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TTM Technologies(TTMI) - 2024 Q4 - Annual Report
TTMITTM Technologies(TTMI)2025-02-21 21:08
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Financial Performance - The company reported net sales of approximately 2.2billionforfiscal2023,positioningitasoneofthelargestandmostdiversifiedPCBmanufacturersglobally[76].−Thecompanyexperiencesseasonalsoftnessinthefirstandthirdquartersduetoholidaysandvacationperiods,leadingtostrongerrevenueinthesecondandfourthquarters[82].−Thecompanymayfacesubstantialliquidityproblemsifcashflowsandcapitalresourcesareinsufficienttofunddebtserviceobligations,potentiallyleadingtoassetdisposalsorrestructuringefforts[178].−ThecompanyisrequiredtomakeadditionalprincipalpaymentsannuallyiftheSecuredLeverageRatioexceeds2.0,indicatinganeedforcarefulcashflowmanagement[176].−Thecompany’sabilitytogeneratecashisinfluencedbyprevailingeconomicconditionsandcompetitivefactors,whicharebeyonditscontrol[177].CustomerRelationshipsandMarketPosition−Thecompanyhasadiversecustomerbasewithover1,500customersandlong−termrelationshipsexceedingtenyearswithitstenlargestcustomers[78].−Thecompanyfocusesonbuildinglong−termrelationshipswithcustomers′engineeringteamsduringtheproductdevelopmentphase,enhancingitssalesstrategy[63].−Thecompanyisrecognizedasaleadingsupplierintheaerospaceanddefensesector,havingpassedOEMandgovernmentcertificationprocesses[81].OperationsandManufacturing−Thecompanyoperates17PCBfabricationandengineeredsystemplantsacrossNorthAmericaandfivePCBfabricationplantsinAsia[66][67].−ThecompanyplanstoestablishanadvancedtechnologyPCBmanufacturingfacilityinNewYorkState,withgroundbreakinganticipatedinthefirsthalfof2024[68].−TemporaryclosuresofoperationsinChinaduetopowershortagescouldadverselyimpactmanufacturingcapabilitiesandrevenuegeneration[182].InnovationandIntellectualProperty−Thecompanyhasapproximately150patentsand20pendingpatentapplications,reflectingitscommitmenttoprotectinginnovationscriticaltoitsbusiness[83].−ThecompanyoffersawiderangeofengineeredsystemsandPCBproducts,includingHDIandUltra−HDIPCBs,flexiblePCBs,andcustomassemblies[77].WorkforceandDiversity−TTM′sU.S.workforceisapproximately412.2 billion for fiscal 2023, positioning it as one of the largest and most diversified PCB manufacturers globally [76]. - The company experiences seasonal softness in the first and third quarters due to holidays and vacation periods, leading to stronger revenue in the second and fourth quarters [82]. - The company may face substantial liquidity problems if cash flows and capital resources are insufficient to fund debt service obligations, potentially leading to asset disposals or restructuring efforts [178]. - The company is required to make additional principal payments annually if the Secured Leverage Ratio exceeds 2.0, indicating a need for careful cash flow management [176]. - The company’s ability to generate cash is influenced by prevailing economic conditions and competitive factors, which are beyond its control [177]. Customer Relationships and Market Position - The company has a diverse customer base with over 1,500 customers and long-term relationships exceeding ten years with its ten largest customers [78]. - The company focuses on building long-term relationships with customers' engineering teams during the product development phase, enhancing its sales strategy [63]. - The company is recognized as a leading supplier in the aerospace and defense sector, having passed OEM and government certification processes [81]. Operations and Manufacturing - The company operates 17 PCB fabrication and engineered system plants across North America and five PCB fabrication plants in Asia [66][67]. - The company plans to establish an advanced technology PCB manufacturing facility in New York State, with groundbreaking anticipated in the first half of 2024 [68]. - Temporary closures of operations in China due to power shortages could adversely impact manufacturing capabilities and revenue generation [182]. Innovation and Intellectual Property - The company has approximately 150 patents and 20 pending patent applications, reflecting its commitment to protecting innovations critical to its business [83]. - The company offers a wide range of engineered systems and PCB products, including HDI and Ultra-HDI PCBs, flexible PCBs, and custom assemblies [77]. Workforce and Diversity - TTM's U.S. workforce is approximately 41% ethnically diverse and nearly 36% female, with 47% of new hires in 2023 identifying as underrepresented minorities [95]. - As of January 1, 2024, TTM had approximately 15,800 employees, with 12,600 in manufacturing roles and 1,100 in professional, managerial, or administrative roles [103]. - TTM's applicant flow more than doubled from 2022 due to enhanced recruitment advertising strategies [101]. - TTM's leadership development programs have over 83% of documented plans completed in 2023, focusing on individual growth and career opportunities [92]. - In 2022, TTM achieved a 94% participation rate in its employee engagement survey, indicating high performance across all 14 engagement drivers [96]. Compliance and Regulatory Risks - The company is subject to stringent export control laws and economic sanctions, with non-compliance potentially leading to significant penalties and reputational harm [195]. - Compliance with environmental laws is critical, as violations could result in fines, litigation, or revocation of necessary permits, adversely affecting operations [187]. - The evolving regulatory landscape in Asia poses risks that could limit legal protections and impact operational results [186]. - The company must adhere to various material content restrictions in products, which may incur liability if certifications are not met [192]. - Failure to maintain security clearance could prevent the company from performing on classified contracts, materially affecting business operations [185]. Financial Management and Risks - The company incurs significant costs due to public company compliance, including legal and accounting expenses, which may adversely affect net income [201]. - Cybersecurity threats, including outages and breaches, pose risks that could disrupt operations and lead to significant legal and financial exposure [202]. - The company is investing in upgrading its enterprise resource planning (ERP) system, which may cause disruptions if not implemented correctly [211]. - Future capital needs may require additional funding for operations, acquisitions, and technological upgrades, which may not be available on favorable terms [208][210]. - Changes in tax rates and regulations, including the OECD's Pillar Two global minimum tax, could adversely affect the company's effective tax rates starting January 1, 2024 [215]. - The company faces potential limitations on utilizing net operating loss carryforwards due to ownership changes, which could impact tax liabilities [212][213]. Community Engagement - The company packaged over 60,000 meals in a coordinated event in 2023, demonstrating its commitment to community service [90]. Financial Instruments - The company has entered into a four-year interest rate swap arrangement with a notional amount of 250 million to mitigate interest rate risk, paying a fixed rate of 3.49% [105].