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Call sheet · Q2'24

TTM Technologies (TTMI)

Q2'24 earnings call · held July 31, 2024 · compared with the Q1'24 call · management-credibility review
5/12
Disclosure score
2 high, 4 medium, 1 low flags
Financial quality
Bottom line
The sleeper story is that TTM is becoming a single-product China manufacturing bet on generative AI while their Malaysia diversification story falls apart with multi-quarter delays. The Street sees 'AI winner beats and raises' but misses that 87% concentration in generative AI demand from 3-4 customers, all made in Dongguan, is existential risk when this cycle turns. The binding constraint isn't demand, it's that they can't manufacture advanced AI boards anywhere but China while Penang struggles with basic qualifications. Management admitted 'customer qualifications are taking longer than originally expected' which is code for 'we don't know how to run a greenfield facility.' My view changes if Penang ships $50M in Q4 with positive gross margins, but that's looking increasingly unlikely.

The 30-second version

  • Malaysia ramp hitting a two-quarter delay while data center runs at 87% concentration
  • Data center hit all-time high at 93% YoY growth, but it's all China-based production
  • Commercial markets showing 'sequential improvement' but book-to-bill tells different story

What changed this quarter

MetricQ1'24Q2'24Change
Revenue$571.1M (up 4.8% YoY)$605.1M (up 10.7% YoY)+590 bps YoY acceleration
Non-GAAP EPS$0.31 (up 72% YoY)$0.39 (up 22% YoY)Growth decelerated 5000 bps
Operating Margin7.1% (up 100 bps YoY)9.0% (up 60 bps YoY)+190 bps sequential but YoY improvement slowing
Data Center Computing Revenue %21% of total (106% YoY growth)21% of total (93% YoY growth)Growth decelerating despite AI hype
A&D Revenue %46% of total45% of totalMix shift away from highest margin business
A&D Program Backlog$1.38 billion$1.45 billion (record)+$70M sequential build
Book-to-Bill Overall1.151.11Demand momentum softening
Asia Pacific Utilization52%64%+1200 bps surge on data center demand
Operating Cash Flow$43.9M (7.7% of sales)$41.9M (6.9% of sales)Cash conversion deteriorating
Share Buyback$9.3M (600K shares)$25.1M (1.39M shares)Aggressive buyback at $18.09 avg

Accountability tracked

8 new promises made5 narrative shifts flagged6 prior promises scored
Inside the full report
The complete write-up covers the full promise ledger with kept/missed calls, disclosure-quality scoring, the metrics-vanished check, verification items, and the questions to ask next quarter.
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Scores, kept-promise rates, and flags on this site reflect the author's opinion, applying a stated methodology to statements management made on public earnings calls. Informational and educational purposes only - not investment advice, a recommendation, or an offer to buy or sell any security. Sources believed reliable but not guaranteed; the author may hold positions in the securities discussed.

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