In This Article:
Release Date: February 05, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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TTM Technologies Inc (NASDAQ:TTMI) achieved revenues and non-GAAP EPS above the high end of the guided range, with a 14% year-on-year revenue growth.
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The aerospace and defense market, which represented 47% of revenues, continues to show strong demand with a record program backlog of approximately $1.56 billion.
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TTM Technologies Inc (NASDAQ:TTMI) reported a second consecutive quarter of double-digit non-GAAP operating margins, reflecting solid execution.
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The company is making strategic investments, including a new state-of-the-art PCB manufacturing facility in Penang, Malaysia, to support growth in commercial markets.
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TTM Technologies Inc (NASDAQ:TTMI) generated a healthy cash flow from operations, representing more than 13% of net sales, and reduced net debt to EBITDA leverage to 1.2 times.
Negative Points
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Year-over-year declines were observed in the automotive and medical, industrial, and instrumentation end markets, partially offsetting revenue growth.
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GAAP operating income for the fourth quarter was negatively impacted by a $32.6 million goodwill impairment charge related to the RF and S component segment.
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Gross margin decreased year-on-year due to continued Penang startup costs, higher employee-related costs, and declines in the automotive market.
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The company is facing challenges with inventory normalization in the medical, industrial, and instrumentation markets, leading to a 9% decline for the full year.
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The automotive market experienced a 12% decline for the full year due to inventory corrections and weak demand, particularly as EV demand stalled in developed countries.
Q & A Highlights
Q: Can you talk about what's changed that's allowing you to smooth the seasonality in operating margin performance and maybe quantify the effect? A: (Tom Edman, CEO) The biggest shift has been improving the aerospace and defense (A&D) revenue mix, which has increased from around 25-30% to 46-47%. This shift, along with selling our mobility business and building strong business-to-business connections, has allowed us to improve consistency in performance. Previously, revenues could drop off 15-20% from Q4 to Q1, but they are now much more consistent.
Q: Can you provide more details on the Penang facility, including revenue generated in Q4 and expectations for Q1? A: (Tom Edman, CEO) The Q4 revenue from Penang was very small and not material. For Q1, we expect revenue in the range of $4 to $5 million. We are working through the yield curve as we ramp up production, and we anticipate reaching breakeven by Q3.