管理層發言
Good day, and welcome to the TTM Technologies Q1 2026 Earnings Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Sean Hannan, Vice President of Investor Relations. Please go ahead.
Greetings, everyone. Welcome, and thank you for joining us today. I'm Sean Hannan, Vice President of Investor Relations for TTM. With me on the call are Edwin Roks, our President and Chief Executive Officer; and Dan Boehle, our Executive Vice President and Chief Financial Officer. Before we get started, I'd like to remind everybody that today's call contains forward-looking statements including statements related to TTM's future business outlook. Actual results could differ materially from these forward-looking statements due to one or more risks and uncertainties, including the risk factors we provide in our filings with the Securities and Exchange Commission, which we encourage you to review. These forward-looking statements represent management's expectations and assumptions based on currently available information. TTM does not undertake any obligation to publicly update or revise any of these forward-looking statements whether as a result of new information, future events or other circumstances, except as required by law. We will also discuss on this call certain non-GAAP financial measures such as adjusted EBITDA. Such measures should not be considered as a substitute for the measures prepared and presented in accordance with GAAP, and we direct you to the reconciliations between GAAP and non-GAAP measures included in the company's release, which is available on the Investor Relations section of TTM's website at investors.ttm.com. We have also posted on the website an earnings presentation that we will refer to during our call. Here is Edwin.
Thank you, Sean. Good afternoon, everyone and thank you for joining us for our first quarter 2026 conference call. At TTM Technologies, we are focused on designing and manufacturing complex products and solutions in two strategic directions. The first is advanced interconnect, which includes highly complex printed circuit boards, substrates and advanced packaging. The second strategic direction is built on our advanced interconnect technology to design and manufacture sophisticated modules, subsystems and systems. Examples of this include our RF modules, thermal and power management systems, edge and AI processing products as well as complex subsystems and fully integrated mission systems. We believe the future of electronics lies in speed to market, high reliability and efficient technology integration. The markets we serve continue to demand highly complex technology solutions in an increasingly compact size and footprint. Our strategy is to stay at the cutting edge of advanced interconnect technologies through innovation and continue to move up the value chain into complex modules and subsystems that combine sensors, actuators, RF and photonics. We engage early with our customers to ensure alignment on product development and speed to market while also enabling optimal management of their complex supply chains. From a demand standpoint, we are experiencing healthy multiyear tailwinds due to our participation in two key megatrends currently driving economic growth, artificial intelligence and defense. We previously stated that approximately 80% of our net sales are related to these two megatrends, and that this puts us in a unique position to benefit our investors. Our ability to seize these organic growth opportunities requires our continuous focus on technological innovation as well as expanding our capacity across our strategic footprint. We are further investing capital and resources to take full advantage of these opportunities today and in the future through our global footprint, which offers our customers manufacturing options across 24 sites located in China, Malaysia, Canada and the United States. We stand well positioned to support this growth across our end markets, and we are tracking well ahead of our previously communicated plan to grow revenues 15% to 20% per year for the next three years and to double our earnings from 2025 to 2027, which were reiterated on our February 4 earnings call. In our commercial segment, we are highly focused on supporting the demand wave of artificial intelligence in the data center and networking end markets where customer demand has materially accelerated. We are also focused on evolving opportunities in the use of automation and AI in our medical, industrial and instrumentation end markets, while we remain strategically positioned in automotive where our highly valuable solution designs are positioned to benefit from competitor consolidation and have additional transfer application into other markets. In our aerospace and defense end markets, we continue to excel with our leading position in advanced interconnect products and we work to expand our product offerings in integrated electronics, including modules, subsystems and full mission systems. Recently, we were proud to be a participant in the success of the Artemis I mission with our microelectronics, PCBs and assemblies for both the space launch vehicle and the Orion crew capsule. As for the current state of the defense budget as well as the geopolitical environment considering the conflict in Iran, our solutions are ever present in the categories of advanced radar systems, avionics systems, missiles and decoys, electronic surveillance systems and satellite and ground-based communication systems. In the commercial aerospace market, we recently won an award from an innovative electric autonomous aerospace company for light passenger travel to provide the sense and avoid radar system for their autonomous aircraft. I'll now begin with an overview of our business highlights from the quarter. Then we'll follow up with a summary on our Q1 fiscal 2026 financial performance and our Q2 and fiscal 2026 guidance. We will then open the call to your questions. We delivered an excellent first quarter of 2026, and I would like to thank our employees for delivering these results. We achieved sales of $846 million and non-GAAP EPS of $0.75 per diluted share, both above our guidance issued in early February and both all-time quarterly highs. Sales grew 30% year-on-year, reflecting continued demand trends in our data center and networking end markets driven by the requirements of AI while our medical, industrial and instrumentation and aerospace and defense end markets also experienced strong growth. The company adjusted EBITDA margin was 15.7% in the first quarter of 2026 compared to 15.3% in the prior year, largely reflecting positive mix impacts. Non-GAAP EPS of $0.75 per diluted share was a 50% improvement year-on-year. The aerospace and defense end market represented 40% of first quarter 2026 sales. Sales in the aerospace and defense market grew 11% year-on-year for the first quarter. The sales growth in the defense market continues to be a result of positive tailwinds in defense budgets, our strong strategic program alignment and key bookings for ongoing programs. During the first quarter of 2026, we saw significant A&D bookings related to the Alteams Air Defense Radar, APS-153 maritime surveillance radar and a transportable radar systems for ballistic missile detection and tracking. In addition, we continue to see an increase in bookings for respective programs and we also had our first booking that was confirmed to support Golden Dome. A&D book-to-bill was 1.10 for the quarter, which led to a program backlog of $1.6 billion, similar to the level a year ago. We expect second quarter 2026 from this end market to represent about 36% of our total sales, while still delivering both year-on-year and sequential growth. Sales in the data center and networking end market represented 36% of our first quarter 2026 sales. This end market experienced 61% year-on-year growth in the first quarter above our growth expectation and reflecting continued demand strength from our data center and networking customers, building out the AI data centers. For the second quarter of 2026, we expect this end market to represent 42% of net sales. The medical, industrial and instrumentation end market represented 16% of the first quarter 2026 sales. This end market saw year-on-year growth of 61% during the first quarter aided by healthy demand for AI-enabled robotics in medical, automated test equipment for AI applications in instrumentation. A notable example when in the quarter was for a major continuous glucose monitoring customer's products with our involvement on both the current and next generation, which will feature a materially smaller footprint and more powerful performance. For the second quarter of 2026, we expect medical, industrial and instrumentation end markets to represent 14% of total sales, growing both sequentially and year-on-year. Automotive sales represented 8% of the first quarter of 2026 sales. We continue to be very selective in this market to focus on higher value-add products that carry margin profiles consistent with our financial goals as we also believe long-term business cycles should migrate back towards advanced capabilities. We are also supporting our Tier 1 automotive customers as they transition some of their more advanced capabilities towards products in ancillary end markets. We expect the automotive end market to represent about 8% of our total sales in the second quarter of 2026. The overall book-to-bill ratio was 1.41 for the first quarter, with the commercial reporting segment at 1.65 and the A&D reporting segment at 1.10. At the end of the first quarter of 2026, the 90 days backlog, which is subject to cancellations, was $787 million compared to $517 million a year ago. Now then Dan will summarize our financial performance for the first quarter. Dan?
Thanks, Edwin, and good afternoon, everyone. I will review our financial results for the first quarter of 2026 that were included in the press release distributed today. Key financial highlights are also summarized in the earnings presentation posted on our website. For the first quarter, our net sales were $846 million compared to $649 million in the first quarter of 2025. The 30% year-over-year increase was due to continued strong growth in our data center networking, medical, industrial and instrumentation and aerospace and defense end markets, partially offset by a more modest than anticipated decline in our automotive end market. GAAP operating income for the first quarter of 2026 was $72.4 million compared to GAAP operating income for the first quarter of 2025 of $50.3 million. On a GAAP basis, net income in the first quarter of 2026 was $50 million or $0.47 per diluted share. This compares to GAAP net income for the first quarter of 2025 of $32.2 million or $0.31 per diluted share. The remainder of my comments will focus on our non-GAAP financial performance. Our non-GAAP performance excludes M&A-related costs, restructuring costs, certain noncash expense items such as amortization of intangibles, impairment of goodwill, stock compensation, gains on the sale of property, unrealized gains or losses on foreign exchange and other unusual or infrequent items. We present non-GAAP financial information to enable investors to see the company through the eyes of management and to facilitate comparison with expectations in prior periods. Gross margin in the first quarter of 2026 was 22.3%, an increase of 150 basis points from 20.8% in the first quarter of 2025. The year-on-year increase was due primarily to higher sales volume and favorable product mix, particularly in the data center and networking and aerospace and defense end markets. Selling and marketing expense was $23.7 million in the first quarter or 2.8% of net sales versus $20.3 million or 3.1% of net sales a year ago. First quarter general and administrative expense was $49.3 million or 5.8% of net sales compared to $38.9 million or 6% of net sales in the same quarter a year ago. Our operating margin for the first quarter of 2026 was 12.8%, a 230 basis point improvement from 10.5% in the same quarter last year. The increase in the period was due both to the improved gross margin as well as operating leverage resulting from selling, general and administrative expense discipline. Interest expense was $10 million in the first quarter of 2026 compared to $10.9 million in the same quarter last year. Interest income was $2.5 million in the first quarter of 2026 compared to $3 million in the same quarter last year. Realized foreign exchange and other nonoperating income and expenses in the first quarter of 2026 totaled a net expense of $6.8 million as compared to net income of $1.5 million in the same quarter last year. The increased expense was driven by the weakening of the U.S. dollar, which resulted in a $7 million foreign exchange loss in the first quarter of 2026 as compared to a $0.9 million gain in the same quarter last year. Our effective tax rate was 14.5% in the first quarter of 2026, resulting in a tax expense of $13.6 million. This compares to an effective tax rate of 15% or a tax expense of $9.3 million in the same quarter last year. First quarter 2026 non-GAAP net income was $80.1 million or $0.75 per diluted share. This compares to first quarter 2025 non-GAAP net income of $52.4 million or $0.50 per diluted share. Adjusted EBITDA for the first quarter of 2026 was $132.9 million or 15.7% of net sales compared with first quarter 2025 adjusted EBITDA of $99.5 million or 15.3% of net sales. Cash flow provided by operating activities was $21.7 million in the first quarter of 2026, despite the increased net working capital supporting our continued revenue growth. This compares to cash used in operating activities of $10.7 million in the same quarter last year. Free cash flow in the first quarter of 2026 was a net usage of $85 million as compared to a net usage of $74 million in the first quarter of last year, both periods reflecting increased capital expenditures in support of organic growth opportunities. Now I'll return to our guidance for the second quarter of 2026 and a directional outlook for fiscal 2026. We project net sales for the second quarter of 2026 to be in the range of $930 million to $970 million and non-GAAP earnings to be in the range of $0.82 to $0.88 per diluted share. In addition, considering the current demand dynamics reflected in our first quarter results and second quarter guidance, we believe that the net sales growth trajectory in the first half of the year should continue in the second half. The second quarter 2026 non-GAAP diluted EPS forecast is based on a diluted share count of approximately 107.5 million shares, which includes the dilutive effect of outstanding stock options and other stock awards. We expect SG&A expense to be about 7.4% of net sales in the second quarter and R&D expenditures to be about 1% of net sales. We expect interest expense of approximately $10.6 million, interest income of approximately $2.5 million, and realized foreign exchange and other nonoperating expenses of approximately $6.9 million. We estimate our effective tax rate will be between 13% and 17%. Further, we expect to record depreciation of approximately $32.1 million, amortization of intangibles of approximately $9.2 million, stock-based compensation expense of approximately $11.5 million and noncash interest expense of approximately $0.5 million. Finally, I'd like to announce that we will be participating in the Barclays Leverage Finance Conference in Austin, Texas on May 19 and the B. Riley 2026 Investor Conference in Los Angeles, California on May 20. In addition, we will host an Investor Day on May 27 at the NASDAQ Exchange in New York City, as announced in our press release last week. That concludes our prepared remarks. Sherry, I'll turn it over to you for questions.
分析師問答
Our first question will come from Steven Fox with Fox Advisors.
Great. I had two questions, if I could. First of all, I was wondering if you could maybe discuss the current interest you're seeing from your customers in bringing business into the UK facility as you ramp it? What kind of customers are looking at the facility and maybe how have the discussions progressed versus a year ago? And then I had a follow-up.
Yes, happy to answer your question. If you think about the UK site, I think we're making really good progress there. We are identifying our anchor customers like we did in Penang. So that's going well. A core team is identified to see what we're going to do. As you remember, it's about 750,000 square feet, and we have basically three modules. So we can use them for both our commercial business or our defense business, and we're very flexible with that. So we're identifying the customers right now. We have, of course, our supplier agreements in place. We are dealing with our equipment vendors. So that's going well. And what I really like about that site as well is that we are going to build an R&D center, which is not only providing capacity for our customers but also being very close with them on new R&D development.
Great. That's helpful. And then as a quick follow-up, can you give us your latest thinking around the impact of higher oil prices on laminate costs and how that flows through your income statement in coming quarters?
Yes, Steve. We did have some conversations within the company and with our supply chain and suppliers. We are observing some pressure in the supply chain environment as is the rest of the industry and that can relate to lead times and to pricing, but we don't think it's restricting our ability to reach our goals. In terms of a derivative impact specifically due to oil pricing, that's not something that we're currently observing through our supply-chain discussions.
Our next question will come from the line of Jim Rashidi with Needham & Company.
Just wanted to focus on the growth you're seeing in the data center networking portion of the business. Is there a way for you to give us a sense of how much of that is volume driven versus price? And when I say price, I guess there are two components to that, right? There are the higher ASPs for the more complex boards and maybe just higher pricing in general. So I'm just wondering if you can maybe drill down a little bit more on that.
Yes, Jim, happy to do that. First of all, before we get to the ASP and the volume aspects let's go back to visibility. I think our visibility is still, for normal orders, within the quarter. As you know, we are doing some larger orders for larger players where we have visibility out a year. And we still have our strategic alliances with the top customers. These are multiyear relationships. That is the whole point with respect to complexity. These boards are getting more and more complex. We spoke in the past about the number of layers. We can go to 80 layers; we've had 100 layers, even 140 layers in some extreme cases. And then, of course, we have these asymmetric panels as well where we distinct the power from the signals. So that's going very, very well. Because of that complexity, our ASPs are going up, let's say, by several times. But I hesitate to talk only about ASP because it's basically complexity. It's the complexity of what's going on. Regarding volume, yes, there is more volume and there are more panels. But also if you look at volume, if you want to create a more complex panel, you need more cycles in the facility to build that panel — that's also a volume aspect. So bottom line, if you look at ASP versus volume, it's mostly ASP-driven, but it still has a big effect on the facility because complex panels require more cycles in the facility. Hopefully, that answers your question.
It does help. And maybe one quick follow-up. I'm wondering if you can give us an update on how the ramp is going in Penang. And Dan, maybe if you can give us some sense as to what kind of a headwind it might have represented in the quarter and how you see that unfolding in Q2 and the second half?
Yes, absolutely. I'm very happy with the performance. Yields are improving a lot. If I look at these anchor customers, and I pick one of them, we saw yields above 40% last quarter. Now we are seeing it closer to 70% and 80%. So that's going very well. In the past, I would say a year ago, we disclosed some of the breakeven numbers. I can tell you we were getting very close to that number. I would be very surprised if in Q4, and hopefully earlier, we are not in a breakeven situation for Penang. So that's going well. We spoke about the headwinds of 160 basis points; bringing that back, so let's say, to half that, about an 80 basis point headwind for the full year, we're still on track there. And again, we hope to do better. We changed the team. I was there myself a few weeks ago. It is going very smoothly. It's a highly automated facility, so yes, I'm very positive about that situation there.
And then just to clarify, when you say an anchor customer, is that an anchor customer in the data center networking area?
It is, but in that facility we also do a lot of medical, industrial and instrumentation business. But in this case, I was talking about one of the data center networking players, yes.
Next question will come from the line of William Stein with Truist Securities.
Congrats on the great results and outlook. First, I want to ask something about data center networking: can you help us understand your size in that market relative to the market overall because most of this market has been served out of Asia? I think there are many investors here in the U.S. who might not appreciate you may not be the biggest, and so it highlights the potential for significant growth, maybe almost you can take whatever you can build to. Can you maybe characterize that? And then the other question I had was about the exposure or concentration in that end market relative to the various GPU or TPU type customers and the other hyperscaler customers. Maybe talk about the dispersion of customer concentration.
Thank you, Will. These are really good questions. So first of all, the market size is always a bit difficult to define. The spend in these data centers, a large portion of it is still in hardware, which we really like. It's the interconnect component, and what we do is the nervous system of all these interconnects, putting all these chips together. We play in the high end of that market — everything that has to do with more than 40 layers and very high complexity, very small pitch. That's where we play. If I look at our competition — thinking about some of the large Asian and global players — we are in the top four in that high-end segment. There is a lot of demand and we are in that top four. Some of the innovations we did, for instance the asymmetrical boards where power is on one side of the board and signal on the other side, we've shared some of that IP where required to ensure we can supply a whole business. The landscape is a handful of players where we are among the top names. Of course, we have a pretty unique situation here. We are a U.S. player that also means that we are very flexible with our location perspective — what the customer wants. We can process in China; we have five facilities in China. We have a facility in Malaysia, and if customers want a China-plus-one strategy that's available. But if these customers want to be in the U.S., we have many sites in the U.S. supporting this. Regarding GPUs, TPUs, XPUs — we are agnostic. Even if it goes to quantum processing, there is a lot of conventional processing required before and after. The boards for whatever customers are very similar and the complexity is fairly similar. So we're fortunate to be agnostic to the specific compute architecture in use. Hopefully that answers your question.
Our next question will come from the line of Michael Crawford with B. Riley Securities.
Within your aerospace and defense vertical, how much was commercial? How much was space? And where do you expect to see space in the future, especially as compute migrates to LEO geodistributed or low-earth orbit-based space?
If you look at aerospace and defense — and you probably saw in the earnings that we moved our commercial space business into the Aerospace and Defense group — we did that because there is a lot of synergy between these businesses. If you look at aerospace and defense, the breakdown is roughly 50% radar related, which can be printed circuit boards up through modules and subsystems and systems. About 25% is communications, mostly communication-related, some guidance systems and similar products. A smaller fraction, below 10%, is munitions — that's where I expect a lot of upside in the coming periods. And currently only about 5% of our business is space. I agree with you that there is a lot of potential, especially given our radiation-hardened designs and other capabilities, so space is an area of focus, but currently it's a small portion of the business.
Okay. And then switching gears: CapEx was high at $107 million in Q1. Can you just provide any updated thoughts on where that might fall out this year and next, and that's assuming that you are not only ramping in China and Malaysia and Syracuse, but also in the UK?
Yes, Mike, I'll take that question. You'll see in our 10-Q when it comes out, we disclosed the CapEx forecast for the year. It was originally about $240 million to $260 million. We're increasing that to $300 million to $320 million — that's the range that we're currently looking at. So we've accelerated some of the capital expenditures that we talked about for Asia as some of the lead times on equipment are starting to stretch out. So we placed orders earlier and in some cases had to pay deposits. That's why the cash expenditures have been up a little bit higher. But as you can see in our numbers, it's also generated faster revenue for us. So we've accelerated some of that CapEx that we had previously discussed in Asia to support demand.
Our next question will come from the line of Ruben Roy with Stifel.
This is Fed sitting on for Ruben. Yesterday, one of the major EMS guys reported and you made mention of challenges in 40-plus layer PCBs and sourcing them. We're already talked about price leverage. It sounds like you have that headwind. Correct me if I'm wrong, I think I heard you say earlier about that. We're talking about volume via the accelerated CapEx ramp, which sounds perhaps tied to anchor customers. Maybe we look at perhaps the contract structures themselves and the length of contracts, the update into '27 we got earlier this year was healthy and great. I'm curious if you're seeing contract structures extend out as we're seeing with some of these other rack-scale customers and what that looks like in terms of securitizing supply with you being the supplier over a multiyear period, particularly as you're investing on an accelerated cadence into CapEx?
Yes, that's a good question. If we look at contracts, it works a bit differently here. Across hyperscalers and data center and networking customers, it's about very tight relationships. We have a lot of alignment on road maps and future needs: how you think about multilayers, or 0-Ohm shields, and other advances. Everything becomes more and more complex. There is a lot of material science in our boards to ensure signal integrity at the highest level. The key for these customers is that you need to be the technology leader, not a follower. And then you need capacity and flexibility — and that's what we provide by being in China, Malaysia and the U.S., and soon Europe. On the supplier side, it's the same: we have strategic alliances with all the critical suppliers. Yes, of course, we have contracts in place, but if you rely only on contract terms, you're often too late. It's always a matter of relationship and making sure you're very relevant to the supplier and the customers. That's how we think about it.
By the way, just to add to Edwin's answer and to clarify: within data center and networking, we don't have just one anchor customer. There was a reference to an anchor customer specific to the Penang facility earlier; however, we have about 10 very major customers within that segment. Only one is a 10% customer right now, but we are working with about ten substantial names.
Okay. That's great. That was actually going to be a follow-up, particularly Dan, because of your CapEx commentary last quarter you were pointing to $250 million at the midpoint, and this quarter it sounds like $310 million, and you're still talking about FY '27 potentially going up. So you're talking about an incremental increase relative to what you signaled last quarter. If you can point to any sorts of puts and takes on the pace at which you might recognize these ramps, I don't know if you're ready to make those types of disclosures. I understand if you're not. And if you're not, the question on A&D: are these procurement-based contracts whereby margins are fixed? Or are these firm-price contracts, whereby there's potential for margin accretion?
I won't go beyond the guidance I just provided for this year. As I mentioned, our capital expenditures for this year are now centered around $310 million in the range of $300 million to $320 million. That's accelerating some of what we had previously talked about over the next two years, to stay at pace with demand from our data center customers. Regarding your question on A&D, we see strong demand across our Aerospace and Defense business for obvious reasons. On the munitions side, in particular, we see an increasing call for supply due to the market environment. Primes are coming to us with requirements to expand capabilities on the munitions side, and that is something we already do, so there's opportunity there.
Thank you. I'm showing no further questions in the queue at this time. I would now like to turn the call back over to Mr. Edwin Roks for any closing remarks.
Yes. Thank you, Sherry. Now I'd like to close by summarizing three key items. First, we are experiencing healthy growth. We delivered strong sales growth in Q1 of 30% year-on-year, resulting in an all-time high for quarterly revenue, driven by increases in our data center networking, medical, industrial and instrumentation and aerospace and defense end markets. Secondly, our adjusted EBITDA for the first quarter of 15.7% reflected strong operating performance, leading to another all-time high record and quarterly non-GAAP EPS results of $0.75 per diluted share. And third, we continue to generate solid cash flows from operations, which enables us to invest in our projected continued growth while maintaining a healthy net leverage ratio of about 1. In closing, I would like to thank all the employees of TTM, our customers, our suppliers and our shareholders for your continued support. Thank you very much, and goodbye.
This concludes today's program. Thank you all for participating. You may now disconnect.