TTM TECHNOLOGIES INC Q4 FY2024 earnings call

Business Highlights

• TTM achieved revenues and non-GAAP EPS above the high end of the guided range in Q4 2024, with revenues up 14% YOY and fourth consecutive quarter of YOY growth.
• Aerospace and Defense and Data Center Computing end markets drove growth, while Automotive and Medical Industrial and Instrumentation saw declines. Book-to-bill was 1.09, with A&D at 1.14, and backlog in A&D reached a record $1.56 billion. Non-GAAP operating margins were double-digit for the second consecutive quarter.

Strategic Update

• TTM is transforming to be less cyclical and more differentiated. A&D revenue mix has improved, with over 50% of A&D revenues from engineered and integrated products. A new state-of-the-art PCB facility in Penang, Malaysia is ramping up. Manufacturing footprint is being consolidated, with closures of certain facilities and plans for others. A new facility in Syracuse, NY for advanced aerospace and defense PCBs is under construction, expected to start low rate production in 2026.

Financial Details

• Q4 2024 net sales were $651M vs $569M in Q4 2023. Full-year net sales were $2.4B vs $2.2B in 2023. Non-GAAP net income for Q4 2024 was $62.8M or $0.60 per diluted share.

In the fourth quarter of 2024, the Aerospace and Defense segment contributed 47% of revenues, with revenues growing 16% year-on-year and reaching a record high. The Data Center Computing segment accounted for 22% of sales, seeing 44% year-on-year growth due to Generative AI demand. The Medical Industrial Instrumentation segment made up 13% of sales, with a year-over-year decline due to inventory normalization. Automotive sales were 11% of total sales, down year-over-year due to inventory adjustments. Networking accounted for 7% of revenue, with 35% year-on-year growth.

For Q1 2025, net sales are projected to be in the range of $600 million to $640 million. Non-GAAP earnings are expected to be in the range of $0.37 to $0.43 per diluted share. SG&A expense is expected to be about 9.4% of net sales, R&D about 1.1% of net sales. Interest expense is approximately $11.2 million, interest income about $2 million, and effective tax rate between 12% and 17%.

• Volatility in foreign exchange gains/losses due to translation of China and Malaysia balance sheets. - Impact of tariffs on direct imports of PCBs from China into the US, though a small portion of revenue. - Yield curve effects and margin impacts as new PCB facilities in Penang and Syracuse ramp up.

Q: Can you talk about what's changed that's allowing you to smooth seasonality in operating margin performance and quantify the effect?

A: The biggest shift is improving the A&D revenue mix, moving from ~25-30% to 46-47%, and selling the Mobility business which was seasonal. The A&D revenue mix and stronger commercial business with longer cycles have made margins more consistent.

Q: Could you break down the percent of backlog or program backlog of PCB versus Integrated Electronics in Aerospace and Defense?

A: Roughly 50-50 in backlog, with Syracuse coming in early next year likely increasing PCB revenue a bit while integrated electronics (IE) continues to grow organically.

Q: Elaborate on pull-ins in the Data Center end market and if it's a headwind in current quarter?

A: Q1 is sequentially down slightly from Q4 due to pull-ins and Chinese New Year impacting facility operations in Asia.