TTM Technologies, Inc. (TTMI) Earnings

Management highlights

- Focused on designing and manufacturing complex products and solutions in two strategic directions: advanced interconnect and building on that to design and manufacture sophisticated modules, subsystems, and systems. - Experiencing healthy multi-year tailwinds from artificial intelligence and defense megatrends, with ~80% of net sales related to these. - Achieved sales of 846 million and non-GAAP EPS of 75 cents per diluted share in Q1 2026, both all-time quarterly highs. - Aerospace and defense end market had A&D booked bill of 1.1 for the quarter, leading to a program backlog of 1.6 billion. - Data center and networking end market saw 61% y-o-y growth in Q1 2026. - Medical-industrial instrumentation end market had a notable example win in a major continuous glucose monitoring custom product. - Automotive sales are focused on higher value-add products with consistent margin profiles. - Overall book-to-bill ratio was 1.41 for Q1 2026, with commercial reporting segment at 1.65 and A&D reporting segment at 1.10. - 90-day backlog at end of Q1 2026 was $787 million compared to $517 million a year ago.

Guidance

- Project net sales for second quarter of 2026 to be in the range of $930 million to $970 million, and non-GAAP earnings to be in the range of 82 cents to 88 cents per diluted share. - Expect SG&A expense to be about 7.4% of net sales in second quarter and R&D expenditures to be about 1% of net sales. - Expect interest expense of approximately $10.6 million, interest income of approximately $2.5 million, and realized foreign exchange and other non-operating expenses of approximately $6.9 million. - Estimate effective tax rate will be between 13% and 17%. - Expect to record depreciation of approximately $32.1 million, amortization of intangibles of approximately $9.2 million, stock-based compensation expense of approximately $11.5 million, base compensation expense of approximately $11.5 million, and non-cash interest expense of approximately $0.5 million. - Capital expenditures for the year are now expected to be in the range of 300 to 320 million, accelerated from the previous 240 to 260 million range.

Segment performance

Advanced interconnect: Includes highly complex printed circuit boards, substrates, and advanced packaging. Sophisticated modules, subsystems, and systems building on advanced interconnect technology, e.g., RF modules, thermal and power management systems, edge and AI processing products, etc. Sales in first quarter 2026: Aerospace and defense end market represented 40% of sales, grew 11% y-o-y; data center and networking end market represented 36% of sales, grew 61% y-o-y; medical-industrial instrumentation end market represented 16% of sales, grew 61% y-o-y; automotive sales represented 8% of sales. Gross margin in first quarter 2026 was 22.3%, an increase of 150 basis points from 20.8% in first quarter of 2025, due primarily to higher sales volume and favorable product mix, particularly in data center, networking, and aerospace and defense end markets.

Analyst Q&A

• Q: Discuss current interest from customers in bringing business into the Eau Claire facility as it ramps, including what kind of customers are looking at the facility and how discussions have progressed versus a year ago.

  A: Steven says they're making good progress, identifying anchor customers like in Penang, have a core team, the facility is 750,000 square feet with three modules flexible for commercial or defense business, identifying customers, have supplier agreements and dealing with equipment vendors, and building an R&D center.

• Q: Follow-up on impact of higher oil prices on laminate costs and how it flows through income statement in coming quarters.

  A: Sean Hannon says they're observing pressure in the supply chain environment but not currently observing a derivative specifically due to oil pricing through their questions.

• Q: Focus on growth in data center networking business, sense of how much is volume driven versus price.

  A: Jim Rusciutti is told that visibility is still within the quarter, boards are getting more complex with more layers and asymmetrical panels, ASPs are going up due to complexity, and volume also has an effect as complex panels require more cycles in the facility.

• Q: Follow-up on ramp in Penang and impact in the quarter and outlook for Kichu in second half.

  A: Dan says yields in Penang are improving, were above 40% last quarter and now closer to 70% and 80%, getting close to breakeven numbers, and they're still on track with the headwind of 160 basis points bringing it back to 80 basis points headwind for the full year.

• Q: Talk about size in data center networking market relative to overall market and customer concentration in that end market.

  A: Edwin says they play in the high end of the data center networking market, are in the top four players, and are agnostic with respect to GPU, TPU, etc., customers.

• Q: Within aerospace and transport, breakdown of business and outlook for space.

  A: Edwin says aerospace and defense breakdown is about 50% radar related, 25% communication, below 10% munitions, 5% space currently, with munitions expected to have upside and space having potential.

• Q: CapEx update and thoughts on where it might fall out this year or next.

  A: Mike is told that capital expenditures for the year are now expected to be in the range of 300 to 320 million, accelerated from the previous range, due to equipment lead times stretching out and getting orders in early.