Good day and welcome to the TTM Technologies Q1 Earnings Call. At this time, I'd like to turn the conference over to Sameer Desai, Senior Director of Investor Relations. Please go ahead.

Thanks, John. 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, Sameer. Good afternoon and thank you for joining us for our first quarter 2017 conference call. I will begin with a review of our business strategy, including highlights from the quarter, followed by a discussion of our first quarter results. Todd Schull, our CFO, will follow with an overview of certain key balance sheet and cash flow metrics, our Q1 2017 financial performance and Q2 2017 guidance. We will then open the call to your questions. I would like to thank our employees for delivering an excellent start to 2017 for TTM Technologies. This year our facilities did an excellent job of starting up immediately after Chinese New Year, which allowed us to deliver revenues above the midpoint of our guidance and non-GAAP EPS above the high-end of the range. Revenues were $625 million growing 7% year-on-year representing the second consecutive quarter of year-over-year growth. This was the highest revenue and EBITDA first quarter results in the history of the company. The non-GAAP EPS of $0.37 grew 164% year-over-year and was the highest Q1, EPS in six years. The first quarter results validated many of the elements of the strategy we communicated over the past year. First, the diversification of our end markets helped to reduce quarterly volatility and stabilize our revenues in what was a challenging quarter in some of our end markets. On a year-over-year basis, most of our end markets grew more than offsetting some difficult conditions in the networking and communications end market. Sequentially, relative strength in our computing, aerospace and defense and medical industrial and instrumentation end markets helped to offset the seasonal downturn in the cellular phone end market and weaker conditions in the networking and communications end market. Second, the automotive market continues to be a core growth driver due to…

Thanks Tom and good afternoon everyone. We had a terrific quarter let me just summarize a few of the financial highlights. Revenue in the first quarter of $625.2 million grew 7% year-over-year and represents an all-time high for the first quarter. Non-GAAP EPS was $0.37 in the first quarter. This was above the midpoint of guidance by $0.09 and was a $0.23 improvement from Q1 last year. Our results did include $0.02 of proceeds from the insurance settlement related to a fire that occurred in our Anaheim Facility a year ago and a $0.01 impact from the delusion associated with our convertible bond. We achieved a non-GAAP operating margin of 9.8%, an improvement from 5.7% operating margin in Q1 one year ago and the highest level for any first quarter since 2011. We generated $95.6 million of adjusted EBITDA versus $74.5 million a year ago. And lastly after quarter end we made a $50 million payment on our term loan further reducing our debt and our leverage ratio. On to the details, for the first quarter net sales were $625.2 million compared to net sales of $583.3 million in the first quarter of last year and compared to fourth quarter net sales of $706.5 million. The year-over-year increase in revenue was across all of our end markets except networking and communications and was led by growth in our cellular, computing and aerospace and defense end markets. GAAP operating income for the first quarter of 2017 was $52.6 million compared to $18.9 million in the first quarter of last year and $69.6 million in the fourth quarter. On a GAAP basis, net income in the first quarter of 2017 was $33 million or $0.28 per diluted share. This compares to a net loss of $7.3 million or $0.07 per share in…

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

Yes, thanks, good afternoon everyone. Just question regarding Tom your commentary on various end markets, didn't look like any big surprises except for the networking and communications and you talked about the weakness there on the telecom side. And I remember at the beginning of the year you gave an outlook for each of your end markets for the year and I believe you are looking at sort of a flattish environment for that segment. Do you expect that even though, I know it’s going to be up sequentially, do you expect that market to be down for the year and perhaps offset by strength in other end markets.

Yes I think if you look at what -- as we look through the year and what we expect to see at this point. Our expectation is that it will be difficult to be flat or to register flat growth in that market at this point. I think on the other side, the aerospace and defense market continues to show strength and we had been saying that it would be at the high end of the 2% to 4% growth rate that the industry forecaster are projecting for that market long-term. We are now expecting that we will be above that growth at the high end of that growth rate.

So that should offset there an no real change to your outlook for the other segments.

That’s correct, the other segments, the outlook would be relatively consistent, and let me just give you a feel for that. If you start with automotive, forecasters have it at 5% to 8% growth, we believe that we’ll be in line in that area. The cellular phone business forecasted 5% to 8%, we would expect to be above that 5% to 8% rate in 2017, largely due to the strength that we are seeing here in the first half. Aerospace and defense as I mentioned above the 2% to 4% growth rate that’s projected there. Computing long-term forecasters are at 0% to 2%, we expect to be above that forecast well above that forecast. And then MII or medical, industrial, instrumentation forecasters having that at 4% to 6%. We do believe that we will be with a relative difficult comparing the first half we should follow that with a second half rebound. So somewhere slightly below that range.

Okay. And the weakness that you are seeing in the electro-mechanical segment were, it looks like you posted a loss there. Is that primarily because there is a lot of exposure to your communications and telecom segment?

It’s really two factors. That has a minor effect. The bigger effect for us in Q1 was in the automotive -- on the automotive side specifically for electric vehicles and I think we have mentioned in the past, we work very closely with a number of particularly Chinese customers in that area. A lot of them are or several of those customers are in the early stages of their ramp. And so you see fluctuations in the business and that’s certainly what we saw in Q1 and we are expecting to see a rebound in Q2. And I think Todd cover the strength of the backlog going into Q2.

Okay. And just lastly from me, regarding the strengthening balance sheet, you talked about the cash balance of 282 and Todd I think you said you pay down $50 million of the debt post the quarter still rather large cash balance here. Would you expect to continue to pay that down as we get through the year in terms of chipping away at the debt?

That’s certainly our goal, right and I think we have shown that, ever since we closed the deal I mean we are going to opportunistic and looking at opportunities to reduce the debt as we generate that cash and as we look at the different alternatives that we have. So, we made the $50 million payment here, a week and a half ago, we’ll continue to look for opportunities to do that throughout the year.

Okay, alright. Thanks a lot appreciate it.

Thanks, Matt.

And we will take our next question from Steven Fox with Cross Research.

Hello, Steve.

Good afternoon. Couple of questions from me, firs on the auto. You mentioned that you are seeing some acceleration and you mentioned a number of the long-term drivers. And I think I also heard that DB adoption is helping, but can you maybe did into little bit more into the acceleration portion how much was related to just a little bit better production rates in Q1 versus your own content gains and how are you looking at production for second half versus your own content gains?

Yes so as the way I would think about that if you look at the combination of RF and the advanced technology work that we do in automotive today that’s approximately in the 15% neighborhood. What we’re trying -- we are trying to drive that above -- over 20% that will be an indicator of electronics content growth and particular growth in some of these new areas as we push that percentage up. Certainly if you look at the short-term quarterly numbers what you’re seeing is Q1 against Q4 we were actually slightly down on a sequential basis. And then we’re forecasting strength sequentially in Q2. And as I mentioned earlier that short-term fluctuation a lot of that is just the EV demand out of China and our EM Solutions business. And then the other factor in Q1 is the Chinese New Year factor, where always production constraint in that first quarter where Chinese New Year we’ll be back to normalcy in the second quarter. So we’ll start seeing again that pick up on the conventional side there.

Okay. So just in terms of the back half of the year you’re factoring in better content on new programs or how would you describe it?

That’s correct, we would expect to see continuing growth in the new areas, they’re certainly growing at a faster rate and if you look at that overall automotive growth that’s projected of 5% to 8%. And then you look specifically at radar and at the HDI demand, you’re easily in the double-digit CAGR area. So those are the areas that grow more rapidly and as you push out into back half of the year of course we’ll continue -- we should continue to see that momentum and then into the out years as well.

Great, that’s really helpful. And then just another question on the EM gross margins you mentioned an inventory reserve can you just sort of talk about what that was about?

Sure you get fluctuations in demand, I think we saw that some of the revenue description that we gave for that business unit. And so we have some excess inventory from an accounting perspective we felt it’s appropriate to reserve for. And then we’ll try obviously we’ll continue to work really hard to recover that, but at this point it was prudent to take the reserve based on what we see today and our expectations for that particular customer.

So there is still a chance that it might not be totally obsolete?

It’s more excess than obsolete from a technical perspective.

Okay, great. Thank you very much.

Thank you.

We’ll take our next question from Sean Hannan with Needham & Company.

Hello Sean.

Good afternoon, thanks so much for taking the question here folks. First one I’d have here there are some rumors that are starting to circulate regarding a large handset customer, some of which ties to a product launch later in the year that the speculation there could potentially be some delays related to some component not really up to performance as of yet and some of that also had reference PCBs as a part of the issue. Just wanted to see if I can get some perspective around what it is that you’re experiencing what you’re observing, any color around that would be very helpful. Thanks.

Okay sure Sean so one area that I think we should just clear the air around is certainly the description of the technology transition that is occurring this year. There have been references to what I recall substrate like PCBs or SLPs as they are called. And essentially what that is, these are printed circuit boards. So this is our printed circuit board transition the referenced to the substrate is really related to the fact that we’re in the next transition we will be and the industry will be using more semi-additive process steps versus simply subtractive process steps. So certainly that does come from substrate technology that was -- where this capability was introduced including in our own substrate facility and we are scaling that up for printed circuit boards. So to give you a feel for what kind of transition is occurring that is what is occurring. It really is targeted at the requirements for miniaturization and continued shrinkage of lines and spacing in circuitry. And in order to shrink the lines and spacing, we are able to incorporate we are incorporating this mix of additive processes. So, as you know, every year we work through a transition process, what I can tell you today is that the prototyping stage has been complete for our Q3, Q4 ramp and we are now into pilot production phase. And again that standard on schedule and as with every year our goal is to maintain or improve on our existing position. We have certainly demonstrated the strong track record, we have the substrate experience that we are leveraging. We have a ability to invest as needed in the technology and we have continued to invest in technologies required. And so our intent is to continue to support or be in a position to support that ramp and certainly we are on schedule to do it. So that sort of hopefully that gives you a little bit of colors Sean about where we stand this year and certainly our Q1 results and what we are seeing in Q2 we have continued to demonstrate performance in that cellular market.

So in that sense, we are always going to have a learning curve with a new platform launch, we are proceeding for normal course in that process and from your advantage point in terms of what you are experiencing with your product and the feedback from customer. You are on schedule at least at present?

Well said. Yes that’s we are on schedule, continue to be on schedule, our focus will be on ramping to meet customer need in Q3 and Q4.

Okay, that’s helpful. And then on the aerospace and defense side of the business that was a great grower for you folks last year you talked earlier about the expectation that initially for ‘17 was a fair bit lower than what you perform that in 2016. And now quickly it starting to bump back up again. So just trying to understand what is improving that growth dynamic what’s really the driver behind that there? Thanks.

Sure. The -- what we try to give, we try to give you visibility to the overall program backlog and you are absolutely right, towards the end of last year we saw a little bit of flatness and actually a decline in the overall program backlog. And as I think we indicated then we weren’t concerned about it, there were a lot of dynamics out there with our customers and programs continue to move forward, it was just the issuance of purchase orders that was getting held up. Today I think there is a very different dynamic out there, we are seeing the program backlog move backup, we are certainly more confident in where we stand for 2017. And we are really excited about is what the nature of the programs that we are involved in and what that might mean as we go forward into next year and beyond. So again that gave us the confidence to talk about being above that 2% to 4% range in growth this year and we will see where the business carries us, we certainly still believe we are in the right programs to grow, grow successfully in that area.

Great, thanks so much for taking the questions here.

Thank you.

[Operator Instructions]. We will take our next question from Paul Coster with JP Morgan.

Thanks for taking my question, and most of them have been answered. However, I missed the utilization rate for U.S., North America, can you just repeat that please?

Sure, yes. The utilization rate for North America was 56% in Q1 that compared to about 51% in the fourth quarter.

Got it. And then the backlog, could you just give us some sense of how that breaks out did it changed significantly year-on-year or quarter-on-quarter and so what does it point to?

So, the 90 day backlog moved up to -- so it was about $414 million that compares to $374 million at the end of the first quarter of last year and $405 million at the end of the Q4. So positive, book-to-bill ratio is about 1.03. So that's positive, it certainly what it indicates is the year-on-year strength. And the year-on-year strength we're seeing particularly in that cellular phone and computing market. But those are the strong indicators as you know we'll work through more than half of that backlog in the first half of the year or first half of the quarter we work through that backlog. So it's an indicator of -- it's an good indicator of strength and certainly a nice indicator of year-on-year strength. But I wouldn't take too much away from it.

And finally the accelerated CapEx or rather the increasing CapEx some of it likely was somewhat routine that you're replacing some existing facilities. But is there anything in that might point to sustainable competitive advantage overtime that you can share?

Well, I think we talked about at the beginning of the year or in our last call actually we talked about this year was going to be a substantial increase in investment compared to 2016. A big reason for the increase is really new technology and focusing on growth opportunities or the technology and growth opportunities associated with both the cellular and as well as the automotive end markets. And we see both technology demands there and some capacity opportunities particularly in automotive. So there is a shift and I think that does provide us some advantages not every company has wherewith all that we have to make these kind of investments number one. And number one in putting these increasing our technology and keeping ourselves on that. I've often talked about being on the technology treadmill. Our vision is to be a leader in our industry from a technology standpoint. So we are always going to out-front trying to stand address of those opportunities to keep us and to give us that competitive advantage as those technologies migrate through the other markets that we participate in. So I do believe there is a competitive advantage there, it's not instantaneous it's something that we're working to grow and maintain overtime. And then the more current uptick here this quarter that we just talked about was the building opportunity we mentioned in Hong Kong, which I think over the long-term is going to give us some cost advantages. And then also we just had some additional demands that we saw in automotive which are consistent with what Tom is talking about in terms of the growth rates that we're seeing. And I think we've commented on that pretty extensively already in the call.

And the only thing I'd add Paul is the -- if you remember in Q4, actually last year we were below that 4% to 5% of revenue that we historically been targeting. So there was a good -- we had some catch up to do from a cash flow CapEx standpoint this year as well.

Very good, thank you very much.

Thank you.

And there are no more questions in the queue at this time.

Okay. Great, so this is Tom Edman I will -- let me just close it by summarizing a few of the points that we made during the call. We did delivered strong results for the first quarter of 2017, we beat the high end of our non-GAAP EPS forecast as well as consensus. Really due to solid growth and very good operational execution. I would like to thank our employees, our customers and you our investors for your continued support. Thank you very much. And good bye.

And that concludes today's call. Thank you for your participation. You may now disconnect.