TTM TECHNOLOGIES INC

TTM Technologies, Inc. is a leading global manufacturer of technology products, including mission systems, RF components, RF microwave/microelectronic assemblies, and technologically advanced interconnect products, including PCBs and substrates. The company serves a diversified customer base of approximately 1,300 customers in various markets throughout the world, including aerospace and defense, data center computing, automotive, medical, industrial, and instrumentation, and networking. Advanced interconnect products serve as the foundation for virtually all electronic products, and products designed to offer faster data transmission, thinner and more lightweight packaging, and reduced power consumption generally require increasingly complex interconnect products. TTM's engineered systems are sold primarily to the aerospace and defense market, and due to modernization priorities, an increased proportion of defense budgets is geared towards defense electronics such as radar, communications, and surveillance. TTM's RF microwave/microelectronic assemblies benefit from increasing electronics content in defense programs as well as increased focus on solid-state AESA radar systems, and based on internal market intelligence, the company expects this market to grow faster than the overall defense market. The growth of the 5G transceiver market is expected to exceed overall telecommunications market growth over the next several years.

For PCBs, TTM's competitors are mostly based in China and Taiwan, while for engineered products such as RF subassemblies and systems, the company competes with a different set of competitors largely based in the U.S. and Europe. The PCB industry remains highly fragmented and characterized by intense competition. TTM's principal competitors for its A&D segment include BAE Systems plc, Curtiss-Wright Corporation, Leonardo DRS, Inc., Mercury Systems, Inc., and Sanmina Corporation. Its principal competitors for its Commercial segment include AT&S (Austria Technologie & Systemtechnik Aktiengesellschaft), Founder Technology Group Co., Ltd., Gold Circuit Electronics Ltd., Isu Petasys Co., Ltd., Kinwong Electronic Co. Ltd., Unimicron Technology Corp., Victory Giant Technology Co., Ltd., and WUS Printed Circuit Co., Ltd. Its principal competitors for its RF&S Components segment include Advanced Micro Devices, Inc., IDT Corporation, MACOM Technology Solutions Holdings, Inc., Microchip Technology Incorporated, Qorvo, Inc., and Silicon Laboratories Inc. TTM believes its key competitive strengths include being a leading global technology manufacturer offering breadth of technology and products and a one-stop solution for customers, being a leading aerospace and defense supplier, and having a diversified business model with sales diversified across end markets with over 1,300 customers and long-term relationships exceeding ten years with its ten largest customers.

TTM generates revenue primarily from the sale of PCBs, engineered systems using customer-supplied engineering and design plans as well as 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. For PCBs and engineered systems, customers have continuous control of the work in progress and finished goods throughout the manufacturing process, as these are built to customer specifications with no alternative use, and there is an enforceable right to payment for work performed to date, resulting in revenue recognized progressively over time based on the extent of progress towards completion of the performance obligation. For certain components, assemblies, subsystems, and completed systems which service its RF&S Components customers and certain aerospace and defense customers, revenue is recognized at a point in time upon transfer of control of the products to the customer. Net sales consist of gross sales less an allowance for returns, which typically have been approximately 2% of gross sales. The company serves a diversified customer base consisting of approximately 1,300 customers in various markets throughout the world, including OEMs, EMS providers, ODMs, distributors, and government agencies.

TTM's A&D reportable segment consists of 13 domestic system, subsystem, and PCB fabrication plants and generated segment sales of $1,292.5 million for the year ended December 29, 2025. This segment provides a wide range of engineered systems including radar systems, surveillance systems, communications systems, RF and microwave assemblies, passive RF components, advanced ceramic RF components and modules, hi-reliability multi-chip modules, beamforming and switching networks, and custom designed ASICs. The segment's products include multi-mode surveillance and weather avoidance radar systems for fixed- and rotary-wing aircraft, UAVs, and shipboard platforms, and TTM is the sole provider of the U.S. Navy's AN/APS-153 multi-mode radar on the MH-60R helicopter and the communications suite within the MH-60R/S multi-mission helicopters. The segment also provides IFF, Monopulse Secondary Surveillance Radars, and Air Traffic Control systems, and advanced wired and wireless communication systems serving as the digital backbone for defense and civil platforms worldwide.

TTM's Commercial reportable segment consists of three domestic PCB fabrication plants, four PCB fabrication plants in China, one in Malaysia, and one in Canada, and generated segment sales of $1,585.7 million for the year ended December 29, 2025. This segment produces conventional PCBs, high-density interconnect (HDI) PCBs, substrate-like PCBs (SLPs), flexible PCBs, rigid-flex PCBs, custom assemblies, IC substrates, and provides quick turnaround services and thermal management solutions. The segment focuses on advanced technology higher layer count conventional PCBs that support electronic products including data center switching and networking equipment, high-performance computing systems, medical robotics, test equipment and devices, industrial automation and robotics, semiconductor test equipment, automotive communications, computing and control systems, and aerospace and defense systems. TTM's RF&S Components reportable segment consists of one domestic RF component plant and one RF component plant in China, and generated segment sales of $40.0 million for the year ended December 29, 2025. This segment manufactures off-the-shelf surface mount microwave components, standard and etched thick-film ceramic substrates, custom hybrid and multi-chip modules, and passive and active beamforming technologies used in military and space applications.

On July 9, 2025, TTM announced the acquisition of a facility in Eau Claire, Wisconsin, as well as land rights for an additional future manufacturing site in Penang, Malaysia. The company acquired land rights for ten acres in Penang to establish a new production site. TTM is also in the process of constructing a new advanced technology PCB manufacturing facility in Syracuse, New York, where building construction is complete, equipment is arriving, and volume production is expected to commence in the second half of 2026. On May 8, 2025, the Board of Directors authorized the 2025 Repurchase Program, under which TTM may repurchase up to $100.0 million in value of its common stock from time to time through May 7, 2027. During the year ended December 29, 2025, under its previous two-year repurchase program that expired on May 3, 2025, TTM repurchased approximately 0.7 million shares of its common stock for a total cost of $17.9 million. As of December 29, 2025, no shares had been repurchased under the 2025 Repurchase Program, and the remaining amount available was $100.0 million. During the quarter ended June 30, 2025, in connection with a change in organizational structure, TTM concluded it has three reportable segments: A&D, Commercial, and RF&S Components, and reallocated PCB goodwill between A&D and Commercial based on estimated relative fair values.

For the year ended December 29, 2025, TTM generated net sales of $2,906.3 million, an increase of $463.6 million, or 19.0%, from $2,442.8 million in the prior year, driven by strong demand in aerospace and defense, data center computing, and networking end markets. Gross profit increased $124.3 million to $601.7 million, and gross margin rate increased to 20.7% from 19.5% in the prior year, primarily due to higher sales volume, improved operational execution, and favorable product mix. Operating income was $264.7 million, compared to $116.0 million in the prior year, and net income was $177.4 million, compared to $56.3 million in the prior year. The increase in operating income was primarily due to the absence of a $32.6 million impairment of goodwill, decreases in restructuring charges and amortization of definite-lived intangibles, and higher gross profit, partially offset by higher stock-based compensation and incentive compensation expense and the absence of $14.4 million of gains on the sale of assets.

TTM expects that its new facility in Syracuse, New York will bring advanced technology capability for domestic high-volume production of ultra-HDI PCBs in support of national security requirements, with volume production expected to commence in the second half of 2026. The company believes the Eau Claire, Wisconsin facility enhances its ability to support future high-volume U.S. production of advanced technology PCBs across key markets, particularly data center computing and networking for generative AI applications. The future Penang, Malaysia facility will be in close proximity to TTM's existing facility and will enable the company to deliver cost-competitive, high-quality advanced technology PCB manufacturing to commercial markets such as data center computing, networking, and medical, industrial, and instrumentation. Together, these new investments support TTM's strategy to offer regionally optimized, globally connected manufacturing solutions for its customers.

TTM's growth strategy includes accelerating expansion into growing markets using its advanced technology and diversified global manufacturing footprint as key points of differentiation. With rising requirements for faster data transmission, shrinking features, thermal management and lower power consumption, many advanced interconnect product designs have migrated to more complex multilayer and advanced HDI PCBs from conventional multilayer PCB technologies. TTM intends to strategically invest to expand and develop its manufacturing footprint both domestically and internationally to meet customer requirements with the goals of supply chain reliability, resiliency, and geographic diversification. The company also aims to accelerate customer, end market, and technology diversification through strategic mergers and acquisitions, with a focus on strengthening and expanding its leadership positions in existing end markets and managing exposure to cyclical businesses.

TTM's gross margin rate increased to 20.7% for the year ended December 29, 2025, from 19.5% in the prior year, primarily due to higher sales volume, improved operational execution, favorable product mix, and increased volume of PCB shipments, partially offset by continued ramp-up costs in connection with its fabrication plant in Penang, Malaysia. The company is highly focused on improving operational execution to increase efficiency, productivity, and yields, and relies on stringent goals for throughput, quality, and customer satisfaction to measure its effectiveness. TTM believes in sharing best practices across its extensive manufacturing footprint and maintains a disciplined approach to manufacturing rooted in continuous improvement and new capability development.

TTM continues the process of upgrading its enterprise resource planning (ERP) system to enhance operating efficiencies and provide more effective management of its business operations, investing significant financial and personnel resources into this project. The company has completed the implementation at certain locations and is in the process of rolling out the ERP to its remaining locations to standardize the system. TTM's manufacturing processes require significant quantities of energy from third parties, and the company is subject to the reporting requirements of California's SB 253 Climate Corporate Data Accountability Act, which could cause it to incur significant costs to monitor and report greenhouse gas emissions.

TTM's total 2026 capital expenditures are expected to be in the range of $240.0 million to $260.0 million. On May 8, 2025, the Board of Directors authorized the 2025 Repurchase Program, under which TTM may repurchase up to $100.0 million in value of its common stock from time to time through May 7, 2027. As of December 29, 2025, the remaining amount available to be repurchased under the 2025 Repurchase Program was $100.0 million. TTM has never declared or paid cash dividends on its common stock and does not anticipate paying cash dividends in the foreseeable future, and its ability to pay dividends is limited pursuant to covenants contained in its various debt agreements.

TTM faces structural headwinds from global economic and market uncertainty, which may negatively impact revenue, earnings, and demand for its products. The current uncertainty in the worldwide economic environment together with other unfavorable changes in economic conditions, such as higher inflation, interest rate increases, labor shortages, and market volatility, may negatively impact consumer confidence and spending in the industries where TTM operates. The conflict between Russia and Ukraine and in other global regions has contributed to volatility in the global economy and markets and ongoing geopolitical instability, including ongoing disruptions of the global supply chain and energy markets, spikes in energy prices, and increased cybersecurity threats. TTM also faces risks from significant international operations, including tariffs, as both the U.S. and Chinese governments have included PCBs among items subjected to tariffs imposed on imports from such countries, which may negatively impact revenue and profitability.

TTM faces execution risks related to its ability to manage growth effectively, including risks associated with potential divestitures of assets and acquisitions of other businesses. The company has pursued and intends to continue to pursue potential divestitures of assets and acquisitions, and failure to manage and successfully integrate acquisitions could have a material adverse effect on its business. TTM also faces risks related to its substantial outstanding indebtedness, which could adversely impact its liquidity and flexibility in obtaining additional financing. As of December 29, 2025, TTM had $916.2 million of outstanding debt, net of discount and debt issuance costs, and its variable rate indebtedness subjects it to interest rate risk, with an assumed 100 basis point change in variable rates causing annual interest cost to change by $1.7 million.

TTM's business is subject to risks from global economic and market uncertainty, which may negatively impact revenue and demand for its products, and the conflict between Russia and Ukraine has contributed to volatility in the global economy, disruptions of the global supply chain, and spikes in energy prices. The company has significant manufacturing operations in China and elsewhere in Asia and is subject to risks of international operations, including tariffs, as both the U.S. and Chinese governments have included PCBs among items subjected to tariffs. TTM depends on the U.S. federal government for a significant portion of its business, and changes in government defense spending or regulations could have a material adverse effect, as a significant portion of revenues is derived from products and services ultimately sold to the U.S. federal government. The company's five largest OEM customers collectively accounted for approximately 44% of net sales for the year ended December 29, 2025, and two customers collectively represented 23% of net sales, creating concentration risk. TTM has substantial outstanding indebtedness of $916.2 million as of December 29, 2025, and its variable rate indebtedness subjects it to interest rate risk, with an assumed 100 basis point change in variable rates causing annual interest cost to change by $1.7 million.

Management's message emphasizes TTM's vision to inspire innovation as a global preeminent technology company, with a core strategy that includes providing differentiated capabilities through advanced design-to-specification engineering support, maintaining a customer-driven culture, driving operational efficiency and productivity, accelerating diversification through strategic mergers and acquisitions, expanding into growing markets using advanced technology, addressing customer needs in all stages of the product life cycle, delivering consistently strong financial performance, and continuously enhancing the elements that make TTM an appealing employer. Management highlights that in 2025, TTM generated approximately $2.9 billion in net sales and ended the year with approximately 18,200 employees worldwide. The company's recent developments include the acquisition of a facility in Eau Claire, Wisconsin, land rights for ten acres in Penang, Malaysia, and the construction of a new advanced technology PCB manufacturing facility in Syracuse, New York, with volume production expected to commence in the second half of 2026. Management states that total 2026 capital expenditures are expected to be in the range of $240.0 million to $260.0 million.