TTM Technologies, Inc. (TTMI) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call shows strong financial performance, with improved gross and operating margins, and significant growth in key sectors like data center computing and networking. Guidance is optimistic, with plans for expansion and increased capacity, particularly in China and Syracuse. The Q&A reveals management's focus on strategic growth and risk management, despite some unclear responses. The positive sentiment is further supported by the market cap, suggesting a likely stock price increase in the range of 2% to 8% over the next two weeks.
Key Financial Performance
Net Sales (Q4 2025) $774.3 million, a 19% year-over-year increase due to strong growth in data center computing, networking, medical, industrial, instrumentation, and aerospace and defense end markets, partially offset by a decline in the automotive end market.
Net Sales (Full Year 2025) $2.9 billion, a 19% increase from 2024, driven by the same end market dynamics as Q4.
Adjusted EBITDA Margin (Q4 2025) 16.3%, compared to 14.7% in Q4 2024, reflecting continued improvements in execution.
Non-GAAP EPS (Q4 2025) $0.70 per diluted share, an all-time quarterly record high for TTM.
Cash Flow from Operations (Q4 2025) $63 million or 8.1% of sales.
Cash Flow from Operations (Full Year 2025) $292 million or 10% of sales.
Aerospace and Defense Sales (Q4 2025) 41% of total sales, with a 5% year-over-year growth for the quarter and 13% for the full year, driven by positive tailwinds in defense budgets and strategic program alignment.
Data Center Computing Sales (Q4 2025) 20% of total sales, with a 57% year-over-year growth for the quarter and 36% for the full year, driven by demand for AI applications.
Networking Sales (Q4 2025) 8% of total sales, with a 23% year-over-year growth for the quarter and 43% for the full year, driven by AI-related demand for complex switching technology.
Medical, Industrial, and Instrumentation Sales (Q4 2025) 14% of total sales, with a 28% year-over-year growth for the quarter and 22% for the full year, driven by demand for AI-enabled robotics, complex sensing applications, and automated testing equipment.
Automotive Sales (Q4 2025) 9% of total sales, with a focus on higher value-add products.
Gross Margin (Q4 2025) 21.7%, compared to 20.5% in Q4 2024, due to higher sales volume and favorable product mix.
Operating Margin (Q4 2025) 12.7%, a 260 basis points improvement from 10.1% in Q4 2024, due to improved gross margin and spending discipline.
Interest Expense (Q4 2025) $11.8 million, compared to $10.7 million in Q4 2024.
Interest Income (Q4 2025) $2.8 million, compared to $2.1 million in Q4 2024.
Effective Tax Rate (Q4 2025) 13.2%, resulting in a tax expense of $11.4 million, compared to 12.2% in Q4 2024.
Adjusted EBITDA (Q4 2025) $126.2 million or 16.3% of net sales, compared to $95.7 million or 14.7% of net sales in Q4 2024.
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Operating Highlights
Advanced Interconnect: Focus on designing and manufacturing complex printed circuit boards, substrates, and advanced packaging.
Sophisticated Modules and Systems: Development of RF modules, thermal and power management systems, edge and AI processing products, and fully integrated mission systems.
Artificial Intelligence and Defense: Approximately 80% of net sales are related to AI and defense megatrends, driving economic growth.
Global Manufacturing Footprint: Expansion across 24 sites in China, Malaysia, Canada, and the United States to support growth.
Revenue Growth: Achieved 19% year-on-year sales growth in Q4 2025, driven by demand in data center computing, networking, and aerospace and defense markets.
Profitability: Non-GAAP EPS of $0.70 per diluted share, an all-time quarterly record, and adjusted EBITDA margin of 16.3%.
Cash Flow: Generated $63 million in Q4 2025, bringing fiscal 2025 cash flow from operations to $292 million.
AI and Defense Focus: Strategic alignment with AI and defense megatrends, with plans to grow revenues by 15%-20% annually and double earnings from 2025 to 2027.
Market Realignment: Combining data center computing and networking into a single end market for reporting in 2026.
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Risk or Challenges
Market Conditions: Potential risks from economic uncertainties and fluctuating demand in key markets such as data center computing, networking, and aerospace and defense.
Competitive Pressures: Challenges in maintaining a leading position in advanced interconnect products and expanding into integrated modules and mission systems amidst competition.
Regulatory Hurdles: No explicit mention of regulatory risks, but potential challenges could arise from operating in multiple countries with varying regulations.
Supply Chain Disruptions: No explicit mention of current disruptions, but reliance on a global footprint with 24 sites across different countries could pose risks.
Strategic Execution Risks: Risks associated with achieving ambitious growth targets of 15%-20% annual revenue increase and doubling earnings from 2025 to 2027.
Economic Uncertainties: Potential impact of global economic conditions on demand for AI, aerospace, and defense products.
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Guidance & Outlook
Revenue Growth: TTM Technologies aims to grow revenues by 15% to 20% per year for the next three years (2025-2027).
Earnings Growth: The company plans to double its earnings from 2025 to 2027.
Capital Investments: TTM is investing capital and resources to expand its capacity across its global footprint, which includes 24 sites in China, Malaysia, Canada, and the United States.
Market Trends: The company expects healthy tailwinds from two key megatrends: artificial intelligence and defense, which currently account for approximately 80% of net sales.
Segment Performance - Aerospace and Defense: Sales in the aerospace and defense market are expected to represent 42% of total sales in Q1 2026, driven by strong program alignment and increased bookings for restricted programs.
Segment Performance - Data Center and Networking: The combined data center and networking end markets are projected to represent 37% of total sales in Q1 2026, reflecting continued demand for AI-related applications.
Segment Performance - Medical, Industrial, and Instrumentation: This segment is expected to represent 14% of total sales in Q1 2026, supported by increased demand for AI-enabled robotics, complex sensing applications, and automated testing equipment.
Segment Performance - Automotive: The automotive end market is expected to represent about 8% of total sales in Q1 2026, with a focus on higher value-add products.
Q1 2026 Sales Guidance: Net sales for Q1 2026 are projected to be in the range of $770 million to $810 million.
Full Year 2026 Sales Guidance: Total net sales for 2026 are expected to increase by 15% to 20% over 2025.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Can you provide an update on adding additional data center capacity in China and the ramp of new capacity in Syracuse?
A:The company is making good progress in expanding capacity in both China and the U.S. They are on track to meet their growth guidance of 15%-20% over the next three years. In Syracuse, the building is complete, equipment is installed, and they are on track to see first revenues in the second half of the year.
Q:What drove the improvement in gross margins, and what was the headwind from Penang?
A:The gross margin improvement was primarily driven by mix in data center and networking, as well as improved margins in aerospace and defense (A&D). Penang had a gross profit headwind of about 180 basis points in Q4, slightly worse than the guided 160 basis points. However, progress is being made, and the company expects the headwind to reduce by half by the end of the year.
Q:What are the plans for the Eau Claire facility, and when might it generate revenue?
A:The Eau Claire facility is a large site with 750,000 square feet. The company plans to tool up the facility over the next 18-24 months, with first revenues expected within that timeframe. The facility is not included in the current capacity plans.
Q:Can you provide details on the large book-to-bill ratio and its implications for visibility and capacity?
A:The book-to-bill ratio reflects strong demand, particularly in defense and commercial sectors. For commercial business, visibility remains at 6-9 months, while defense backlog extends over 2-2.5 years. The company is in discussions with customers to align capacity with demand.
Q:What is the CapEx outlook and its allocation between aerospace, defense, and data center growth?
A:The company expects incremental CapEx of $200-$300 million over the next 2-3 years for data center and compute capacity in China, in addition to the normal 4%-5% CapEx. Expected CapEx for 2026 is $240-$260 million, with growth anticipated in subsequent years.
Q:Is the doubling of earnings expected to be organic or inorganic?
A:The doubling of earnings is expected to be achieved through organic growth, driven by capacity investments and operational improvements.
Q:Are advanced printed circuit board processes being ported to other facilities in China, and how long does it take?
A:Yes, advanced processes for boards with up to 78 layers are being implemented in existing facilities in Dongguan and Guangzhou. The new capacity will be efficiently operational as it involves optimization of existing lines rather than new factories.
Q:What is the company's involvement in space-related projects, and is it a future opportunity?
A:The company is currently working on space-related projects and considers it a strategic direction. They are focusing on technologies like radiation-hardened integrated modules and PCBs for space applications.
Q:What is the impact of volatile copper prices on the company's P&L?
A:The company mitigates the impact of volatile copper prices by building the volatility into pricing and passing it through to customers. They also hedge copper prices to offset risks.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the timeline for achieving full capacity utilization in Eau Claire and the exact breakdown of CapEx allocation between different sectors. Additionally, while they mentioned progress in Penang, they did not provide detailed metrics or timelines for achieving targeted yield improvements.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AD booking
AI application
AI correlation
AI processing
AI robotics
Canada United
Commercial reporting
Commission measure
Examples house
Executive Vice
Greetings today
Officer
President Chief
President Investor
Vice President
air
application instrumentation
area demand
booking program
direction interconnect
edge
flow sale
future
intelligence
interconnect technology
market end
market value
megatrends
mission system
module subsystem
program AD
reporting segment
sale Sales
sale market
solution
subsystem mission
TTMI Transcript
TTM Technologies, Inc. (TTMI) Q4 2025 Earnings Call Transcript
Positive2-4
The earnings call shows strong financial performance, with improved gross and operating margins, and significant growth in key sectors like data center computing and networking. Guidance is optimistic, with plans for expansion and increased capacity, particularly in China and Syracuse. The Q&A reveals management's focus on strategic growth and risk management, despite some unclear responses. The positive sentiment is further supported by the market cap, suggesting a likely stock price increase in the range of 2% to 8% over the next two weeks.
TTM Technologies, Inc. (TTMI) Q3 2025 Earnings Call Transcript
Positive10-29
The earnings call indicates strong financial performance with a 22% YoY net sales increase and improved operating income. Despite a slight gross margin decline, the company is making strategic investments in facilities and R&D. The Q&A reveals confidence in capacity and strategic direction, with improved margin forecasts. The aerospace, defense, and data center markets show strong growth, and management's focus on qualitative growth and cash generation is positive. Considering the market cap, the stock price is likely to see a positive movement (2% to 8%) over the next two weeks.
TTM Technologies, Inc. (TTMI) Q2 2025 Earnings Call Transcript
Positive7-30
The earnings call shows strong financial performance with increased GAAP operating and net income, and a 15% adjusted EBITDA. Although there are concerns about the breakeven timeline in Malaysia and cost competitiveness in Eau Claire, the company's strong revenue growth, operating margin improvement, and optimistic guidance for Q2 revenue and EPS are positive indicators. The defense sector's growth and customer diversification in the data center segment further bolster confidence. Given the market cap, these factors collectively suggest a positive stock price movement in the next two weeks.
TTM Technologies, Inc. (TTMI) Q1 2025 Earnings Call Transcript
Positive4-30
The earnings call summary indicates strong financial performance with a 14% YoY revenue increase and improved margins. The share buyback program suggests confidence in future growth. While there are some risks, such as supply chain challenges and defense budget uncertainty, these are being actively managed. The Q&A reveals positive momentum in data center and networking sectors, and the potential upside from the reconciliation bill. The stock's market cap suggests a moderate reaction, leading to a positive prediction of 2% to 8% increase in stock price.
TTMI Report
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