Business context and reporting period
TTM Technologies, Inc. manufactures printed circuit boards (PCBs), RF components and assemblies, and engineered systems, serving aerospace and defense, automotive, data center computing, medical/industrial/instrumentation, and networking markets. This 10-K reports fiscal 2023, the 52 weeks ended January 1, 2024; it does not provide standalone fourth-quarter results.
Key financial metrics
| Metric | FY2023 | FY2022 |
|---|---|---|
| Net sales | $2,232.6 million | $2,495.0 million |
| Gross profit / margin | $413.3 million / 18.5% | $458.0 million / 18.4% |
| Operating income / margin | $42.3 million / 1.9% | $210.4 million / 8.4% |
| Net income (loss) | $(18.7) million; $(0.18) diluted EPS | $94.6 million; $0.91 diluted EPS |
| Cash from operations | $187.3 million | $272.9 million |
| Cash and cash equivalents at year-end | $450.2 million | $402.7 million |
Capital expenditures were $198.7 million in FY2023. At January 1, 2024, debt principal was $929.1 million ($917.8 million net of unamortized discount and issuance costs); available borrowing capacity under revolving facilities was $189.1 million. The company reported compliance with debt covenants. Approximately 80.7% of debt was fixed-rate, including through an interest-rate swap.
Material changes versus prior year
- Sales fell 10.5%, primarily due to weaker commercial-market demand and the sale of Shanghai Backplane Assembly; aerospace and defense growth and a full year of Telephonics partially offset the decline.
- Operating income fell to $42.3 million from $210.4 million. FY2023 included a $44.1 million non-cash goodwill impairment, $24.4 million of restructuring charges, and $48.7 million of intangible amortization. FY2022 operating income included a $51.8 million gain on the sale of the Shanghai E-MS property.
- Net income turned to a loss despite slightly higher gross margin, as lower sales, restructuring, impairment, higher amortization and other expenses weighed on results. Income before tax was only $0.3 million; the $19.0 million income tax provision contributed to the net loss.
- PCB capacity utilization declined to 49% in Asia from 75% and to 38% in North America from 45%. PCB sales decreased 10.0%; RF&S Components sales decreased 32.5% and the segment reported a $33.2 million operating-segment loss, versus $23.5 million income in FY2022.
- Operating cash flow declined by $85.6 million. Cash increased year over year, supported in part by asset-sale proceeds and financing activity.
Outlook, commentary and risks
- Management expects FY2024 capital expenditures of $135–155 million. It is planning a proposed advanced-technology PCB facility in Syracuse, New York; phase one is estimated at $100–130 million through 2026, with final scope and timing dependent on funding and other stakeholders.
- The company expects cash on hand, operating cash generation and borrowing capacity to cover anticipated capital spending, debt service and working-capital needs for the next 12 months. This is management’s assessment, not formal earnings or revenue guidance.
- Management cites commercial-market weakness, low utilization, customer demand variability, and potential supply constraints as operating pressures. Other material risks include customer concentration (five largest OEM customers represented 41% of FY2023 sales; one customer represented 13%), reliance on government-related defense programs, labor and materials costs, China exposure, foreign exchange and interest rates, and cybersecurity and ERP implementation risks.
- The company closed three manufacturing sites in 2023 and recorded $24.4 million in restructuring charges plus $5.3 million of accelerated depreciation. It also sold Shanghai Backplane Assembly for approximately $11.2 million and recorded a $1.3 million gain.
- Outstanding foreign industrial cooperation (offset) agreements totaled approximately $28.0 million, some extending through 2028; certain agreements may carry penalties for nonperformance. Ordinary-course legal matters are not expected by management to result in material losses, though outcomes are uncertain.
Important facts for investors to verify
- Whether commercial demand and PCB utilization recover, and whether management’s expected benefits from facility consolidation are achieved.
- Whether RF&S Components performance stabilizes and whether further goodwill impairment is required.
- Execution, funding, final cost and timing of the proposed Syracuse facility and the FY2024 capital-spending plan.
- Debt repayment capacity, floating-rate exposure, covenant headroom and the amount of cash accessible outside the United States.
- Customer concentration, defense-program funding, supply availability and the financial impact of outstanding offset obligations.