Executive Summary / Key Takeaways

• Strategic Transformation Driving Growth: TTM Technologies has successfully transformed into a highly differentiated provider of advanced electronic solutions, significantly increasing its focus on the high-growth Aerospace and Defense (A&D) and Artificial Intelligence (AI)-driven data center computing and networking markets.
• Strong Financial Performance: The company delivered robust Q3 2025 results, with net sales growing 22.1% year-over-year to $752.7 million and non-GAAP diluted EPS reaching a record $0.67, reflecting strong demand in key end markets and improved operational execution.
• Technological Leadership and Strategic Investments: TTM's core competitive advantage lies in its advanced PCB and RF technologies, including Ultra HDI and high-layer count boards. Strategic investments in new facilities in Penang, Malaysia, Syracuse, New York, and Eau Claire, Wisconsin, are expanding its global and domestic manufacturing capabilities to meet evolving customer demands and supply chain diversification needs.
• Favorable Market Tailwinds: Approximately 80% of TTM's Q3 2025 sales were linked to the secular growth trends in A&D and AI, providing significant tailwinds that are expected to drive performance above long-term market projections in these segments for 2025.
• Disciplined Capital Allocation and Liquidity: With strong cash flow from operations and a healthy balance sheet, TTM is well-positioned to fund its strategic capital expenditures, pursue potential acquisitions, and execute its $100 million share repurchase program.

A Strategic Pivot Towards High-Growth Frontiers

TTM Technologies, Inc. (TTMI) stands as a leading global manufacturer of mission systems, radio frequency (RF) components, RF microwave/microelectronic assemblies, and technologically advanced printed circuit boards (PCBs). The company's very name, "time-to-market," encapsulates its core mission: delivering complex, high-performance solutions at global scales to accelerate customer product development. Over the past decade, TTM has undergone a profound strategic transformation, shedding its cyclical past to emerge as a highly differentiated player focused on the most critical and rapidly expanding sectors of the electronics industry.

This strategic pivot has seen TTM significantly increase its exposure to the Aerospace and Defense (A&D) market, which now accounts for 45% of its total sales, up from approximately 25-30% six years ago. This growth was fueled by strategic acquisitions like Anaren and Telephonics, expanding TTM's offerings beyond traditional PCBs to integrated electronic products, which now comprise over 50% of A&D revenues. Concurrently, TTM divested its highly seasonal Mobility business in 2020 and its Shanghai BPA facility in Q1 2023, streamlining its portfolio and reducing exposure to volatile consumer markets. The company has also consolidated its manufacturing footprint, reducing its global facility count to 22, enhancing efficiency and focus.

The current industry landscape is defined by two powerful secular trends: the explosion of Artificial Intelligence (AI) driving unprecedented demand for data centers, and rising global defense spending. TTM is strategically aligned with both, with approximately 80% of its total sales in Q3 2025 directly linked to these robust industries. This positioning underscores the company's successful shift towards less cyclical, higher-value markets.

Technological Edge: The Foundation of TTM's Moat

TTM's competitive advantage is deeply rooted in its advanced technological capabilities, which enable the creation of high-performance, high-reliability electronic solutions. The company specializes in sophisticated PCB technologies, including Ultra High-Density Interconnect (HDI) boards, high-layer count designs, and innovative asymmetrical designs where power and signal layers are optimized for superior performance. TTM is actively demonstrating advanced PCB capabilities, such as 87-layer boards, and is focused on minimizing pitch and developing complex stack micro-vias for higher resolution. This focus extends to its RF components, microelectronic assemblies, and integrated mission systems, all designed for demanding applications where speed, reliability, and integration are paramount.

These technological differentiators translate into tangible benefits for TTM's customers and, consequently, for its financial performance. For instance, the Syracuse, New York facility, currently under construction, is specifically designed to provide domestic high-volume production of Ultra HDI PCBs, critical for national security requirements. This capability offers a strategic advantage by reducing lead times and ensuring a secure supply chain for defense customers. Similarly, the newly acquired Eau Claire, Wisconsin facility is equipped to support advanced technology PCB manufacturing for generative AI applications, addressing the urgent need for high-performance computing infrastructure. TTM's commitment to investing "a lot more in R&D" aims to maintain its leadership in these advanced areas, driving higher average selling prices (ASPs) and stronger gross margins.

Strategic Investments and Global Footprint Expansion

To solidify its market position and capitalize on global trends, TTM has embarked on significant capital expenditure programs. The Penang, Malaysia facility is a cornerstone of the company's "China Plus One" strategy, aiming to diversify its supply chain and offer cost-competitive, high-quality advanced technology PCB manufacturing for commercial markets like data center computing, networking, and medical, industrial, and instrumentation. While the Penang facility experienced initial "growing pains" and a slower-than-expected revenue ramp in early 2025 due to customer qualifications, training, and yield optimization, management expects growth in Q4 2025. The company's long-term confidence in Malaysia is evident in its acquisition of land rights for a second production site in Penang, though construction timing will align with future demand.

In the United States, the Syracuse, New York Ultra-HDI PCB manufacturing facility is progressing, with equipment installation and testing underway, and volume production anticipated in the second half of 2026. This $100 million to $130 million investment, supported by approximately $52 million in federal and state funding, is crucial for meeting national security demands. The recent acquisition of the 750,000-square-foot Eau Claire, Wisconsin facility further enhances TTM's U.S. domestic capacity for advanced technology PCBs, particularly for generative AI applications, responding directly to customer requests for supply chain resiliency. These investments underscore TTM's commitment to a regionally optimized, globally connected manufacturing solution.

Competitive Landscape: Differentiated in a Crowded Market

In the competitive landscape of electronic components, TTM Technologies distinguishes itself through its specialization and technological prowess. The company holds the #1 position in U.S. PCB manufacturing and ranks among the top 3-4 globally in data center PCB production, and #6-7 overall worldwide. While direct competitors like Sanmina Corporation (SANM), Flex Ltd. , Jabil Inc. , and Benchmark Electronics, Inc. (BHE) offer broad electronic manufacturing services, TTM's strength lies in its niche expertise.

TTM's proprietary RF technology, high-density interconnect PCBs, custom assemblies, and integrated system offerings provide a qualitative edge in performance-critical applications, particularly in A&D and advanced data center environments. This specialization allows TTM to command stronger customer loyalty and potentially higher margins compared to competitors with more generalized EMS focuses. For example, TTM's RF design capabilities can lead to significantly higher efficiency in data center applications, fostering recurring revenue from long-term contracts.

However, TTM acknowledges that its U.S. production, such as the planned Eau Claire facility, will likely face higher costs—potentially "at least 50% higher than what we would see in China"—necessitating strong customer commitment for long-term agreements. While larger competitors like Flex (FLEX) and Jabil (JBL) benefit from economies of scale and extensive global supply chains, TTM counters this with its focus on advanced technology, customization, and a growing, strategically diversified manufacturing footprint. The company's strong North American presence, bolstered by recent capacity additions, provides a significant advantage in an era of increasing supply chain regionalization.

Robust Financial Performance and Liquidity

TTM Technologies delivered an impressive financial performance in the third quarter of 2025, exceeding its own guidance for the fourth consecutive quarter. Net sales surged 22.1% year-over-year to $752.7 million, driven by strong demand in A&D, data center computing, and networking. For the three quarters ended September 29, 2025, net sales reached $2.13 billion, an increase of 19% over the prior year. This growth translated into a record non-GAAP diluted EPS of $0.67 for the quarter, and $1.21 for the three quarters.

Profitability metrics also showed strength. Gross profit for Q3 2025 increased to $156.7 million, although the gross margin rate slightly decreased to 20.8% due to ramp-up costs at the Penang facility. However, year-to-date gross margin improved to 20.4%, reflecting improved operational execution, favorable product mix, and increased PCB shipment volume. Operating income for Q3 2025 rose to $71.9 million, with the operating margin expanding to 9.6%. The A&D segment was a significant contributor, with segment operating income increasing 23.8% to $52.9 million and its margin expanding to 15.7% due to higher sales, favorable product mix, and improved execution. The Commercial segment also saw strong sales growth, though its operating margin was impacted by Penang ramp-up costs and product mix changes.

TTM's liquidity remains robust, with cash and cash equivalents totaling $491.1 million as of September 29, 2025. Cash flow from operating activities was strong at $141.8 million for the quarter and $229 million year-to-date, providing ample resources for strategic investments. The company's net debt-to-last twelve months EBITDA ratio stood at a healthy 1.0x. TTM's Board of Directors authorized a new $100 million share repurchase program in May 2025, signaling confidence in its financial health and commitment to shareholder returns. Management anticipates that cash generated from operations, existing cash, and revolving debt will be sufficient to meet its capital expenditure, debt service, and working capital needs for the next 12 months.

Outlook and Growth Trajectory

TTM's outlook remains positive, underpinned by sustained demand in its core growth markets. For the fourth quarter of 2025, the company projects net sales in the range of $730 million to $770 million and non-GAAP diluted EPS between $0.64 and $0.70. This guidance includes the ongoing operating costs associated with the Penang facility, which is expected to see its margin headwind decrease to approximately 160 basis points in Q4 2025.

Management anticipates continued strong performance in its key end markets for 2025. A&D and data center computing are expected to grow above their longer-term market projections, with generative AI being the primary catalyst for the latter. Networking is also projected to exceed its longer-term growth forecast, driven by AI-related demand and new products. While the medical, industrial, and instrumentation market is expected to grow in line with its long-term forecast, the automotive market is anticipated to remain soft due to inventory adjustments and weak demand.

The company's capital expenditure plans for 2025 are substantial, ranging from $265 million to $285 million, with approximately $54 million allocated to the Syracuse facility. These investments are crucial for expanding TTM's advanced manufacturing capabilities and securing its long-term growth trajectory in high-value markets.

Key Risks and Considerations

Despite a compelling growth narrative, investors should consider several risks. Geopolitical volatility and the imposition of tariffs remain a concern, although TTM's diversified manufacturing footprint and customer mitigation strategies are expected to limit direct short-term impacts. However, indirect impacts such as overall end market demand weakness or economic slowdowns are harder to predict. The ramp-up of new facilities, particularly Penang, carries operational risks related to customer qualifications, workforce training, and yield optimization, which have already led to slower-than-expected breakeven timelines.

Customer concentration is another factor, with two customers collectively accounting for approximately 23% of Q3 2025 net sales and the top ten customers representing 56%. While this indicates strong relationships with key players, it also presents a dependency risk. Furthermore, the higher cost structure of U.S. domestic production, as seen with the Eau Claire facility, requires strong customer commitment to ensure long-term profitability.

Conclusion

TTM Technologies is executing a powerful transformation, strategically positioning itself at the nexus of the burgeoning AI and resilient Aerospace and Defense sectors. Its "time-to-market" ethos, coupled with a relentless focus on advanced technological differentiation in PCBs and integrated electronic systems, underpins a robust competitive moat. The company's disciplined approach to portfolio optimization, global manufacturing expansion, and operational excellence is yielding strong financial results, as evidenced by its record Q3 2025 performance and positive outlook.

With significant investments in state-of-the-art facilities in Malaysia and the U.S., TTM is not merely participating in these high-growth markets; it is actively shaping their supply chains and technological capabilities. While operational challenges in new facility ramps and geopolitical uncertainties persist, TTM's leadership in critical technology, strategic market alignment, and solid financial footing present a compelling investment thesis for discerning investors seeking exposure to the foundational components of the future's most advanced systems.