10-K: TTM Technologies Reports Increased Net Sales for Fiscal Year 2024, Driven by Data Center and Aerospace Demand

TTM Technologies' 2024 annual report reveals a 9.4% increase in net sales, reaching $2.44 billion, fueled by growth in the data center computing and aerospace and defense sectors.

Summary

• TTM Technologies' 2024 net sales reached $2.44 billion, a 9.4% increase from 2023.
• The PCB segment saw a 9.6% increase in net sales, driven by demand in data center computing and aerospace and defense.
• The RF&S Components segment experienced a 3.6% decrease in net sales due to lower demand in networking.
• Aerospace and defense accounted for 46% of total net sales in 2024.
• The company recorded a goodwill impairment charge of $32.6 million related to the RF&S Components segment.
• TTM expects 2025 capital expenditures to be between $230 million and $250 million, including investments in a new facility in Syracuse, New York.
• The company repurchased approximately 2.0 million shares of its common stock for $34.5 million during 2024.
• As of December 30, 2024, TTM had $918.2 million in outstanding debt.
• The company expects to commence initial low rate production in 2026 at the new Syracuse, New York facility.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook with increased net sales and improved profitability, but also highlights some challenges and risks, such as the goodwill impairment charge and supply chain concerns.

Positives

• Net sales increased by 9.4% to $2.44 billion.
• PCB segment net sales grew by 9.6%.
• Strong demand in data center computing and aerospace and defense end markets.
• Increased capacity utilization in Asia PCB facilities.
• Construction has commenced on the new advanced technology PCB manufacturing facility in Syracuse, New York.

Negatives

• RF&S Components segment net sales decreased by 3.6%.
• Demand weakness in automotive, medical, industrial, instrumentation, and networking end markets.
• Recorded a goodwill impairment charge of $32.6 million related to the RF&S Components segment.
• Wage inflation pressures in North America.

Risks

• Global economic and market uncertainty may adversely impact the business.
• Dependence on the U.S. federal government for a significant portion of business.
• Raw material supply chain disruptions and price changes.
• Inability to maintain satisfactory capacity utilization rates.
• Intense competition in the PCB market.
• Potential product design or manufacturing defects.
• Damage to manufacturing facilities due to unforeseen events.
• Cybersecurity threats and data breaches.
• Rising labor costs and labor shortages.
• Climate change initiatives could materially adversely affect the business.

Future Outlook

TTM expects 2025 capital expenditures to be in the range of $230 million to $250 million, including investments in a new facility in Syracuse, New York, and expects to commence initial low rate production in 2026.

Management Comments

• The project reflects our support for cultivating a stronger microelectronics ecosystem in New York and across the U.S. Aerospace and Defense industrial base.

Industry Context

The report notes that worldwide demand for PCBs is forecast to grow at a 5.6% compound annual growth rate (CAGR) from 2023 to 2028, driven by recovery from the 2023 market downturn, continued expected growth in the data center and networking end markets from various demand sources including generative artificial intelligence (AI), and continued projected growth in the aerospace and defense end market from increasing defense growth.

Comparison to Industry Standards

• According to a December 2024 report by Prismark Partners, TTM is one of the largest PCB manufacturers in the world based on 2023 revenue.
• The PCB industry is highly fragmented with the top 40 PCB providers comprising approximately 80% of market share based on 2023 revenue, according to Prismark Partners.
• Competitors for RF products and engineered systems include BAE Systems plc, Honeywell, Crane Aerospace & Electronics, Elta Systems Ltd., Hensoldt AG, Mercury Systems, Inc., RN2 Technologies Co., Selex ES (subsidiary of Leonardo S.p.A.), Smiths Group plc, and Thales Group.

Stakeholder Impact

• Shareholders may see increased value due to improved financial performance and share repurchases.
• Employees may benefit from the company's growth and investments in new facilities.
• Customers can expect continued innovation and advanced technology solutions.
• Suppliers may experience increased demand due to the company's growth.

Next Steps

• Commence initial low rate production in 2026 at the new Syracuse, New York facility.
• Continue construction for the new building on the 24-acre property adjacent to our existing facility in Syracuse for the campus expansion and the site for the new facility.

Key Dates