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01/10 05:58
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
Revenue $730.6 million, a 21% 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.
Non-GAAP Operating Margins 11.1%, up 210 basis points year-over-year, reflecting continued solid execution and the fourth consecutive quarter of double-digit operating margin performance.
Non-GAAP EPS $0.58, a quarterly record for TTM, taking into account adjustments for unrealized foreign exchange gains.
Cash Flow from Operations 13.4% of revenues, with net leverage ending the quarter at 1.2x.
Aerospace and Defense Revenue $327.6 million, a 21% year-over-year increase, driven by positive tailwinds in defense budgets, strategic program alignment, and key bookings for ongoing franchise programs.
Data Center Computing Revenue 21% of total sales, a 20% year-over-year growth, attributed to strength from data center customers building products for generative AI applications.
Medical/Industrial/Instrumentation Revenue 15% of total sales, a 28% year-over-year growth, driven by increased demand in robotics and automated test equipment for generative AI applications.
Automotive Revenue 11% of total sales, a slight year-over-year decline due to continued inventory adjustments and soft demand at several customers.
Networking Revenue 8% of total sales, a 52% year-over-year growth, driven by increased switch-related demand from certain networking customers.
GAAP Operating Income $61.8 million, compared to $39 million in the second quarter of 2024, reflecting higher sales volume and improved operational execution.
GAAP Net Income $41.5 million or $0.40 per diluted share, compared to $26.4 million or $0.25 per diluted share in the second quarter of 2024.
Adjusted EBITDA $109.7 million or 15% of net sales, compared to $84.6 million or 14% of net sales in the second quarter of 2024.
Generative AI applications: TTM announced the acquisition of a 750,000 square foot facility in Eau Claire, Wisconsin to support high-volume U.S. production of advanced technology PCBs for generative AI applications.
New facilities in Penang and Syracuse: Progress continues on customer qualifications in Penang, with revenues increasing to $5.2 million in Q2. However, breakeven revenue levels of $30-$35 million per quarter are yet to be achieved. A second facility in Malaysia is planned to meet customer demand. The Syracuse facility is nearing completion of external construction, with volume production expected in the second half of 2026.
Aerospace and defense: Revenue grew 21% year-on-year, representing 45% of total revenues. The program backlog is approximately $1.46 billion, with significant bookings for SABER and LTAMDS-related programs. NATO and U.S. defense spending increases provide additional growth opportunities.
Data center computing: Revenue grew 20% year-on-year, representing 21% of total sales. Growth is driven by generative AI applications, with expectations for this segment to grow to 24% of Q3 sales.
Networking: Revenue grew 52% year-on-year, driven by increased switch-related demand and AI-related products.
Operational efficiencies: Non-GAAP operating margins improved to 11.1%, up 210 basis points year-on-year. Cash flow from operations was 13.4% of revenues, and net leverage ended at 1.2x.
Geopolitical and tariff strategies: TTM has diversified its end markets and manufacturing footprint, reducing exposure to tariffs. Investments in U.S. and Malaysian facilities align with customer demand for supply chain diversification.
Defense spending alignment: TTM is well-positioned to benefit from increased U.S. and NATO defense budgets, with a focus on radar systems and missile defense programs.
Geopolitical Environment: Potential indirect impacts from tariffs, such as overall end market demand weakness and economic slowdown, though no significant short-term impact has been observed yet.
Penang Facility Ramp-Up: Slower-than-expected revenue ramp at the Penang facility, delaying breakeven revenue levels of $30 million to $35 million per quarter. This is attributed to growing pains in a greenfield start-up manufacturing complex multilayer products.
Automotive Market: Slight year-over-year decline in automotive sales due to continued inventory adjustments and soft demand at several customers.
Defense Market Book-to-Bill Ratio: Aerospace and Defense (A&D) segment's book-to-bill ratio below 1 (0.69), attributed to order timing, though demand remains healthy.
Supply Chain and Equipment Installation: Potential risks in the timing of equipment installation at the new Eau Claire, Wisconsin facility, which is closely tied to customer end demand.
Economic Slowdown: Possible indirect impact of economic slowdown on end market demand, though not currently observed.
Penang Facility Expansion: Uncertainty in timing for construction of a second facility in Malaysia, which depends on longer-term customer demand.
Revenue Projections: Net sales for Q3 2025 are projected to be in the range of $690 million to $730 million.
Earnings Per Share (EPS): Non-GAAP earnings for Q3 2025 are expected to range between $0.57 and $0.63 per diluted share.
Capital Expenditures: Net capital spending for Q2 2025 was $60.2 million, with ongoing investments in facilities such as Penang and Syracuse to support future growth.
Market Trends and Growth: The aerospace and defense market is expected to represent about 43% of Q3 sales, with continued strong demand. Data center computing revenues are projected to grow, representing 24% of Q3 sales, driven by generative AI applications. The medical/industrial/instrumentation market is expected to contribute 15% of Q3 revenues, while the automotive market is projected to decline slightly to 10% of Q3 revenues. Networking is expected to remain strong, contributing 8% of Q3 revenues.
Facility Expansions: The Penang facility is expected to continue ramping up revenues in Q4 2025, though breakeven levels of $30 million to $35 million in quarterly revenue are not yet certain. A second facility in Malaysia is planned, with construction timing aligned to customer demand. The Syracuse facility is on track for volume production in the second half of 2026.
Defense Spending: Increased U.S. defense budgets and NATO's commitment to higher defense spending are expected to provide long-term growth opportunities, particularly in radar systems and missile defense programs.
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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