact the to we general like mix would Since of increase ability and our America we the adjustments. quarter you update to in and year also impacted in increases have conditions our then, improvement in North a product our on continued The with quarter, the the adjustments in all America I though still margins talent, the year. will that price that increases tight remain North base compensation our through seen price quarter, cost increased costs are Last on retain additional make to virtually the challenging. offset the competitiveness. in plan of higher to first have to material positive savings, we balance price pay labor we mitigated first these year. a rates the situation. of adjustments COVID-XX earlier anticipated

two the facilities, levels naturally our labor North rates larger production During shortages infection in in experienced constraints more America. quarantines, facilities China. capacity this In by Hong general than similar Southern growth disruptions and of higher offset employee Kong our saw COVID-related along employees quarter, we of by contributed the Shanghai. and the was Asia-Pacific inefficiencies in higher Asia-Pacific, with smaller facilities in But to in stronger which our resulted in from

be journey on to strategy a to remains and TTM long-term more business transform cyclical our unchanged. less Our is differentiated.

transition, As part $XXX the XXth, million announced in of April of for cash. on we strategic acquisition this Telephonics

by about differentiation PCB in our center automated is industrial accretive and components and The TTM customer-driven factory the this several and need The we key be aerospace of response national in markets direct facility of broadening to the value decision and build for The consistently horizontally PCB will offering defense customer’s China. in networking another surveillance part telecom, and In non-GAAP customers solutions will to new this closed market. in deliver is supply we past into options strategy and add is and the system product for of TTM’s approach our is highly and immediately highly in RF solutions systems. and a instrumentation. the aerospace diversification, XX, sourcing regions Anaren radar that that of quarter to increasing concerns in resources. Malaysia thank our and we data vertically well critical particular, advanced in into customers, governments disciplined culture our new and engineering regional the years, to the April level builds adding position resiliency. we medical, RF resiliency facility our and Anaren, broadened higher manufacturing Over multi-layer state-of-the-art TTM’s I new XXXX, Penang, chain our outside customers strategy, on open had I announced that defense ceremony has TTM’s Malaysia. and into as local subassemblies, XXXX a a had groundbreaking product further facility and element Xst, to emphasized of March the commercial particularly of end support of Adding communication EPS. an chain recognizing manufacturing Malaysia in expected second Telephonics opportunity to attending the value improving for engineered close which transaction the engineered assist by long-term where supply strengthening and of to pleasure to and to computing in their expected such as the our product as while portfolio on on to markets, capability acquisition

the four sales, XX% page aerospace QX like I’d our XXXX Now, first markets, compared to of website. The QX of sales which XXXX. investor XX% are sales our referenced defense on presentation end to and in and total end XX% quarter market review on of of represented

provides approximately was strong The fiscal signed We key in continue a our to A&D the year tailwind $XXX climate, program programs. $XXX and million ago. for positive to experience spending. of our year-on-year bookings XXXX market Bill defense ongoing backlog The compared X.X% a in defense a is March with program a million, defense solid franchise result XXth budgets Appropriations positive at demand growth year into Omnibus and in and law defense on for alignment strategic

defense year the for approximately and enacted largest X% In addition, fiscal spending to-date. XXXX proposed growth XXXX shows is the year House White budget request the of fiscal budget over

Skynet the Oriented the RFS or Ground/Air AN/TPS-XX During programs. significant Task bookings saw G/ATOR Radar we quarter, and for the

This a was expect contributed sales XX% much does We end XXXX. broad-based market new and the in from year the from record, it for to to performing quarter as a in sales XX% compared fourth MI&I million medical, of quarter, than in in expectations, all total year-on-year, Telephonics, include total not any fourth revenue contribution we market closed. ago about and quarter The QX of across acquisition in as segments. better our not the The represent the our quarterly XX% XX% $XXX end strength this quarter in instrumentation up sales. exceeding as row the XX% has saw market industrial, of set first yet

will continued scheduled of also during as combined be during of demand the a first Automotive automotive compared Automotive There second our of sales downtime remains by the the the to the second new caused be Ukraine-Russia chain available and conflict the of XX% MI&I facility environment. PCB impact supply total million. For our sales XX% XX% with production. by fourth expect for maintenance. XXXX, represented and of XX% all quarter, XXXX. quarter PCBs, automotive to quarter we impacting and production continues shortages strong demand strong semiconductor above be ago disruptions year-over-year equipment in in installations revenues, quarter facility XX% to exceeded levels demand quarter, year near-term, the grew are In for but and largest COVID, slightly particularly OEM impacted capacity, automotive the $XXX

up XXXX. we quarter, in fourth of center first end was and center from our XX% result, the quarter Sales XX% market the market XXXX total in year-on-year, primarily expect end compared data to to a contribute in the total of our due data PCB XX% in sales QX. XX% growth This automotive customers. of As to XX% of in represented business computing sales QX

continues computing networking second This our and the as We continue of customers. in boards to of to XXXX. accounted capacity the we in year-on-year year-on-year XXXX communications saw a we second telecom, compares drive of during in center this revenue relative approximately strong market XXXX. continues quarter to as this grow. in end to first XX% revenue a first growth. quarter, and quarter of the allocate networking expect count for fourth for data high-layer the quarter to as of center be revenues We of expect of represent end data networking, as demand revenue, on to market strength XX% XX% to XX% sales, In quarter Networking compared to and basis XX%

first some our available will page five quarter. on details presentation. of is the I cover Next, information also This from earnings

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

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

holiday. XX% capacity overall was America was during capacity The QX, quarterly that due capacity challenges ago QX. rate Asia shortages. quarter and labor lower and the the plating America we in caused Chinese in New in quarter in and Year posed was added This utilization in decline additional compared direct in North the Our absences COVID-XX by to by the XX% utilization to North in year XX% the

of of customers compared backlog, the of top Our end of the above at XX% end the XX-day first five subject our contributed XX% compared at had the one fourth quarter XX% XXXX. the We in first At the $XXX.X of year, was quarter which to to quarter. and QX, QX. million in customer in $XXX.X million of the total cancellations, to end XXXX, last $XXX.X is million, sales quarter

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

and efforts conclude related TTM. our in TTM want Our investment of mission we to are highlighting customers. uncertainty Despite around like strategic with our backlog challenges I facing, significant that expected, to innovation the Telephonics contribute differentiate thank made and than a result further Malaysia higher to direct our of inspiring performed I’d for pressures announced we again to TTM and the forecast will the our supply ourselves. employees which the critical in labor quarter, support customers than our acquisition, both challenges due both and partner’s supply better and revenue concerted also customers. chain for inflationary is and moves the of for chain labor our our continuing our to our we as employees business and to by

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

Todd Schull

website. the for today, good as and be on will also release our results distributed presentation, slide our Tom, well posted is everybody. are Thanks, our quarter which earnings press reviewing shown that first as in six the of on I afternoon, financial

$XX.X For all revenue virtually due due increase The $XXX.X market were compared the in commercial softness more decline $XXX.X first growth of in XXXX. strong first which markets, than million to defense net America. our in a challenges offset to GAAP income first the of loss million in basis, first share. end GAAP quarter was our of million, XXXX. operating in diluted million of XXXX North in to compared quarter, $X.XX and or the in quarter for was income and first aerospace was performance. a will XXXX commercial or million, million of to year-over-year sales to $XX.X in the aerospace a production quarter on per of of year. share financial last $XX.X diluted The remainder On non-GAAP the quarter compares first the net of net $X.XX This $X.X per our comments quarter focus my

revenue challenges to excludes items by or North was non-cash in costs, The expectations the infrequent businesses. in expense to of with of year-on-year first the to performance tax comparisons and prior growth XX% costs, eyes to to was and in other financial the due information production periods. XXXX. facilitate XX.X%, decline restructuring quarter certain non-GAAP partially non-routine largely investors commercial compared Our America, in present quarter unusual Gross offset M&A items, management first items. margin the see our and in We labor non-GAAP enable company through related

significant were first million in but quarter, we sales the manufacturing was increases. $XX.X increases X% million cost or or X% the During did efficiencies other a quarter sales to $XX.X the price ago. able of impact versus Selling material and of year net mitigate of expense through marketing profit experience net and increases, we those

compared First X.X% $XX.X X% compared net to of quarter million first was $X.X the $X.X was year. revenue, first year excuse million in quarter of last In X.X% R&D quarter G&A or of or million the or quarter. the me, to or million sales, of $XX.X XXXX, in ago expense X.X% sales of net same SG, quarter

first unchanged the from to X.X% last in last the quarter was same in margin the in year. Interest first expense the operating This quarter Our $XX.X X.X%. compares same quarter year. million quarter, was

$X line. income positive million or $X.X year. operating impact exchange interest a in During increased of million incentives million and the $X.XX or to was impact a to last to $X.X QX of EPS. there the quarter, below foreign a compares $X.XX impact Government this This

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

spending the net income income Adjusted million. EBITDA cash This was was $X.XX $XX.X first net per compares first million million share. diluted of quarter $X.XX diluted XXXX quarter EBITDA share. or per or to the in $XX.X compared million. First with $XX.X and quarter Depreciation was quarter $XX operations of for $XX.X first adjusted quarter the million, $XX flow from million $XX was XXXX was for quarter Net capital million. for

our previously fourth million quarter, repurchase of the under an million $XXX for of stock During we at $XX.X $XX.XX X.X price total of our a announced shares million. average repurchased stock common program

our repurchased the have As we today, million stock program completed stock. a million have of total and $XXX of shares of buyback X.X

month’s remain $XXX.X plan leverage to of from X.X last very We balance divided cash which target Our balance, the were positions liquidity of to the and times. strong. end XXXX sheet at would by net our cash above our of of XX increase X.X X and debt net first Telephonics fund acquisition our million EBITDA Cash equivalents our quarter and times. was times, $XXX the million

We authorization not will comes below X our buyback the likely back until increase stock leverage times. down

I’d America. conditions globally In Now, the we for operating expect in guidance second improving to quarter. like second revenue and turn stronger North to quarter, the

the awaiting diluted guidance on we diluted million EPS in to a the to forecast quarter securities earnings which $X.XX we dilutive regulatory to second to of does for be previously revenue approximately We announced any of such includes share non-GAAP in total and options range of share to $X.XX shares, expect closing. prior of XXX million share. the approvals be diluted $XXX expect based This the per of Telephonics, million, include not per range is XXXX as and count are as The acquisition contribution from RSUs. $XXX

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

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

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

May Conference Insight the be and open over Xth. to Transportation Services like Technology, that would UBS Communications the Xth, with conferences several Institutional like Xth, Cross-Sector concludes on June JPMorgan and Media Yield to June Conference June Finally, remarks Danielle? and Loan Conference I’d the XXth, Investor Bond on announce Consumer, Xst, on questions. May That we several in the participating on weeks, and the Industrials Craig-Hallum the & starting on Global now Global for Global June will Barclays and prepared Syndicated High next XXth, Baird on our Technology the Conference the Conference line we Conference Stifel


We take Ricchiuti. ahead. from Thank you. question [Operator our the of line go Instructions] Please first will Jim

Your line open. is now

Jim Ricchiuti

A of afternoon. Good Hi. questions. couple

I fair margins, a coming gross know gross pressures gross with because on it QX wondering as have characterize in volume little first higher how to here, margin parts trough but China, sounds areas the margins? there’s am know we might got, like mix it QX and moving is Just like alluded we don’t A&D if have here, better but up I a that COVID the in to continued you I think a about

Todd Schull

at very is cycle qualifier, to because when primarily Well, equal a right? New of a now you going being all a generally Chinese be things Year. But look quarter QX our speaking, challenging always and big in that’s seasonality,

work season. pronounced to because strategy in that regarding try And workforce attracting to is so a workers way America North the and holiday that increase on implemented into and we of year, our that our compensation our revenue competitiveness pressure more that in stabilizing This our new and always costs little to puts through business.

last so were and to basis we call, those costs QX. estimated have we point I quarter because expecting this we I implementing XXX are a had And in around hit QX, pretty costs indicated when these be as short-term hit in significant margin

have so We actually show it December, issue through those mitigate as the also P&L our effect. of to price have those will really in before in mentioned significant a through to backlog be pretty costs adjustments actions and backlogs but that pricing adjustments up new before takes taken begin timing a to we those back result a we work

definitely is mark. QX So low a

You our starting economy, we in see more some in And go improve of and as through expect back. dramatic QX result the increases we the to effect take regain second coming year. of price these absent the to shifts as the a year would half

Jim Ricchiuti

introducing to a it differently, that on facility facilities equipment, and it, doing first past going if have expect do Got automation you when off, question if in anything that automation And talked know question I up you I are you may sure the about I terms labor be... are differently in but there’s anything doing missed that had costs still I your I might and but the there, wondering and just of you the you more from have it. of benefits And relates facility, am am into type that you new low there’s mentioned Malaysia, be the the into to it, is, bigger the running? you have new as

Tom Edman


Jim Ricchiuti

this in facility? ...incorporating Thanks.

Tom Edman

Jim. Yeah. Sure, Yeah.

going being that at But automating to half ex-additional in room up -- XX end So XXXX building. in forward. able the gradually XX—at X -- at of will into next we standpoint, so latter have do should have be then going facilities we capacity and start We half of in a are an an throughout incorporating then that versus end additional XXXX, been but of we of second year or capacity. XXXX really sort will XX% looking for things full do what case, time, to the From be we into bring to right, capacity and be first will full first, the the and XXXX, back going facilities its we be of this ramp facility of automation like are be Phase approach. starting plant absolutely the close from the should ramping XXXX, in our in to XXXX, greenfield over actually that’s automation Malaysia we

a XXX,XXX So that’s a this facility single will at square you -- a more what looking you see are than in little floor, it’s bit approx feet. about facility, XXX,XXX

floor a large So very facility. single

to then We we the of are the bring automation, to line the itself, from incorporated of the we the are about robots well the Industry loading, use going that when are practices line, being the to be be from not various great and we X.X the robotic the But plating as just then back taking our use automation opportunity example. data, the a to front being are to great be into of talking data optimizing standpoint going share and equipment going incorporate how we production production yields. it’s term as automation from talking platforms we to the optimize our And the and about equipment flow. a in -- data

optimizing a to are that in in we automation. at yeah, is yes, East are revenue certainly Asia, looking located the we can this of the employee use facility -- per So, facility you be taking -- but South going through

Jim Ricchiuti

Thank you.

Tom Edman

you. Thank


Mike the next line will question from ahead. Crawford. Please We go take our of

line is open. Your

Mike Crawford

Thank you.

China Malaysia, XXXX the be operations is your China some any that capacity? around expected then that Just up of ramped Southern from from of ancillary is, that end facility business of would customers? won fully further to reload then you new much capacity shifted the And looking what to are how your for it’s once to versus of

Tom Edman


it’s almost in course, certainly in stay sure, Mike, right, programs of have ongoing are say, will to that because that’s for that and we difficult So, -- China. China

from South we in us revenue, life our a say, program it’s that that going think, and something thing, with little pretty we Malaysia. customers as in startup are China about bad because to programs somewhere, that East But, Asia the at into million we XX%-ish if being insignificant. as transfer. China mean, have again, may $XXX efforts, of combined a to be they and the are through we program our with transfer you early to program. critical looking may I be relatively into as their We they go it look will cross-qualify able then I that okay, but at if will be of planning, that at facility of to for size see where But put customers let’s going expecting is it’s talk not be customers here of advantage that looking to -- potentially The a help but are insignificant. bit

So effort our outside Asia qualification South of piece least facilities vice South and Asia they know a an China or at the option program that into East a and put have East in versa. of

thing terms East do in in placing same China. Asia South option business or in the of South You in East either the the ramping Asia with of

customer a from here opportunity real the standpoint. that’s So

Mike Crawford

to your gears you. mentioned And capacity switching slightly, efforts, then, are now. because support the just at installed equipment you Thank automotive Okay. new being you

in that? what for when you Europe? capacity regional of of the in be lead you will question And verticals to automotive additional as that I then, to am go from guess, capacity to kind well search is, main your So I get lift one continue ancillary that would going

Tom Edman

it’s So on the the that part of an upgrading side, we effort have the answer actually facility. in first

capacity. huge see incremental to are you not So going

moderate increase aspect if approximately as on equipment that we and is order as replaces out real that our that $XX can of that capacity of and it we are that less equipment is over will, think the about million. We and so upgrading a do time into are equipment or important will automotive also you facility the more But is see of that putting we facility level date, then of automation incorporating optimal. the you

doing to And you that’s So course, flow. production a it’s disruptive little equipment, install there. of as bit are we what

Europe next little a we So the at right that’s quarter. incremental other lose question, and of back so... will be where capacity it quarter was we right, the a bit for

Mike Crawford

Yeah. Yeah.

Tom Edman


Europe on medical, continue and As we -- also that area turn be -- certainly do to been what progress have industrial but we from the a for in as Europe. and be some That’s on. quick to might we we making automotive, in support watch an able customers instrumentation standpoint, to

And so as mix, aerospace business European automotive actually continues we to defense. MII, of product bit our look and and a It’s at our grow. little

out in see a As and for going haven’t to look with our that continue that’s capacity they resiliency that’s supply for really in over to facility where China and yet certainly looking we coming a in year, to we the even area. build are Certainly, looking automotive so are customer one at data that instrumentation that terms medical, and to while Asia us of industrial for the volume there. continuing we South footprint, will build customers got and networking manufacturer. our on our sets to right piece. That’s real East area And big look on right us center, satisfied the with be in that the time, chain it’s our other focus

Mike Crawford

Okay. much. great. you very Thank Well,

Tom Edman

Thank you.


the of take Travis ahead. line [Operator question from next go Bucknall. Please Instructions] will We our

now open. is line Your

Travis Bucknall

I touched on Hi. from demand war know us Stein I Will you my seeing for calling today. please supplier how question. in on any Thanks touched am ongoing are you also taking has of the earlier, you if have operations. behalf impacted how Can Ukraine? your or you tell COVID disruptions

Tom Edman

-- So COVID chain the supply disruptions the situation? from so

Todd Schull


Travis Bucknall

am wondering... I Well,

Tom Edman

Russia. Ukraine Oh! and Well, Russia. and Ukraine

Understand. Okay.

yeah. -- So

look I’d Russia biggest supply that haven’t more there terms of direct on really and So indirect Ukraine conflict, are pricing, and seeing a indirect shifting pricing, lately is began, the call you metal But impact bit. the if that’s the in one the place did put increases particularly we the at chain. in impacts have as we the quarter seen copper been in -- terms are way bouncing of all been pricing has conflict what see palladium What to and we early it. over

have impact make in But copper potential we -- are the into are at flows expecting price we the impacts laminate. adjustments costing -- that particular, as in had terms those looked to in we as the of We December. inflationary pricing, continuing contemplated our an have increases back

short-term, that through. So watching to is at our least pricing those that will a flow to any cost again, real pretty view see and there’s absorb be environment if we structural changes able volatile what metal is

I fairly far there. are So we think good shape in

Travis Bucknall

Okay. am market? then, any a I this have you end you. design I if or been in activity seeing war And follow-up. Thank your accelerated have production has military that similar triggered curious

Tom Edman

-- So yeah. question. Interesting

that We inventories several does down. have some take are have It where historical been impacted, content while. there being with programs some drawn a --

As it this of we in start year we certainly, of about will you look into know, on come positive year, usually year, terms back terms next something a the watch the a inventories yes, have as when probably down, then take release. you as of the In a it’s that actual from and but customers hearing passed, year. small, over be takes for are case, of development same But, -- relatively can to through half budgets view, going of would demand, would the the impact sort you positive again, program sort be in it a year-and-a-half to us impact a course positive us. this budgets of

Travis Bucknall

you. Thank

Tom Edman

Thank you.


at the [Operator this Instructions] any Edman, you additional closing I’d are back further questions turn for no to remarks. Mr. There time. to like conference

Tom Edman

for thank and all us. joining Thank you, you Danielle,

that of made emphasize wanted earlier. some to Just points I the

global and in earnings end of inflationary midpoint phase inefficiencies labor North high guidance. that about and the We in pressures. the the at revenues delivered and production of we did First, America

XX.X%. Second, diversification year-on-year experience end to solid our again revenue growth allowed us of market

to in to used strategy steps just I’d joining we our to again by as acquisition. we take expansion continue moving very with as Third, we and for you our continued Malaysia, next fourth, of this support with move we to well all forward into our differentiation quarter. the continued close forward into like Thank cash major the And repurchase Telephonics much. as stock. your thanking generation call you to look


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

disconnect. now may You