TTM Technologies Inc (TTMI) Q1 2025 Earnings Call Highlights: Strong Revenue Growth and Record ...

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Thu, May 1, 2025, 1:17 AM 4 min read

Revenue: $648.7 million, a 14% year-over-year increase.
Net Income (GAAP): $32.2 million or $0.31 per diluted share.
Net Income (Non-GAAP): $52.4 million or $0.50 per diluted share.
Gross Margin: 20.8%, up from 18.8% in the prior year.
Operating Margin (Non-GAAP): 10.5%, a 340 basis points increase from the previous year.
Adjusted EBITDA: $99.5 million or 15.3% of net sales.
Cash and Cash Equivalents: $411.3 million at the end of the quarter.
Book-to-Bill Ratio: 1.10.
Top 5 Customers: Contributed 45% of total sales.
90-Day Backlog: $517.5 million.
Aerospace and Defense Revenue: 47% of total sales, with a 15% year-on-year growth.
Data Center Computing Revenue: 21% of total sales, with a 15% year-on-year growth.
Networking Revenue: 8% of total sales, with a 53% year-on-year growth.
Automotive Revenue: 11% of total sales, a decline from 13% in the previous year.
Cash Flow from Operations: Net cash usage of $10.7 million.
Net Debt/EBITDA: 1.3.

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Release Date: April 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

TTM Technologies Inc (NASDAQ:TTMI) achieved revenue and non-GAAP EPS above the high end of the guided range, with a 14% year-on-year revenue growth.
The aerospace and defense market, which constitutes 47% of revenues, remains strong with a solid program backlog of approximately $1.55 billion.
Non-GAAP operating margins reached a record high of 10.5%, up 340 basis points year-on-year, marking the third consecutive quarter of double-digit operating margin performance.
The company has diversified its manufacturing footprint, reducing exposure to consumer markets and investing in new production capabilities in regions like Malaysia.
TTM Technologies Inc (NASDAQ:TTMI) published its second corporate sustainability report, reflecting a commitment to minimizing environmental impact.

Negative Points

The automotive end market experienced a year-over-year decline due to continued inventory adjustments and soft demand at several customers.
TTM Technologies Inc (NASDAQ:TTMI) faces potential indirect impacts from tariffs, such as end-market demand weakness and economic slowdown, which are difficult to predict.
The company's PCB capacity utilization in North America was relatively low at 35% in Q1, indicating potential inefficiencies.
There is a significant exposure to tariffs on materials and equipment, with approximately 11% of revenues tied to imports into the U.S. from Europe and Asia.
The Penang facility is currently operating at a loss, with an operating income loss of approximately $11.5 million, although it is expected to reach breakeven by the end of Q3.

Q & A Highlights

Q: Can you provide details on the revenue and margin performance of the Penang facility during Q1, and what is the expected trajectory for the next quarters? A: In Q1, the Penang facility generated approximately $2.2 million in revenue. The operating income loss was around $11.5 million. We anticipate reaching a breakeven point by the end of Q3, with revenue between $30 million and $35 million. The facility is ramping up steadily, with strong book-to-bill ratios indicating positive momentum.

Q: There was a slight decline in the aerospace and defense program backlog. Can you explain the reasons behind this and the outlook for this segment? A: The book-to-bill ratio in defense was 0.96, with a minor decrease in backlog from $1.56 billion to $1.55 billion. Despite this, bookings were stronger than expected in Q1, and we anticipate similar strength in Q2. Our defense operations performed well, reducing past dues and maintaining strong bookings.

Q: How many customers are qualified at the Penang facility, and which market verticals are they in? A: We have four anchor customers and are in qualification with approximately 10 customers overall. The qualifications are progressing well, with a focus on data center, networking, and medical, industrial, and instrumentation markets. Revenue contribution is primarily from data center and networking.

Q: Are you seeing any changes in customer behavior due to administration policies, and which verticals have the strongest outlook beyond Q2? A: We haven't observed significant changes in customer behavior due to administration policies. The strongest outlook beyond Q2 is in data center and networking, driven by investments in generative AI. Aerospace and defense remain robust, with over 70% of revenue from these segments.

Q: Are there opportunities for TTM in the current tariff environment, especially with competitors based in Asia? A: There are ongoing conversations with customers about potential shifts due to tariffs. Our Penang facility is well-positioned to handle future volume needs, particularly for higher layer count boards. While competitors are also expanding in Southeast Asia, we aim to make Penang the best choice for customers.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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