TTM Technologies, Inc.

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the TTM Technologies First Quarter 2021 Financial Results Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will open for questions. As a reminder, this conference is being recorded today, April 28, 2021. I would now like to turn the conference over to Sameer Desai, TTM Vice President of Corporate Development and Investor Relations, who will now review the TTM Disclosure Statement.

Thanks, Casey. Before we get started, I would like to remind everyone that today's call contains forward-looking statements within the meaning of the Private Securities and Litigation Reform Act of 1995, including statements related to TTM's future business outlook. Actual results could differ materially from these forward-looking statements due to one or more risks and uncertainties, including factors explained in our most recent annual report on Form 10-K and our other filings with the Securities and Exchange Commission. These forward-looking statements are based on management's expectations and assumptions as of the date of this presentation. TTM does not undertake any obligation to publicly update or revise any of these statements, whether as a result of new information, future events, or other circumstances, except as required by law. Please refer to the disclosures regarding the risk that may affect TTM, which may be found in the reports on Form 10-K, 10-Q, 8-K, the registration statement on Form S-4, and the company's other SEC filings. We will also discuss on this call certain non-GAAP financial measures, such as adjusted EBITDA. Such measures should not be considered as a substitute for the measures prepared and presented in accordance with GAAP, and we direct you to the reconciliation of non-GAAP to GAAP measures included in the company's press release, which is filed with the SEC and is available on TTM's website at www.ttm.com. We have also posted on our website a slide deck, which we will refer to during our call. I will now turn the call over to Tom Edmond, TTM's Chief Executive Officer. Please go ahead, Tom.

Thank you, Samir. Good afternoon and thank you for joining us for our first quarter 2021 conference call. I'll begin with a review of our business strategy, then an update on how COVID-19 has impacted our business, followed by highlights from the quarter and a discussion of our first quarter results. Todd Schull, our CFO, will follow with an overview of our Q1 2021 financial performance and our Q2 2021 guidance. We will then open the call to your questions. I am pleased to report that in the first quarter of 2021, TTM generated revenues and non-GAAP EPS above the midpoint of the guided range. All end markets performed better than guidance, while year-on-year growth was led by strength in the automotive and data center computing end markets. These results were achieved despite higher raw material costs and production inefficiencies due to COVID-19. The pandemic continues to create operational difficulties, macroeconomic uncertainty, and employee concerns. These challenges are currently being compounded by increasing prices and lead times of copper clad laminates or CCLs, a key raw material for the manufacturer of printed circuit boards. CCLs are made from epoxy resin, glass cloth, and copper foil, all of which are seeing limited supply and price increases. In addition, Metals such as copper, gold, and palladium are also used in our manufacturing process. We are actively managing higher raw material costs through such measures as supplier diversification, ongoing operational efficiency efforts, and quotation adjustments to mitigate the impact to TTM. I am extremely proud of how TTM employees have worked to deliver excellent performance despite the formidable challenges of this environment. I would also like to highlight that in Q1, we generated solid cash flow from operations and our leverage remained at a comfortable 1.4 times. Looking into Q2, I am optimistic that we are seeing healthy demand trends across virtually all of our end markets, which is supported by our stronger than normal backlog coverage. Next, I would like to provide an update on our long-term strategy. PTM is on a journey to transform our business to be less cyclical and more differentiated. We believe that over time investors will be rewarded with more stable growth, strong cash flow performance, and improving margins. As part of this strategic transition, we sold our mobility business last year. As a reminder, Our operating margins with mobility as part of our business in Q1 of 2020 were 5.8%, and non-GAAP EPS was 18 cents, which was greatly impacted by the seasonality of that business, among other factors. We are now able to generate more consistent cash flow and earnings with our strong set of technologies and broad exposure to longer cycle end markets. A key part of our ongoing strategy will be to add capabilities and products that are complementary to our current offerings, both internally and through acquisitions. Looking forward, our balance sheet is in a strong position to pursue further acquisitions, as well as to support our organic investment needs. I would also like to update you on the COVID situation. At the time of last quarter's conference call in February, we were seeing a surge of North America COVID-19 cases following the winter holidays, which we expected to have some impact on production. Since then, cases in North America have dropped off, and as a result, we have seen a significant reduction of new cases in our sites as well. We are hopeful that the vaccine rollout will further reduce new cases, and we are looking forward to being able to welcome customers and other important visitors back into our plants in the not-so-distant future. In the meantime, we will continue TTM's protective measures, such as masking, temperature checks, and proper distancing across our facilities worldwide, along with routine internal communications to keep our employees informed. Because of the stringent preventative measures in place and our culture of transparency and communications, COVID-19 has had less impact on our operations than might have been the case without these precautions. Now I'd like to review our end markets. All historical end market disclosures exclude the Mobility Business Unit and the two EMS plants, which halted production in December of 2020. For more details on end market disclosures, please refer to page four of our earnings presentation, which is posted on our website. The aerospace and defense end market represented 36% of total first quarter sales compared to 38% of Q1 2020 sales and 38% of sales in Q4 2020. We continued to experience a positive defense climate with our A&D program backlog increasing to a record $694 million compared to $687 million in Q4. Q1 revenues were up 1% year-on-year, as solid growth in defense more than offset sharp year-on-year declines in commercial aerospace. Growth in the defense market is a result of our strong strategic program alignment and key bookings for ongoing franchise programs. We saw significant bookings in the quarter for Northrop Grumman's AESA radar systems for the F-35 program. We expect sales in Q2 from this end market to represent about 34% of our total sales. Automotive sales represented 17% of total sales during the first quarter of 2021 compared to 13% in the year ago quarter and 17% during the fourth quarter of 2020. Automotive grew almost 50% year over year and continued to grow sequentially despite a normally seasonal slower period for Chinese New Year. We are aware that the shortage of semiconductors is currently limiting automotive production, but this situation has not directly affected our business, since we do not purchase semiconductors. While we are monitoring this situation closely, to date, it has had a very limited indirect impact on our PCB demands. We expect automotive to contribute 17% of total sales in Q2. The medical industrial instrumentation end market contributed 17% of our total sales in the first quarter, compared to 19% in the year-ago quarter and 16% in the fourth quarter of 2020. In Q1, instrumentation customers in the semiconductor capital equipment end market were stronger than expected. For the second quarter, we expect MI&I to be 17% of revenues. Network and communications accounted for 15% of revenue during the first quarter of 2021. This compares to 16% in the first quarter of 2020 and 16% of revenue in the fourth quarter of 2020. We saw relative strength on a year-on-year basis in the networking segment compared to the telecom segment, as the 5G build-out has been slower to ramp. In Q2, we expect this segment to be 16% of revenue. Sales in the data center computing end market represented 14% of total sales in the first quarter, compared to 12% in Q1 of 2020 and 13% in the fourth quarter of 2020. This end market was up 24% year-on-year, due primarily to growth from our data center customers. We expect revenues in this end market to represent approximately 14% of second quarter sales as data center continues to drive year on year growth. Please note that we have renamed this segment to better represent our customer mix and growth opportunities. Next I'll cover some details from the first quarter. All of the following operations metrics exclude the mobility business unit, and the two EMS plants that were closed. This information is also available on page five of our earnings presentation. During the quarter, our advanced technology business, which includes HDI, RigidFlex, and RF subsystems and components, accounted for approximately 31% of our revenue. This compares to approximately 28% in the year-ago quarter and 31% in Q4. We are continuing to pursue new business opportunities and increase customer design engagement activities that will leverage our advanced technology capabilities in new programs and new markets. Capacity utilization in Asia Pacific was 80% in Q1 compared to 52% in the year-ago quarter and 63% in Q4. Our overall capacity utilization in North America was 55% in Q1 compared to 67% in the year-ago quarter and 58% in Q4. Our top five customers contributed 33% of total sales in the first quarter of 2021 compared to 34% in the fourth quarter of 2020. Our largest customer accounted for 13% of sales in the first quarter. At the end of Q1, Our 90-day backlog, which is subject to cancellations, was $540.5 million compared to $470.8 million at the end of the first quarter last year and $483.9 million at the end of Q4. Our PCB book-to-bill ratio was 1.2 for the three months ending March 29th. I'd like to conclude. by again thanking our employees for continuing to contribute to TTM and our critical mission of inspiring innovation with our customers. Despite the COVID-19 and raw materials related challenges we faced in Q1, our business performed better than we expected as a direct result of our employees concerted efforts to engage and support our customers. We've also taken positive strategic moves that will strengthen TTM for the long term. Now, Todd will review our financial performance for the first quarter. Todd?