TTM Technologies (TTMI) Jefferies Global Industrial Conference summary

Strategic direction and market focus

• Transitioning from commoditized PCBs to higher-value subsystems and integrated electronics, with a focus on aerospace and defense markets for stable growth and margins.

• Recent acquisitions (Anaren, Telephonics) expanded capabilities and customer base, while divestitures and plant closures reduced exposure to volatile commercial markets.

• Aerospace and defense now represent 45% of revenue, with strong backlog and alignment to major defense programs, and a focus on engineered products for long-term platform integration.

• Commercial sector growth driven by data center, generative AI, and automotive sensing, though automotive and networking are currently slower due to inventory drawdown.

• Diversification across end markets and global footprint, including a new automated plant in Malaysia and a high-end facility in Syracuse, supports resilience and future growth.

Financial performance and targets

• 2023 revenue was $2.2 billion, with a target long-term annual growth rate of 4-6% and operating margin of 11-13%.

• Operating margin has been around 9%, with improvement expected from plant closures, cost recovery, and ramping up new facilities.

• Penang plant is a current headwind but expected to reach breakeven by mid-next year, contributing significantly to margin improvement.

• Telephonics acquisition synergies are nearly fully realized, with ongoing supply chain optimization.

• Strong balance sheet with leverage at 1.4x, no major debt maturities until 2028, and active share buyback program to offset dilution.

Operational execution and competitive positioning

• Largest U.S.-based PCB manufacturer, with significant engineering depth and early customer engagement as key differentiators.

• High-end defense and Ultra HDI products face limited competition, especially for government contracts, supporting confidence in filling new capacity.

• Capacity utilization is about 65% in Asia Pacific and 30-40% in North America, with flexibility to handle quick-turn, high-mix orders.

• ROI for new Syracuse facility targeted at less than three years, with strong customer demand anticipated.

• Continued focus on disciplined capital allocation, investing in technology and footprint, and returning capital to shareholders.