TTM Technologies(US:TTMI)2024-08-06 20:05Sales Performance - Total net sales increased by $58.6 million, or 10.7%, to $605.1 million for Q2 2024 compared to $546.5 million for Q2 2023[64] - PCB reportable segment net sales rose by $59.6 million, or 11.1%, to $596.1 million for Q2 2024, driven by demand growth in aerospace and defense and data center computing[64] - Net sales for the RF&S Components reportable segment decreased by $1.0 million, or 9.5%, to $9.0 million for Q2 2024 due to lower demand in the networking end market[64] - Total net sales for the first two quarters of 2024 increased by $84.4 million, or 7.7%, to $1,175.3 million from $1,090.9 million for the same period in 2023[64] - The primary driver for the increase in net sales was demand growth in aerospace and defense and data center computing, partially offset by weakness in automotive, networking, and medical markets[64] Profitability and Margins - Gross profit margin improved to 19.4% for Q2 2024, compared to 18.0% for Q2 2023, reflecting a decrease in the cost of goods sold as a percentage of net sales[63] - Operating income for Q2 2024 was 6.4% of net sales, up from 3.9% in Q2 2023, indicating improved operational efficiency[63] - Net income for Q2 2024 was 4.3% of net sales, compared to 1.2% for Q2 2023, highlighting significant profitability growth[63] - Overall gross margin increased to 19.4% for Q2 2024 from 18.0% for Q2 2023, with PCB segment gross margin rising to 20.0% from 18.6%[65] Expenses - Selling and marketing expenses rose to $19.8 million, or 3.3% of net sales, for Q2 2024, up from $18.2 million, also 3.3% of net sales, in Q2 2023[67] - General and administrative expenses increased to $38.6 million, or 6.4% of net sales, for Q2 2024, from $37.8 million, or 6.9% of net sales, in Q2 2023[68] - Research and development expenses grew to $8.5 million, or 1.4% of net sales, for Q2 2024, up from $6.4 million, or 1.2% of net sales, in Q2 2023[69] Cash Flow and Investments - Cash flow from operating activities was $85.8 million for the first two quarters of 2024, compared to $81.0 million in the same period of 2023[72] - Net cash used in investing activities was $52.5 million for the first two quarters of 2024, primarily due to $88.8 million spent on property, plant, and equipment[72] - Total capital expenditures for 2024 are expected to be in the range of $190.0 million to $210.0 million[72] Debt and Financing - The company closed a $346.5 million senior secured term loan with an interest rate of 1-month CME SOFR plus 2.25%, resulting in estimated annual interest savings of approximately $1.7 million[58] - As of July 1, 2024, the company had $916.1 million of outstanding debt, including $496.3 million of Senior Notes due March 2029[74] - The company entered into a four-year interest rate swap arrangement with a notional amount of $250 million, paying a fixed rate of 3.49% against a portion of its Term SOFR-based debt[81] - As of July 1, 2024, approximately 80.9% of the company's total debt was based on fixed rates, with an assumed 100 basis point change in variable rates causing an annual interest cost change of $1.8 million[81] - The fiscal calendar maturities of the company's debt instruments through 2028 total $426.5 million, with a weighted average interest rate of 7.81%[85] Commodity and Foreign Exchange Risks - The company is exposed to commodity price risks, particularly with copper, which is a major driver of laminate costs for printed circuit boards[83] - The company has not experienced any losses on derivative financial instruments due to counterparty credit risk[80] - The company does not engage in hedging to manage foreign currency exchange rate risks, primarily exposed to costs in foreign currencies[82] - The company is evaluating its commodity risks and may utilize commodity forward purchase contracts more in the future[83] - The company has not experienced any adverse financial impact from unfavorable movements in commodity prices due to its hedging strategies[80] - The company’s foreign exchange exposure results primarily from employee-related costs and foreign currency-denominated purchases[82] - The company continually monitors its commodity hedge price positions to ensure effectiveness[80] Capacity and Production - Capacity utilization for Asia PCB facilities improved to 64% in Q2 2024 from 46% in Q2 2023, driven by strong data center demand[66] - A new advanced technology PCB manufacturing facility is proposed in Syracuse, New York, with an estimated capital investment of $100.0 million to $130.0 million, expected to begin low-rate production within 18 to 24 months[58] Share Repurchase - The company repurchased 2.0 million shares for a total cost of $34.5 million during the first two quarters of 2024[73]