Ttm Technologies, Inc. · NASDAQ:TTMI
Ttm Technologies — Investor Day (May 2016)
92 slides from Ttm Technologies's investor day presentation, May 23, 2016
Slide 1: TTM 2016 Investor Day
TTM 2016 Investor Day [Location] [Date] Global Presence Local Knowledge
Slide 2: Agenda
Agenda [Specific Agenda to be included for each conference.]
Slide 3: Disclaimer
Disclaimer Forward-Looking Statements Certain statements in this communication may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements related to TTM’s future business outlook. Actual results may differ materially f
Slide 4: Diversified, Differentiated and Disciplined
Diversified, Differentiated and Disciplined Tom Edman
Slide 5: Key Messages
Key Messages Diversification Differentiation Discipline Diversified Near term—Auto, Aerospace & Defense Technology breadth One stop solutions Disciplined integration Cash flow generation
Slide 6: What is a PCB?
What is a PCB? Building blocks for electronics Connects electronic components Customized for each end application
Slide 7: Different PCBs for Different Markets
Different PCBs for Different Markets TTM Capabilities Conventional Advanced Highly Reliable RF High Layer HDI Rigid Flex Substrate Auto Networking pace & Cell Phone Defense, Networking Aerospace & Defense Auto
Slide 8: PCBs: Foundation of all Electronics
PCBs: Foundation of all Electronics Automotive Mobile Station Storage Data Center Smar Commercial Aircraft Network Router
Slide 9: Message #1 – Diversification and Growth
Message #1 – Diversification and Growth
Slide 10: Increasing End Market Diversification
Increasing End Market Diversification Revenue $1,325 mm 2015 Pro Forma Revenue $2,602 mm Aerospace & Other Aerospace & Other Defense 2% Defense 6% Networking / 16% 14% Communications Automotive 22% Networking / 0% Communications 33% Automotive Cellular Pho 18% 23% Medical / Industrial / Instrumentat
Slide 11: Top Tier Customers
Top Tier Customers % UTC Aerospace Systems Autoliv ‘Where ingenuity takes off stftetfne cisco. HUAWEI Nokia Networks BOSCH Raytheon SOEING Pees
Slide 12: End Market Growth Drivers 2014-2019 CAGR
End Market Growth Drivers 2014-2019 CAGR Aerospace & Defense Increased Commercial Air Traffic 2-4% Increased Military Equipment Builds Automotive Electric Vehicle 6-8% Safety/ADAS/Infotainment Cell Phone New Phone Functionality 5-8% Emerging Markets Computing Data Center Build 5-8% IoT Networking/Te
Slide 13: Automotive Opportunities
Automotive Opportunities Safety – Advanced Driver Assist (ADAS) driving adoption of new technologies like Radar, IR, Ultrasound Electric – Tighter emission standards driving EV/hybrid adoption Infotainment – Video/Audio entertainment, internet access, connectivity Key growth driver – Increasing elec
Slide 14: Aerospace & Defense Opportunities
Aerospace & Defense Opportunities Aerospace seeing strong traffic growth Continued rollout of Boeing 737 and 787 programs 2016 Defense budget up 5.8% Missile Defense Agency awards New Long Range Discrimination Radar contract to Lockheed ($784 M) Navy awards Air and Missile Defense Radar to Raytheon
Slide 15: Message #2 – Differentiated through “One Stop Shop”
Message #2 – Differentiated through “One Stop Shop”
Slide 16: Customer Engagement Model
Customer Engagement Model Production Shop Production Stop Pilot One Prototype Concept Engineering Development Mo’s 1 yr 2 yrs 3 yrs 4 yrs 5 yrs 6 yrs 7 -10 yrs Time Consumer Automotive, Networking Aerospace & Defense
Slide 17: Global Footprint
Global Footprint 8 9 21 13 4 14 7 5 10 25 17 1 18 6 24 2 12 19 23 26 16 20 11 22 A&D AMI&I C&C E-MS Aerospace & Defense Specialty Automotive Medical, Ind, Inst Mobility Communications E-M Solutions 1 Santa Ana—SA 6 Anaheim—ANA 11 Zhongshan—ZS 12 Huiyang—HY 16 Guangzhou—GME 24 Shanghai – SH BPA 20 Ho
Slide 18: Global Footprint Meets Product Life Cycle Needs
Global Footprint Meets Product Life Cycle Needs Chippewa Falls, WI Customer focused engineering Prototyping new products Quick turn customer response Guangzhou, China Advanced backplanes Dongguan, China Line card volume production
Slide 19: Aligned with Technology Trends
Aligned with Technology Trends End Device Trends PCB Features TTM Capabilities Increasing complexity Decreasing size Increasing signal speed Increasing performance Higher layer count Microvias Thin cores Material/Laminate innovations HDI Rigid Flex RF Radar Increasingly Crowded PCBs Microvias Laser
Slide 20: Leveraging New Technology in Smart Phones
Leveraging New Technology in Smart Phones Adoption of HDI and Rigid Flex Smartphones New Auto Features Medical Patient Aerospace & Defense ADAS, Infotainment Monitoring
Slide 21: Message #3 – Disciplined Integration & Deleveraging
Message #3 – Disciplined Integration & Deleveraging
Slide 22: Track Record of M&A Integration
Track Record of M&A Integration 2006 2015 Acquires Tyco Acquires Via IPO Aerospace & Defense Automotive Diversification Synergies 1998 2002 2010 TTM Incorporated Acquires Honeywell Acquires Meadville Networking/Communications Cellular market High layer count Asia footprint
Slide 23: Business Units and Leadership
Business Units and Leadership Phil Jon Doug Tony Titterton Pereira Soder Princiotta
Slide 24: Conclusions
Conclusions Diversified, near term opportunities in Auto, Aerospace & Defense Differentiated through “one stop shop” Disciplined M&A, Delivering solid cash flow Adjusted Cash Flows from Operations 300 $282 Millions $133 in $99 $ FY 2013 FY 2014 FY 2015
Slide 25: Communications and Computing
Communications and Computing Doug Soder
Slide 26: Value Proposition
Value Proposition Full Product Preferred Supplier Advanced Technology Life Cycle Solutions Acknowledged High Layer Count Line Engineering services Technology & Cards & Backplanes for product concept & Industry Leadership Advanced HDI development Proven customer Flex & Rigid-Flex Quick-turn & volume
Slide 27: Balanced Markets & Diversification
Balanced Markets & Diversification
Slide 28: Top Tier Networking & Communications Customers
Top Tier Networking & Communications Customers Top Customers
Slide 29: Top Tier Cellular Phone Customers
Top Tier Cellular Phone Customers Top Customers Chengrui
Slide 30: Top Tier Computing Customers
Top Tier Computing Customers Top Customers
Slide 31: Mega Trends Drive Exciting Change & Opportunities
Mega Trends Drive Exciting Change & Opportunities Smart World Connections “By 2020, average mobile connection speed will increase 3.2-fold & global mobile IP traffic will reach an annual run rate of 367 exabytes!” Data Storage, “Big Data is growing at 40% annually! Access & By 2025, Global Data Traf
Slide 32: Networking & Communications
Networking & Communications
Slide 33: Growth Outlook – Networking & Communications
Growth Outlook – Networking & Communications Market Overview 2015 Total PCB: $6.0B TTM Focus 4G-5G Base Stations & Radios Core & Edge Routing Optical Networking Cloud Architecture Infrastructure CAGR 14/19F: 3-6% Sources: Prismark Partners May 2015, BPA March 2015, Electronic Outlook Corporation Q3
Slide 34: Success Story – Major Networking Customer
Success Story – Major Networking Customer Why WE Win: Broad-based Customer Engagement Technology Roadmap Collaboration Advanced Materials Expertise Multi-plant Global Solutions Operations Excellence Product Portfolio Global Account Management Model Line Cards Backplanes Flex Rigid Flex HDI Year Grow
Slide 35: The Power of One: Cellular Phones
« te The Power of One th oe o i Cellular Phones
Slide 36: Growth Outlook – Cellular Phone
Growth Outlook – Cellular Phone + Overall market 2015 Total PCB Market Mobile Phones: $9.6B Consumer $5.0B Product focus areas High end smartphones Main boards Battery modules Camera modules Wifi modules Audio modules Wearables CAGR 14/19F: 5-8% Sources: Prismark Partners May 2015, BPA March 2015, E
Slide 37: Growth Opportunities from Increasing Functionality
Growth Opportunities from Increasing Functionality HDI Flex Rigid Flex/ Substrate Front Panel Home Button Power Button Vibrator Motherboard Charging Battery Daughter Board
Slide 38: Success Story – Top Tier Smartphone OEM
Success Story – Top Tier Smartphone OEM Why WE Win Industry Reputation Close Engineering Engagement for New Product Development Multiple Product Line Solutions Integrated Rigid & Flex factory speed & flexibility NPI through Mass Production Capability Year Growth Record 2M—$25M & Growing IoT Module C
Slide 39: Communications & Computing Business Unit
Communications & Computing Business Unit Growth Opportunities Increasing Smartphone Functionality IoT / Wearables Cloud Infrastructure Service Provider Infrastructure Why WE Win? Industry Leadership Reputation Technology Leadership Global Scale & Flexibility
Slide 40: Electro-Mechanical Solutions
Electro-Mechanical Solutions Tony Princiotta
Slide 41: Value Proposition
Value Proposition PCB Pull Through Customer Accountability Boutique Player E-MS help to sell High mix, low to mid One “Back to pat” or higher margin PCBs volume “Throat to choke” More touch points Large enough to be Long cycle programs increases program responsible, small retention enough to be Cros
Slide 42: TTM Technologies Advantage
TTM Technologies Advantage Under One Roof Custom Systems PCB Design/NPI PCBA/BPA Metal Bus Bar Test Chassis & Integration Enclosures Vertically Integrated-Value Added Model-One Stop Shop
Slide 43: End to End Customer Solutions
End to End Customer Solutions Complexity Level 5: A fully configured and tested system ready to deliver to the end customer Level 4: Integrates the PCBA with functional testing of the system Level 3: PCBA ready Custom Chassis & Enclosure incorporating the BPA. Level 2: Custom Chassis & Enclosure inc
Slide 44: Diversified with Increased Auto Focus in China
Diversified with Increased Auto Focus in China Comp. ~10% Industrial/ Comm Med Equip ~25% ~50% Auto ~10% Market Segments Top Tier Customers
Slide 45: Growth Opportunities
Growth Opportunities WW Electronic Equipment Production ($M) 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 2013 2014 2015 2016 2017 2018 2019 2020 BUSINESS COMMUNICATIONS CONSUMER COMPUTER MILITARY INDUSTRIAL INSTRUMENT AUTOMOTIVE Source: Henderson Q1 2016 TTM Opportunities Asian Communi
Slide 46: Success Story – Battery Management
Success Story – Battery Management Major EV Automotive Manufacturer Why We Won Existing PCB position Customized process development Industrial product built to Automotive Specifications Successful volume launch led to additional opportunities Includes PCB, PCBA, Bus Bars, Custom Metal, Integration &
Slide 47: Success Story—Industrial
Success Story—Industrial 1.6 Megawatt Converter Why we won Crisp manufacturing transition to China Effective localization of the supply chain Redesigned three separate enclosures to a single unit Success: Delivered in excess of 10,000 units
Slide 48: Success Story—Transportation
Success Story—Transportation Locomotive Console Why We Won Positive PCB reputation with parent company Customer’s desire to outsource console manufacturing to China Strong vertical manufacturing competencies Ability to work with incomplete documentation Success: Prototypes delivered Q4, 2015 Current
Slide 49: Conclusions
Conclusions E-M Solutions helps drive customer adoption of PCB products One stop shop that provides complete solutions increases “stickiness” to the customer and helps the PCB business retain core programs Growth opportunities in electric vehicles, optical transmission networks, industrial products
Slide 50: Aerospace & Defense / Specialty
Aerospace & Defense / Specialty Phil Titterton
Slide 51: Value Proposition
Value Proposition Superior reliability for mission critical applications Multi-site solution to the military/aerospace community All necessary certifications One stop shop offering technology breadth and depth
Slide 52: Leading Player Alignment with Top Tier Customers
Leading Player Alignment with Top Tier Customers Leading #1 A&D PCB Manufacturer with 2015 Revenue ~$350 million Player
Slide 53: Strategic Partnerships Strengthen Position
Strategic Partnerships Strengthen Position Customer Years Partnered Industry Sector(s) 25 Comm Aero & Defense Defense & Space 18 Defense & Space 29 Comm Aero, Defense & Space 16 Comm Aero, Defense & Space Defense & Space 34 Defense & Space 28 Defense & Space 20 Comm Aero, Defense & Space 33 Comm Aer
Slide 54: Aerospace & Defense – Diverse Applications
Aerospace & Defense – Diverse Applications Flight Critical Electronics Missile & Munitions Communication Products Sensing & Surveillance Engine Control Systems Satellite Communications Foreign Military Sales Nuclear Deterrence Infrared Acquisition Targets Power Distribution Systems Ballistic Defense
Slide 55: Aerospace – Strong Commercial Traffic Driven by Asia
Aerospace – Strong Commercial Traffic Driven by Asia
Slide 56: Commercial Aerospace
cial Aerospace TTM supports flight critical electronics on 737, 777, 787, A319, A320, A321, A350, A380 Fly by wire electrical content replacing traditional hydraulic systems Opportunity
Slide 57: Aerospace Success Story
Aerospace Success Story Designs (units) Volume Production ($ millions) $3.1M Engineering Design Orders $77M Manufacturing Drag 8% Growth 2015 12% Growth 2015 Design Cycle: 3-7 Years Product Life Cycle: 7-20+ Years Design through volume production capability Why we win
Slide 58: Defense – Budgets Increasing in 2016
Defense – Budgets Increasing in 2016 DOD portfolio of 79 major defense acquisitions with total planned investment of $1.44 trillion DOD Programs
Slide 59: Key Opportunities in Defense
Key Opportunities in Defense TTM supports mission critical electronics for a majority of DOD Programs including JSF, THADD, Patriot, F16, JDAM & Hellfire Opportunity
Slide 60: Defense Success Story – “One Stop Shop”
Defense Success Story 1 – “One Stop Shop” Space Fence SUPPORTING FACILITIES CAPABILITY DESIGN ENGINEERING Digital, RF, Flex • Space Fence 100,000 debris tracking system down to size of STAFFORD, CT RF Structure baseball STAFFORD SPRINGS, CT Flex Assembly Radar installation is equivalent to CHIPPEWA
Slide 61: Defense Success Story – “Mission Critical”
Defense Success Story 2 – “Mission Critical” Proven mission critical technology provider Why we win
Slide 62: Conclusion
Conclusion Aerospace & Defense BU offers mission critical, reliable product to industry leaders One stop solution that provides enabling technologies and capabilities Strategic partnerships with our customers strengthens our leading market position Growth opportunities in commercial aerospace and in
Slide 63: Automotive, Medical, Industrial and Instrumentation
Automotive, Medical, Industrial and Instrumentation Jon Pereira
Slide 64: Value Proposition
Value Proposition ONE-STOP SOLUTION TRUSTED HIGH SEAMLESS GLOBAL RELIABILITY SUPPLIER TRANSFER WIDE-RANGE OF PROVEN TRACK FULL PRODUCT CAPABILITIES RECORD LIFE-CYCLE
Slide 65: Diverse Markets and Top Tier Customers
Diverse Markets and Top Tier Customers MI&I ~40% US $326m US $448m Automotive ~60%
Slide 66: The Power of One: Automotive
« te The Power of One th oe o i Automotive
Slide 67: Automotive Electronic Content Increasing
Automotive Electronic Content Increasing Vehicle Production • Auto units expected to grow from 90M in 2015 to 110 110M in 2020 Units 100 • Government regulations require advanced safety features Millions 90 CAGR: ~3% 85 • Electric Vehicles growing with much higher PCB 80 content 2015 2016 2017 2018
Slide 68: “Electrification” driving PCB Usage
“Electrification” driving PCB Usage Cluster and Heads-Up Climate Controls Lane Departure Warning Power Electronics Display Forward Collision Front-View Camera System Warning Interior Lighting Electronic Cooling Systems Electronic Suspension Electronic Steering Engine and Transmission Gear Box Shifte
Slide 69: Well Positioned for Emerging Trends
Well Positioned for Emerging Trends Key Opportunities Key Differentiators ADAS Connectivity Autonomous Extensive experience with passive safety, Driving powertrain, body control, and chassis 27% CAGR 12.2% CAGR 33% CAGR electronics (P&S Market Research) (ResearchandMarkets) (Strategy&/PWC) Technolog
Slide 70: Emerging Market: Automotive Technology- Radar
Emerging Market: Automotive Technology- Radar Global automotive radar market size is estimated to exceed US $5Billion by 2023 - Total radar sensor volume: - 2015 19 M units - 2020 70 M units 2015 2020 Source: Global Market Insights, March 2016
Slide 71: Success Story: Autoliv
Success Story: Autoliv Multiple products including: Airbag, braking, Radar & camera New product launch 2016: 77Ghz (advanced radar detection) Major Customers: GM, Hyundai, Honda, VW, Mercedes, & Chrysler Designed in North America pre-production in North America; seamless transfer to Asia Pacific for
Slide 72: Medical, Industrial and Instrumentation
Medical, Industrial and Instrumentation
Slide 73: Growth Opportunities: Medical, Industrial & Instrumentation
Growth Opportunities: Medical, Industrial & Instrumentation Surgical Robotics $17.9B by 2020 12.7% CAGR through 2020 (Grand View Research, Inc.) Home Automation (IoT) $12.8B by 2020 11.4% CAGR through 2020 (MarketsandMarkets) Automated Test Equipment $4.4B by 2020 2.5% CAGR through 2020 (Radiant Ins
Slide 74: Seamless Transition Wins MI&I Business
Seamless Transition Wins MI&I Business Medical Device Company specializing in ``continuous” glucose monitoring systems Small wearable device — smart device compatible Development initiated in Sterling and seamlessly migrated to Toronto; FDA approval required Patient monitoring systems are expected t
Slide 75: AMI&I Growth Opportunities
AMI&I Growth Opportunities Increasing Auto PCB content with focus on faster growing Electric Vehicles, ADAS, and Infotainment. In Medical, focus on surgical robotics and patient monitoring. In industrial, focus on automation, robotics, and home connectivity. Why AMI&I Wins One Stop, Highly Customize
Slide 76: Diversified, Disciplined and Deleveraging
Diversified, Disciplined and Deleveraging Todd Schull
Slide 77: Agenda
Agenda Via Integration/Cost Improvement P&L Operating Model Cash Flow/Deleveraging Model
Slide 78: Via Integration Review
Via Integration Review What we said last year Increased scale Increased auto exposure New BU operating model Expect $55 million synergies by Q2 16 Pay down debt
Slide 79: End Market Mix Past Three Years
End Market Mix Past Three Years Q1’14 Q1’15 Q1’16 Other Other Other Aero & Aero & Aero & 3% 2% 4% Network/ Defense Network/ Defense Defense Comm. 15% Comm. 15% Network/ 17% 29% Auto 24% Comm. Auto 3% 34% 2% Auto Cellular 21% 15% Cellular Medical/ 30% Indus/Inst Medical/ Medical/ Compute Indus/Inst 1
Slide 80: Diversification Reduces Volatility
Diversification Reduces Volatility Revenues ($ millions) Non-GAAP Operating Margin 800 10.0% 9.0% 700 -13% 8.0% 600 7.0% -6% -3% -2.3% 6.0% -16% 400 -20% 5.0% 300 4.0% 3.0% 200 -28% -57% 100 -50% 2.0% 1.0% 0 0.0% Q4’13 Q1’14 Q4’14 Q1’15 Q4’15 Q1’16 Q4’13 Q1’14 Q4’14 Q1’15 Q4’15 Q1’16 Cellular Revenu
Slide 81: Disciplined M&A Integration
Disciplined M&A Integration Combined Company Combined Company Non- Combined Company Non-Revenues ($ millions)* GAAP Operating Margin* GAAP EPS* 640 6.0% $0.15 620 5.0% 4.0% $0.10 600 3.0% $0.05 580 2.0% 560 $- 1.0% 540 0.0% $(0.05) Q1 14 Q1 15 Q1 16 Q1 14 Q1 15 Q1 16 Q1 14 Q1 15 Q1 16 Improving marg
Slide 82: Timeline of Via Synergies
Timeline of Via Synergies Quarter Value of Action P&L Impact Q2’15 $6 million Q3’15 $12 million $2.7 million Q4’15 $13 million $4.5 million Q1’16 $12 million $8 million Q2’16E $12 million $11 million Q3’16E $14 million x 4 Total $55 million $56 million
Slide 83: Post Via—Continuous Cost Improvement
Post Via—Continuous Cost Improvement Supply chain management Alternate suppliers Price reductions Best practice sharing Materials usage reduction Process improvement Margin improvement Yield/Scrap improvement Productivity improvement G&A efficiencies Shared services ERP
Slide 84: Operating Model
Operating Model Historical Non-GAAP Operating Margin 10.0% 9.0% 8.0% TTM 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 Target 10% Non-GAAP operating margins for combined company
Slide 85: Key Outstanding Debt
Key Outstanding Debt Term loan ($871 million) Issued ($950 million) in conjunction with Via acquisition Due May 31, 2021 Interest rate: Libor (1% floor) + 5% (6% currently) Primary covenant leverage ratio <3.75 No pre-payment penalty Repaid $76.5 million in Q1’16 Convertible ($250 million) Due Dec 1
Slide 86: Significant Cash Flow Generation Capability
Significant Cash Flow Generation Capability +342 350 • $342 million pro-forma 300 adjusted EBITDA in 2015 Expected capex, interest and taxes -125 Millions 200 • Capex can be flex’d $ down -60 +112 • Expected free cash flow 100 $100-$120 million -45 50 • Target leverage ratio of 0 2.0 EBITDA Capex In
Slide 87: Reported Cash Flows
Reported Cash Flows Adjusted Cash Flows from Adjusted EBITDA Operations (Quarterly) 120 30% $95.8 100 $87.6 150 $141.4 $74.5 125 80 20% Sales 100 $59.7 Millions 60 $42.5 Net Millions $72.1 75 in 14.3% of in $ 13.4% 13.4% $ $47.6 40 12.9% 12.8% 10% % 50 25 $21.3 $20.2 20 0 0 0% 1Q15 2Q15 3Q15 4Q15 1Q
Slide 88: Future Priorities for Cash Flow Generation
Future Priorities for Cash Flow Generation Generate Cash from Operations – Grow Earnings Execution Synergies Generate Cash through Asset Efficiency Deleverage our Balance Sheet – More Cash for Shareholders
Slide 89: Conclusions
Conclusions Successful Via integration – Improved cost structure Continuous focus on cost reduction and cash flow generation Solid cash flow capability for deleveraging
Slide 90: The Power of One – Thank You
« te The Power of One th oe o i Thank You
Slide 91: Reconciliations
Reconciliations $ Millions (except where noted) Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 GAAP Gross Profit $51.6 $61.2 $89.1 $108.3 $83.6 Add back items: Inventory markup and PP&E step up — 7.4 8.2 0.6 - Stock-based compensation 0.2 0.2 0.3 0.3 0.3 Non-GAAP Gross Profit 51.8 68.8 97.7 109.2 83.9 GAAP
Slide 92: Reconciliations
Reconciliations $ Millions (except where noted) 2012 2013 2014 2015 GAAP Gross Profit $225.0 $217.8 $194.7 $310.1 Add back item: Inventory markup and PP&E step up ——— 16.2 Stock-based compensation 1.1 1.1 0.9 1.1 Non-GAAP Gross Profit 226.1 218.9 195.6 327.5 GAAP Operating Income (Loss) (142.0) 69.1