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TTM (TTMI) Q2 Earnings call transcript Jul 31, 2024

AInvestThursday, Aug 1, 2024 4:23 pm ET
2min read

TTM Technologies Inc. recently held its second quarter 2024 financial results conference call, providing valuable insights into the company's performance and strategic direction. The call, led by CEO Thomas Edman and CFO Daniel Boehle, highlighted several key themes and trends that underscore TTM's financial health and growth prospects.

Strong Financial Performance and Strategic Transformation

TTM delivered a robust second quarter performance, with non-GAAP earnings per share surpassing the guided range and demonstrating year-on-year growth due to higher revenues and improved operational execution. The company's revenue growth was driven by the aerospace and defense and data center computing end markets, with the latter experiencing significant growth due to the surge in generative AI applications.

In terms of strategic initiatives, TTM's focus on transforming its business to be less cyclical and more differentiated is paying off. The company's acquisition of Anaren and Telephonics has enabled it to generate over 50% of its revenues in aerospace and defense from engineered and integrated electronic products, positioning it well for future growth. TTM's investment in a new state-of-the-art PCB manufacturing facility in Penang, Malaysia, is another strategic move aimed at servicing customers in commercial end markets such as data center computing, networking, and medical industrial and instrumentation.

Market Trends and Competitive Landscape

TTM's earnings call also shed light on broader market trends and the competitive landscape. The aerospace and defense end market, which accounted for 45% of total sales, is experiencing strong demand due to positive tailwinds from previous defense budgets and increased strategic program alignment. TTM's strong book-to-bill ratio of 1.26 and record A&D program backlog of approximately $1.45 billion are clear indicators of the market's confidence in the company's capabilities and growth prospects.

On the other hand, the data center computing end market, which is driving TTM's growth, is experiencing a surge due to the increasing demand for generative AI applications. This trend is expected to continue, with TTM projecting revenues in this end market to represent 21% of third-quarter sales. However, TTM also acknowledged the competitive landscape in this market, with major players in Taiwan and Korea posing significant challenges.

Challenges and Opportunities

Despite the strong financial performance and strategic initiatives, TTM also faced challenges, particularly in areas such as supply chain management and labor shortages. The company is actively addressing these issues, with the recent establishment of a supply chain organization for its non-PCV area and the ongoing refinement of its operations to improve efficiency and productivity.

Outlook and Future Prospects

Looking ahead, TTM is optimistic about its future prospects, with strong demand expected in the aerospace and defense and data center computing end markets. The company is also making strategic investments in its manufacturing facilities, such as the new facility in Syracuse, New York, to support its growth and meet the evolving needs of its customers.

In conclusion, TTM Technologies Inc.'s second quarter 2024 financial results paint a picture of a company on the right track for growth and transformation. With a strong focus on strategic initiatives, operational excellence, and market trends, TTM is well-positioned to capitalize on the opportunities in its end markets and overcome any challenges that may arise. As the company continues to navigate its strategic journey, investors and stakeholders will be closely watching its progress and performance in the quarters to come.

Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.