Good day, and welcome to the TTM Technologies, Inc. Fourth Quarter and Fiscal Year 2015 Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Tony Righetti with the Blueshirt Group to review TTM's disclosure statement.

Thank you, operator. Before we get started, I would like to remind everyone that today's call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements related to TTM’s 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 filings with the Securities and Exchange Commission. These forward-looking statements are based on management's expectations and assumptions as of the date of this presentation. TTM does not undertake any obligation to publicly update or revise any of these statements, whether as a 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 statement 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 and 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 at 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 fourth quarter and fiscal year 2015 conference call. I'll begin with a review of our business strategy, including highlights from our 2015 fiscal year, followed by a discussion of our fourth quarter results. Todd Schull, our CFO, will follow with an overview of certain key balance sheet and cash flow metrics and our Q4 financial performance and Q1 guidance. We will then open the call to your questions. 2015 was an excellent year for TTM Technologies. We achieved record revenues during fiscal year 2015 and closed the year with a very strong fourth quarter non-GAAP EPS of $0.31 leading to an annual EPS in 2015 of $0.87. We also achieved an important strategic objective of our company, by closing the Viasystems acquisition on May 31, 2015. The acquisition established us as the global rigid printed circuit board leader and allowed us to solidify our technology leadership in the critical markets of networking and communications, automotive, aerospace and defense and medical, industrial and instrumentation. After closing the acquisition, we quickly embarked on the task of delivering accretive results to our investors. I am very pleased to report that we closed the year, having already announced and implemented 80% of our stated annual synergy target of $55 million. This strong run rate of synergies combined with the superior cash flow and earnings generation of our combined company give us confidence in our ability to deliver accretion in the first year following the closing of the acquisition. The Viasystems acquisition represented a critical step for TTM and achieving the three pillars of the strategy that we outlined in 2015, namely, to continue to diversify our business with leadership positions in a diverse set of markets. I am proud of our…

Thanks, Tom, and good afternoon, everyone. Tom has already outlined strategic objectives and successes of 2015; I'd like to add to that by reviewing just some of the financial successes for the year before I jump into the details of the fourth quarter. We had revenues in 2015 of $2.1 billion. On a non-GAAP basis, we earned $0.87 per diluted share. We produced EBITDA of $285.7 million. We generated adjusted cash flow from operations of $282.4 million and free cash flow of $182.7 million. The financial performance of TTM's organic business was outstanding, sales were approximately $1.43 billion an all-time high and just over $100 million better than last year. Gross and operating margins were very strong and higher than they've been in the past several years. Of course, the big event, the acquisitions of Viasystems changed our company financially as well as strategically. To complete the transaction, we issued a six-year term loan for $950 million maturing until 2021 and borrowed $80 million in our U.S. ABL. Taking on this debt increased our leverage to 3.3 times as of the end of Q4. Of course, this metric only included seven months of EBITDA generation from Viasystems. If you use pro forma numbers for the full year, our leverage ratio was about 2.7. Our goal is to reduce this metric to 2.0 over the next two to four years. With this goal in mind, we chose to structure our debt as a term loan rather than a high yield bond, allowing us to make prepayments without any penalty. The structure is covenant light with the primary covenant being our leverage ratio. Our covenant is set at 4.5 through the first quarter of 2016, and reduces to 3.75 thereafter. Our loan requires modest amortization payments, 1% in year one, 4% in…

Yes sir. [Operator Instructions]. And we'll now take our first quarter from Matt Sheerin with Stifel.

Yes, thanks. Good afternoon, guys. Just following up on just the comments that you made Todd, regarding the handset or the cellular business being down 45% or so sequentially. It looks like, if you look at other suppliers to Apple, obviously everyone was guiding down. But it looks like, this looks like the biggest decline sequentially. The timing within the supply chain of your big supplier differs by component supplier. But I'm just trying to figure out why that seems to be deeper than others. And as you look to the year, I think you said that I mean you expected - I think the comment was that you expected to grow this business but was down 32% to 33% year-over-year right out in the box here, I mean unless you have a huge ramp in the second half. It looks like that business will be down double-digits for you this year and the concern is that of the most of that is advanced technologies where you get better margins. So, the question is, A, are you going to be able to grow the business for the year and B, if not, are you going to see margin contraction in that business?

So, this is Tom. Let me answer that. I of course can't comment on others on others and on their business situation. I think you - as we emphasized, if you looked at the year-on-year growth for TTM in the cellphone business we grew year-on-year against 2014 by 43%. We had a very strong fourth quarter. Sometimes that what I point you to is potential inventory situations that are then corrected in the first quarter. And so, I think that's going to help explain any potential differences you might see, between different participants in the cellphone market. If you look at, how we're looking at the year. This was a - as you know a product upgrade cycle, what we saw this year very similar to 2014, if you looked at 2014 Q1 Q2, you were looking at sort of the tail end of a product upgrade cycle. What is very different of course is when you're looking at a new product or a major product introduction cycle and the ramp that occurs then. So as we look forward at this year we have quite a bit of confidence that as we build into Q3 and Q4 and we look at that usual seasonal turn that will be in a good position to ramp and that the demand as we showed or talked about that we'd be seeing. Again, slightly below what industry forecast look at as the longer-term CAGR at 5% to 8% that it would be below that, but that we would see overall growth. So, that's where we stand right now as we look at that particular market. And as we emphasized as what is terrific about our position now is that we've got a very strong diversified set of end markets that we're serving that really help to mitigate that seasonal Q1, Q2 effect.

Okay. I appreciate that and if you look at on the EPS guidance you are looking roughly 200-250 basis point decline in gross margin, and I understand that the negative leverage particularly the holidays in China, the handset business et cetera. But I think the whole point of doing the Viasystems acquisition was to mitigate the volatility in the margins quarter-to-quarter and here you are you have a fairly significant drop, and I understand it could be sort of one-off, because of the handset business. But as you get through the consolidation of manufacturing and the cost-cutting, are you expecting that the Q4 to Q1 swings will be less pronounced going forward or is that just hard to tell at this point?

Well, I think it's a little bit challenging. Each year is different. We are always going to have the seasonality in our cellular consumer product market segment. The trick that are one of the focus is that we've had is try to dilute that impact. So, the dollar amount doesn't necessarily change, but the percentage of that as a piece of the total pie does change. So, we are expecting some improvement and if you look kind of cycle-to-cycle over the last similar time in 2014 when you're in kind of a similar product cycle swing. The EPS impact was much more severe and we're not saying the guidance this quarter is robust or anything, we're certainly working to improve that, but we are much better than we were positioned a couple of years ago when we went through a similar cycle. We are benefiting from the synergies that we've implemented. But at this stage we are probably only seeing about half of that benefit and so the other half will come in as we projected and discussed over the last couple of quarters. We'll continue to come on during the rest of this year, and you would get the - that should provide some incremental benefit as we look at Q1 a year from now all things being equal. So, I think there is couple of things to keep in mind as you look at the guidance that's offer you.

Okay, fair enough. And then just on the networking and communications business, which sounds like it's holding up well, particularly the networking side. You're guiding at sequentially basically flattish, which seems to be a little bit better than seasonal. Why is that? Are you starting to see any signs of the Telecom 4G build out in China resume?

Yes. So what - if you look at Telecom and especially during the last year we saw Telecom drift down to closely, we traditionally talked about as being half of that networking communications market. Now, it's closer to about 40%. But if you look at the situation in China really from about mid-December, we started to see our customers come back with demand reflecting the momentum or regain a momentum around the build out in China 4G. We’ve continued to see that momentum carry into the first quarter and we do expect it to continue in the first quarter. So that’s sort have been - that is the swing factor that we’re seeing that's helping us - on the networking communication side.

Okay, great. That’s it from me. Thanks a lot and good luck this year.

Thank you.

Thank you. We’ll now move on to our next question from Paul Coster with JP Morgan.

Yeah, thanks for taking the questions. So I'm intrigued by what seems like a new product cadence and a new customer acquisition cadence. Can you just talk us through that little bit and how if it’s all you think that might benefit utilization rates in the North American facilities and ultimately gross margins for the overall company?

So with the acquisition and I think there are just a couple of points there. Clearly, the acquisition has helped us in our position particularly in the automotive area, but it's also brought us a nice strengthen in position and product offering across the board into our other end markets particularly in the networking telecom, into the MII area and aerospace and defense. So, when you’re looking at automotive, what the principal strategy for us is as I emphasized earlier is taking the TTM Technology or the legacy TTM Technology capabilities moving those into the automotive area where Viasystems has always had a very strong position and we’re finding increased traction now with our customers there. It does take usually several years to really build the volume into that area, but we’re really encouraged by the response and the interest from our customers. As you look at North America in particular that’s more about for automotive it’s a new product introduction market as it is for networking telecom and then you have the aerospace and defense component, all three of those areas as we now have increased product technology breadth and product capability, we’re looking to move utilization rates up in the facilities obviously that will also be enhanced as we complete the shutdown of our announced plant shutdowns that we announced back in September. So with the completion there we’ll see a tick-up in utilization rates, we’ll continue to look at the revenue opportunities that we’re seeing now. Aerospace and defense strength has clearly have helped there as we look at fueling those facilities.

As you increased the utilization rates are you, is there some kind of rule of thumb, we can use to determine the impact as a gross margin?

Well in North America there is a very, very correlation between utilization and profitability. As we’ve reported in the last couple of quarters some rather low levels of utilization we’ve had some of the best profit quarters in our North America operations that we’ve had in sometime. So it’s difficult to correlate that very well at all. And on Asia it’s quite a different story. More of a high volume oriented footprint utilization is a much more useful metric, and as you look at those levels, I haven’t necessarily calculated for five point change in utilization, what does that due to our gross margin that’s something to look at and I’ve just done it precisely. But there is a definite benefit to us as we improve utilization levels in Asia. And as Tom mentioned in the fourth quarter, our utilization level was down more in the mid-80s which is actually less the Q3, which is a little uncommon but still at a relatively high level and I will say that our profitability was very good in Asia for the quarter. And again what we saw and why it was maybe down a few points from where we expected - things softened a little bit in December and some of our advanced technology plans maybe a few weeks sooner than we might normally have seen in past cycles. So you can kind of wage that and engage, but I don't have a specific number to share with you at this point.

Okay. And then the remaining trend synergies are really sort of long lead time items, if I remember correctly like real estate and insurance and other cost that you manage that, is that correct?

I'm sorry, could you repeat that?

The remaining 20% of the synergies that you intend to achieve out of the $55 million relate to long lead time items such as rents and insurance, is that correct?

No, not really. We're just working down a rather methodical path. There are some efficiencies both in our cost structure in terms of looking at our staffing levels we have plans in place through the rest of the year to make small adjustments as we transition certain processes. We've also got best practice initiatives that we've identified. And steps that we're taking to take advantage of knowledge throughout the company that we can share that will provide some improvements all specifically identified that we're working. So it's not so much long lead time real estate driven as it is just actions within the operations that take a little bit of time to be able to implement. So we've - you'll see those kick in here over the next two quarters to fulfill our overall goals to $55 million target.

Okay. And my last question is as we look at the overall shape of the year, I'm assuming that we just sort to see sequential revenue and margin improvement and obviously EPS improvement sequentially. Does that align with your expectations?

I think so. Tom made comments in his script about what we think what our view is on the market in terms of the growth of the certain end market segments that we participated. If you work through the math and some of those you're going to see that we're looking at an encouraging year we're just having a pretty tough start to it. And so obviously as the revenue picture improves and as we implement the additional synergies and feel the effect of the synergy actions that we've already taken all of those will contribute to improving margins as we go forward here this year.

Very good. Thank you.

Thank you.

[Operator Instructions]. We'll now take our next question from Sean Hannan with Needham & Company.

Hi, Sean.

Yes, thanks. Good evening. Can you hear me?

Yes.

Okay, great. So I'm going to see if I can take the direction of the questions that on a little bit of a different path. The automotive space you've touched on a bit tonight certainly fit in the area of the growth focus for much of the IT supply chain. Can you elaborate for us as I know you've talked about this a fair amount really with the Viasystems acquisitions et cetera? Can you elaborate for us a little bit more in specific systems that you're seeing the growth in, certainly realizing that there is a lot more content related to safety features within the cars, within more complex infotainment. Is there way to perhaps given some bit of a sense of what specifically is a growth driver today and then also based on the long cycle of design that you typically would go through. I am sure there must be some insight that you'd have today for how perhaps that growth may make more - where it goes. Thanks.

Okay, sure. Think about, I would start with the - what are the traditional PCB uses in the car. And a lot of that has been built around engine controls around the basic safety systems. Think about it sort of the power trained transmission related area as well. What has been really starting to grow in terms of applications would be areas now around the engine. So you start thinking about first and foremost electric vehicles and hybrids and there you're now incorporating a battery. So, as you incorporate the battery, you're looking at a very different level of electronic or electronic content requirement. As you start looking at radar requirements. So now you are looking around the car and looking at sensor requirements whether those sensors are built into the mirrors or elsewhere sensor requirement again is going to require a relatively a pretty complex printed circuit board generally an RF board requirement something similar to what we would see traditionally in aerospace and defense now moving into automotive. As you look at more and more battery management power electronic requirements require very special boards, heavy copper boards and generally you are looking there at a very difficult copper layers to lay down very precise registration requirements and then the advance drivers assistant systems and infotainment you can almost categorize those together because there you are looking at requirement for it high density interconnect or HDI board and what we would classify is advance technology requirements for those cameras also those requirements for the infotainment applications. All of those non-traditional areas of the automobile or where you are seeing growth that's where the TTM and the legacy TTM capability is concentrated and often if you are looking particularly an infotainment you are looking at a slightly shorter cycle for…

That's great. And then, if I could just key on few times in mentioning you the advanced technologies obviously that's the goal and the growth focus of yours in terms of your mix and solutions. Is it appropriate for us to step back and think this is not just a TTM goal, this is not just a general direction of where some of the market is in PCBs? But instead that you have enhanced tangible programs that have longer visibility that allow you to road map you to continue growing this mix when I think about contributor sets the higher growth automotive content and so forth. Isn't it appropriate way to think about things?

That's correct. Now, what you will - as you look long term what we and as we look at our ability to capture more share of the overall PCB usage and automobile. The swing factor as you look at it is good course unit volume always difficult to estimate what that growth rate is. Much more I think we're going to have a pretty good handle going forward as we look at electronics content development in the automobile and we look at the particular opportunities as we qualify for specific models. So we're going to have visibility there. What's always difficult to estimate is okay how are those models is going to sale what is the unit volumes that's going to be ultimately associated with that model. But it certainly enhances our visibility long-term, similar to what we see in aerospace and defense, where we qualify for programs. And also more similar to networking communications where we qualify for a platform. So that's the kind of visibility that we like as a company and it also makes very good use of our capability to support the customer at the NPI stage and to take that the volume production as they go to ramp. So really nice fit with the TTM model.

Sure, all make sense. And thanks very much for all the color.

Yeah, thank you Sean.

That concludes today's question-and-answer session. I'd like to turn the conference back over to our management team for any additional or closing remarks.

Sure. Let me just, I just wanted to close by emphasizing a few of the points that --summarizing the points that we made earlier. First of all the 2015 results from TTM were strong and we made a real strategic step forward with the Viasystems; acquisition. Secondly, with the acquisition, we've got a leadership position now in a diverse set of end markets; that diversity is going to be pay off for us in Q1 and beyond as we deliver on the synergies. Thirdly, the automotive market offers real growth potential at TTM, and we are positioned to take advantage of that growth with our advanced technology platform. And finally all of these efforts are focused on generating the cash that will rapidly allow us to delever our balance sheet and repay our debt. And we will be showing investors evidence of that with the $70 million to $80 million repayment of our debt in the first quarter. We really appreciate your interest in TTM. Thank you for joining us on the call.