TTM TECHNOLOGIES INC

Previous wording

We are a leading global manufacturer of technology solutions including mission systems, radio frequency (RF) components, RF microwave/microelectronic assemblies, and quick-turn and technologically advanced printed circuit boards (PCB). We focus on providing time-to-market and volume production of advanced technology products and offer a one-stop design, engineering, and manufacturing solution to our customers. This solution allows us to align technology development with the diverse needs of our customers and to enable them to reduce the time required to develop new products and bring them to market. We serve a diversified customer base consisting of approximately 1,500 customers in various markets throughout the world, including aerospace and defense, data center computing, automotive, medical, industrial and instrumentation, and networking. Our customers include original equipment manufacturers (OEMs), electronic manufacturing services (EMS) providers, original design manufacturers (ODMs), distributors, and government agencies (both domestic and allied foreign governments).

Current wording

We are a leading global manufacturer of technology solutions including mission systems, radio frequency (RF) components, RF microwave/microelectronic assemblies, and quick-turn and technologically advanced printed circuit boards (PCB). We focus on providing time-to-market and volume production of advanced technology products and offer a one-stop design, engineering, and manufacturing solution to our customers. This solution allows us to align technology development with the diverse needs of our customers and to enable them to reduce the time required to develop new products and bring them to market. We serve a diversified customer base consisting of approximately 1,400 customers in various markets throughout the world, including aerospace and defense, data center computing, automotive, medical, industrial, and instrumentation, and networking. Our customers include original equipment manufacturers (OEMs), electronic manufacturing services (EMS) providers, original design manufacturers (ODMs), distributors, and government agencies (both domestic and allied foreign governments).

Previous wording

While our customers include both OEMs and EMS providers, we measure customers based on OEM companies, as they are the ultimate end customers. Sales to our ten largest customers collectively accounted for 54% and 53% of our net sales for the quarter and three quarters ended September 30, 2024, respectively. Sales to our ten largest customers collectively accounted for 53% and 50% of our net sales for the quarter and three quarters ended October 2, 2023, respectively. We sell to OEMs both directly and indirectly through EMS providers.

Current wording

Our customers include both OEMs and EMS providers. We sell to OEMs both directly and indirectly through EMS providers. For such indirect sales, we measure customers based on OEM companies as they are the ultimate end customers. Sales to our ten largest customers collectively accounted for 56% and 53% of our net sales for the quarters ended March 31, 2025 and April 1, 2024, respectively.

Previous wording

We derive revenues primarily from the sale of PCBs, engineered systems using customer-supplied engineering and design plans as well as our long-term contracts related to the design and manufacture of highly sophisticated intelligence, surveillance, and communications solutions, and RF and microwave/microelectronics components, assemblies, and subsystems. Orders for products generally correspond to the production schedules of our customers and are supported with firm purchase orders. Our customers have continuous control of the work in progress and finished goods throughout the PCB and engineered systems manufacturing process, as these are built to customer specifications with no alternative use, and there is an enforceable right of payment for work performed to date. As a result, we recognize revenue progressively over time based on the extent of progress towards completion of the performance obligation. We recognize revenue based on a cost method as it best depicts the transfer of control to the customer which takes place as we incur costs. Revenues are recorded proportionally as costs are incurred.

Current wording

We derive revenues primarily from the sale of PCBs, engineered systems using customer-supplied engineering and design plans, as well as our long-term contracts related to the design and manufacture of highly sophisticated intelligence, surveillance, and communications solutions, and RF microwave/microelectronics components, assemblies, and subsystems. Orders for products generally correspond to the production schedules of our customers and are supported with firm purchase orders. Our customers have continuous control of the work in progress and finished goods throughout the PCB and engineered systems manufacturing process, as these are built to customer specifications with no alternative use, and there is an enforceable right of payment for work performed to date. As a result, we recognize revenue progressively over time based on the extent of progress towards completion of the performance obligation. We recognize revenue based on a cost method as it best depicts the transfer of control to the customer which takes place as we incur costs. Revenues are recorded proportionally as costs are incurred.

Previous wording

Net sales consist of gross sales less an allowance for returns, which typically have been approximately 2% of gross sales. We provide our customers a limited right of return for defective PCBs including components, subsystems, and assemblies. We record an estimate for sales returns and allowances at the time of sale based on historical results and anticipated returns.

Current wording

Net sales consist of gross sales less an allowance for returns, which typically have been approximately 2% of gross sales. We provide our customers a limited right of return for defective PCBs including components, assemblies, and subsystems. We record an estimate for sales returns and allowances at the time of sale based on historical results and anticipated returns.

Previous wording

See Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the fiscal year ended January 1, 2024 for further discussion of critical accounting policies and estimates. There were no material changes to our critical accounting policies and estimates since January 1, 2024.

Current wording

See Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the fiscal year ended December 30, 2024 for further discussion of critical accounting policies and estimates. There have been no material changes to our critical accounting policies and estimates since December 30, 2024.

Previous wording

The following discussion and analysis is for the quarter and three quarters ended September 30, 2024, compared to the quarter and three quarters ended October 2, 2023, unless otherwise stated.

Current wording

The following discussion and analysis is for the quarter ended March 31, 2025, compared to the quarter ended April 1, 2024, unless otherwise stated.

Previous wording

An important factor affecting gross margins is capacity utilization, which is measured by the actual production as a percentage of maximum capacity. This measure is particularly important in our high-volume PCB facilities in Asia, as a significant portion of our operating costs are fixed in nature. We believe that our North America utilization figures are not as meaningful as Asia because bottlenecks in these high mix low volume facilities tend to occur in areas outside of plating, which is the core process that we use for calculating utilization rates. Capacity utilization for the third quarter of 2024 in our Asia and North America PCB facilities was 60% and 35%, respectively, compared to 46% and 38%, respectively, for the third quarter of 2023. Capacity utilization for the first three quarters of 2024 in our Asia and North America PCB facilities was 59% and 37%, respectively, compared to 48% and 39%, respectively, for the first three quarters of 2023. The increase in capacity utilization in our Asia PCB facilities was due to continued strong data center demand.

Current wording

An important factor affecting gross margins is capacity utilization, which is measured by the actual production as a percentage of maximum capacity. This measure is particularly important in our high-volume PCB facilities in Asia, as a significant portion of our operating costs are fixed in nature. We believe that our North America utilization figures are not as meaningful as Asia because bottlenecks in these high-mix low-volume facilities tend to occur in areas outside of plating, which is the core process that we use for calculating utilization rates. Capacity utilization for the quarter ended March 31, 2025 in our Asia and North America PCB facilities was 58% and 35%, respectively, compared to 52% and 38%, respectively, for the quarter ended April 1, 2024. The capacity utilization in our Asia PCB facilities improved due to stronger demand in data center computing and networking end markets.

Previous wording

Total other expense, net increased $18.9 million to $25.9 million for the third quarter of 2024 from $7.1 million for the third quarter of 2023. During the third quarter of 2024, there was a $17.8 million foreign exchange loss, compared to a $0.9 million foreign exchange gain in the third quarter of 2023. We utilize the Chinese Renminbi (RMB) and Malaysian Ringgit (MYR) at our China and Malaysia facilities, respectively, for employee-related and other costs of running our operations in foreign countries. However, the current year impact was primarily driven by $14.3 million of unrealized foreign exchange losses from translation of our China and Malaysia balance sheets from local currency into the U.S. dollar functional currency, which experienced significant devaluation against the RMB and MYR during the third quarter of 2024 as compared to the third quarter of 2023. Interest expense increased $1.7 million in the third quarter of 2024 as compared to the same period of 2023, partially offset by a $1.0 million increase in interest income.

Current wording

Total other expense, net increased $6.3 million to $9.3 million for the quarter ended March 31, 2025, from $3.0 million for the quarter ended April 1, 2024, primarily as a result of unrealized foreign exchange losses during the quarter ended March 31, 2025. We utilize the Chinese Renminbi (RMB) and Malaysian Ringgit (MYR) at our China and Malaysia facilities, respectively, for employee‑related and other costs of running our operations in foreign countries. There was a $2.2 million unrealized loss from foreign exchange during the quarter ended March 31, 2025, compared to a $4.3 million unrealized gain from foreign exchange during the quarter ended April 1, 2024. This unrealized loss was related to the translation of our China and Malaysia balance sheets from their local currencies into the U.S. dollar functional currency, which experienced devaluation against the RMB and MYR during the quarter ended March 31, 2025 as compared to the quarter ended April 1, 2024.

Previous wording

Our effective tax rate is primarily impacted by the mix of foreign and U.S. income, tax rates in China and Hong Kong, the U.S. federal income tax rate, apportioned state income tax rates, the generation of credits and deductions available to us as well as changes in valuation allowances and certain non-deductible items. We had a net deferred income tax liability of $40.4 million and $56.8 million as of September 30, 2024 and October 2, 2023, respectively.

Current wording

Our effective tax rate is primarily impacted by the mix of foreign and U.S. income, tax rates in China and Hong Kong, the U.S. federal income tax rate, apportioned state income tax rates, the generation of credits and deductions available to us as well as changes in valuation allowances and certain non-deductible items. We had a net deferred income tax liability of $40.6 million and $44.2 million as of March 31, 2025 and April 1, 2024, respectively.

Previous wording

Our principal sources of liquidity have been cash provided by operations, the issuance of debt, and borrowings under our revolving credit facility. Our principal uses of cash have been to finance capital expenditures, finance acquisitions, fund working capital requirements, repay debt obligations, and repurchase common stock. We anticipate that financing capital expenditures, financing acquisitions, funding working capital requirements, servicing debt, and repurchasing common stock will be the principal demands on our cash in the future.

Current wording

Our principal sources of liquidity have been cash provided by operations, the issuance of debt, and borrowings under our revolving credit facilities. Our principal uses of cash have been to finance capital expenditures, finance acquisitions, fund working capital requirements, repay debt obligations, and repurchase common stock. We anticipate that financing capital expenditures, financing acquisitions, funding working capital requirements, servicing debt, and repurchasing common stock will be the principal demands on our cash in the future.

Previous wording

Cash flow provided by operating activities during the first three quarters of 2024 was $150.8 million as compared to cash flow provided by operating activities of $139.8 million in the same period in 2023. The increase in cash flow was primarily due to an increase in net income of $87.2 million partially offset by an increased investment in working capital.

Current wording

Cash flow used in operating activities during the first quarter of 2025 was $10.7 million as compared to cash flow provided by operating activities of $43.9 million in the same period in 2024. The decrease in cash flow from operations was primarily due to the timing of cash collections from customers which drove an increase in working capital.

Previous wording

Net cash used in investing activities during the first three quarters of 2024 was $93.4 million, primarily resulting from the use of $129.7 million for purchases of property, plant and equipment and other assets. This is partially offset by the receipt of $29.6 million of proceeds from the sale of property, plant, and equipment and other assets primarily related to the sale of two buildings vacated by the closure of our Anaheim and Santa Clara plants and $6.7 million of proceeds from the sale of property associated with our Shanghai E‑MS subsidiary. Net cash used in investing activities was approximately $46.1 million for the first three quarters of 2023, primarily reflecting the use of $114.2 million for purchases of property, plant, and equipment and other assets, partially offset by the receipt of $61.8 million of proceeds from the sale of property associated with our Shanghai E‑MS subsidiary and $6.0 million of proceeds from the sale of our Shanghai Backplane Assembly subsidiary, net of cash disposed.

Current wording

Net cash used in investing activities during the first quarter of 2025 was $63.2 million, primarily resulting from the use of $63.3 million for purchases of property, plant, and equipment and other assets. Net cash used in investing activities during the first quarter of 2024 was approximately $42.6 million, primarily reflecting the use of $49.3 million for purchases of property, plant, and equipment and other assets, partially offset by $6.7 million of proceeds from the sale of property associated with our Shanghai E-MS subsidiary.

Previous wording

Net cash used in financing activities during the first three quarters of 2024 was $38.2 million reflecting the use of $34.5 million for repurchases of common stock, $8.7 million for the repayment of long-term debt borrowings, and $1.1 million for payment of debt issuance costs, partially offset by $6.1 million of proceeds from long-term debt borrowings related to the refinancing of our Term Loan Facility. Net cash used in financing activities during the first three quarters of 2023 was $87.9 million, primarily reflecting repayment of long-term debt borrowings of $291.5 million, repurchases of common stock of $14.6 million, refunding of customer deposits of $7.5 million, payment of debt issuance costs of $5.5 million, and payment of the original issue discount of $3.5 million, partially offset by the receipt of proceeds from long-term debt borrowing of $234.8 million.

Current wording

Net cash used in financing activities during the first quarter of 2025 was $18.8 million, reflecting the use of $17.9 million for repurchases of our common stock and $0.9 million for the repayment of long-term debt borrowings. Net cash used in financing activities during the first quarter of 2024 was $11.1 million, reflecting the use of $9.3 million for repurchases of common stock and $1.8 million for the repayment of long-term debt borrowings.

Previous wording

As of September 30, 2024, we had cash and cash equivalents of $469.5 million, of which $189.0 million was held by our foreign subsidiaries, primarily in China. Should we choose to remit cash to the United States from our foreign locations, we may incur tax obligations which would reduce the amount of cash ultimately available to the United States. However, we believe there would be no material tax consequences not previously accrued for the repatriation of this cash.

Current wording

As of March 31, 2025, we had cash and cash equivalents of approximately $411.3 million, of which approximately $151.5 million was held by our foreign subsidiaries, primarily in China, and $195.6 million of available borrowing capacity under our revolving credit facilities. Should we choose to remit cash to the United States from our foreign locations, we may incur tax obligations which would reduce the amount of cash ultimately available to the United States. However, we believe there would be no material tax expenses not previously accrued for the repatriation of this cash.

Previous wording

Our total 2024 capital expenditures are expected to be in the range of $175.0 million to $195.0 million.

Current wording

Our total 2025 capital expenditures are expected to be in the range of $230.0 million to $250.0 million, of which approximately $66.0 million relate to our construction of our new plant in Syracuse, New York.

Previous wording

On May 3, 2023, our Board of Directors authorized a share repurchase program (2023 Repurchase Program) allowing us to repurchase up to $100.0 million of our common stock from time to time through May 3, 2025. We did not repurchase any shares of our common stock during the quarter ended September 30, 2024. During the three quarters ended September 30, 2024, we repurchased 2.0 million shares of our common stock for a total cost of $34.5 million (including commissions). As of September 30, 2024, the remaining amount in value available to be repurchased under the 2023 Repurchase Program was approximately $41.1 million.

Current wording

On May 3, 2023, our Board of Directors authorized a share repurchase program (2023 Repurchase Program) allowing us to repurchase up to $100.0 million of our common stock from time to time through May 3, 2025. During the quarter ended March 31, 2025, we repurchased approximately 0.7 million shares of our common stock for a total cost of $17.9 million (including commissions). As of March 31, 2025, the remaining amount in value available to be repurchased under the 2023 Repurchase Program was approximately $23.2 million.

Previous wording

As of September 30, 2024, we had $916.3 million of outstanding debt, net of discount and debt issuance costs, composed of $496.5 million of Senior Notes due March 2029, $339.8 million under the Term Loan Facility, and $80.0 million under the Asia Asset-Based Lending Credit Agreement (Asia ABL).

Current wording

As of March 31, 2025, we had $917.6 million of outstanding debt, net of discount and issuance costs, composed of $496.8 million of Senior Notes due 2029, $338.6 million under the Term Loan Facility due 2030 (Term Loan Facility), $80.0 million under the Asia Asset-Based Lending Credit Agreement (Asia ABL), and $2.2 million of other loans.

Previous wording

We have agreements with financial institutions to facilitate payments to certain suppliers. Under the terms of the agreements, we confirm the validity of each supplier invoice to the respective financial institution upon receipt. The supplier receives payment from the financial institution, and we pay the financial institution based on the terms negotiated, which generally range from 160 days to 360 days. Liabilities associated with these agreements are recorded in accounts payable on the consolidated condensed balance sheets and amounted to $18.3 million and $18.8 million as of September 30, 2024 and January 1, 2024, respectively.

Current wording

We have agreements with financial institutions to facilitate payments to certain suppliers. Liabilities associated with these agreements are recorded in accounts payable on the consolidated condensed balance sheets and amounted to $10.4 million and $17.2 million as of March 31, 2025 and December 30, 2024, respectively.

Previous wording

As part of our on-going operations, we enter into contractual arrangements that obligate us to make future cash payments. These obligations impact our liquidity and capital resource needs. Our estimated future obligations consist of long-term debt obligations, interest on debt obligations, derivative liabilities, purchase obligations, and leases. As of September 30, 2024, there were no material changes outside the ordinary course of business since January 1, 2024 to our contractual obligations and commitments and the related cash requirements except for future interest on debt obligations. Our projected aggregate future interest on debt obligations as of September 30, 2024 amounted to $243.8 million, which we expect to settle as follows: $49.7 million within 1 year, $98.6 million within 1-3 years, $80.1 million within 4-5 years, and $15.4 million after 5 years. For debt obligations based on variable rates, interest rates used are as of September 30, 2024.

Current wording

As part of our ongoing operations, we enter into contractual arrangements that obligate us to make future cash payments. These obligations impact our liquidity and capital resource needs. Our estimated future obligations consist of long-term debt obligations, interest on debt obligations, derivative liabilities, purchase obligations, and leases. As of March 31, 2025, there were no material changes outside the ordinary course of business since December 30, 2024 to our contractual obligations and commitments and the related cash requirements.