TTM Technologies, Inc.

Good afternoon. Thank you for standing by. Welcome to the TTM Technologies, Inc. Second Quarter 2024 Financial Results Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, press star 11 again. As a reminder, this conference is being recorded today, July 31st, 2024. Samir Desai, TTM's Vice President of Corporate Development and Investor Relations, will 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 that we provide in our filings with the Securities 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 of GAAP and redirect you to the reconciliation between GAAP and non-GAAP measures included on 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 Edmond, TTM's Chief Executive Officer. Please go ahead, Tom.

Thank you, Samir. Good afternoon, and thank you for joining us for our second quarter 2024 conference call. I'll begin with a review of our business highlights from the quarter and a discussion of our second quarter results. followed by a summary of our business strategy. Dan Bailey, our CFO, will follow with an overview of our Q2 2024 financial performance and our Q3 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 strong quarter, and I would like to thank our employees for their hard work and contributions in support of these results. In the second quarter of 2024, non-GAAP earnings per share were above the guided range and demonstrated solid year-on-year growth due to higher revenues and improved operating execution. Revenues were above the guided range, representing the second consecutive quarter of year-on-year growth due to demand strength from our aerospace and defense and data center computing end markets. the latter being driven by generative AI. The growth in revenues was partially offset by year-over-year declines from our medical, industrial, and instrumentation, automotive, and networking end markets, though these markets did see sequential improvements. Overall, the company book to bill was 1.11, with the A&D book to bill at 1.26. Demand in our aerospace and defense market, which was 45% of revenues for the quarter, continues to be strong, and we now have a record program backlog of approximately $1.45 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 demonstrated 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 Anorin 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 customers in our commercial end markets. This new facility in Malaysia is supporting customers in markets such as data center computing, networking, and medical, industrial, and instrumentation. We continue to make progress ramping volume production as we manage through ongoing customer audits and qualifications. In several cases, customer qualifications are taking longer than originally expected, though we are making steady progress. We expect our Malaysia facility to register limited revenues in the third quarter as we continue our production ramp. 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. During the second quarter, We sold the Anaheim facility and one of the small buildings we owned in Santa Clara, and we continue to ramp production for the transferred parts at receiving facilities. 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 high HDI PCBs in support of increasing national security requirements for high technology PCBs. We have broken ground for the new building and expect initial low rate production within 18 to 24 months. 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. Final capital investment commitments will be determined after finalizing terms with various stakeholders. 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 45% of total second quarter sales compared to 47% of Q2 2023 sales and 46% of sales in Q1 2024. The solid demand in the defense market is a result of a positive tailwind in previous defense budgets. including supplemental funding related to conflicts in Ukraine and Israel, our strong strategic program alignment, and key bookings for ongoing franchise programs. We had a strong bookings quarter with a book-to-bill ratio of 1.26, leading to a record A&D program backlog of approximately $1.45 billion at the end of the second quarter. During the quarter, we saw significant bookings for TPS-80 Gator, MH-60R, and a key restricted program. We expect sales in Q3 from this end market to represent about 45% 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 second quarter, compared to 12% in Q2 of 2023 and 21% in the first quarter of 2024. This end market performed better than expected and saw 93% year-on-year growth to reach an all-time high due to strength from our data center customers building products for generative AI applications. We expect revenues in this end market to represent 21% of third quarter sales. The medical industrial instrumentation end market contributed 14% of our total sales in the second quarter compared to 16% in the year-ago quarter and 14% in the first quarter of 2024. The year-over-year decline was generally the result of lower demand and ongoing inventory normalization, particularly in the industrial area. However, the industrial market did improve sequentially. In addition, the medical market remained stable, and we saw pockets of improved demand from our semiconductor testing customers as generative AI drove growth in the DRAM market, leading to increased purchases of automated test equipment. For the third quarter, we expect the medical industrial instrumentation end market to be 14% of revenues. Automotive sales represented 14% of total sales during the second quarter of 2024, compared to 17% in the year-ago quarter and 13% during the first quarter of 2024. The year-over-year decline for automotive was due primarily to continued inventory adjustments and soft demand at several customers. However, we experienced solid sequential growth in Q2, tied to inventory normalization and improved demand for internal combustion engine and ADAS applications. We expect our automotive business to contribute 14% of total sales in Q3. Networking accounted for 6% of revenue during the second quarter of 2024. This compares to 8% in the second quarter of 2023 and 6% of revenue in the first quarter of 2024. We saw sequential growth due to recovering demand from certain networking customers. On a year-on-year basis, demand was softer as customers continue to focus on inventory digestion and experience weak end market demand. In Q3, we expect this end market to be 6% of revenues. Next, I'll cover some details from the second 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 45% of our revenue. This compares to approximately 43% in the year-ago quarter and 48% in Q1. We are continuing to pursue new business opportunities and increase customer design engagement activities that will leverage our advanced technology and engineered products capabilities in new programs and new markets. PCV capacity utilization in Asia Pacific was 64 percent in Q2 compared to 46 percent in the year-ago quarter and 52 percent in Q1. Utilization rates improved as data center demand continues to be strong and other commercial markets started to rebound. Our overall PCB capacity utilization in North America was 39% in Q2 compared to 38% in the year-ago quarter and 38% in Q1. 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 second quarter of 2024, compared to 40% in the second quarter of 2023. We had one customer with over 10% of our total sales in the quarter. At the end of Q2, our 90-day backlog, which is subject to cancellations, was $633.5 million compared to $556.2 million at the end of the second quarter last year. And as I mentioned earlier, our aerospace and defense backlog increased from $1.39 billion at the end of Q2 last year to a record of $1.45 billion at the end of Q2 this year. Our overall book to bill ratio was 1.11 for the three months ended July 1st. Now, Dan will review our financial performance for the second quarter. Dan?