Good day and welcome to the TTM Technologies Inc. Q3 Earnings Call. At this time, I would like now to turn the conference over to Sameer Desai, Senior Director of Investor Relations. Please go ahead.

Thanks. 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 our 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 third quarter 2017 conference call. I’ll begin with a review of our business strategy, including highlights from the quarter, followed by a discussion of our third quarter results. Todd Schull, our CFO, will follow with an overview of certain key balance sheet and cash flow metrics, our Q3 2017 financial performance and Q4 2017 guidance. We will then open the call to your questions. Revenue for the quarter was $666.8 million, above the midpoint of guidance and growing 4% year-on-year, representing the fourth consecutive quarter of organic year-over-year growth. In addition, this was the highest revenue third quarter in the history of the company. We also demonstrated solid operating results with non-GAAP operating income of above our expectations for the quarter. Non-GAAP EPS of $0.32, was negatively impacted by approximately $0.06 of non-cash foreign exchange loss due to the weakening U.S. dollar. Absent this impact, we would have exceeded the high end of our guidance. The third quarter results validated many of the elements of the strategy we’ve communicated over the past year. First, the diversification of our end-markets helped to reduce quarterly volatility. 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. Of particular note, we achieved record program backlog in the aerospace and defense market. Second, the automotive market continues to be a core growth driver due to increasing electronics content, as well as the adoption of advanced technologies. We see four key mega trends driving automotive content growth, one, vehicle safety and autonomous driving, number two, increasing adoption of hybrid and electric vehicles, number three, advanced infotainment and number four, increased connectivity. In previous calls, we have stated that market forecasters expected…

Thanks, Tom and good afternoon everyone. We had a solid operating quarter in Q3. Let me just summarize a couple of the highlights. Revenue in the third quarter of $666.8 million grew 4% year over year and represents an all time high for the third quarter. Non-GAAP operating margin was 8.3%, exceeding expectations. Non-GAAP EPS was $0.32 cents in the third quarter at the midpoint of guidance, notwithstanding the negative impact of $0.06 per share resulting from $7.4 million of unrealized non-cash foreign exchange loss, due primarily to the depreciation of the U.S. dollar versus the Chinese currency. Excluding this impact, EPS was $0.38 above the high end of the guided range. We generated $85.7 million of adjusted EBITDA. And last week we completed a debt refinancing, whereby we replaced our term loan B which had an interest rate of LIBOR plus 425 basis points with a $375 million high yield bond with a fixed rate of 5 and 5/8 [ph] percent in a $350 million term loan B with an interest rate of LIBOR plus 250 bps. The net effect of this transaction was to reduce our cash interest expense by $4 million annually, while fixing a portion of our debt. On to the details. For the third quarter, net sales were $668.8 million, as compared to net sales of $641.7 million in the third quarter of 2016. And compared to second quarter 2017 net sales of $627.2 million. The year over year increase in revenue was across most of our end markets, led by growth in our computing, automotive and aerospace and defense end markets, partially offset by lower revenue on our networking communications end market. GAAP operating income for the third quarter of 2017 was $44.1 million, compared to $50.2 million in the third quarter last year…

Thank you. [Operator Instructions] And we can take our first question from Stephen Fox [Cross Research]. Please go ahead. Your line is open.

Thanks. Good afternoon. First question was on automotive. So can you talk a little bit more about the growth there in terms of how it affected your mix? It seems like you now have a large customer in the auto that's new. Is that mix continue to be negative to gross margins going forward, like what type of course would you expect from that and how. And also can you talk about just generally the growth that's been driven in the backlog electric [ph] vehicles and chargers things like that to next year?

Okay. Yeah. So let me - this is Tom by the way. Thanks for the question Steve. Let me let me start with the situation on the customer front. I think you were referring to our top 5 customers is the fact that Tesla is on - was on the list, it doesn't mean that that's a new customer at all, just means that they were in the top five this last quarter. So as we look forward, certainly the content in electric vehicles is higher than standard vehicles. That's a positive from TTM perspective. Certainly use in autonomous driving capability, some of the other electric vehicle areas where you're looking at dense circuitry demands leads to demand for HDI, as well as RF boards. And that's again a positive from a PCB content standpoint. Certainly those are areas that we are focused on. Overall, we were very encouraged with the announcement, this was a Bismarck [ph] data point that came out where they did move their projections for content and PCB at $62 per vehicle at the end of this year and then $75 by 2020. We had talked with our investors on the - fact that we thought that was - that that was expected. And let me correct that was actually an NTI forecast not Bismarck. But that was very encouraging. And overall of course, we are supported here by longer term trends. And in terms of the mega trends that I spoke about earlier. We’ll see those continuing, we see electronics content continuing to be driven. I think the forecasters now are catching up with the reality. So bodes well for growth. And then just as a as a reminder, you know, if you if you look at our growth this year we are still expecting to be at the high end of that 5% to 8% projected growth rate for automotive. So again good - nice backdrop there.

That's helpful. And then just to be clear though, there is an electric vehicle related market demand out of your electromechanical business is that correct?

Yes, absolutely. And so as we look at definitely the overall automotive piece and PCB both impacted by electric vehicles as well and that electric vehicle piece in our EM solutions business has a nice broad brush of customers like electric vehicle customers, China and non-China.

Got it. And then just as a follow up, if you could talk a little bit further about seasonality in the cell phone market. So obviously, it's a little different this year like you pointed out, but does that have any implications beyond this quarter that you could share with us in terms of how it may be seasonality is different it first half? And along the same lines, can you just confirm that your own ramps, in terms of your yield et cetera to you large customer went off as you would have expected this past quarter and going forward?

Yeah, I think – let me start with the second part of the question. In terms of the yield ramp, as we reported last quarter, the yield - the ramp itself did start later than it has in recent years, more similar to what we saw with the iPhone 6 several years ago. That ramp did start late. Therefore we moved up that yield curve later in the quarter than expected. And as you remember we encompass that in our forecast for the third quarter. What I can say is that we were encouraged by our yield performance, in fact, did better than we had forecasted in the third quarter. We're continuing to work on yield improvement here as we go into the fourth quarter. We're very much heads down in terms of focusing on output and maximizing our output capabilities. And as in past years what is the similarity here will be that, we expect really not to get a glimpse into the sell-through until mid December timeframe. And so how that carries into next year, right now it's difficult to estimate, what I can say is that, you know, it did start - we started a little bit later than expected this year. The only sort of similar data point that I can point - sort of point you to is the iPhone 6 and in that case certainly demand carried over into Q1 and even into Q2. Now we'll see how that cycle carries out this year.

Great. Thank you very much.

Thank you, Steve.

Thank you. We can go next to Matt Sheerin [Stifel]. Please go ahead. Your line is open.

Yes, thanks. Good afternoon. Just following up on Steve's question regarding the cellular and smartphone business and margins, you talked about yields improving and profitability should be improving there too. But if you look at your guidance it implies that operating margins will be down somewhat year over year. I know last year you had a lot of things go right, you had mix in your favor and other issues. But at these revenue levels, do you expect to be able to get to 11% plus operating margins at some point?

Yes. So I'd also remind you all - you know and this again below the line, that last year we also had $0.07 [ph] of FX and other that were favorable. So - but as you look at the operating line and specific to cellular there's no question we're in a technology transition here, and it's a large technology transition. We've talked about the fact that means we're on a steep yield curve, as we move in and then of course, we're starting a little bit later this year than we haven't in the last several years. So that's moving up that yield curve. Absolutely critical and improving our profitability. We're making very good progress there. We're anticipating that that progress will continue in the fourth quarter. And as we become more comfortable with this new technology node then you know, we foresee again bringing that operating profit, continuing to improve it going forward, as we work with this AMSAT [ph] technology. And while I let Todd cover the overall operating margin.

Yeah, I would just add to that. So when you look year over year Matt, the other thing that’s kind of we're battling this year is softer revenue or softer market conditions in our networking and communications end market and we have a few plants that are primarily focused in those end markets. And so obviously they have a bit more of a challenge this year than they did last year. So those are two major factors. The market – end market condition and network communications, as well as the technology transition that Tom was talking about and how we’re progressing in our profitability model there through better yields. Those things are different this year. Now, will those changes going into the future. We still have as a target our operating model of a 10%, our operating margin average for the year. And of course, we know that Q4 tends to be our best quarter of the year because of the seasonal ramp. So naturally it would be above - you would expect it to be above that average. We're not there this year, but we certainly have the expectation that the business model itself is capable of getting it better, as we climbed through these two challenges that we just talked about.

Okay. Thank you for that. And just let me sort of dovetailing on your comments on the networking and communications weakness, it looks like the year over year declines are going to be worse in Q4. I know we're sort of in the in the middle of or between the 4G and 5G and I know you've talked about you know volumes not really playing out there for a couple of years. But do you get a sense that this segment both networking and coms together will bottom at some point, where you're more flat and if not are there cost - things that you can do in terms of lowering your cost structure or moving facilities or things like that?

Yes, so the telecom side and I'd say that this is albeit I’ll start with a little bit of encouragement actually. On the telecom side and we talked about last quarter, I characterize telecom sort of bouncing along the bottom and I think you know sequentially seeing our telecom side of that business come up in this last quarter, that's at least good news from a standpoint of seeing it. You know, I think we've hit - certainly hit bottom and we're now starting to see you know, some relative improvement. I don't expect that to be a major by any means, where I do expect that that shift to come in telecom will be with 5G. And as I've said before we see 5G coming - you know starting to play into our mix from a prototype - prototyping standpoint next year. But really not hitting - really not hitting volume until 2019 into 2020. On the networking side and this is where I I'd say we were a little surprised by the softness. I still view that as more of a short term phenomenon. It was related you know, we've just seen enterprise spending come down. I think the longer term trends there are positive. They're driven by data traffic. I think that's going to drive networking equipment. Certainly the service provider demand should strengthen. Going forward that will enable, that will help our customers and in turn help TTM. So on the networking side, I view it again as more of a temporary situation. In terms of how are we responding, Matt, the good news there is we were already on track to shift part of our China footprint towards volume requirements on the MII side, the medical industrial and instrumentation side. We have that - on that path. We continue to be on that path. That's really where we're taking our footprint. And one of our plants that was very involved in this area into more and more volume requirements there. And that will be our direction, that will leave us with really 2 volume facilities for networking communications in China. And then our U.S. footprint support for prototyping and pilot production.

Okay. Thank you very much.

Thank you.

Thank you. And we go next to Sean Hannan [Needham & Company] Please go ahead. Your line is open.

Yeah. Thanks for taking the questions here folk. So just wanted to see if I come back really quick around the yield topic. Tom you acknowledge that this is certainly going to be a - it's a steep yield curve as you work through this year. Just try and better understand now that we're a little further on down the path. Is there an opportunity where you folks you know could be able to hit say target or more normalized yields perhaps at some point into the March quarter, is there a greater level of confidence of being able to accomplish something like that?

Yeah, I think Sean, there is no question as you - as we become more comfortable with the technology transition that are confidence clients and that you know - I think that that has happened in the past, as we commercialize the advanced ATI technology, we saw the same kind of thing over the course of one year cycle and then going into the next year we’ve gained quite a bit of confidence. And certainly that's the case here as well. We're just now through our first quarter of ramp, so it's too early to say you know, where we’ll pop out, but certainly we've got a critical - we've taken a critical step as TTM and in terms of making that technology transition, initiating it, starting to climb up that curve and to be ahead of - a little bit ahead of plan that's all good news and we'll see where we can take it from here.

That’s great to hear. Okay. And then separately, one of the segments that you would mentioned a little bit earlier, in terms of getting some strong performance within industrial, also lumped into that group, I think you have medical, where you're playing into those markets and just want to see if we could get a sense of how you feel the cadence of the business going into that segment grouping, how that feels at this point based on prior activity for new programs and wins and designs going into some of those efforts. Clearly there are some longer lead times there, so hoping that there might be a little bit of visibility or viewpoints you could share with us here?

Yes, so you're right to point out at MI&I is a very mixed segment, when you think about the different drivers and what we're seeing you know, the instrumentation as an example, the last I under and MI&I is an area where you see quite a bit of you know, fluctuation, it's been a area of some strength here, as semiconductor capital equipment has been you know, demand has been strong. But also an area that's very dynamic and certainly as we look at Q4, we're seeing that a little a little bit of softness there. The balance industrial improvement we saw that in the quarter, good strength in industrial. We are seeing that down-hole market come back a little bit. That's been a positive, just as we forecast to start to see some strength there in the back half of the year that has happened. And I would expect that to carry forward. The medical side, we're very excited about and that - and why say that is because it's one of those areas where our customers can range from start up to a very large medical instrumentation company. And with that kind of breadth and the number of customers in this area, we're able to service that you know, that initial start up with what we do very well in North America in terms of design, support, really engineering support, carrying into prototyping and pilot and we now have that volume answer for that customer as they grow into as their volume growth. If they decide to keep it onshore, we also have volume answers for them in North America. So its really for us a very exciting area. I think the medical area has been growing on the high end of that 4% to 6% that that the industry forecasters are projecting. And again it's an area we feel we've got the right solution too. So that gives you – that’s a breakdown of the MI&I.

That's very helpful. And if I step back and think about that in aggregate, it would seem to me and tell me if the logic is incorrect that on the performance you have as an opportunity for that segment should be able to - we have an opportunity for some acceleration as we move into ‘18 here. Is that a fair thought at this point in time?

I think that's fair thought, especially when you think about where we're coming from, because you know this year with the first half of the year being relatively weak on the industrial front. If you start looking for it in ’18, I'd see you know, at that point the - we feel much better about certainly moving up from that level and moving back towards that 4% to 6% that is being projected by Bismarck.

That's great. Thanks so much.

Thank you.

Thank you. [Operator Instructions] We can take our next question from Paul Coster [JPMorgan]. Please go ahead. Your line is open.

Hi, thanks. This is Paul Chong on Coster. Thanks for taking my question. So on the lower ramp in 4Q, did I hear you correctly, did you say 27% of revenue?

Yes, you did Paul.

Okay. So that would be maybe your highest, probably on record in that segment. Is that a function of more higher ASPs or unit driven?

Yes. So Good way to think, the one - so post-acquisition of the air system [ph] I think your statement is right, pre- acquisition it would have been a different story. The - with a significant technology transition like this, there is generally going to be a change in ASP and that shift in ASP would drive higher revenues, also drives higher production costs as you know. And so - so that it really does become all about that yield performance and where we're focused. But more of an ASP story there.

Okay. So the year on year decline is really from that ramp in 3Q for gross margins because your utilization rates look like they were - they're actually up here. So is that technology transition occur?

Yeah, that's correct. We're going through that big technology change and as Tom mentioned earlier you know, we're developing our skill set with it and it grows you know it grows every week. We're pleased to say that we exceeded our expectations in the third quarter, but we still have a ways to go. We're not kidding ourselves. There's room to improve here and we need to improve. So we have set some high goals for ourselves and we're driving towards that.

Okay. And then your opportunity beyond Apple, can we expect you know, attempt to leverage with expertise and maybe expand materially in the Android platform?

So the technology itself allows our customers to move there - to narrow their line and spacing and to move below 30 micron lines is basic. So that enablement and you think about it in terms of circuitry density right, allows our customers to build thinner, lighter product and to populate the component density or increase component density. So that characteristic of course is attractive to other customers in the cellular area and certainly it's attractive to other customers and in different end market. So I would say that you know, I would look at this as being similar to the advanced identity interconnect technology and that it enables capability that our customers across our end markets will be looking for long-term. And the question always is how you know what is the rate of adoption. How does the - how robust is the circuitry becomes critical as well. And so there will be a number you know - of course they'll be passed and qualifications going forward that will determine that rate of adoption by our customers.

Got you. And then last question from me is, in the aerospace segment it looks like they're on track to the high single digits for the fiscal year. How should we think about this segment longer term, especially in fiscal year ‘18 as you're hitting a tough comp and what you expect to drive that growth there? Thank you.

Sure. Thanks, Paul. Started out with the backdrop, the budget certainly the DOD budget request is up 7% from fiscal year ‘17. I think the climate in terms of support from Congress is very positive, that spending is certainly going to be concentrated in favorable areas from a TTM perspective around modernization of our armed forces. And then also in areas where we have particular strength. And to talk a little bit more about that, if you think about surveillance and communication areas. RF comes into play there, very important to TTM as a core technology. As our customers look at increasing - again increasing their circuitry density that leads to HCI demand and as customers looking at modernizing older analog platforms, generally looking at moving from a wire cable kind of connection into flex, rigid flex requirements in order to accommodate spacing requirements and to improve overall digital design. So those are all positive aspects that come with modernization. So we've got a nice favorable backdrop here and specific programs and breadth of program programs that - there's over 80 programs at this point that we're involved in. So a nice breadth of programs, programs that are moving in the right direction. And so - and then I'll just end with a comment. I think the overall program backlog being at record levels $220 million provides further evidence of the momentum there. So we're very encouraged about the support that we can provide our customers here in the aerospace and defense segment end markets.

Great. Thank you very much.

Thank you.

Thank you. And it appears we have no further questions at this time. I can turn it back over to you speakers for any additional or closing remarks.

Sure. I'll close by summarizing a few of the key points that we made earlier. We delivered solid results in the third quarter of 2017. We delivered revenue and operating income above expectations. Our goal is to continue to improve our operating and financial performance in the coming quarters. I'd like to thank our employees, our customers and our investors for your continued support. Thank you and good-bye.

And this does conclude today's call. Thank you everyone for your participation and you may disconnect at any time and have a great day.