TTM Technologies' Q3 2025 Earnings Call: Contradictions in Capacity Expansion, Penang Strategy, and Data Center Visibility Spark Investor Scrutiny

Date of Call: October 29, 2025

Financials Results

• Revenue: $752.7M, up 22% YOY (vs $616.5M in Q3 2024)
• EPS: $0.67 per diluted share (non-GAAP), up from $0.55 in Q3 2024; GAAP $0.50 per diluted share
• Gross Margin: 21.5% (non-GAAP), down from 22.0% in Q3 2024; GAAP 20.8% compared to 21.1% in prior year
• Operating Margin: GAAP operating margin 9.6%, up from 8.3% in Q3 2024; adjusted EBITDA margin 16.1% vs 16.3% prior year

Guidance:

• Net sales for Q4 2025 expected to be $730M to $770M
• Non-GAAP EPS expected $0.64 to $0.70 per diluted share (assumes ~106M diluted shares)
• SG&A ~8.9% of net sales; R&D ~1% of net sales
• Interest expense ~ $10.2M; interest income ~ $2.7M; effective tax rate 11%–15%
• Depreciation ~$28.1M; amortization ~$9.2M; stock-based comp ~$12.3M; noncash interest ~$0.5M

Business Commentary:

• Sales Growth and Market Performance:
• TTM Technologies reported net sales of $752.7 million for Q3 2025, up 22% year-on-year.

• The growth was driven by increases in data center computing, networking, medical, industrial, instrumentation, and aerospace and defense markets, particularly a record high in the A&D market at 45% of total sales.

• Adjust EBITDA and Earnings:

• TTM's adjusted EBITDA margin was 16.1% for Q3 2025, comparable to the previous year's 16.3%.

• Non-GAAP EPS was $0.67, reflecting a record consecutive quarterly high, supported by solid operating performance.

• Cash Flow and Investments:

• Cash flow from operations was $141.8 million or 18.8% of sales, contributing to year-to-date cash flow of $229 million or 10.7% of sales.

• The company plans to invest hundreds of millions in its facilities in Penang, Syracuse, and China, aligning with its growth strategy.

• Geopolitical and Supply Chain Stability:

• Despite potential tariff impacts, TTM does not foresee significant short-term effects, attributed to its diversified supplier base and global manufacturing footprint.
• Demand in defense and other key markets remained steady, with no major disruptions due to global economic slowdowns.

Sentiment Analysis:

Overall Tone: Positive

• CEO: "We delivered an excellent third quarter... Sales grew 22% year-on-year." CFO: "Net sales were $752.7 million... The 22% year-over-year increase"; CEO/CFO highlighted record non-GAAP EPS of $0.67 and strong cash flow ($141.8M in Q3), signaling operational strength and positive outlook.

Q&A:

• Question from James Ricchiuti (Needham & Company, LLC): On the data center market, how far out does your visibility extend and have you been able to bring on additional capacity at your two main facilities in China to satisfy customer demand?
  Response: Visibility is about 6–9 months; capacity over the coming years is adequate and well balanced between North America and Asia Pacific to meet demand.

• Question from James Ricchiuti (Needham & Company, LLC): Can you update on Penang — the margin headwind experienced there and expectations for Q4?
  Response: Penang ramp caused ~195 basis points headwind to the bottom line in Q3 (improved from ~210 bps in Q2); Q4 headwind forecast ~160 bps with higher revenue.

• Question from Michael Crawford (B. Riley Securities, Inc.): Can you characterize your PCB manufacturing capacity share globally, in China and in the U.S.?
  Response: TTM is #1 in the U.S., roughly #6–7 globally, and about #3–4 in the data-center segment.

• Question from Michael Crawford (B. Riley Securities, Inc.): In Penang you start with ~15-layer boards — where are you moving to in density in China for data center applications?
  Response: Focus is beyond 16 layers; demonstrating up to 87 layers and investing in R&D to lead on higher layer counts, microvias and advanced stackups.

• Question from William Stein (Truist Securities, Inc.): Can you share your background and what led you to TTM and how your experience positions you to succeed here?
  Response: CEO has an engineering/semiconductor background with senior leadership roles at Philips, DALSA and Teledyne (including CEO); he views TTM as a strategic back-end integrator and joined to drive growth in integrated PCB/subsystem solutions.

• Question from William Stein (Truist Securities, Inc.): Which metrics should investors focus on (growth, margins, operating targets) given prior targets of 4%–6% organic growth and 11%–13% operating margin?
  Response: Top metrics are growth (qualitative and sustainable), gross margin (primary competitiveness measure), and cash generation, with healthy EBITDA; company prioritized investing to grow while maintaining strong gross margins and cash.

Contradiction Point 1

Capacity Expansion and Strategic Location

It involves differing statements regarding the strategic location and capacity expansion plans, which are crucial for understanding the company's growth strategy and market positioning.

How far does your visibility extend into the data center market? Have you added capacity at your two main China facilities to meet customer demand? - James Ricchiuti(Needham & Company, LLC, Research Division)

2025Q3: Capacity is balanced between North America and Asia Pacific, with both regions expected to handle future demand over the coming years. - Edwin Roks(CEO)

Did you provide a timeline for the new Wisconsin capacity? Was the investment decision driven by customer requests? Which market verticals? - James Ricchiuti(Needham & Co.)

2025Q2: Tom Edman: The Wisconsin investment is driven by long-term supply chain resilience needs. Customers are discussing U.S. capacity requirements. - Thomas Edman(CEO)

Contradiction Point 2

Capacity and Production Strategy in Penang

It involves differing statements regarding the initial capacity and expansion plans for the Penang facility, which are critical for understanding the company's production strategy and market positioning.

Can you update on the margin headwinds in Penang and your Q4 outlook? - James Ricchiuti (Needham & Company, LLC, Research Division)

2025Q3: Penang remains a key part of the China Plus One strategy. Progress is being made with customer qualifications and training the local workforce. Five customers are lined up, and the second facility is planned based on long-term customer demand. - Edwin Roks(CEO)

Can you explain the customer profiles at the Penang facility and their primary markets? - Jim Ricchiuti (Needham & Co.)

2025Q1: Tom Edman: Penang facilities are primarily serving data center and networking customers, with some activity in medical industrial instrumentation. There are four anchor customers and approximately ten customers in qualification, with more expected to join as the facility ramps up. - Tom Edman(CEO)

Contradiction Point 3

Data Center Market Visibility

It involves differing statements regarding the visibility into the data center market, which is crucial for understanding the company's strategic planning and market expectations.

How far into the data center market does your visibility extend? Have you added capacity at your two main China facilities to meet customer demand? - James Ricchiuti (Needham & Company, LLC, Research Division)

2025Q3: Edwin Roks: Visibility into the data center market is between 6 to 9 months. - Edwin Roks(CEO)

Are there indications of accelerated activity in the data center business due to potential tariffs? - Ruben Roy (Stifel)

2025Q1: Tom Edman: Obviously, we're very focused on the data center market. We actually own a significant part of it, and it's growing. - Tom Edman(CEO)

Contradiction Point 4

Data Center Market Visibility and Demand Management

It highlights differing perspectives on the company's visibility into the data center market and its ability to manage demand, which are crucial for strategic planning and stakeholder expectations.

How far does your visibility extend into the data center market? Have you added capacity to meet demand from customers at your two main facilities in China? - James Ricchiuti (Needham & Company, LLC, Research Division)

2025Q3: Visibility into the data center market is between 6 to 9 months. Capacity is balanced between North America and Asia Pacific, with both regions expected to handle future demand over the coming years. TTM is working with top players and expects capacity to meet requirements. - Edwin Roks(CEO)

Are the pull-ins in the Data Center end market a headwind this quarter? - Chris Grenga (Needham)

2024Q4: Pull-ins contributed to Q4 revenues, but Q1 will see a slight decline due to Chinese New Year shut-downs. While pull-ins are a factor, demand remains strong, and customer qualifications continue to ramp. - Tom Edman(CEO)