TTM Technologies, Inc.

Thank you for standing by. Welcome to the TTM Technologies first quarter 2024 financial results conference call. During today's presentation, all parties will be in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, press star 1 1 again. Please be advised that today's conference is being recorded on May 1st, 2024. I would now like to turn the conference over to your host, Mr. Samir Desai, TTM's Vice President of Corporate Development and Investor Relations. We'll now review TTM's disclosure statement.

Thank you. Before we get started, I would like to remind everyone that today's call contains forward-looking statements, 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 the risk factors we provide in our filings with the Securities and Exchange Commission, which we encourage you to review. These forward-looking statements represent management's expectations and assumptions based on currently available information. TTM does not undertake any obligation to publicly update or revise any of these forward-looking statements, whether as a result of new information, future events, or other circumstances, except as required by law. 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 reconciliations between GAAP and non-GAAP measures included in the company's earnings release, which is available on the investor relations section of TTM's website at investors.ttm.com. We have also posted on that website a slide deck that we will refer to during our call. I will now turn the call over to Tom Edmund, TTM's Chief Executive Officer. Please go ahead, Tom.

Thank you, Samir. Good afternoon, and thank you for joining us for our first quarter 2024 conference call. I'll begin with a review of our business highlights from the quarter and a discussion of our first quarter results. followed by a summary of our business strategy. Dan Bailey, our CFO, will follow with an overview of our Q1 2024 financial performance and our Q2 2024 guidance. We will then open the call to your questions. Highlights of the quarter's financial results are summarized on slide three of the earnings presentation posted on TTM's website. We delivered a solid quarter. and I would like to thank our employees for their hard work and contributions in support of these results. In the first quarter of 2024, non-GAAP earnings per share were above the high end of the guided range and demonstrated solid year-on-year growth due to improved operating performance and favorable product mix. Revenues were at the high end of the previously guided range and returned to year-on-year growth due to demand strength from our aerospace and defense and data center computing end markets, which was partially offset by lower than expected results from our medical, industrial and instrumentation and automotive end markets. Demand in our aerospace and defense market, which was 46% of revenues for the quarter, continues to be solid as we registered a positive book to bill in the quarter and now have a program backlog of approximately $1.38 billion. I would now like to provide a strategic update. TTM is on a journey to transform our business to be less cyclical and more differentiated. Over the past several years, TTM has consistently emphasized that a key part of our strategy is to add value to the product solutions that we deliver to our customers. particularly in the aerospace and defense market. As a result of strategic transactions in the aerospace and defense end market through the acquisitions of Anarin and Telephonics, over 50% of our revenues in aerospace and defense are now generated from engineered and integrated electronic products, with PCBs contributing less than 50% overall. Another important element of our differentiation strategy is our investment in a new state-of-the-art, highly automated PCB manufacturing facility in Penang, Malaysia, to service our customers in our commercial end markets. The decision to build this new factory is a direct response to our customers' increasing concerns about supply chain resiliency and regional diversification, and in particular, the need for advanced multilayer PCB manufacturing options in locations outside the Greater China region. The new facility in Malaysia will support customers in our commercial markets, such as networking, data center computing, and medical, industrial, and instrumentation. We continue to make progress on the Malaysian facility, with ongoing customer audits and qualification sampling occurring. and with our test panel yields climbing. I was thrilled to welcome customers, vendors, and government officials to our grand opening event in Penang, which was held on April 25th. We expect our Penang facility to register limited revenues in the second quarter and ramp further in the second half with investments in phase two expansion of the facility starting towards the end of the year. I'd also like to update you on the consolidation of our manufacturing footprint. We previously announced our plan to close three small manufacturing facilities in order to improve total plant utilization, operational performance, customer focus, and profitability. During the course of 2023, PCB manufacturing operations in Anaheim and Santa Clara, California, and Hong Kong were closed. and consolidated into TTM's remaining facilities. We are presently on track and are ramping production for the transferred parts at receiving facilities throughout North America and Asia Pacific. Finally, I would like to update you on the previous announcement of our intent to expand our advanced technology capability for the aerospace and defense market through the construction of a new facility immediately adjacent to our existing Syracuse, New York campus. This new facility will focus on specialized high-technology PCB production, providing customers with reduced lead times and a significant increase in domestic capacity for ultra-HDI PCBs in support of increasing national security requirements for high-technology PCBs. Provided we are able to complete discussions with various stakeholders regarding their support for this facility, we anticipate that we will be prepared to break ground in the first half of 2024 with initial low rate production expected to follow within 18 months after groundbreaking. As previously announced, we expect the investment for phase one of the proposed project, including capital for campus-wide improvements, to be in the range of between $100 to $130 million and is anticipated to run through 2026 with TTM's capital investment commitments determined after finalizing terms with various stakeholders. To date, we have secured the land for this facility and applied for various government incentive packages in support of future equipment purchases. Now I'd like to review our end markets, which are referenced on page four of the earnings presentation on our website. The aerospace and defense end market represented 46% of total first quarter sales compared to 43% of Q1 2023 sales and 46% of sales in Q4 2023. The solid demand in the defense market is a result of a positive tailwind in previous defense budgets, our strong program alignment, and key bookings for ongoing franchise programs. We had a strong bookings quarter with a book-to-bill ratio of 1.2, leading to an A&D program backlog of approximately $1.38 billion at the end of the first quarter. During the quarter, we saw significant bookings for the F-16 Scalable Agile Beam Radar, or SABR, program, Javelin missile program, and a key restricted program. We expect sales in Q2 from this end market to represent about 44% of our total sales. Bookings in the aerospace and defense market ship over a longer period of time than in our commercial markets. and provide good visibility into future revenue growth. Sales in the data center computing end market represented 21% of total sales in the first quarter, compared to 10% in Q1 of 2023 and 17% in the fourth quarter of 2023. This end market performed better than expected and saw 106% year-on-year growth due to strength in our data center customers building products for generative AI applications. We expect revenues in this end market to represent 20% of second quarter sales. The medical industrial instrumentation end market contributed 14% of our total sales in the first quarter, compared to 19% in the year-ago quarter and 16% in the fourth quarter of 2023. The year-over-year decline was caused primarily by inventory reductions at a number of our customers, particularly in the industrial and instrumentation areas. However, we are beginning to see generative AI driving growth in the DRAM market, which is leading to increased purchases of automated test equipment. For the second quarter, we expect the medical industrial instrumentation end market to be 15% of revenues. Automotive sales represented 13% of total sales during the first quarter of 2024, compared to 17% in the year-ago quarter and 15% during the fourth quarter of 2023. The year-over-year decline for automotive was due primarily to continued inventory adjustments and soft demand at several customers. We expect our automotive business to contribute 14% of total sales in Q2. Networking accounted for 6% of revenue during the first quarter of 2024. This compares to 11% in the first quarter of 2023 and 6% of revenue in the fourth quarter of 2023. Demand was softer as customers continue to focus on inventory digestion and experience weak end market demand. As a reminder, The Shanghai backplane business, which we sold in our first quarter of 2023, contributed approximately $8 million in sales to this segment in the first quarter of 2023. In Q2, we expect this end market to be 7% of revenues. Next, I'll cover some details from the first quarter. This information is also available on page five of our earnings presentation. During the quarter, Our advanced technology and engineered products business, which includes HDI, RigidFlex, RF subsystems and components, and engineered systems, accounted for approximately 48% of our revenue. This compares to approximately 41% in the year-ago quarter and 47% in Q4. We are continuing to pursue new business opportunities and increase customer design engagement activities that will leverage our advanced technology and engineered product capabilities in new programs and new markets. PCB capacity utilization in Asia Pacific was 52% in Q1 compared to 52% in the year-ago quarter and 51% in Q4. Utilization rates were suppressed due to weak demand in several of our commercial markets. Our overall PCB capacity utilization in North America was 38% in Q1 compared to 39% in the year-ago quarter and 35% in Q4. As a reminder, North America utilization figures are not as meaningful as Asia Pacific because bottlenecks in these high-mix, low-volume facilities tend to occur in areas outside of plating which is the core process that we use for calculating utilization rates. Our top five customers contributed 42% of total sales in the first quarter of 2024, compared to 44% in the fourth quarter of 2023. We had two customers over 10% of our total sales in the quarter. At the end of Q1, our 90-day backlog, which is subject to cancellations, was $592.6 million compared to $482.2 million at the end of the first quarter last year. Our book-to-bill ratio was 1.15 for the three months ended April 1st. Now Dan will review our financial performance for the first quarter. Dan?