Good day, and welcome to TTM Technologies Inc Second Quarter 2015 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Tony Righetti. Please go ahead.

Thank you, operator. Before we get started, I would like to remind everyone that today's call may contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Including statements related to TTM future business outlook. Actual results could differ materially from these forward-looking statements due to one or more risks and uncertainties, including the factors explained in our most recent Annual Report on Form 10-K, and our other files with the Securities and Exchange Commission. These forward-looking statements are based on Management's expectations and assumptions as of the day of this presentation. TTM does not undertake any obligation to publicly update or revise any of these statements, whether as the result of new information, future events or other circumstances, except as required by law. Please refer to the full disclosures regarding the risks that may affect TTM, which may be found in the reports on Form 10-K, 10-Q, 8-K, the registration statements on Form S-4 and the company's other SEC filings. We will also discuss on this call, certain non-GAAP financial measures, such as adjusted EBITDA. Such measures should not be considered as a substitute for the measures prepared and presented in accordance with GAAP as we direct you to the reconciliation of non-GAAP to GAAP measures included in the company's press release, which was filed with the SEC and is available on TTM's website www.ttm.com. I would now like to turn the call over to Tom Edman, TTM's Chief Executive Officer. Please go ahead, Tom.

Thank you, Tony. Good afternoon and thank you for joining us for our second quarter 2015 conference call. I will begin with a review of our business, Todd Schull, our CFO will follow with a discussion of our financial performance, review changes to our reporting structure and provide third quarter guidance for the combined company. We will then open the call to your questions On May 31, 2015, we completed the acquisition of the Viasystems furthering our path toward building the preeminent company and the PCB industry. The combined company is entering its third month and we are already beginning to see tangible evidence that the capabilities and the scale we now possess are allowing us to add value to our customers with a broader technology portfolio. The integration process is proceeding on track and we are excited about the opportunity in front of us. Over the past few months, I have met with a number of our critical customers and our new employees both, in North America and Asia. The reaction from both constituencies has been positive. Our employees are communicating very well with one another, are sharing best practices and our sales force is uncovering new cross-selling opportunities at a rapid pace. We are acting as the one TTM, which had envisioned for our organization and I thank all of our employees for embracing this philosophy. Our message to employees and customers from day-one of the acquisition has been to remain focused on execution on behalf of our customers. We have been aided in this effort by the fact that overlap is minimum between our customer bases. This has allowed us to really emphasize our expanded capabilities to our customers and to explore new opportunities with them. As you know, Viasystems and TTM were competitors in the marketplace…

Thanks, Tom. Good afternoon everyone. For the second quarter net sales were $445.4 million compared to net sales of $297.6 million in the second quarter of 2014 and compared to first quarter net sales of $329.2 million. The year-over-year increase in revenues was driven by an 18% increase in organic revenue and the one-month contribution of sales from the Viasystems acquisition of approximately $93 million. GAAP operating loss for the second quarter was $7.1 million compared to GAAP operating income of $3.2 million in the second quarter of 2014 and compared to our operating income in the first quarter of $8.3 million. On a GAAP basis, our net loss for the second quarter of 2015 was $36.6 million or $0.41 per share. This compares to a GAAP net loss of $3.1 million or $0.04 per share in the second quarter of last year and GAAP net income of $3.4 million or $0.04 per diluted share in the first quarter 2015. Our GAAP results in the second quarter were impacted by approximately $46 million of expenses related to the acquisition of Viasystems. The remainder of my comments will focus on our non-GAAP financial performance. Our non-GAAP performance excludes the amortization of intangibles, stock based compensation expense, non-cash interest expense, restructuring impairment and early extinguishment of debt related costs, acquisition related costs, purchase accounting impact and other unusual or infrequent items as well as the associated tax impact on these items. Additionally, we exclude nonoperational changes in our tax expense such as impact of retroactive changes in the tax law and non-cash discrete items. We present non-GAAP financial information to enable investors to see the company through the eyes of management and to provide better insight into the company's ongoing financial performance. Gross margin in the second quarter was 15.5% compared to…

Thank you. [Operator Instructions] The first question comes from David Rold with Needham & Company.

Hi. Good afternoon. Thank you. Just first on the segment, could you elaborate on what gives you the confidence that the telco spending in China is going to come back? Just given some of the commentary out of the supply chain? Could you remind us where the networking segment as a whole should be when Viasystems [ph] run rate as a percentage of revenue?

Okay. Sure. Let us start with the last part of that. I think if you look at the overall run rate, we gave you the pro forma forecast. If you look at the 26% of total sales expected in the third quarter, so that would be the combined company, you can expect that if you think back to the last year which was a very strong telecom environment then the combined company would have been up to about 32% of total sales, obviously, the most significant market for TTM. In terms of China and telecom, of course, always what I am really relating their comments that we hear from our customers in the area, there has been a, I wound say unanticipated slowdown the environment this year, particularly last quarter and then forecasted into the third quarter. The anticipation is that bids are going to be let or started to be let again in China in this coming quarter and that would translate into a base station demand in the fourth quarter, so that we would start to see an improvement in the fourth quarter. With all of these things, there is a macro environment in China that I would say is not favorable right now. How the government reacts to that of course is an open question. There may be even more encouragement for infrastructure spending there or perhaps not. At this point what I can relate to is what our customers are saying, which is they do expect the fourth quarter to improve.

Okay. Then on the new segments that you are going to be reporting, could you just give us an update on seasonality I guess by each one I guess in your revenue cadence and kind of how that affects margins?

Sure. The real segment that we will be looking at is new segment is automotive. If you look at automotive demand in terms of cycles, generally the summer season would be where you would see a little bit of a slowdown and then strength particularly starting to build in the fourth quarter and then into the first quarter. As you probably understand from my remarks, we are not seeing that this year. We are seeing good solid strength continue into the third quarter, so we actually are not seeing a summer slowdown this year, at least as we see demand for the third quarter.

Okay. Then just lastly, I am wondering if you identified any potential additional cost synergies maybe beyond the second quarter 2016 timeframe and chance to kind of integrate.

Yes. We are absolutely working on that. As you can probably guess, now that the teams are able to fully share information, we have been upgrading and really at this point taking a fresh look at our plans on the integration and on synergies and continuing to update our plans there. For now, our immediate goal in the first year is $55 million. We believe that there is opportunity beyond that and we certainly will continue to keep you updated.

Okay. Great. Thank you.

[Operator Instructions] The next question comes from Matt Sheerin with Stifel.

Yes. Thanks. Hello everybody. Hi, guys. A few questions, looking at the guidance, it looks like the operating - it implies that operating margins it is going to be down a little bit. Is that just because of the drag of the gross margin of Via, and the fact that you are really just getting started with the cost synergies?

I think you are right. Heavy impact is the fact that these cost synergies are just starting. Tom mentioned one of our major objectives. Certainly, we still feel very confident is that the deal is going to be accretive transaction at the end of the first year. In the first quarter, we have got a ramp up into the synergies. We have got all net interest expense now; we have got the increased shares, so we kind of took the two hits right upfront in full force. We have got to swim our way through that with the synergy exercise, which we are very aggressively focused on here as Tom mentioned already. You are correct in saying that, we have got a little bit a headwind that we are working through in terms of the dilution of the new business while we are ramping our synergies.

It sounds like you said that 20% to 25% of the synergies that is December quarter, right? Not September? By the end of September, so in other words, we will see that in December and then into March, so that seems to imply that you should be able to - demand being what it is in a stable or growing that you should be able to get kind of a low double-digit, kind of operating margin in the fiscal '16. Is that fair?

We have not projected out of the 2016 yet...

I am looking at in terms of high single-digit. Okay, that is fair.

I would like to take the opportunity just to clarify the synergy number, right, We are looking at potentially 25%, we are going to take actions on 20% to 25% of that $55 million, so pick a number, it is 10, 13, 15 something like that. In the third quarter, that will yield benefits in the fourth quarter, so that is the one quarter lag kind of concept and just remember that if it is a full-year impact of $10 million to $15 million of actions in Q3 you get a quarter of that in Q4 and then another quarter each quarter after that. As you build and as you think about your models going forward, make sure you kind of layer in those synergies properly. The other point I want to clarify is that we did say that we are looking for 20% to 25% in actions in Q3 and then an additional 20% to 25% of actions in Q4. If you have add that with 11% we already took, we are somewhere in the 50% to 60% of that $55 million of actions before at the end of the calendar year, so we are not backend loading it from an action standpoint. Then like Tom mentioned earlier, we are certainly looking to update that number as we get a little bit more into the integration planning process, which is just really just getting underway.

Okay. That is helpful. I mean, that is coming on from both, COGs and SG&A, right?

That is correct.

Yes. Okay. Do they fall off sort of evenly or really the [ph] COGs parts take a longer. In other words, will that be more backend loaded than SG&A?

At this point I would say it would be relatively equal in terms of the space. We have plans to take action on both that would impact both lines each quarter, so it is not like we are just focusing on SG&A today and deferring on the manufacturing cost structure.

Okay. On the handset business, you talked about, Tom; it moderating because of some product transitions which sounds like it is going to be down, sequentially. Typically you have been up building in advance of Q4 product demand from your customers. Is that just because of product transition or you are seeing any kind of slowdown whether it would be from your bigger customer or other customers?

Great question. In terms of this year perhaps you remember last year was an unusually difficult period for our cell phones in Q1 and Q2. This year has been unusually strong period with new product introductions being highly successful, so we are coming off of a notably a strong Q2 performance in terms of unit production, which of course was excellent for us and we are very we are thrilled with that. Now, as we are going into Q3, we will be transitioning to new products. While we are not seeing a change in the customers' forecast, what we have there is a little bit of a dip based on the new ramp as we start to ramp yields, so much less of an indication from end markets as this is the fact that we have got to be we are phasing into a new model and therefore are restarting net yield ramp cycle and that carries into Q4 and of course then you will see a gig you should again seasonally expected Q4 will be the peak and then we will see how that carries in the Q1 and Q2 next year.

Okay. Great. Just on the interest expense and the financing, Todd. Will you be looking to go back and refinance or is that going to be sort of steady-state for now?

I would look at that as steady-state for now. The contract that we have in place, it is just not feasible to go back out here in the immediate couple of next few months or quarters. Our goal, of course, is to generate cash and pay down that debt. We have some very minimal amortization payments that we will make, but our goal internally is to generate cash flow and to phase that down a little bit more rapidly than that. As far as refinancing in the near-term, that is not really our on our radar at this point.

Okay. All right. Thanks a lot guys.

Thanks, Matt.

[Operator Instructions] Our next question comes from Paul Coster with JPMorgan.

Hi. This is Paul Chung on for Paul Coster. Thanks for taking my question. Just want to talk on the cross-selling opportunities I know it is early days. Can you confirm any benefit if at all during the quarter from Viasystems, channel partners and can you expand upon which end markets do you see the most potential for personally? Thanks.

Sure. Your first statement is actually correct. It is early for us to really talk to dollars at this point. As you can imagine the sales cycle, in most cases it is the multiple monsters qualification involved that can sometimes take up to half a year or so. It is difficult to talk in terms of numbers as yet. Ask me again next quarter, but what I can say is there are few areas where we are seeing real opportunities. One area to highlight is, automotive and there is as we had hoped quite a bit of interest from our customer base and what the legacy TTM brings to the product offering in terms of advanced HDI capability and rigid-flex and those are areas that are growing particularly in infotainment applications in automobiles for the customers, it is a relief to be able to source from the same vendor for your critical, highly reliable boards as for your HDI boards so there has been a positive reaction there to our ability to provide a stronger breadth of offerings. I would also highlight in the networking telecom area, actually with our E-M Solution business, the legacy TTM at a backplane assembly capability. Viasystems is a much more complete E-M Solutions offering. We are getting quite a bit of interest from the legacy TTM customer base there and turning to our broader product offering, so those are two areas that I would highlight and I am sure our sales force actually has been turning them up very quickly, so we have been selectively as an organization looking at how we can respond. The real focus for us is, job number one is to execute on existing customers' existing orders, make sure that we do not drop the ball during this interim period and then ensure that we are delivering on potential revenue upside opportunities.

Great. Thank you. Great quarter.

Thank you.

That does conclude the question-and-session. I will now turn the conference back over to Management for any additional or closing remarks.

Sure. This is Tom Edman. I will just a wrap this up. We are looking forward to seeing many of you in Boston or in Arizona in the next several months and I would just like to emphasize again that we are really thrilled with the Q2 results. We believe we are positioned for a strong third quarter here as the combined organization. As we continue to focus on our strategic priorities as a company, building on technology leadership, caring our advanced technologies into the new markets that have opened up for us, generating strong cash flow from de-levering that balance sheet and then starting to deliver on synergies. We are thrilled with where we stand that at this point and look forward to speaking with our investors again in the next few months. Thank you.