Analyst Conference Summary

TTM Technologies

conference date: April 30, 2009 @ 1:30 PM Pacific Time
for quarter ending: March 31, 2009 (1st quarter)

Forward-looking statements

Overview: Took a hit from the economic slowdown, but remained profitable, especially on a cash basis.

Basic data (GAAP) :

Revenues were $149.0 million, down 10% sequentially from $164.9 million and down 14% from $174.1 million year-earlier.

Net income was $1.4 million, up sequentially from a loss of $69.2 million but down 90% from $14.4 million year-earlier.

EPS (earnings per share) were $0.03, up sequentially from a loss of $1.62, but down from $0.34 year-earlier.


Second quarter revenues between $141 and $149 million. GAAP earnings from $0.08 to $0.14. Non-GAAP EPS $0.13 to $0.19 per share. Tax rate 38%.

Conference Highlights:

Macro economy impacted demand for printed circuit boards (PCBs). The Aerospace & Defense market, however, was stable.

Gross margin dropped to 16.3% from 18.6%. There was a restructuring charge of $2.5 million. Excluding asset impairment and restructuring charges, operating income in the quarter declined to $7.8 million from $14.5 million in Q4.

FASB APB 14-1 was adopted, resulting in increased interest expense of $1.1 million for the quarter. For the full year increase is estimated at $4.4 million. This allows for interest on convertible debt instruments.

$12.1 million in cash profits were generated in the quarter. Adjusted EBITDA was $11.1 million. Cash and equivalent investments ended at $164.2 million. Inventories decreased $2 million to $69 million. Accounts receivable decreased $7 million to $108 million. Accounts payable decreased $3 million to $45 million. Long term liabilities are $138.7 million (interest rate is 3.25% per year).

Cash grew by an additional $10 million during April.

Non GAAP numbers: net income $5.4 million. EPS $0.12. Stock based compensation expense excluded was $1.6 million. $2.5 million in restructuring also excluded.

PCB Manufacturing segment had sales of $132.3 million, down from $144.2 million in Q4. Average price per panel increased 7%. However, there is increasing pricing competition.

Backplane Assembly segment sales were $24.9 million, down from $31.1 million in Q4. Weakness due to networking and communications markets. 3G rollout in China was a positive contributor.

End markets: Aerospace & Defense up slightly, up to 45% of total sales. Computing storage decreased slightly, was 12% of sales. Medical/industrial was only 10% of sales on slumping revenues. Networking and communications dropped to 33% of sales. Decline was across the board except in China.

35% of sales were from the top 5 customers: BAE, Cisco, WaWay (?), ITT, and Raytheon. None was an over 10% customers.

10% of revenue was from quickturn business. Lead times were steady.

.98 book to bill ratio at end of quarter, improved from end of Q4.

Cost of goods sold was $124.7 million, leaving gross profit of $24.3 million. Operating expenses of $19.2 million included $7.2 million selling and marketing; $8.4 million general and administrative; $0.9 million amortization; $0.3 impairments; $2.5 million restructuring. Leaving GAAP operating income of $5.0 million. Other income was negative $2.7 million. Income tax provision was $0.8 million.


Non-GAAP gross margins? Gross margin 16.3% is almost identical GAAP and non-GAAP.

Pricing impact on guidance? On book to bill, March was not that strong, April also slipped, but was still higher than January. Pricing is stable, no major trends, just a few specific cases of price competition. Also, competition is at low end products, not high technology products.

Backplane guidance up? We believe backplane revenue will be up $5 million in Q2. PCB segment down about $9 million.

Impact of known program cancellations? The major programs we are involved in will not be affected through 2010. On joint-strike fighter there is possibly some upside. We probably had some parts in cancelled programs, but nothing significant. Also, a lot of our parts are for repairs.

Inventory levels? You would think with sales dropping, inventory would drop more. But we are seeing a bit of a ramp up in raw materials in Shanghai because of the backlog on 3G rollout.

Networking guidance? Most of our challenge comes from the networking communication end market, for both enterprise and service providers. We believe U.S. market will continue to decline in Q2, offset partly by China demand.

China acquisition? We have narrowed it down to 3 or 4 companies that would be a good fit. We need to get the pricing lined up. Nothing is imminent.

Materials costs? We are not very impacted; our materials costs are a lesser percentage of finished costs. Prices are mostly stable.

How much of the backplane assembly business goes into China? About 80%, with the other 20% going to Europe.

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Disclaimer: Our analyst summaries may include both our condensations of statements made by company representatives and our own analysis. They are not covered by any warranty. We cannot guarantee anything said by company representatives is true. We try not to make errors, but it is possible. Before making or terminating an investment you should always verify any factual basis of your decision.

Copyright 2009 William P. Meyers