Analyst Conference Summary

TTM Technologies

conference date: February 4, 2010 @ 1:30 PM Pacific Time
for quarter ending: December 31, 2009 (fourth quarter)

Forward-looking statements

Overview: Good sequential growth, but still well below pre-recession numbers.

Basic data (GAAP) :

Revenues were $149.9 million, up 8% sequentially from $139.1 million, but down 9% from $164.9 million in the year-earlier quarter.

Net income was $2.75 million, up sequentially from negative $4.9 million, and up from negative $69.2 million year-earlier.

EPS (earnings per share) were $0.06, up sequentially from negative $0.11, and up from negative $1.62 year-earlier.


Q1 2010 revenues from $132 to $140 million. GAAP EPS $0.06 to $0.11; non-GAAP $0.14 to $0.19. This excludes possible impact of Meadville Holdings acquisition.

Revenue decline is from plant closures and none of the order acceleration seen in Q4.

Conference Highlights:

Renewal of demand from commercial markets led to sequential increase.

Gross margin was 18.%, up from 17.4% in Q3.

Non-GAAP net income was $8.4 million or $0.19/share.

GAAP numbers include $6.1 million in charges for plant closures and Meadville acquisition.

EBITDA was $14.7 million, up from $10.7 million in Q3.

PCB Manufacturing sales were $128.2, up sequentially from $123.2 million. 11% panel price increase. But ASPs down 6% due to change in product mix. 38% networking and communications, up from 35% in Q3. Medical, industrial, instrumentation 10% of revenue, up from 9%. Aerospace and defense was flat, and was 42% of sales. Computing was 10% of revenue, down from 12% sequentially.

34% of sales from top five customers: Cisco, Huaway, Juniper, Northrup-Grumman and Raytheon. No 10% customers.

Backplane Assembly sales were $29.3 million, up sequentially from $24.0 million.

Cash and investment balance was $215.7 million, up $15 million in the quarter. $16.7 million cash flow from operations.

Lead times have increased to 5 to 10 weeks.

Book to bill ended at 1.05.

Meadville Holdings transaction should be completed towards the end of this current quarter.

Cost of goods sold was $122.3 million, leaving gross profit of $27.7 million. Operating expenses of $20.4 million included: selling and marketing $6.5 million; general and administrative $11.1 million; amortization of intangibles $0.9 million; restructuring $0.5 million; impairment of long-lived assets $1.5 million. Operating income of $7.3 million. Other income negative $2.4 million due to interest on convertible notes.

$1.6 million stock-based compensation expense.

$1.6 to $1.8 million in increased medical costs in quarter due to change of plans. About one-third of that will recur.


Q1 guidance, commercial v. defense? Aerospace and defense down about $3 million. We have a broad customer base in this segment, with some programs growing and some nearing end-of life. Commercial should be about flat. Networking and communications would be down due to plant closures and year-end pull-ins.

Networking and communications OEMs have been putting out strong guidance? We are experiencing that same strength.

Meadville transaction timing? We need the 2 shareholder votes and the anti-trust approval in China. So we expect to close in the latter part of March. In next conference call we will have a lot broader set of topics to discuss.

How is Meadville doing with sales? We are satisfied with what they are experiencing. They are participating in the growth in China.

The revenue drop in Q1, will it be recovered in Q2? No, we expect that to be a permanent drop due to facilities closures. But our margins should improve, because the work was not a good fit with us.

By Q2 we should see a pretty clean run rate, as costs from closing plants should be over.

The pull-in was a customer wanting boards ahead of schedule, whereas last year we saw customers delaying.

Quickturn business? We were at about 10% of revenue. We won't see that percentage change to much, ranging from 10% to 12%.

With plants closed and Meadville done, we can focus on operating efficiency.

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Copyright 2010 William P. Meyers