TTM Technologies(US:TTMI)2024-11-05 21:05Sales Performance - Total net sales increased by $43.9 million, or 7.7%, to $616.5 million for Q3 2024 compared to $572.6 million for Q3 2023, driven primarily by growth in aerospace and defense and data center computing markets [65]. - The PCB reportable segment saw a net sales increase of $43.1 million, or 7.6%, to $606.8 million for Q3 2024 from $563.7 million for Q3 2023 [65]. - Net sales for the RF&S Components reportable segment increased by $0.8 million, or 9.4%, to $9.7 million for Q3 2024 from $8.9 million for Q3 2023 [65]. - For the first three quarters of 2024, total net sales rose by $128.3 million, or 7.7%, to $1,791.8 million from $1,663.5 million in the same period of 2023 [65]. - The PCB reportable segment's net sales increased by $130.4 million, or 8.0%, to $1,764.7 million for the first three quarters of 2024 compared to $1,634.3 million for the first three quarters of 2023 [65]. Profitability and Margins - Cost of goods sold as a percentage of net sales decreased to 78.9% in Q3 2024 from 80.2% in Q3 2023, contributing to a gross profit increase to 21.1% from 19.8% [64]. - Overall gross margin increased to 21.1% for Q3 2024 from 19.8% for Q3 2023, driven by higher sales volume in aerospace and defense and data center computing [66]. - Gross margin for the PCB segment rose to 21.9% in Q3 2024 from 21.1% in Q3 2023, while RF&S Components segment gross margin decreased to 50.4% from 56.4% due to unfavorable product mix [66]. - Operating income for Q3 2024 was $51.2 million, compared to a loss of $1.8 million in Q3 2023 [64]. Expenses - Selling and marketing expenses increased to $20.0 million, or 3.2% of net sales, for Q3 2024, up from $18.8 million, or 3.3% of net sales, in Q3 2023 [68]. - General and administrative expenses rose to $42.6 million, or 6.9% of net sales, for Q3 2024, compared to $38.9 million, or 6.8% of net sales, in Q3 2023 [69]. - Research and development expenses increased to $8.1 million, or 1.3% of net sales, for Q3 2024 from $6.2 million, or 1.1% of net sales, in Q3 2023 [70]. - Total other expense, net increased to $25.9 million for Q3 2024 from $7.1 million in Q3 2023, primarily due to a $17.8 million foreign exchange loss [71]. Cash Flow and Capital Expenditures - Cash flow from operating activities was $150.8 million for the first three quarters of 2024, up from $139.8 million in the same period of 2023 [75]. - The company anticipates total capital expenditures for 2024 to be in the range of $175.0 million to $195.0 million [75]. Debt and Interest Rates - As of September 30, 2024, the company had $916.3 million of outstanding debt, with $496.5 million in Senior Notes due March 2029 [78]. - 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% [85]. - As of September 30, 2024, approximately 80.9% of the company's total debt was based on fixed rates [85]. - The interest rate swap decreased interest expense by $1.1 million for the quarter ended September 30, 2024, and $3.5 million for the three quarters ended September 30, 2024 [85]. - The weighted average interest rate for the company's US$ variable rate debt is 6.92% [87]. - An assumed 100 basis point change in variable rates would cause the company's annual interest cost to change by $1.8 million [85]. Foreign Currency and Risk Management - The company is exposed to foreign currency exchange rate risks, primarily related to the Renminbi (RMB) and Malaysian Ringgit (MYR) [86]. - The company may consider the use of derivatives in the future to manage foreign currency risk [86]. - The fair value of the interest rate swap was recorded as a net liability of $0.6 million as of September 30, 2024 [85]. - The fiscal calendar maturities of the company's debt instruments through 2028 total $426.5 million, with a fair value of $427.79 million [87]. - The company has not experienced any losses on derivative financial instruments due to counterparty credit risk [84]. Capacity and Investment - The company plans to invest between $100 million and $130 million in a new advanced technology PCB manufacturing facility in Syracuse, New York, with expected support of approximately $52 million from federal and state sources [58]. - The company expects initial low-rate production at the new facility within 18 to 24 months, supporting national security requirements [58]. - Capacity utilization in Asia PCB facilities improved to 60% in Q3 2024 from 46% in Q3 2023, reflecting strong data center demand [67].