TTM Technologies, Inc. Financial Report Analysis: Q4 2024

Key Insights Snapshot

• Recommendation: Hold
• Total Revenue: $2.44 billion
• Net Income: $56.3 million
• EPS (Diluted): $0.54
• Segment Highlights: Aerospace and Defense lead revenue contributions.
• Restructuring Costs: Totaled $27.4 million, primarily due to facility closures.
• Long-term Debt: $914 million, with upcoming maturities requiring careful cash flow management.

Introduction

TTM Technologies, Inc. (TTMI) has released its financial results for the fourth quarter of 2024, revealing a mix of challenges and opportunities as the company restructures its operations. With significant changes in its operational structure and market dynamics, investors should analyze these results carefully to gauge their impact on the company's future performance.

Revenue and Profit Performance

Revenue Breakdown

TTM reported total revenue of $2.44 billion for the year ending December 30, 2024, a slight decrease from $2.495 billion in the previous year. The revenue breakdown by segment is as follows:

• Aerospace and Defense: $1.13 billion
• Data Center Computing: $502.3 million
• Automotive: $315.9 million
• Medical/Industrial: $333.3 million
• Networking: $126.6 million

Profitability Metrics

• Net Income: The company posted a net income of $56.3 million, translating to a diluted EPS of $0.54, a significant improvement from the prior year’s loss of $0.18.
• Operating Income: The operating income of $294.7 million indicates strong core operations, though the company faced challenges reflected in other expenses.

Cost Management

Despite the decline in total revenue, TTM managed to control costs effectively:

• COGS: Reduced to $1.77 billion, down from $2.01 billion.
• Operating Expenses: Reduced to $127.6 million, a positive trend indicating improved operational efficiency.

Restructuring Efforts

TTM has been undergoing significant restructuring to enhance operational efficiency. The total restructuring costs incurred amounted to $27.4 million, primarily associated with:

• Employee severance costs.
• Contract termination expenses related to the closure of three manufacturing facilities (Anaheim, Santa Clara, and Hong Kong).

The restructuring plan aims to align the company's resources with its strategic goals, and the associated costs reflect a proactive approach to managing operational challenges.

Long-term Debt and Financial Health

TTM's long-term debt stands at $914 million, with significant repayments due in the coming years:

• The company faces a substantial maturity of $503 million in 2029, which necessitates careful cash flow management and potentially refinancing strategies to mitigate liquidity risks.

Debt Composition

• Senior Notes due March 2029: $500 million at 4% interest.
• Term Loan due May 2030: $345.6 million at 6.59% interest.

This debt structure indicates a reliance on long-term financing, which could impact future profitability if not managed effectively.

Market and Competitive Landscape

Economic Environment

The macroeconomic environment remains challenging, with inflationary pressures and geopolitical uncertainties affecting the technology sector. TTM must navigate these dynamics as it restructures and optimizes its operations.

Competitive Analysis

TTM operates in a highly competitive landscape, with key rivals in the aerospace and defense sectors. Maintaining competitive pricing and enhancing product offerings will be essential for sustaining margins and market share.

Conclusion and Recommendation

TTM Technologies, Inc. is navigating a complex landscape marked by restructuring efforts and changing market dynamics. While the company has shown resilience in managing costs and improving profitability, significant debt obligations loom on the horizon.

Final Recommendation: Hold

Investors should maintain their position in TTM Technologies, observing the outcomes of the restructuring plan and overall market conditions. Long-term growth prospects remain promising, but caution is warranted given the current economic landscape and debt management challenges.