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01/10 05:52
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call indicates strong financial performance with a 22% YoY net sales increase and improved operating income. Despite a slight gross margin decline, the company is making strategic investments in facilities and R&D. The Q&A reveals confidence in capacity and strategic direction, with improved margin forecasts. The aerospace, defense, and data center markets show strong growth, and management's focus on qualitative growth and cash generation is positive. Considering the market cap, the stock price is likely to see a positive movement (2% to 8%) over the next two weeks.
Sales Sales grew 22% year-on-year, reflecting continued demand strength in our data center computing and networking end markets, driven by the requirements of generative AI. Medical, industrial, instrumentation, and aerospace and defense end markets also experienced double-digit year-on-year sales growth.
Adjusted EBITDA Margin The company's adjusted EBITDA margin was 16.1%, which is comparable to 16.3% in the same quarter a year ago, reflecting continued solid execution.
Non-GAAP EPS Non-GAAP EPS of $0.67 reflects a solid consecutive quarterly record for TTM.
Cash Flows from Operations Cash flows from operations were $141.8 million or 18.8% of sales, which brings the year-to-date cash flow from operation to $229 million or 10.7% of sales.
Aerospace and Defense Sales Sales in this market grew 20% year-on-year to a record high, significantly better than expected, partially due to timing of sales originally planned in the fourth quarter. Solid demand was driven by positive tailwinds in defense budgets, strong strategic program alignment, and key bookings for ongoing programs.
Data Center Computing Sales This end market saw 44% year-on-year growth, which was better than expected and a record high due to continued demand strength from our data center customers building products for GenAI applications.
Medical, Industrial, and Instrumentation Sales This end market saw year-on-year growth of 22% during the third quarter of 2025 as the medical and industrial segment saw increased demand for robotics, and the instrumentation segment saw increased demand for automated test equipment and GenAI applications.
Automotive Sales Automotive sales represented 11% of third quarter 2025 sales compared to 14% in the third quarter of 2024. The year-over-year decline was primarily due to continued inventory adjustments and soft demand at several customers.
Networking Sales Year-on-year growth was 35% as this market continues to show strong growth driven by AI-related demand and new products.
Net Sales Net sales were $752.7 million compared to $616.5 million in the third quarter of 2024, a 22% year-over-year increase due to growth in aerospace and defense, data center computing, networking, and medical, industrial, and instrumentation end markets, partially offset by a slight decline in the automotive end market.
Gross Margin Gross margin for the third quarter of 2025 was 20.8% compared to 21.1% in the third quarter of 2024. The year-over-year decrease was primarily due to ramp-up costs in connection with the fabrication plant in Penang, Malaysia.
Operating Income Operating income for the third quarter of 2025 was $71.9 million or 9.6% compared to $51 million or 8.3% in the third quarter of 2024.
Net Income Net income in the third quarter of 2025 was $53.1 million or $0.50 per diluted share compared to $14.3 million or $0.14 per diluted share in the third quarter of 2024.
Aerospace and Defense Segment Sales The Aerospace and Defense segment recorded $336.8 million in net sales and $52.9 million in segment operating income compared to $279.5 million in net sales and $40.3 million in segment operating income in the year-ago quarter.
Commercial Segment Sales The Commercial segment recorded $408.9 million in net sales and $60 million in segment operating income compared to $329.4 million in net sales and $51.1 million in segment operating income in the year-ago quarter.
RF and Specialty Components Segment Sales The RF and Specialty Components segment recorded $10.4 million in net sales and $3.1 million in segment operating income compared to $9.8 million in net sales and $2.4 million in segment operating income in the year-ago quarter.
AI-driven PCB design and mission-critical subsystems: TTM is advancing into highly complex modules and subsystems combining sensors, actuators, RF, and photonics for markets like aerospace, defense, data centers, telecom, instrumentation, and medical systems.
Ultra-HDI PCB manufacturing facility: Progress continues in Syracuse, New York, with equipment installation and testing underway. Volume production is expected in the second half of 2026.
Aerospace and defense: Sales grew 20% year-on-year to a record high, driven by strong demand and key bookings for programs like the AMRAAM missile and APS-153 radar system. This market represented 45% of Q3 sales.
Data center computing and networking: Sales grew 44% year-on-year, driven by demand for generative AI applications. This market represented 23% of Q3 sales and is expected to grow to 28% in Q4.
Medical, industrial, and instrumentation: Sales grew 22% year-on-year, driven by demand for robotics, automated test equipment, and AI applications. This market represented 14% of Q3 sales.
Penang facility: Sales remained steady at $5 million in Q3, with growth expected in Q4. Long-term plans for a second facility are in place, but construction timing depends on customer demand.
Adjusted EBITDA margin: Maintained at 16.1%, reflecting solid execution despite ramp-up costs in Penang.
Strategic review: The company is undergoing an annual strategic review, with plans to be presented to the Board next month. No immediate strategic changes were announced.
Tariffs and Economic Slowdown: While the company does not expect significant short-term impacts from tariffs due to its diversified supplier base and global manufacturing footprint, there is a potential indirect impact from overall end market demand weakness and economic slowdown, which could affect key end markets.
Ramp-up Costs in Penang Facility: The ramp-up costs associated with the fabrication plant in Penang, Malaysia, have contributed to a decrease in gross margin, indicating operational challenges in scaling production.
Automotive Market Weakness: The automotive end market experienced a year-over-year decline due to continued inventory adjustments and soft demand at several customers, which could impact overall sales performance.
Geopolitical Environment: The company mentioned an update on the geopolitical environment, which could imply potential risks related to global political and economic uncertainties affecting operations or supply chains.
Customer Demand Alignment for New Facilities: The timing of construction for the planned second production facility in Malaysia is dependent on long-term customer demand, indicating potential risks if demand does not materialize as expected.
Q4 2025 Revenue Guidance: Net sales projected to be in the range of $730 million to $770 million.
Q4 2025 Non-GAAP EPS Guidance: Expected to be in the range of $0.64 to $0.70 per diluted share, inclusive of operating costs associated with the Penang facility.
Q4 2025 SG&A Expense: Expected to be about 8.9% of net sales.
Q4 2025 R&D Expense: Expected to be about 1% of net sales.
Q4 2025 Interest Expense: Expected to be approximately $10.2 million.
Q4 2025 Interest Income: Expected to be approximately $2.7 million.
Q4 2025 Effective Tax Rate: Estimated to be between 11% and 15%.
Q4 2025 Depreciation: Expected to be approximately $28.1 million.
Q4 2025 Amortization of Intangibles: Expected to be approximately $9.2 million.
Q4 2025 Stock-Based Compensation Expense: Expected to be approximately $12.3 million.
Q4 2025 Noncash Interest Expense: Expected to be approximately $0.5 million.
Penang Facility Growth: Sales expected to grow in Q4 2025, with long-term plans for a second production facility aligned with customer demand.
Ultra-HDI PCB Manufacturing Facility: Volume production expected to start in the second half of 2026.
Aerospace and Defense Sales: Expected to represent 42% of total Q4 2025 sales.
Data Center Computing Sales: Expected to grow to represent 28% of total Q4 2025 sales.
Medical, Industrial, and Instrumentation Sales: Expected to represent 14% of total Q4 2025 sales.
Automotive Sales: Expected to represent about 9% of total Q4 2025 sales.
Networking Sales: Expected to represent 7% of total Q4 2025 sales.
The selected topic was not discussed during the call.
The earnings call indicates strong financial performance with a 22% YoY net sales increase and improved operating income. Despite a slight gross margin decline, the company is making strategic investments in facilities and R&D. The Q&A reveals confidence in capacity and strategic direction, with improved margin forecasts. The aerospace, defense, and data center markets show strong growth, and management's focus on qualitative growth and cash generation is positive. Considering the market cap, the stock price is likely to see a positive movement (2% to 8%) over the next two weeks.
The earnings call shows strong financial performance with increased GAAP operating and net income, and a 15% adjusted EBITDA. Although there are concerns about the breakeven timeline in Malaysia and cost competitiveness in Eau Claire, the company's strong revenue growth, operating margin improvement, and optimistic guidance for Q2 revenue and EPS are positive indicators. The defense sector's growth and customer diversification in the data center segment further bolster confidence. Given the market cap, these factors collectively suggest a positive stock price movement in the next two weeks.
The earnings call summary indicates strong financial performance with a 14% YoY revenue increase and improved margins. The share buyback program suggests confidence in future growth. While there are some risks, such as supply chain challenges and defense budget uncertainty, these are being actively managed. The Q&A reveals positive momentum in data center and networking sectors, and the potential upside from the reconciliation bill. The stock's market cap suggests a moderate reaction, leading to a positive prediction of 2% to 8% increase in stock price.
The earnings call summary indicates strong financial performance with a 14% revenue increase and improved margins, alongside positive guidance for Q1 2025. The share buyback program further boosts shareholder confidence. Despite challenges in the Penang facility and competitive pressures, the overall sentiment remains positive due to strong growth in key sectors like aerospace and defense, and networking. The market cap suggests a moderate reaction, leading to a positive stock price movement prediction of 2% to 8% over the next two weeks.
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