Again, welcome to the Bank of America Leveraged Finance Conference. I'm Anna Goshko. I cover technology and telecom from the fixed income research side, and we're thrilled to have TTM Technologies with us, particularly Dan Boehle, who's the company's Executive Vice President and CFO. Dan, thanks so much for being with us. Great. Great. Happy to be here, Anna. Appreciate you being here. So I think just as a precursor to our bigger discussion, just in case we have anyone in the audience that's new to the TTM story, if you could just start with some brief introductory comments on the company's history and its roots in the PCB space. Yeah. So yes, we began as a PCB business, but we are diversifying beyond PCBs into more engineered product. But we currently advertise ourselves as a leading global manufacturer of technology solutions, which include mission systems, RF componentry, and RF microwave microelectronic assemblies, and quick turn, and high technologically advanced printed circuit boards. So the PCBs that we still do are not really commoditized, more complex high technology PCBs. Our name, TTM, stands for time to market, which represents how our time critical one-stop manufacturing services help our customers, enable our customers to bring product to market faster as we're involved with them early in the design and manufacturing process to bring product to market. We have, over the last five, six years, been transitioning from more of that printed circuit board business solely into more of a diversified product offerings with engineered product where we are involved, again, early on in development, but higher above the board subsystems, assemblies, and full mission systems through the acquisitions of Anaren and Telephonics that we've done. We're trying to diversify our product base into more engineered product and then diversify our end products into more longer cycle. That's why we've been focused on aerospace and defense, longer cycle contracts, longer cycle production, development and production process so we can be involved in these programs for years and decades rather than just months or years. So you're still relatively new to the company, I think just under two years still? Yes. Came last August, so just under two years. So we'd love to hear just what your experiences have been to date, what you've learned, what you've achieved, and what your goals are from here. So my history or my background has been in aerospace and defense. So part of the draw coming to TTM for me was the transition that the company is going through to become more of an A&D company. So I've been focused on helping learn what that business model is, the difference between PCB and that business model, the processes and disciplines that we have to have in place for aerospace and defense company. And then also focused on what the company put out two or three years ago as far as what their targets were for margin expansion. The A&D part of the business has driven some top line growth, but also had some challenges in the margins early on. We've been working through the supply chain challenges and labor challenges and really are starting to see the improvements in the margin and that side of the business. Across the North America footprint, we've been really optimizing that footprint in order to expand the margins across the North America footprint, and then looking at cost cutting where we can, operating expenses across the board as well as in the factories, making sure that we're running efficiently, and so I've been very pleased with what we've been able to achieve in the time that I've been here. Stock price has been reflecting that. We are still in steady growth, and what we want to be able to show is not only can we achieve it on a quarterly basis, but consistently quarter by quarter and over the years, so consistency is what we're driving for. Okay. Great. So I think we're going to delve into numerous of those topics. So first one, so just supply chain bottlenecks. So I think for the last three years of this conference, that has been central to our discussion among many of the companies we've had here. I'd say it's not really coming up much today. So it's good news for everyone. But can you just let us know, so where do you guys stand today with regard to excess inventory levels that resulted from the supply chain bottlenecks and those two issues? Are they totally behind you at this point? Yeah. As you said, I think over the last two to three years, we had quite a bit of inventory buildup in our commercial markets. We think we are largely through that. We're starting to see that bottom out. Certainly in the data center, there's no issues there. We're trying to keep up with demand in that area. But the other markets, networking, medical industrial instrumentation, and auto, I think we're seeing the end of the inventory buildup. We're starting to see true demand come through. However, it's mixed within those markets as to how much that demand is really pulling through. But all in all, I think we're over the inventory issues in most of the inventory in the commercial markets. From a supply chain standpoint, the other thing, as I just mentioned, in the integrated electronics business, Aerospace and Defense, through those COVID years and what have you, had difficulties with their supply chain. They're generally lower volume work, high specifics that you have to meet. And so managing that supply chain is very important. And most of that is relational, and it's building a, I guess, a good track record with your customers and then being able to make sure that you have vendors who can meet your expectations and your customer expectations on time every time. And we've been getting much better at that. So we've reduced the inventory levels there, built up those relationships with our vendors, made sure that we have consistency and resiliency across our supply chain there. And that's helped us a lot too. And the labor has come back as well. So we don't have as many, I think, supply labor issues that we had back in the COVID days. So this year, I think it's been. Just on the labor, I mean, what's helped to improve the labor situation? Well, you know. Still a tight labor market. It is a tight labor market. I mean, but I think it's become more reliable. During COVID, you had people that were jumping from one job to the next and trying to, it's hard to keep them in one position for a while. I think that that's going away. Employers have adopted hybrid type. We use a hybrid model. Of course, in our factories, they're there all the time, but across other functions, you're able to have a hybrid model where I think we're being able to retain people better, and if we're retaining people, then they're learning, they're getting better over time, and I think that's happening through the supply chain. Okay. Okay. Great. Did I cut you off? No. I'd like to delve into the segments of the business, kind of operationally, what's going on now and really what the outlook is. A&D, aerospace and defense, your largest, approximately 45% of revenue. What's the defense and commercial mix just to set the stage? It's largely defense. So our commercial aerospace is only about 5%. And then we have a little section of space that's another 5%. So 90% of our aerospace and defense is defense related. Okay and then. Probably about half of that is radar. Right. Okay. So half of that is radar. So just a general view on outlook there. And then just how would a pullback in Ukraine support kind of impact the business? Sure. So we use a third party called Prismark to kind of give us market data. And we compare to that in our investor slides. We tend to look at their benchmarking and then compare ourselves to them just as this one-year outlook because we don't give a full year's guidance. So we just kind of say, are we in line or growing? So aerospace and defense, I think the Prismark benchmark was 3%-5%. Our 2024 experience and our projection was to be better than that. We have grown beyond that. It's been a strong business for us. We're well aligned with, I think, the strong platforms. And I think some people have been asking us today, any impact from the change in our presidency, the change in administration? The defense budget generally tends to be pretty bipartisanly supported. And it doesn't change much from that 3% to 5% growth year over year. So we don't see a lot of impact from that. The Ukraine pullback, the money, the appropriations, and the funding and everything else from Ukraine has taken years to actually hit and start hitting production. And so that wave is really starting now as far as building to replenish our government stockpiles and our ally stockpiles. So even if they were to start pulling back now, we're still going to spend two to three years of probably building up our current stockpiles. It's still a replenishment. So we're going to do that first. And then we'll probably have allies wanting even more because they see what the impact of this was to us and to them. So I don't see any significant impact from that in the near term. Okay, so stable growth. Yes. Stable growth, which is why we want to be in the aerospace and defense business in the long run, is that stable, consistent, reliable growth. It might not be stellar double-digit growth, but it's consistent and it's reliable. Okay. So then next larger segment is percentage of revenue, I believe, is data center and computing, approximately 20%. Hot sector right now, I think you said a lot of the investor questions today have been around this. Obviously, just say the word AI and dollar signs light up in people's eyes. So you obviously are currently experiencing very strong growth. I think you are up 20% year over year in 3Q, guided for more than 30% in 4Q. So a couple of questions around this. One, how much of the total revenue is actually from the top hyperscalers? So our growth has been driven by hyperscalers as well as the Generative AI shift, right? And so about 85% of our data center and computing, I'd say 85% of that data center and computing business is data center. The other is semiconductor, the other 15%. So and of that 85%, it used to be about 50% AI versus standard cloud-based computing. And it's now probably more 75% to 80% Generative AI. So you're seeing an explosion in growth there. We are at our limits or our capacity right now. We're constrained by the factory that is doing that in China right now for us is pretty much at full capacity. We've added equipment there, and we're trying to certify a second facility out there to meet the demand that we see as continuing through Q4 and into next year for us. So we're facilitating to meet that demand that we think is going to continue through the next year. Okay. I'm just going to pause there for a minute because you said the word China. So in this hot sector, you are producing in China and putting more capacity in China. Can you just talk about what your strategy might be with regard to tariffs and the administration and kind of policy towards China? Yeah. So first of all, so about 42% of our manufacturing is in China. It's all on our commercial side. Of course, aerospace and defense is all manufactured in the U.S. for obvious reasons. The facilities that we have out in China have been there for years, grew through acquisition, and do very high-end, highly technical PCB manufacturing. We've, over the last two, three years, been our customers have requested an alternative to China, at least a China plus one strategy. So that's why we built Penang, the Penang facility over the last couple of years. That is fully up and running now. We're still trying to certify and get qualified on our customers' products so that we could ramp up our sales there. So sales are very, very little. They will be ramping up in the next year. We do expect to break even there and move on beyond that later in the second half of next year. We do have an alternative to China if that does heat up again, right? Currently, as much as customers have said, we want an alternative, they're not pushing very hard to move out of it. Tariffs, we've been through this before. We are not necessarily that impacted from a direct tariff standpoint because what we produce in China gets shipped within China to EMS manufacturers or other assemblers, what have you. We're not shipping from China over to the U.S. or across borders. We're not very much impacted from a direct standpoint. If our customers are shipping outside and then they end up having tariffs, it's unknown yet whether they will pass that down to us or whether they would pass that through to the customer. So unknown now, but we didn't have much impact from that in the last kind of round of tariffs. So we think we're pretty protected, not a significant headwind for us. And as I said, if everything does go very far against China and a full decoupling, then we have that Penang alternative. So that would probably be a good thing for us. Could be a headwind or in the end, or a tailwind in the end for us too. To ramp. Move more, to ramp more in Penang. To Penang. Got it. And then we've got plans to, if we can or if we need to grow further there as well. Okay. Perfect. Well, on pause, we'll go back to talking about the data center demand. So obviously, super strong demand right now. It sounds like you actually have some constraint potentially just by your manufacturing capabilities. Any kind of outlook that you can provide kind of on what the demand's going to look like into 2025? We don't really have any more insight into it than what you all read in the papers and we can read in the papers. Obviously, a lot of capital expenditure going into hyperscale cloud and generative AI-based data centers. And so we see the demand continuing in 2024. Is it fair? We don't give guidance that far out. You could produce more, you could sell more? I believe that's the case. Yes. Okay. Okay. So then down to what are kind of now your smaller segments? So medical, industrial, instrumentation, slightly growing after a period of mostly declines. Are you getting past the trough and is this business inflecting? Yeah, we believe so. So it's been, as you said, I think probably hit the trough in 2023. We had double-digit growth in MII in 2021 and 2022. And so I think now the inventory has bled out, probably hitting the bottom, and we're starting to see some improvements there. In the medical industry, we are generally, our products are in sensing monitoring devices like diabetes monitoring and/or robotic assistance for medical treatments, what have you. So that is starting to come back. I think people are going back to the doctor to have procedures done and what have you. And so the robotics is starting to come back a little bit there. But it's muted growth. It's slow growth. I mean, I think the Prismark numbers for that is like 2%-4%. And our guidance was in line with that growth. And so we are experiencing that small growth. In industrial, we're starting to see that come back through robotics as well. So again, the robotic nature of the industrial business. And then instrumentation, that's probably a little bit lagged, but our instrumentation is primarily automated test equipment for semiconductors. So that's lagged with the semiconductor business. But again, I think we're at the trough of inventory build and we're starting to see demand come there. So MII is slow growth, but I think we're still feeling good about the markets that we're in and that they've bottomed out. We're going to start seeing them improve. Okay. So auto, that's about roughly 13% of revenue. So I think that auto market challenges are pretty well known. Anything to add on your exposure to this market and the outlook? Yeah. I think this is the one area where coming into the year, we thought we'd have a better second half of the year, but it continues to be pretty slow. This is the one where we're against the benchmarks. We probably feel like we're a little bit lower than what the benchmarks say. However, we probably think that because we think the benchmarks are being optimistic and that the growth is going to be slower than what the 3% to 5% of which we've put as our benchmark out there. So primarily driven by the Chinese market has been closed off to our customers. They're fully integrated. They're using domestic supply base. And they're the place where most of the EV growth is. With our electronics, our business base, right, the electrification of cars is what drives more demand and more use for our products. So EVs is where we have the most content. On the flip side, the combustion engine cars are starting to use more of the ADAS systems, the advanced driving assist programs. So that is a place where we play quite a bit. And so as those become more standard, we'll start seeing more content on those cars. But car sales in total have been down and the EV cars demand is not there. So yeah, it's the one that we're a little bit worried about as far as demand. But I think, again, like MII, it's probably bottomed out. It can only go one direction, right? There's going to be up. And if as ADAS becomes more standard, that does present opportunity. Okay. And then so networking, 8% of revenue. So networking and communications also been a tough one for a while, but are you seeing any renewed spending and do you think you've gotten to the point where this has bottomed out and potentially inflecting? Yeah. So our networking business is probably about 90% the traditional networking business like Cisco and Juniper type of business, and then 10% is telecom like Nokia and Ericsson. So that networking part of it is starting to see some pull-through from Generative AI. And so we are starting to see business growth there in the second half of this year and into Q4. As the data traffic grows for these Generative AI data centers, we see more demand in the networking space. So that is starting to improve, which is good. Okay. Good. So if we take these kind of five segments together, I think there's more up arrows than down arrows as you're ending the year going into. So we're ending the year, yes, and going into. 2025. Yeah. So if you net it out, any preliminary thoughts on a 2025 outlook? And are there any sort of mega trends that we haven't hit on that sort of impact your business and the outlook? No, I think we kind of hit them all. I mean, data center is a mega trend going on right now, and we're well positioned there. And I think the growth that we've seen in 2024 will continue into next year. Aerospace and Defense with the geopolitical and other things going on in the world right now, that's a good growth area for us. We're on good solid programs there, and our strategic positioning has been good there. So we'll see that continue into next year. As we just said, the auto market is probably the one that's arrowed down maybe for us or flat, but the other markets do have good positive trajectory into next year, so. Okay. Great. So then maybe just spend a minute just updating us on your manufacturing and geographic footprint strategy. So I think you hit on many of the piece parts already. So you talked about the shift from Greater China to the Malaysia facility. Just I think there's still a ramp process going on there. So any kind of update? Yep. You've generally been rationalizing and consolidating your footprint because that's kind of a cost-save and margin improvement strategy. And then just I think there's a build in Syracuse. What's the progress there? Expected ramp scale and. Sure. I'll take those one at a time. We'll start with Malaysia. As I mentioned, that is completed, and we are starting to see revenue come into there early next year. We'll get a pretty steep ramp and are expecting to get to break even towards the middle of next year. And so that's going well. No change to what we said in our last earnings call. And then with the other new greenfield, I'll hit that one first and then go back to the other. Syracuse is a purpose-built manufacturing site for high-density interconnect PCBs that will be used for the defense market. We are, through a number of our customers, seeing demand in that area. We're starting to do prototyping in some of our factories right now within the U.S. But the demand that's coming towards the end of 2025, end of 2026, will require us to build this purpose-built factory to manage that scope. So that is going well. We broke ground in the middle of, I think, the second or third quarter. We've gotten the roof up there. We wanted to get that up before the weather started coming in so that we can continue to work through the winter. So that is moving very quickly. We've got the same team that did the Penang facility, which they did very quickly, working on the Syracuse facility as well. So the scope of this is about probably half of what the Penang one was. It's about $100 to $130 million of facility with equipment and everything else involved. We have negotiated some incentives from the state and local governments there that add up to about $22 million over the years. Then we just announced $30 million of federal government funding from the Defense Production Act. That'll help offset some of the outlay for us. That production or construction will go through 2025 to be ready for production in early 2026. Looking forward to that coming online. Again, very strong demand there from our defense customers. The other rationalization of facilities in 2023, we did close two North America sites and an Asia site. Most of that business, I think the target was about 60% to 65% in Asia and about 80% of our U.S. business that was at those factories closed had been transferred over to other sites. We're about done with that. I think at the end of this year, early into next year, we'll have all that business transferred into the other sites. So that was the idea to fill more of the sites and get more efficiencies out of that and close the ones that were lost producing. That's been successful. We are doing a little bit more portfolio shaping through the middle of next year. It was in relation to the Telephonics acquisition. We had two small sites that we're going to consolidate into our Farmingdale, New York site. So part of the plan, we're just timing that over the next nine months, so. Okay. I realize you're not giving guidance yet for 2025, but maybe just kind of bigger picture, if you can talk about to the degree just overall corporate growth targets, margin targets, capital intensity, free cash flow. What are your goals? Yeah. So it hasn't changed from the, I think, analyst day we did a couple of years ago. So our top-line growth, we're targeting 4% to 6% top-line growth. Our operating margins in the range of 11% to 13%. We've shown in this last quarter we can do that. We just need to be able to do that consistently. So we've come a long way. We just need to be able to consistently show that quarter after quarter. That translates into an EBITDA growth of about our EBITDA range of 15% to 17%. Our capital expenditures, our target is to be between 4% and 5%. The last couple of years because of Penang, it's been higher. Going into next year, it'll be higher. I think it'll be about 8% or so until we get past the Syracuse facilitization. And then we'll get back down to kind of those targets in the long run, 4% to 5%. Cash flow perspective, our goal is 10%. We have been able to achieve that in the recent quarters. And we feel strongly that we'll continue to drive good, strong cash flow at 10% or better of revenue, so. Okay. And then so capital allocation, and this is credit conference. So you can talk about a leverage target or a credit rating profile that you target. The current credit rating profile, I think, is appropriate for us. Our leverage target is one and a half to two times, and we're currently sitting at 1.4, so it's slightly below that. We've been well leveraged or at that low leverage for a while. So that gives us plenty of room, dry powder if we want to do an M&A, which going over to where are we allocating our assets. We talked about the internal investment in our facilities, our greenfield facilities. That's our number one priority right now. Second priority would be to do M&A. So that's why we're keeping enough dry powder there to be able to do that. Currently, keeping an eye on the market. I think the market for M&A is becoming a little bit more active. And so we'll try to continue to look for opportunities in M&A for primarily in that A and D space that we've been focused on strategically over the last few years, so. Okay. So you preempted my next question. So I was setting you up to talk about your low leverage, setting you up for the potential to be opportunistic in M&A. So you said it's becoming a little bit more active. Obviously, you're busy with your organic kind of efforts that you've got going on in Penang and Syracuse. But what are your areas of interest in M&A? And is it not on the PCB side? Is it more on the A and D side? And are they tuck-ins? And aren't these expensive? And kind of what's driving the renewed activity as kind of the crux of the question? What's driving the renewed activity, I think, in the market is just some of the assets have been held by private equity for years, for a number of years now, and they're kind of getting to the end of and maybe even beyond what they probably wanted to hold. And the debt markets were not very receptive to deals over the last few years, but that's kind of turning the corner. We're just starting to see more talk, more activity. Our strategic focus is to continue that transformation into more of an engineered products, subsystems, systems. But it would be in the line of our wheelhouse, which is RF and RF microwave electronics and microelectronics. So still within that same kind of focus. And within the aerospace and defense industry, we want to continue to grow that part of our business. As I said, part of why I'm here, we like the stability of that business, the stability of that industry, steady growth, good cash flows, good margins over time, and that should ultimately drive multiple expansion and increased value, so. Do you want to build kind of some dry powder on the cash side with, I mean, you said you're hitting your free cash flow targets. Do you want to build up your cash balance, or in the meantime, are you willing to use that for share buybacks? We do have a share buyback program. We've been active. We're about 60% complete on that. We'll continue through May of next year. So certainly, that is the third prong of our capital allocation. And we will continue to look at that opportunistically in buying back shares, so. Okay. Okay. Good. I think we just have a few minutes or a few seconds left, actually. But any final comments you want, anything we didn't touch on or kind of key takeaways you'd like to leave the audience with? I think we hit them all. I think that the business has been running quite well. We've been focused on operational efficiency, investing in these greenfield facilities to provide that geopolitical alternative within China plus one, and then to meet our U.S. customer base needs in Syracuse. So our margins have expanded, and we're continuing to see the top-line growth. So we're doing well, but there's still more to do. And we'll continue to work on that, so. Okay. Great. Well, it's an exciting story, and hopefully, wishing you all the best in 2025. For sure. Fingers crossed. Thank you, Anna. Okay.