TTM Technologies Achieves Strategic Growth with Strong Q3 Results

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TTM Technologies Achieves Strategic Growth with Strong Q3 Results

On October 30, 2024, leading global printed circuit board (PCB) manufacturer TTM Technologies, Inc. (TTMI) announced its financial results for the third quarter of 2024. The company reported that its revenue increased from $572.6 million in the same period last year to $616.5 million. This growth was attributed to strong demand in the aerospace and defense sectors, which accounted for 46% of the revenues, as well as the data center computing market. TTM Technologies also recorded a significant year-over-year increase in net income, reporting a net profit of $14.3 million compared to a net loss of $37.1 million in Q3 2023.

Key Highlights:

  • TTM Technologies’ Q3 revenue rose to $616.5 million, driven by aerospace and defense as well as data center computing.
  • The company's GAAP net income turned around from a net loss of $37.1 million in the same quarter last year to a profit of $14.3 million.
  • Aerospace and defense orders reached a record level of $1.49 billion with a book-to-bill ratio of 1.20.
  • The company is making strategic investments, including new facilities in Penang, Malaysia, and Syracuse, New York.
  • TTM expects net sales in Q4 to range between $610 million and $650 million, with non-GAAP earnings per share projected to be between $0.44 and $0.50.

Company Outlook:

  • Projected net sales for Q4 2024 are expected to be between $610 million and $650 million.
  • Non-GAAP earnings per share for Q4 are anticipated to be between $0.44 and $0.50.
  • The Penang facility is expected to reach breakeven by the middle of next year, with operating margins anticipated to be in the mid-10s.
  • Forecasting beyond Q1 is challenging due to market uncertainties.

Negative Aspects:

  • The automotive market remains weak, with only $25 million in program value gained last quarter.
  • There is high customer concentration in the data center and computing segment, with reliance on four or five large clients.
  • Challenges are anticipated in forecasting beyond the next two quarters.

Positive Aspects:

  • Aerospace and defense orders are at a record level of approximately $1.49 billion.
  • Strong growth in the aerospace and defense markets along with data center computing.
  • Significant improvement in operating income and net income on a year-over-year basis.

Shortcomings:

  • Despite overall growth, the company reported a 25% decline in quarterly revenue derived from 787 productions.

Q&A Highlights:

  • Customer interest in the new Penang facility remains strong for supply chain resilience.
  • The Syracuse expansion is a long-term strategy, with minimal financial impact expected in the next fiscal year.
  • A recent fire at the Chippewa Falls facility did not have a significant impact on operations.

TTM Technologies' strategic initiatives such as expanding production capacity in Penang and Syracuse reflect the company’s commitment to mitigating cyclical market impacts and positioning itself for future growth. With a solid balance sheet and a net debt/EBITDA ratio of 1.4x, the company appears to have a stable financial foundation. Upcoming conferences in November and December 2024 will offer investors additional opportunities to assess the company’s trajectory. Despite some challenges in the automotive market and high customer concentration in the data center segment, TTM Technologies' strong performance in aerospace and defense, along with significant investments in new technologies and facilities, underscores its focus on long-term growth and market resilience.

InvestingPro Forecasts: TTM Technologies’ recent financial performance aligns with several key metrics and forecasts from InvestingPro. The company’s increasing revenue and return to profitability in its Q3 2024 results are reflected in InvestingPro’s data, which shows that TTM recorded $2,316.87 million in revenue over the past twelve months.

An InvestingPro Tip emphasizes that net income is expected to rise this year, coinciding with the company’s improving financial results and positive outlook for Q4 2024. This growth expectation is further supported by two analysts revising their earnings forecasts upward for the upcoming period, indicating confidence in TTM’s short-term performance.

The strong performance in aerospace and defense, which constitutes 46% of the company's revenue, is reflected in InvestingPro’s data as a significant total return of 71.63% compared to the previous year. This impressive return is also supported by another InvestingPro Tip indicating that TTM is trading near its 52-week high; the current price is 95.85% of this high.

While the article mentions difficulties in forecasting beyond the next two quarters, InvestingPro's data shows that TTM's liquid assets exceed its short-term liabilities, indicating a strong financial position that can help manage market uncertainties.

It is noteworthy that InvestingPro has provided 11 additional tips for TTM Technologies, offering investors a more comprehensive analysis of the company's financial health and market position. For those interested in gaining a deeper understanding of TTM's investment potential, exploring these additional forecasts on InvestingPro may be valuable.