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TTM TECHNOLOGIES INC 10-K Analysis & Summary – 2/21/2025

⚠️This is not investment advice.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️

TTM TECHNOLOGIES INC

Filing date:

02/21/2025

TLDR:

TTM Technologies Inc. reported revenue growth driven by data center computing and aerospace and defense, but profitability was impacted by a goodwill impairment charge and rising operating expenses. The company faces risks related to supply chain disruptions and economic uncertainties.

ELI5:

TTM Technologies made more money this year, especially from computer and defense industries, but some unexpected costs hurt their profits. They need to watch out for problems with getting supplies and the overall economy.

Accession #:

0000950170-25-024839

Published on

Analyst Summary

  • Net sales increased by 9.4% to $2.44 billion in 2024.
  • Gross margin improved to 19.5% from 18.5% in the previous year.
  • Operating expenses increased, driven by higher general and administrative costs.
  • Goodwill impairment charge of $32.6 million impacted profitability.
  • Aerospace and Defense sales accounted for 46% of net sales.
  • Data Center Computing sales accounted for 21% of net sales.
  • Basic EPS: $0.55
  • Diluted EPS: $0.54
  • Current Ratio: 1.99
  • Quick Ratio: 1.71
  • Cash Ratio: 0.62
  • Debt-to-Equity Ratio: 0.59
  • Debt-to-Assets Ratio: 0.27
  • Interest Coverage Ratio: 2.44
  • Inventory Turnover: 9.0
  • Days Sales Outstanding (DSO): 66.9 days
  • Days Payable Outstanding (DPO): 75.5 days
  • Asset Turnover: 0.70
  • Price-to-Earnings Ratio (P/E): 46.1
  • Price-to-Book Ratio (P/B): 1.66
  • Price-to-Sales Ratio (P/S): 1.06
  • Enterprise Value to EBITDA (EV/EBITDA): 11.3
  • Revenue Growth: 9.4%
  • Net Income Growth: N/A – Turnaround from Loss
  • EPS Growth: N/A – Turnaround from Loss

Opportunities and Risks

  • Opportunities: Strategic focus on aerospace and defense, data center computing, and advanced technologies.
  • Risks: Global economic and market uncertainty, dependence on the U.S. federal government, raw material supply chain disruptions, intense competition, cybersecurity threats, substantial outstanding indebtedness.

Potential Implications

Company Performance

  • Monitor the company’s ability to improve margins and manage operating expenses.
  • Track the progress of the new manufacturing facility in Syracuse and its impact on domestic production capabilities.
  • Assess the company’s ability to mitigate supply chain risks and navigate economic uncertainties.
  • Evaluate the effectiveness of the company’s debt management strategies.

TTM Technologies Inc. (TTMI) 10-K Filing Analysis – Fiscal Year 2024

Executive Summary

This report analyzes TTM Technologies Inc.’s 10-K filing for the fiscal year ended December 30, 2024. TTM is a leading global manufacturer of technology solutions, including PCBs and RF components. The analysis focuses on key financial performance indicators, strategic initiatives, risk factors, and overall outlook. While revenue increased, a goodwill impairment charge and rising operating expenses impacted profitability. The company’s strategic focus on aerospace and defense, data center computing, and advanced technologies presents growth opportunities, but supply chain risks and economic uncertainties remain concerns. A HOLD rating is recommended, pending further clarity on margin improvement and successful execution of its growth strategies.

Company Overview

TTM Technologies, Inc. (TTMI) is a global technology solutions provider specializing in mission systems, radio frequency (RF) components, RF microwave/microelectronic assemblies, and quick-turn and technologically advanced printed circuit boards (PCB). The company operates 23 specialized facilities in North America and Asia, serving diverse markets including aerospace and defense, data center computing, automotive, medical, industrial, instrumentation, and networking. Recent developments include the construction of a new advanced technology PCB manufacturing facility in Syracuse, New York, and the consolidation of integrated electronics facilities.

Detailed Analysis

Revenue Analysis

Net sales increased by 9.4% to $2.44 billion in 2024, driven by strong demand in data center computing and aerospace and defense. However, there was weakness in automotive, medical, industrial, instrumentation, and networking end markets. The PCB segment saw a 9.6% increase, while the RF&S Components segment experienced a 3.6% decrease.

Profitability Analysis

Gross margin improved to 19.5% from 18.5% in the previous year, primarily due to higher sales volume and improved operational execution in the PCB segment. However, the RF&S Components segment saw a decrease in gross margin due to lower sales. Operating expenses increased, driven by higher general and administrative costs, including a write-down of the Hong Kong building. A goodwill impairment charge of $32.6 million further impacted profitability.

Key Ratios and Trends

  • Gross Margin: 19.5% (up from 18.5% in 2023)
  • Operating Margin: 4.8% (up from 1.9% in 2023)
  • Aerospace and Defense Sales: 46% of net sales (up from 45% in 2023)
  • Data Center Computing Sales: 21% of net sales (up from 14% in 2023)

Management’s Discussion and Analysis (MD&A) Insights

Management highlights the company’s focus on attractive end markets with a favorable growth outlook and dependence on sophisticated product capabilities. The MD&A emphasizes the importance of one-stop solutions for customers and the company’s leading position as an aerospace and defense supplier. However, the MD&A also acknowledges the impact of global economic and market uncertainty on the business.

Risk Factors

The 10-K filing identifies several key risk factors, including:

  • Global economic and market uncertainty
  • Dependence on the U.S. federal government for a significant portion of business
  • Raw material supply chain disruptions
  • Intense competition in the PCB market
  • Cybersecurity threats
  • Substantial outstanding indebtedness

Uncommon Metrics

The filing mentions backlog, indicating future revenue potential. The company also highlights its employee engagement model and talent development programs, suggesting a focus on human capital management.

Debt and Liquidity

TTM has substantial outstanding indebtedness, which could adversely impact its liquidity and flexibility in obtaining additional financing. The company’s debt includes Senior Notes due 2029, a Term Loan Facility, and Asia ABL Revolving Loans. As of December 30, 2024, TTM had cash and cash equivalents of approximately $503.9 million and $195.6 million of available borrowing capacity under its revolving credit facilities.

Conclusion and Actionable Insights

TTM Technologies demonstrated revenue growth in 2024, driven by specific sectors like data center computing and aerospace and defense. However, profitability was impacted by a goodwill impairment charge and rising operating expenses. The company’s strategic focus on advanced technologies and key end markets presents growth opportunities, but it faces challenges related to supply chain risks, economic uncertainties, and intense competition. The high level of debt also remains a concern.

Overall Assessment: HOLD

Recommendations:

  • Monitor the company’s ability to improve margins and manage operating expenses.
  • Track the progress of the new manufacturing facility in Syracuse and its impact on domestic production capabilities.
  • Assess the company’s ability to mitigate supply chain risks and navigate economic uncertainties.
  • Evaluate the effectiveness of the company’s debt management strategies.

TTM Technologies, Inc. Financial Analysis (Year Ended December 30, 2024)

TTM Technologies demonstrated improved profitability in 2024, driven by revenue growth and enhanced operational efficiency. While the company experienced a net income turnaround compared to the previous year’s loss, it still faces challenges related to debt and intangible asset amortization. The company’s strategic focus on aerospace and defense end markets appears to be paying off, contributing significantly to revenue. Overall, TTM Technologies shows signs of recovery and growth, but careful management of debt and intangible assets will be crucial for sustained success.

1. Financial Ratio and Metric Analysis

Profitability

  • Gross Profit Margin

    • Ratio/Metric: Gross Profit / Net Sales = $477,375 / $2,442,753 = 19.5%
    • Trend: 19.5% (2024) vs. 18.5% (2023). Percentage Change: 5.4%
    • Industry: The average gross profit margin for the electronic components industry is around 25-35%. TTM Technologies’ gross profit margin is below the industry average, suggesting potential areas for improvement in cost management or pricing strategies.
  • Operating Profit Margin

    • Ratio/Metric: Operating Income / Net Sales = $116,043 / $2,442,753 = 4.8%
    • Trend: 4.8% (2024) vs. 1.9% (2023). Percentage Change: 152.6%
    • Industry: The average operating profit margin for the electronic components industry is around 10-15%. TTM Technologies’ operating profit margin is below the industry average, indicating higher operating expenses relative to sales compared to its peers.
  • Net Profit Margin

    • Ratio/Metric: Net Income / Net Sales = $56,299 / $2,442,753 = 2.3%
    • Trend: 2.3% (2024) vs. -0.9% (2023). Percentage Change: N/A (Turnaround from Loss)
    • Industry: The average net profit margin for the electronic components industry is around 5-10%. TTM Technologies’ net profit margin is below the industry average, suggesting that the company’s profitability is lower than its peers.
  • Return on Assets (ROA)

    • Ratio/Metric: Net Income / Total Assets = $56,299 / $3,472,494 = 1.6%
    • Trend: N/A – Previous period assets not provided
    • Industry: The average ROA for the electronic components industry is around 3-7%. TTM Technologies’ ROA is below the industry average, indicating that the company is not generating as much profit from its assets as its peers.
  • Return on Equity (ROE)

    • Ratio/Metric: Net Income / Total Stockholders’ Equity = $56,299 / $1,563,824 = 3.6%
    • Trend: N/A – Previous period equity not provided
    • Industry: The average ROE for the electronic components industry is around 8-15%. TTM Technologies’ ROE is below the industry average, suggesting that the company is not generating as much profit from its equity as its peers.
  • Earnings Per Share (EPS)

    • Basic EPS: $0.55
    • Diluted EPS: $0.54
    • Trend: Basic EPS: $0.55 (2024) vs. $(0.18) (2023). Percentage Change: N/A (Turnaround from Loss)
      Diluted EPS: $0.54 (2024) vs. $(0.18) (2023). Percentage Change: N/A (Turnaround from Loss)
    • Industry: EPS varies widely based on company size and profitability. However, the positive EPS for TTM Technologies indicates a return to profitability.

Liquidity

  • Current Ratio

    • Ratio/Metric: Current Assets / Current Liabilities = $1,606,744 / $809,054 = 1.99
    • Trend: 1.99 (2024) vs. 2.03 (2023). Percentage Change: -2.0%
    • Industry: A current ratio of 1.5 to 2 is generally considered healthy. TTM Technologies’ current ratio is within this range, indicating good liquidity.
  • Quick Ratio (Acid-Test Ratio)

    • Ratio/Metric: (Current Assets – Inventories) / Current Liabilities = ($1,606,744 – $224,985) / $809,054 = 1.71
    • Trend: 1.71 (2024) vs. 1.72 (2023). Percentage Change: -0.6%
    • Industry: A quick ratio of 1 or higher is generally considered healthy. TTM Technologies’ quick ratio is well above 1, indicating strong short-term liquidity.
  • Cash Ratio

    • Ratio/Metric: Cash and Cash Equivalents / Current Liabilities = $503,932 / $809,054 = 0.62
    • Trend: 0.62 (2024) vs. 0.64 (2023). Percentage Change: -3.1%
    • Industry: A cash ratio of 0.5 or higher is generally considered acceptable. TTM Technologies’ cash ratio is above this level, indicating a good ability to cover current liabilities with cash.

Solvency/Leverage

  • Debt-to-Equity Ratio

    • Ratio/Metric: Total Debt / Total Stockholders’ Equity = $927,945 / $1,563,824 = 0.59
    • Trend: N/A – Previous period equity not provided
    • Industry: A debt-to-equity ratio of 1 or lower is generally considered healthy. TTM Technologies’ debt-to-equity ratio is below 1, indicating a reasonable level of leverage.
  • Debt-to-Assets Ratio

    • Ratio/Metric: Total Debt / Total Assets = $927,945 / $3,472,494 = 0.27
    • Trend: N/A – Previous period assets not provided
    • Industry: A debt-to-assets ratio of 0.5 or lower is generally considered healthy. TTM Technologies’ debt-to-assets ratio is below this level, indicating a relatively low level of debt compared to its assets.
  • Interest Coverage Ratio (Times Interest Earned)

    • Ratio/Metric: Operating Income / Interest Expense = $116,043 / $47,515 = 2.44
    • Trend: 2.44 (2024) vs. 0.88 (2023). Percentage Change: 177.3%
    • Industry: An interest coverage ratio of 1.5 or higher is generally considered acceptable. TTM Technologies’ interest coverage ratio is above this level, indicating a good ability to cover its interest expenses.

Activity/Efficiency

  • Inventory Turnover

    • Ratio/Metric: Cost of Goods Sold / Average Inventory = $1,965,378 / (($224,985 + $213,075) / 2) = 9.0
    • Trend: N/A – Previous period inventory not provided
    • Industry: Inventory turnover varies widely by industry. A higher turnover ratio indicates efficient inventory management.
  • Days Sales Outstanding (DSO)

    • Ratio/Metric: (Accounts Receivable / Net Sales) * 365 = ($448,611 / $2,442,753) * 365 = 66.9 days
    • Trend: N/A – Previous period sales not provided
    • Industry: DSO varies by industry and customer payment terms. A lower DSO indicates faster collection of receivables.
  • Days Payable Outstanding (DPO)

    • Ratio/Metric: (Accounts Payable / Cost of Goods Sold) * 365 = ($406,221 / $1,965,378) * 365 = 75.5 days
    • Trend: N/A – Previous period payables not provided
    • Industry: DPO indicates how long a company takes to pay its suppliers. A higher DPO can indicate better cash management.
  • Asset Turnover

    • Ratio/Metric: Net Sales / Total Assets = $2,442,753 / $3,472,494 = 0.70
    • Trend: N/A – Previous period assets not provided
    • Industry: Asset turnover indicates how efficiently a company uses its assets to generate sales. A higher ratio is generally better.

Valuation

  • Price-to-Earnings Ratio (P/E)

    • Ratio/Metric: Stock Price / EPS = $25.36 / $0.55 = 46.1
    • Trend: N/A – Previous period stock price and eps not provided
    • Industry: The average P/E ratio for the S&P 500 is around 20-25. TTM Technologies’ P/E ratio is higher than the market average, suggesting that the stock may be overvalued.
  • Price-to-Book Ratio (P/B)

    • Ratio/Metric: Market Cap / Book Value of Equity = (101997 * $25.36) / $1,563,824 = 1.66
    • Trend: N/A – Previous period equity not provided
    • Industry: A P/B ratio of 1-3 is generally considered reasonable. TTM Technologies’ P/B ratio is within this range.
  • Price-to-Sales Ratio (P/S)

    • Ratio/Metric: Market Cap / Net Sales = (101997 * $25.36) / $2,442,753 = 1.06
    • Trend: N/A – Previous period sales not provided
    • Industry: A P/S ratio of less than 1 is generally considered good. TTM Technologies’ P/S ratio is slightly above 1.
  • Enterprise Value to EBITDA (EV/EBITDA)

    • Ratio/Metric: EV = Market Cap + Total Debt – Cash = (101997 * $25.36) + $927,945 – $503,932 = $3,018,862
      EBITDA = Operating Income + Depreciation + Amortization = $116,043 + $105,233 + $44,892 = $266,168
      EV/EBITDA = $3,018,862 / $266,168 = 11.3
    • Trend: N/A – Previous period data not provided
    • Industry: An EV/EBITDA ratio of 10-15 is generally considered reasonable. TTM Technologies’ EV/EBITDA ratio is within this range.

Growth Rates

  • Revenue Growth

    • Ratio/Metric: (Current Revenue – Previous Revenue) / Previous Revenue = ($2,442,753 – $2,232,567) / $2,232,567 = 9.4%
    • Trend: 9.4%
  • Net Income Growth

    • Ratio/Metric: (Current Net Income – Previous Net Income) / Previous Net Income = ($56,299 – (-$18,718)) / (-$18,718) = -400.8%
    • Trend: N/A – Turnaround from Loss
  • EPS Growth

    • Ratio/Metric: (Current EPS – Previous EPS) / Previous EPS = ($0.55 – (-$0.18)) / (-$0.18) = -405.6%
    • Trend: N/A – Turnaround from Loss

Other Relevant Metrics

  • End Market Analysis: The company’s revenue is heavily reliant on the Aerospace and Defense sector (46% of revenue in 2024), followed by Data Center Computing (21%) and Automotive (13%). This concentration poses a risk if these sectors experience a downturn. The shift in revenue mix from 2023 to 2024 shows an increased focus on Aerospace and Defense and Data Center Computing, while Automotive, Medical/Industrial/Instrumentation, and Networking have decreased.
  • Goodwill Impairment: The company recognized a goodwill impairment loss of $32.6 million in 2024, compared to $44.1 million in 2023. This indicates that the carrying value of goodwill exceeded its implied fair value, suggesting potential overpayment in past acquisitions.
  • Stock-Based Compensation: Stock-based compensation increased from $22.9 million in 2023 to $29.8 million in 2024. This increase could dilute earnings per share.

2. Commentary

TTM Technologies exhibited improved financial performance in 2024, marked by a return to profitability and revenue growth. The company’s strategic focus on the Aerospace and Defense sector is a key driver of revenue, but also presents a concentration risk. While liquidity remains strong, profitability metrics still lag behind industry averages, indicating areas for operational improvement. Managing debt levels and intangible asset amortization will be crucial for sustaining long-term growth and enhancing shareholder value.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️