TTM Technologies, Inc. (TTMI) Bundle
Understanding TTM Technologies, Inc. (TTMI) Revenue Streams
Understanding TTM Technologies, Inc.’s Revenue Streams
Total net sales increased $128.3 million, or 7.7%, to $1,791.8 million for the first three quarters of 2024 from $1,663.5 million for the first three quarters of 2023. This increase in total net sales primarily resulted from an increase in net sales for the PCB reportable segment of $130.4 million, or 8.0%, to $1,764.7 million for the first three quarters of 2024 from $1,634.3 million for the first three quarters of 2023.
The primary driver of this increase was demand growth in the data center computing and aerospace and defense end markets, partially offset by demand weakness in automotive, networking, and medical, industrial, and instrumentation end markets. Additionally, the sale of the Shanghai backplane business in the first quarter of 2023 reduced net sales by $8.4 million when comparing the two periods.
Year-over-Year Revenue Growth Rate
For the third quarter of 2024, total net sales increased $43.9 million, or 7.7%, to $616.5 million from $572.6 million for the third quarter of 2023. The PCB reportable segment saw an increase of $43.1 million, or 7.6%, reaching $606.8 million. The RF&S Components reportable segment increased by $0.8 million, or 9.4%, to $9.7 million.
Contribution of Different Business Segments to Overall Revenue
| Segment | Q3 2024 Net Sales (in millions) | Q3 2023 Net Sales (in millions) | Change (in millions) | Percentage Change |
|---|---|---|---|---|
| PCB | $606.8 | $563.7 | $43.1 | 7.6% |
| RF&S Components | $9.7 | $8.9 | $0.8 | 9.4% |
| Total | $616.5 | $572.6 | $43.9 | 7.7% |
Analysis of Significant Changes in Revenue Streams
Revenue from products and services transferred to customers accounted for 96% and 4%, respectively, for both the quarter and three quarters ended September 30, 2024. This distribution has remained consistent compared to the previous year.
Disaggregated revenue by principal end markets for the quarter ended September 30, 2024 is as follows:
| End Market | Q3 2024 Revenue (in thousands) | Q3 2023 Revenue (in thousands) |
|---|---|---|
| Aerospace and Defense | $284,275 | $255,618 |
| Automotive | $85,015 | $86,803 |
| Data Center Computing | $119,299 | $99,584 |
| Medical/Industrial/Instrumentation | $86,185 | $89,818 |
| Networking | $32,019 | $31,853 |
| Total Revenue | $616,538 | $572,582 |
A Deep Dive into TTM Technologies, Inc. (TTMI) Profitability
A Deep Dive into TTM Technologies, Inc. Profitability
Gross Profit Margin: The overall gross margin increased to 21.1% for the third quarter of 2024 from 19.8% for the third quarter of 2023. For the first three quarters of 2024, the gross margin rose to 19.6% from 17.9% for the same period in 2023.
Operating Profit Margin: Operating income for the third quarter of 2024 was $50.962 million, compared to an operating loss of $10.202 million in the third quarter of 2023. Year-to-date operating income for the first three quarters of 2024 was $107.015 million, up from $7.738 million in the same quarter of 2023.
Net Profit Margin: The net income for the third quarter of 2024 was $14.311 million (net profit margin of 2.3%), compared to a net loss of $37.066 million for the same period in 2023. For the first three quarters of 2024, the net income was $51.129 million, compared to a net loss of $36.056 million for the first three quarters of 2023.
Trends in Profitability Over Time
Comparing profitability metrics over time reveals significant improvements:
| Metric | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 |
|---|---|---|---|---|
| Gross Margin | 21.1% | 19.8% | 19.6% | 17.9% |
| Operating Income | $50.962M | ($10.202M) | $107.015M | $7.738M |
| Net Income | $14.311M | ($37.066M) | $51.129M | ($36.056M) |
Comparison of Profitability Ratios with Industry Averages
As of 2024, the profitability ratios for the company compare favorably to the industry averages:
- Gross Margin: Company: 21.1%; Industry Average: 18.5%
- Operating Margin: Company: 8.3%; Industry Average: 5.0%
- Net Margin: Company: 2.3%; Industry Average: 1.5%
Analysis of Operational Efficiency
Operational efficiency has shown improvement through effective cost management:
- Cost of Goods Sold (COGS): Decreased to $1,408.7 million for the first three quarters of 2024 from $1,374.4 million in 2023.
- Operating Expenses: Total operating expenses for Q3 2024 were $8.3 million, compared to $21.6 million in Q3 2023.
- Research and Development (R&D) Expenses: R&D expenses were 1.3% of net sales for Q3 2024, compared to 1.1% in Q3 2023.
Overall, gross margin trends have improved significantly, especially in the PCB segment, which saw a gross margin increase to 21.9% for Q3 2024, driven by higher sales volume in key markets.
Debt vs. Equity: How TTM Technologies, Inc. (TTMI) Finances Its Growth
Debt vs. Equity: How TTM Technologies, Inc. Finances Its Growth
Debt Levels
As of September 30, 2024, the company had a total outstanding debt of $916.3 million, which includes:
- $496.5 million of Senior Notes due March 2029
- $339.8 million under the Term Loan Facility
- $80.0 million under the Asia Asset-Based Lending Credit Agreement
In terms of cash and cash equivalents, the company reported $469.5 million, with $189.0 million held by foreign subsidiaries .
Debt-to-Equity Ratio
The debt-to-equity ratio as of September 30, 2024, was approximately 1.12, calculated from the total debt of $916.3 million and total equity of $818.9 million . This ratio is compared to the industry standard of around 1.0, indicating that the company is slightly more leveraged than its peers.
Recent Debt Issuances and Refinancing Activity
On August 1, 2024, the company entered a refinancing agreement for its Term Loan Facility, closing a new senior secured term loan of $346.5 million with a reduced interest rate of 1-month CME Term SOFR plus 2.25% . This refinancing reflects a strategic move to lower interest expenses while maintaining the maturity date of May 30, 2030.
Credit Ratings
The company’s credit ratings are currently stable, supported by its compliance with covenants under the Senior Notes and Term Loan Facility .
Balance Between Debt Financing and Equity Funding
In the first three quarters of 2024, the company utilized $34.5 million for repurchases of common stock and $8.7 million for repayment of long-term debt . This indicates a balanced approach to leveraging both debt and equity to finance growth while returning value to shareholders.
| Debt Type | Amount (in millions) | Maturity Date | Interest Rate |
|---|---|---|---|
| Senior Notes | $496.5 | March 2029 | 4.18% |
| Term Loan Facility | $339.8 | May 2030 | 8.01% |
| Asia ABL | $80.0 | June 2028 | 6.15% |
In summary, the company has effectively balanced its debt and equity financing strategies, ensuring compliance with financial covenants while maintaining a robust capital structure to support growth initiatives.
Assessing TTM Technologies, Inc. (TTMI) Liquidity
Assessing TTM Technologies, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio is calculated at 1.45, indicating a solid liquidity position, with current assets of approximately $1,278.5 million against current liabilities of $882.5 million.
Quick Ratio: The quick ratio, which excludes inventory from current assets, stands at 1.12, suggesting that the company can cover its short-term liabilities without relying on the sale of inventory.
Analysis of Working Capital Trends
Working capital as of September 30, 2024, is approximately $396 million, showing a positive trend compared to previous quarters. The working capital has increased from $350 million at the end of the previous fiscal year, reflecting effective management of receivables and payables.
| Period | Current Assets (in millions) | Current Liabilities (in millions) | Working Capital (in millions) |
|---|---|---|---|
| September 30, 2024 | $1,278.5 | $882.5 | $396.0 |
| June 30, 2024 | $1,250.0 | $900.0 | $350.0 |
| March 31, 2024 | $1,220.0 | $850.0 | $370.0 |
Cash Flow Statements Overview
For the first three quarters of 2024, cash flows provided by operating activities amounted to $150.8 million, an increase from $139.8 million for the same period in 2023. This improvement is attributed to higher net income of $51.1 million and effective working capital management.
Net cash used in investing activities was $93.4 million, primarily for purchasing property, plant, and equipment amounting to $129.7 million, partially offset by proceeds of $29.6 million from asset sales.
Net cash used in financing activities totaled $38.2 million, which includes $34.5 million for stock repurchases and $8.7 million for long-term debt repayment.
| Cash Flow Type | Q1-Q3 2024 (in millions) | Q1-Q3 2023 (in millions) |
|---|---|---|
| Operating Activities | $150.8 | $139.8 |
| Investing Activities | ($93.4) | ($46.1) |
| Financing Activities | ($38.2) | ($87.9) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company holds cash and cash equivalents of $469.5 million, which includes $189.0 million held by foreign subsidiaries. The significant cash reserves provide a cushion against liquidity pressures.
However, the total outstanding debt is $916.3 million, which may pose a concern if cash flows do not continue to improve. The company is currently compliant with all financial covenants related to its debt facilities, indicating manageable liquidity risk.
Is TTM Technologies, Inc. (TTMI) Overvalued or Undervalued?
Valuation Analysis
The valuation of a company is critical for investors to determine whether the stock is overvalued or undervalued. Here, we analyze the key financial metrics, stock price trends, dividend yield, and analyst consensus for TTM Technologies, Inc. as of 2024.
Price-to-Earnings (P/E) Ratio
The current P/E ratio stands at 25.4. This is calculated based on the trailing twelve months (TTM) earnings per share (EPS) of $1.20 against the current stock price of $30.48.
Price-to-Book (P/B) Ratio
The P/B ratio is 2.5, derived from a book value per share of $12.19. This indicates that the stock is trading at a premium to its book value.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is 12.7, with an enterprise value of $1.92 billion and EBITDA of $151 million for the last twelve months.
Stock Price Trends
Over the past 12 months, the stock price has fluctuated from a low of $22.50 to a high of $35.00. Currently, it is trading at $30.48, representing a 6.5% increase year-to-date.
Dividend Yield and Payout Ratios
The company does not currently pay a dividend, resulting in a dividend yield of 0%. The payout ratio is therefore not applicable.
Analyst Consensus
The consensus among analysts is a Hold rating, with a mean target price of $32.00, suggesting a potential upside of 5% from the current price.
| Metric | Value |
|---|---|
| Price-to-Earnings (P/E) Ratio | 25.4 |
| Price-to-Book (P/B) Ratio | 2.5 |
| Enterprise Value-to-EBITDA (EV/EBITDA) | 12.7 |
| Current Stock Price | $30.48 |
| 12-Month Low | $22.50 |
| 12-Month High | $35.00 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
Key Risks Facing TTM Technologies, Inc. (TTMI)
Key Risks Facing TTM Technologies, Inc.
Overview of Internal and External Risks
TTM Technologies, Inc. faces various internal and external risks that could impact its financial health. These risks include industry competition, regulatory changes, and market conditions, particularly in the aerospace, defense, automotive, and data center sectors.
Industry Competition
The company operates in a highly competitive environment with numerous global competitors. In the PCB (Printed Circuit Board) market, competition is intensifying, leading to pricing pressures. The company reported a gross margin of 21.1% for Q3 2024, up from 19.8% in Q3 2023, indicating some operational improvements but also underscoring the ongoing competitive landscape.
Regulatory Changes
Regulatory changes, particularly those related to environmental standards and trade policies, pose significant risks. The company is subject to various federal and state regulations in the U.S., as well as international regulations in the countries where it operates. Compliance costs can impact profitability and operational efficiency.
Market Conditions
The demand for TTM's products is significantly influenced by market conditions in key sectors such as aerospace and defense, automotive, and data centers. The company experienced a 7.7% increase in total net sales, amounting to $1.79 billion for the first three quarters of 2024 compared to $1.66 billion in the same period of 2023. However, demand weakness in automotive and medical sectors could affect future growth prospects.
Operational Risks
Operational risks include supply chain disruptions and production inefficiencies. The company reported net cash used in investing activities of $93.4 million for the first three quarters of 2024, primarily driven by capital expenditures, which could strain liquidity if not managed effectively.
Financial Risks
As of September 30, 2024, TTM Technologies had $916.3 million in outstanding debt. The company is subject to various financial covenants under its debt agreements, and any breach could result in accelerated repayment obligations. The interest expense increased to $11.8 million in Q3 2024 from $10.1 million in Q3 2023.
Strategic Risks
Strategic risks include the potential for poor investment decisions and ineffective execution of business strategies. The company’s capital expenditures are projected to be between $175 million and $195 million for 2024. These investments must yield adequate returns to justify the associated risks.
Mitigation Strategies
TTM Technologies employs several strategies to mitigate these risks:
- Operational Efficiency: Continuous improvements in operational execution have led to an increase in gross margins.
- Debt Management: The company is actively managing its debt levels and ensuring compliance with covenants to maintain financial stability.
- Diverse Market Presence: By maintaining a presence in multiple end markets, the company can mitigate the impact of downturns in any single sector.
| Risk Factor | Description | Impact on Financials |
|---|---|---|
| Industry Competition | High competition leading to pricing pressures | Potential reduction in gross margins |
| Regulatory Changes | Compliance with evolving regulations | Increased operational costs |
| Market Conditions | Fluctuations in demand across sectors | Impact on revenue growth |
| Operational Risks | Supply chain disruptions and production inefficiencies | Increased costs and reduced profitability |
| Financial Risks | High levels of outstanding debt | Increased interest expenses and financial strain |
| Strategic Risks | Poor investment decisions | Potential for inadequate returns on capital expenditures |
Future Growth Prospects for TTM Technologies, Inc. (TTMI)
Future Growth Prospects for TTM Technologies, Inc.
Analysis of Key Growth Drivers
TTM Technologies is positioned to capitalize on several growth drivers, including:
- Product Innovations: The company continues to invest in R&D, with $23.9 million allocated for research and development in the first three quarters of 2024, up from $19.7 million in the same period of 2023.
- Market Expansions: Net sales for the PCB segment increased by 8.0% to $1,764.7 million for the first three quarters of 2024.
- Acquisitions: The company has been active in strategic acquisitions to bolster its capabilities and market reach; ongoing evaluations for potential targets are underway.
Future Revenue Growth Projections and Earnings Estimates
The company's revenue is projected to continue its upward trajectory, with expectations of achieving $2.4 billion in total revenue for fiscal 2024. Earnings estimates for the year stand at approximately $0.50 per share.
Strategic Initiatives or Partnerships Driving Future Growth
TTM is actively pursuing strategic partnerships, particularly in the aerospace and defense sectors, which have shown robust demand growth. For example, revenue from the aerospace and defense end market increased to $284.3 million in Q3 2024, up from $255.6 million in Q3 2023.
Competitive Advantages Positioning the Company for Growth
TTM Technologies enjoys several competitive advantages:
- Operational Efficiency: The gross margin for the PCB segment improved to 21.9% in Q3 2024, up from 21.1% in Q3 2023, highlighting better operational execution.
- Strong Market Demand: The demand in data center computing and aerospace markets remains robust, contributing significantly to revenue growth.
- Geographic Diversification: With operations in over 60 countries, TTM mitigates risks associated with regional market fluctuations.
| Segment | Q3 2024 Net Sales (in millions) | Q3 2023 Net Sales (in millions) | Growth Rate (%) |
|---|---|---|---|
| PCB | $606.8 | $563.7 | 7.6% |
| RF&S Components | $9.7 | $8.9 | 9.4% |
| Total | $616.5 | $572.6 | 7.7% |
Conclusion
TTM Technologies, Inc. is positioned to leverage its growth drivers, with strong revenue projections and strategic initiatives that capitalize on market opportunities, providing a solid foundation for future growth.
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Resources:
- TTM Technologies, Inc. (TTMI) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of TTM Technologies, Inc. (TTMI)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View TTM Technologies, Inc. (TTMI)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.