Ttm Technologies, Inc. · NASDAQ:TTMI
Ttm Technologies — Investor Day (September 2011)
85 slides from Ttm Technologies's investor day presentation, Sep 28, 2011
Slide 1: Company and Industry Overview
Company and Industry Overview Kent Alder September 28, 2011
Slide 2: Safe Harbor
Safe Harbor During the course of this presentation, the company will make forward- looking statements subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, bu
Slide 3: Presenting Today
Presenting Today Kenton K. Alder President & CEO Canice T.K. Chung CEO, Asia Pacific Region Steven W. Richards EVP, Chief Financial Officer Douglas L. Soder EVP Shane Whiteside EVP, Chief Operating Officer 31 years of industry experience Prior companies: Tyco Electronics, ElectroStar 21 years of ind
Slide 4: Global Leader in PCB Manufacturing
Global Leader in PCB Manufacturing Top 5 global PCB manufacturer - $1.4 billion in revenue* 15 specialized factories located in U.S. and China Over 17,000 employees worldwide Focused on advanced technology products Total customer solution: prototype through production Technology development coordina
Slide 5: Specialized Facilities Provide Optimal Growth
Specialized Facilities Provide Optimal Growth Integrated manufacturing platform enables TTM to execute a global facility specialization strategy Focused Assembly 8 Shanghai, China 1 Stafford, CT 3 San Diego, CA Aerospace/Defense 5 High Tech/Quick-Turn/High Mix 4 Chippewa Falls, WI 2 Santa Clara, CA
Slide 6: 2010 World PCB Production by Product Type
2010 World PCB Production by Product Type TTM is focused on advanced technology % of production dollars Source: Prismark Partners, August 2011
Slide 7: World PCB Outlook
Source: N.T. Information Ltd. June, 2011 World PCB Outlook The worldwide PCB market grew 24% in 2010 following the global slowdown in 2008-2009 55% of world PCB production will be generated from the Greater China region in 2011 PCB production in the Americas has declined over time but remains signif
Slide 8: Historical PCB Production by Region
Historical PCB Production by Region 2005 2010 Source: N.T. Information Ltd. Sept 2007, June 2011 $ in thousands Expectations are for continued growth in China Year / Region N. America Europe Japan China Taiwan S. Korea Rest of Asia ROW Total 2005 4,583 3,605 9,995 10,060 5,980 4,890 2,750 539 42,402
Slide 9: Growth of World Top PCB Makers
Growth of World Top 20 PCB Makers Source: NT Information
Slide 10: Current Global Ranking Top World PCB Makers
Current Global Ranking Top 10 World PCB Makers 2010 Represents approximately 27% of 2010 total world PCB output ($ in Millions) Core supplier to wide range of high-end networking products addressing increasing bandwidth demands Key supplier in rapidly growing touch screen tablet market Expanding pos
Slide 11: World PCB Company Ranking 2010
World PCB Company Ranking 2010 Rank Company Revenue est. Rank Company Revenue est. 1 Unimicron $2,179 6 Samsung $1,282 2 Ibiden $2,110 7 Nanya PCB $1,158 3 Nippon Mektron $2,106 8 Foxconn $1,150 4 Tripod $1,370 9 Hannstar + GBM Group $1,148 5 TTM Technologies * $1,366 10 KB PCB Group $1,122 Rank Com
Slide 12: Current Market Dynamics
Current Market Dynamics Global Market Environment is Challenged Focus on right areas of growth and re-invest in capacity and technology PCB Industry Asia Continued growth forecast Smaller competitors unable to invest in technology and overcome increasing costs Large makers continue to get bigger Nor
Slide 13: Historical Pro Forma Sales
Historical Pro Forma Sales $510 $734 $1,248 $1,350 $1,205 $1,362 $ millions AP: 24% CAGR NA: 19% CAGR Total: 22% CAGR
Slide 14: Global Strength
Global Strength Combined Strength, Total Solution Asia Pacific North America 8 factories Smartphones, Tablet PCs, Servers, Storage and Networking Advanced "any layer" HDI High layer count conventional PCB 7 factories Aerospace & Defense, High End Servers, Storage and Networking Proto, Ramp and Low V
Slide 15: Positioned for Revolutionary Growth
Positioned for Revolutionary Growth Advanced PCB and Semiconductor Technology Expansion in Communication, Networking & Storage Infrastructure Proliferation of "Converged Mobile Devices" Explosion of Network Applications & Cloud Computing Consumer Demand for Advanced Printed Circuit Board Technology
Slide 16: Value Added Strategy Throughout Product Life Cycle
Value Added Strategy Throughout Product Life Cycle Advanced Technology & Service Excellence Early involvement engineering support Prototype / QTA Pilot orders Increasing volumes - short lead time High technology Volume production High Mix / Low Volume High Volume R&D START END Maturity NPI Launch/ R
Slide 17: Key Initiatives
Key Initiatives AP - Growth Strategy Focus on smartphone, touch-pad tablets and other hand-held devices by expanding further in advanced HDI flex and rigid-flex Continue to grow higher conventional technology capabilities for networking infrastructure Leverage niche position in substrate Grow organi
Slide 18: Summary - Competitive Advantages
Summary - Competitive Advantages Continue to invest in advanced HDI technology Leverage global customer service & footprint Strong balance sheet management Grow organically / acquisition Diversification of end markets, geographies and product mix reduces risk Experienced management team
Slide 19: Thank You!
THANK YOU! ‘Tiitechnologies 19
Slide 20: Sales Force and Markets
Sales Force and Markets Douglas L. SoderSeptember 28, 2011
Slide 21: Overview
Overview Sales forceCustomersEnd marketsBusiness development cycles 2
Slide 22: Large Global Sales Force
3 Large Global Sales Force North America: 110Direct sales: 42Reps: 39Engineering services: 29 EMEA: 12Direct sales: 6Reps: 3Engineering services: 3 Asia Pacific: 81 Direct sales: 66Reps: 6Engineering services: 9 Over 200 Field Sales Personnel Worldwide
Slide 23: Customer Focused Business Model
4 Customer Focused Business Model Based on 2Q 2011 trailing 12 months Field Sales Operations Engineering Services CustomerService Customer Total Active OEM Customers: 1,260AP: 667EMEA: 116NA: 477 Total Active EMS Customers: 256 Over 1,500 active customers
Slide 24: Engineering Services
5 Engineering Services Customer Design Engineering Design for Manufacturing & Assembly (DFMA) Materials Testing Reliability & Failure Analysis Product Development & Collaborative Engineering Field Application Engineering Design for Manufacturing (DFM) Supporting strategic technology engagement with
Slide 25: Diversified End Markets
(CHART) 6 6 Diversified End Markets AP Combined NA Aerospace / DefenseCellular PhoneComputing / Storage / PeripheralsMedical / Industrial / InstrumentNetworking / CommunicationsOther 0%15%31%5%40%9% 43%0%10%11%35%1% 2Q 2011 Sales
Slide 26: Diversified End Market & Customer Base
7 Topwise A E Diversified End Market & Customer Base Q2 2011 Sales Selected Customers by End Market 17% 23% 7% 38% 6% 9% Aerospace & Defense Cellular Phone Computing, Storage & Peripherals Medical / Industrial/ Instrument Networking & Communications Other (includes Consumer)
Slide 27: End Market Review
END MARKET REVIEW — —— ———___ ||| iin
Slide 28: Aerospace & Defense
9 9 Aerospace & Defense TTM Market Facts: Available Market & CAGR: Market Factors: 2010 PCB TAM: $1.7 billion % of total PCB demand: 3.2%2010 Target Market $1.4 billion 2010 - 2015 CAGR: 4.1% DEFENSEDOD budget uncertainty Force modernization continuesForeign Military Sales (FMS) growthProgram alignm
Slide 29: Aerospace & Defense - Industry Considerations
10 Aerospace & Defense - Industry Considerations N. America Military/Aerospace PCB Market Share Source: FY 2012 PRCP (DoD) investment categorization Rank Maker 2010 % 1 TTM Technologies $236 22% 2 DDI $90 9% 3 Pioneer Circuits $38 4% 4 Viasystems $35 3% 5 Sanmina-SCI $33 3% Top 5 Total Top 5 Total $
Slide 30: TTM Products & Select A&D Applications
TTM Products & Select A&D Applications Conventional PCBBackplane PCBHDI PCBSpecialty Materials PCBRF PCBThermal Management PCBFlex & Rigid-FlexLarge Format PCB & Rigid-FlexFlex & Rigid-Flex AssemblyBackplane AssemblyChassis AssemblySystem IntegrationSpecialty Assembly Products 11
Slide 31: Cellular Phone
12 Cellular Phone Market Factors: 2010 PCB TAM: $6.7 billion % of total PCB demand 12.8%2010 Target Market: $3.8 billion 2010 - 2015 CAGR: 12.3% Smartphone sales increasing dramatically at the expense of feature phonesStrong growth outlook for 3G and 4G smartphone products fueled by ever- increasing
Slide 32: Computing
13 Computing Market Factors: 2010 PCB TAM: $16.5 billion % of total PCB demand 31.4%2010 Target Market : $3.5 billion 2010 - 2015 CAGR: 12.2% 2010 - 2015 Tablet CAGR: 44.1% Explosive growth in mobile devices; Increasing quality of content; Immediacy of content movement; storage & availability of con
Slide 33: Medical / Instrument / Industrial
14 14 2010 PCB TAM: $3.6 billion % of total PCB demand 6.9%2010 Target Market : $2.0 billion* 2010 - 2015 CAGR: 5 - 7% Medical / Instrument / Industrial Market Factors: MII customers typically High Mix / Low Volume (HMLV)Medical - Product innovation & automation of medical recordsIndustrial - Indust
Slide 34: Networking & Communications
15 Networking & Communications Market Factors: 2010 PCB TAM: $5.8 billion % of total PCB demand 11.0%2010 Target Market : $4.2 billion 2010 - 2015 CAGR: 5.9% World's data is more than doubling every 2 yearsMobile device growthSocial networkingMassive content movementIncreasing IP traffic fuels Servi
Slide 35: TTM Products & Selected Commercial Applications
TTM Products & Selected Commercial Applications Conventional PCBBackplane PCBHDI & Advanced HDI PCBHigh tech laminate PCBRigid-FlexFlexFlex AssemblyBackplane AssemblyChassis Assembly 16
Slide 36: Business Development Cycles Vary by Customer Type
17 17 Business Development Cycles Vary by Customer Type Time Concept Production Pilot Production Commercial Consumer Aerospace & Defense Commercial High Rel. Engineering Development Prototype Typical development cycles 6 Mo's 1 yr 2 yrs 3 yrs 4 yrs 5 yrs 6 yrs 7 -10 yrs
Slide 37: Summary - Key Messages
Summary - Key Messages Large, multidimensional global sales force drives worldwide revenue growthCustomer & end market diversification creates business balanceStrategic customer collaboration drives successful business investment resultsFocus on growth customers and markets + higher technology produ
Slide 38: PCB Technology Trends and Focus
PCB Technology Trends and Focus Shane Whiteside September 28, 2011
Slide 39: The Role of the Printed Circuit Board
The Role of the Printed Circuit Board What is a PCB? A PCB is a customized component that provides interconnections between other active & passive components and power & ground in an electronic assembly PCB's are customized for each electronic device, appliance, or system There are no "off the shelf
Slide 40: PCB Technology Parameters
PCB Technology Parameters Line width & space Number of Layers Hole size Aspect ratio Material type Embedded components Signal integrity High Density Interconnect The PCB is custom-designed by OEMs for unique end market products, using selected manufacturers with capable technologies. TTM provides an
Slide 41: Factors Driving Printed Circuit Board Technology
Factors Driving Printed Circuit Board Technology Connected society Richer content Centralization of storage Delivery on demand Network router Storage Data Center Mobile Base Station SmartPhone Touch Screen Tablet PC
Slide 42: Higher Functionality, Smaller Size
Higher Functionality, Smaller Size Smaller Products that deliver more . . . Computing power Connectivity Battery life Ball Grid Array System on Chip Require PCB's that provide Higher density Smaller features Flexible routing through use of HDI
Slide 43: High Density Interconnect Trends
High Density Interconnect Trends Migration from through-hole connections to HDI PCB Higher density & quantity of I/O's at the Chipset interface drives the need for HDI routing in the PCB Structure Line & Space Hole size PCB Thickness 2+n+2 (6L) 100-75 µm 120-100µm 1,0-0,9 mm 3+n+3 (8L) 100-75 µm 100
Slide 44: Manufacturing PCB's with HDI
Manufacturing PCB's with HDI HDI requires specialized equipment and processes Laser Drills Copper Filling Standard Process HDI Process Lamination Laser Drills Copper Fill-Plate-Etch 2x - Nx
Slide 45: Connectivity of Devices requires Network Capacity
Connectivity of Devices requires Network Capacity More data volume Web traffic Gaming Video Growth in devices More Users More devices per User Exponential expansion in required capacity
Slide 46: Network Traffic Expansion
Network Traffic Expansion Mobile network traffic expected to double every 18 months Server I/O traffic doubles in 24 mos Drives requirements for high-performance Systems & PCB's
Slide 47: PCB Applications in Communication
PCB Applications in Communication Advanced technology PCB's are used in Network routers & switches Network servers and storage 3G & 4G base stations Technology trends in Networking & Computing PCB's Increasing layer count Smaller holes & higher aspect ratios Next generation low-loss materials Tighte
Slide 48: PCB Applications in Communication Specialized Capabilities
PCB Applications in Communication Specialized Capabilities Tight tolerance registration of layers - holes - features Large size format Next-generation materials Manufacturing consistency Performance characterization Reliability performance Signal performance optimization Small batch production
Slide 49: R&D efforts to address future PCB Technologies
Reduced component pitch with finer feature sizes Projects to support: Small Laser Via Technology --- Laser drilling mSAP3 Technology SAP3 Technology Small Laser Via Technology --- High A/R > 1 High Aspect Ratio PTH < 20:1 More functions - for more challenging designs Projects to support: Embedded Re
Slide 50: Market Leadership through Technology
Market Leadership through Technology Technology Leadership Narrows competitive landscape Rewards successful performers Source: Prismark Partners Q2 2011 Target Markets
Slide 51: Summary
Summary TTM maintains market leadership through technology World-class factories, capabilities, and staff Engaged with leading OEM's Globally positioned Capacity to invest Expertise to execute
Slide 52: TTM Asia Pacific Growth Strategy
TTM Asia Pacific Growth Strategy CANICE CHUNG September 28, 2011
Slide 53: Agenda
Agenda Asia Pacific Overview Asia Pacific Market Place & Competitive Landscape Asia Pacific Growth Drivers Capacity Review & Expansion Plan
Slide 54: Asia Pacific Overview
ASIA PACIFIC OVERVIEW C—O |sC=*"0d Ny
Slide 55: Asia Pacific Overview
Asia Pacific Overview 7 factories 14,000 employees About 2.65M sq. ft. capacity per month (annualized capacity of over 31.8 M sq. ft.) Advanced and high tech product strategies Ramp and volume capability
Slide 56: Plant Specialties in Asia Pacific
Plant Specialties in Asia Pacific Hong Kong Shanghai 0.4M sq ft Annual Capacity Location Facility Product Type Specialty OPCM High mix, QTA & Commercial Aerospace Dongguan DMC Embedded Components/ Advanced Technology / Heavy Copper 10.0M sq ft SYE Specialty in High Speed Material/ Hybrid / Coin 5.3M
Slide 57: Asia Market Place & Competitor Landscape
ASIA MARKET PLACE & COMPETITOR LANDSCAPE
Slide 58: Migration of demand to China
Migration of demand to China Global PCB demand by region 1999, 2009, 2011F & 2014F Source: BPA Consulting 5-Year Forecast - December 2010 5.2% CAGR% 11E-14E 9.5% 5.5% 13.5% 4.5% USD million -4.0% 5.9% -7.1% CAGR% 99-11E 3.0% 19.3% 41,689 54,957 73,740 10.3% 3.6% Total 35,779 2,657 15,291 22,104 32,3
Slide 59: 2010 Ranking of Competitors
2010 Ranking 2010 Ranking Substrate Technology (Substrate/ 2+ or above) Volume (Cost, 2-8L) Niche (Flex) End Markets Served End Markets Served Plant Locations 1. Unimicron ^ ^ ^ ^ A. Cellular Phone/ Mobile Devices B. Computer/ Storage/ Peripherals C. Communication/ Networking D. Consumer Electronics
Slide 60: 2010 Company Ranking in China
Represents approximately 25% of total China PCB output Rank Company Revenue est. US$ M 1 Tripod $1,208 2 Foxconn $1,150 3 Kingboard $1,122 4 Hannstar $1,078 5 TTM Technologies (Asia Pacific only) $792 Top 5 China PCB Makers NT Information June 2011 2010 Company Ranking in China
Slide 61: Fastest Growing Segments/ Product Types
Fastest Growing Segments/ Product Types Growth of world PCB market by application (11E-14E) USD million Source: BPA Consulting 5-Year Sectoral Forecast - Feb 2011 11E-14E CAGR 11.0% 10.9% 10.9% 41,688 54,956 73,740 7.3% CAGR 11E-14E: 10.3% 5.2% 8.4% Source: Prismark 2Q Aug 2011 Migration towards hig
Slide 62: TTM AP Revenue Trend
TTM AP Revenue Trend Target growing end-markets 2009-2010 Growth 11.8% 56.6% 12.0% 59.4% 49.8% -10.4% Market Segments of Asia Pacific Sales CAGR 2005-2010: 24% Historical Pro Forma Revenue Trend USD Million
Slide 63: Asia Pacific Growth Drivers
ASIA PACIFIC GROWTH DRIVERS ‘Tiiitechnologies 12
Slide 64: Product Strategy
Product Strategy THIN & LIGHT Advanced HDI PCBs & IC Substrates Fine line product applications Eg. handsets, high-end consumer products, smartphones, touch screen tablet PCs Advanced Multi-layer & backplane PCBs Complex design for high speed applications Backplanes, base stations THICK & BIG 1 2 Not
Slide 65: TTM AP Growth Drivers
Early 1980s Early 1990s Early 2000s 2009 Future 1G-2G 2.5G 3G 4G Modem PC Notebook/ Tablet PC Touch screen Tablet Touch screen Tablet Touch screen Tablet Servers/ Storage Servers/ Storage Clouds Clouds Clouds Analog Phones Feature Phones Smartphones Smartphones Mobile/ Media Devices TTM AP Growth Dr
Slide 66: High Density Interconnect (HDI) Technology & ASP
ASP (USD) High Density Interconnect (HDI) Technology 1x 2x 3x Technology & ASP
Slide 67: Asia Pacific Revenue Trend
Asia Pacific Revenue Trend YoY Growth of 15% Increased demand for advanced HDI applications due to the launch of touchpad tablets and smartphones Continued demand for increased bandwidth HDI YoY Growth of 38%
Slide 68: Capacity Review & Future Expansion Plan
CAPACITY REVIEW & FUTURE EXPANSION PLAN
Slide 69: Annualized Capacity
Annualized Capacity Annualized Capacity1 (as of 31 December) Annualized Capacity1 (as of 31 December) Annualized Capacity1 (as of 31 December) Annualized Capacity1 (as of 31 December) Factory 2010 2011 2012 Million square feet Million square feet Million square feet OPCM (Hong Kong) 0.5 0.4 0.4 SYE
Slide 70: Capex Planning
Capex Planning Facility Location Products Expanded Capacity Target Completion DMC Dongguan Inner Layer Capability NA Q3, 2012 GME Guangzhou Advanced HDI, Conventional, Flex & Rigid-flex Rigid PCB - 1.6 M sq.ft Q3, 2012 GME Guangzhou Advanced HDI, Conventional, Flex & Rigid-flex Flex PCB - 0.3 M sq.f
Slide 71: Recap on Asia's Initiatives
Recap on Asia's Initiatives R&D for NPI - Understand industry and customers' product roadmaps and prepare our capabilities for the industries Launch & Ramp ALWAYS stay on the edge of new & advanced technologies and ride on new product ramps Advanced Technologies Focus
Slide 72: Thank You!
THANK YOU! ‘TiMitechnologies 21
Slide 73: Financial Performance and Objectives
Financial Performance and Objectives Steve Richards September 28, 2011
Slide 74: Adjusted Income Statement - Q2 YTD Actual
Adjusted Income Statement - Q2 YTD Actual* * Excludes $48.1 million impairment charge
Slide 75: Target Model
Target Model * Excludes $48.1 million impairment charge
Slide 76: Competitive Benchmarking
Competitive Benchmarking Note: TTM operating margin excludes impact of $48.1 million impairment charge.
Slide 77: Balance Sheet Highlights
Balance Sheet Highlights (8 in millions) 2010 2011 Assets Cash and Cash Equivalents $216.4 ‘Accounts and Notes Receivable, Net 287.7 Inventories, 1354 Property, Plant and Equipment, Net 740.6 Goodwill 1978 Definite-Lived intangibles, Net 979 All Other Assets 65 Total Assets $1,762.0 __$1,787.0 s and
Slide 78: Cash Flow
Cash Flow {Sin millions) Net Income Depreciation of Property, Plant and Equipment ‘Amortization of Definite-Lived Intangible Assets Deferred Income Taxes Stock-Based Compensation Impairment of Long-Lived Assets Other Operating Activities Working Capital Changes Cash Flow from Operations Net Capital
Slide 79: TTM Key Statistics
TTM Key Statistics * EBITDA adds back impairment charges
Slide 80: Working Capital Efficiency
Working Capital Efficiency 2009 2010 1011 2011 AIR Days 63.2 724 73.6 729 Inventory Days 49.1 462 46.7 45.0 AIP Days 495 89.1 93.5 88.9 Cash Conversion Cycle 62.8 292 26.8 29.0 ai ||| —“n ll ee
Slide 81: Cash Flow Planning
Cash Flow Planning ($ in millions)
Slide 82: Leverage and Gearing Ratios
Leverage and Gearing Ratios ($ in millions)
Slide 83: Investment Highlights
Investment Highlights Market leader in advanced technology PCBs globally Strong track record of operating performance Emphasis on customer service with facilities tailored to meet customer needs now and in the future Focused on growth through organic opportunities as well as strategic acquisitions H
Slide 84: Appendix
Appendix 12
Slide 85: Reconciliations
Reconciliations yrp (Sin millions, except EPS) 2010 June 27, 2014 Adjusted EBITDA Reconciliation: Net income $799 $08 ‘Add Back tems: Income Tax Provision 287 198 Interest Expense 23 130 Depreciation Expense 487 25 ‘Amortization of intangibles 138 a5 EBITDA $193.4 $82.6 ‘Add Back: Impairment of Long