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TTM Technologies, Inc. (TTMI)
Q1 2010 Earnings Call Transcript
May 6, 2010 4:30 pm ET
Diane Weiglin – Executive Assistant
Kenton Alder – President and CEO
Steven Richards – CFO, EVP and Secretary
Canice Chung – CEO of Asia-Pacific Region
Matt Sheerin – Thomas Weisel Partners
Shawn Harrison – Longbow Research
Amitabh Passi – UBS
Jiwon Lee – Sidoti & Company
Previous Statements by TTMI
» TTM Technologies Q3 2009 Earnings Call Transcript
» TTM Technologies, Inc. Q4 2008 Earnings Call Transcript
» TTM Technologies, Inc. Q3 2008 Earnings Call Transcript
During the course of this call, 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 but are not limited to, fluctuations in quarterly and annual operating results, the volatility and cyclicality of various industries that the company serves and the impact of the current economic crisis and other risks described in TTM’s most recent SEC filing.
The company assumes no obligation to update the information provided in this conference call. The company also will present non-GAAP financial information in this call. For a reconciliation of TTM’s non-GAAP financial information to the equivalent majors under GAAP, please refer to the company’s press release, which we filed with the SEC and is posted on TTM’s website.
I would now like to turn the conference over to Kenton Alder, President and Chief Executive Officer. Please go ahead Kent.
Okay. Thanks Diane. And good afternoon and thanks for joining us for our 2010 first quarter conference call. Joining me on today's call are TTM’s CFO, Steven Richards; and from Hong Kong, Tom Tang, Managing Director of the ; the Asia Pacific region; Canice Chung, CEO of the Asia Pacific region and Audrey Sim, Vice President of investor relations and business development for the Asia Pacific region.
I will begin with a review of the business, and Steve will follow with the review of the financial performance, and after that we will discuss Meadville, and then open the call up to your questions. Now before I discuss our first quarter results, I would like to offer a high-level view of where we stand strategically.
Over the course of 2009, we undertook several company transforming actions designed to strengthen TTM operationally and become a global company. With the closure of three North American divisions, we restructured our business to better align our footprint to North American demand, and we announced the combination with Meadville Holdings Limited printed circuit board business, a transaction that closed on April 9 of this year, involves us with one of the largest printed circuit board companies in the world based on 2009 revenue estimates. This is an exciting time for TTM.
With the restructuring largely complete and the combination with Meadville closed, we are well on our way to transforming TTM into a stronger world-class printed circuit board manufacturer with the scale, production capabilities, market breath and extended customer service to lead in today's competitive global printed circuit board business.
Okay, now moving on to our first quarter highlights. Gross margin increased for the second quarter in a row from 18.5% in the fourth quarter to 19.5% in the first quarter of 2010 due primarily to cost savings and improved capacity utilization achieved through our restructuring. Our balance sheet and cash position remain strong with an increase in our cash accounts of 7.2 million in the first quarter to a total cash position of $222.9 million.
Improved market conditions enabled us to have firmer pricing in our commercial business, while pricing in our aerospace and defense business benefited from a higher mix of technological products. Steve will provide more details later in our presentation. Now let me provide an overview of our operating segments for the first quarter.
Our printed circuit board manufacturing segment recorded first-quarter net sales of $122.9 million compared with $128.2 million net sales in the fourth quarter. The decrease was due to the closure of our Los Angeles facility, and a return to normal order patterns following a spike in demand at the end of the fourth quarter.
First quarter operating segment income was $10.5 million compared to $5.1 million in the fourth quarter. Fourth quarter operating segment income reflected charges of $6.7 million associated with our Meadville transaction, and our previously announced PCB plant closures. These costs totaled $2.4 million in the first quarter.
Excluding these charges, first quarter operating segment income was $12.9 million compared to fourth-quarter operating segment income of $11.8 million, an increase of $1.1 million or 9%. On a sequential basis, average price per panel increased almost 5% due to product mix and improved market dynamics as business has picked up.
For the backplane assembly, first quarter net sales were $21.7 million compared with $29.3 million in the fourth quarter. The decrease was primarily due to the winding down of our Hayward facility during the first quarter. First quarter operating segment income was $158,000 compared with $2.4 million in the fourth quarter. The significant decline in income was due to a $1 million [ph] operating loss at our Hayward facility.