Good day everyone and welcome to the TTM Technologies Incorporated Q2 Earnings Conference Call. And now your host for today's conference Mr. Sameer Desai, Senior Director of Investor Relations. Mr. Desai, please go ahead sir.

Thank you. 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 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 Web site at www.ttm.com. I'd 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 second quarter 2016 conference call. I'll begin with a few highlights and a review of our business. Todd Schull, our CFO, will follow with a discussion of our financial performance. We will then open the call to your questions. TTM delivered strong results in the second quarter. Revenue came in at $601.8 million and was within the guidance. Non-GAAP EPS came in at $0.28 per diluted share and was above First Call consensus by $0.10 and well above the top end of our guidance. Our diversified revenue mix continues to yield benefits as improvements in cellular and communications end markets offset modest quarterly declines in the automotive and computing end markets. In addition, the aerospace and defense end markets achieved record revenues for the quarter. I am particularly pleased to highlight our strong operational execution, which drove better than expected non-GAAP EPS during the quarter. As evidence of our improved operating efficiency and synergy realization are $0.28 EPS in the quarter, was significantly better than the $0.15 EPS of the two combined companies in the second quarter of last year on 7% lower revenue. Finally, we prepaid $30 million of principal on our term loan in line with our focus on deleveraging. This is in addition to the $6.5 million of principal we repaid in the first quarter. Onto a strategic update, we continue to deliver on our strategic goals of improved business diversification, leveraging our advanced technology position, growth in the automotive market and operational excellence. I've already discussed the benefits of diversification as reflected in our performance in the second quarter. In the automotive area, the main growth driver for our business is increased electronic content due to industry focus on safety and emissions. We…

Thanks, Tom, and good afternoon, everyone. Before I jump into the details, let me summarize a few of the financial highlights for the quarter. Revenue in the second quarter was $601.8 million, up $18.5 million sequentially. But a decline on a pro forma basis from last year's second quarter of $648 million due primarily to declines in the cellular phone end market. Non-GAAP EPS was $0.28 in the second quarter. This was above the midpoint of guidance by $0.09 and above the combined EPS the two companies in the second quarter of last year of $0.15. The year-over-year improvement reflects the benefits of our diversification and synergy initiatives, as we were able to offset the negative impacts of lower revenue in our cellular phone end market at an increased share count, We achieved the non-GAAP operating margin of 7.7% an improvement from the combined 5.9% operating margin of the two companies last year. Despite lower revenues and an improvement from 3.1% in the second quarter in 2014 when we experienced a similar cell phone cycle. We generated $90.2 million of adjusted EBITDA. Cash flow from operations during the second quarter was $80.1 million, a strong rebound from the first quarter. We completed our synergy initiatives by delivering the $55 million in cost savings on schedule. We repaid $30 million of our debt in the second quarter demonstrating our commitment to deleveraging. To date now, we’ve repaid over $105 million of the debt we incurred to acquire Viasystems. So on to the details. For the second quarter net sales of $601.8 million compared to net sales of $445.4 million in the second quarter of 2015 and compared to the first quarter net sales of $583.3 million. The year-over-year increase in revenue was due to the -- due to sales from the…

Thank you, sir. [Operator Instructions] And for our first question we go to Nikhil Kumar with Stifel.

Yes, hi. Thanks for taking my question. This is Nick for Matt. Can you, I mean your guidance implied a nice sequential jump from your cellular business, I mean, could you talk about where the strength is coming from and how much is that coming from your -- one of your top customer, and how much is coming from other customers.

Yes. So, let me just talk about first of all overall cellular. I think what we’re seeing is a regular pattern for TTM whereby we have completed at this point prototyping stage and we’re now into the ramp on new product. And that will -- we expect that to continue through third quarter and fourth quarter. So certainly that's the normal situation as our customers introduce product towards the latter half of the year. And as you know our China and Korea customers also do a product introduction in the first half of the year. But what’s unusual in the second half of the year is that you really see a concentration of really everyone introducing a new product and that yields to or that brings us to an aggressive ramp starting in third quarter.

And do you expect that is trying to continue in Q4. I mean, could you provide, share any visibility on Q4?

What I would say is, I just point you to historical activity. And historically what will happen is, we’ll be working very focused on new product ramp and on improving our yield in the third quarter. That carries into the fourth quarter where we -- coming out of the third quarter we’re looking to have stabilized yield, be building into that fourth quarter. Generally our customers will evaluate the situation what they see in terms of ongoing demand having filled their own pipelines or look at ongoing demand usually around December. So it certainly carries into that fourth quarter period.

And that's helpful. And lastly on, guidance also implied like operating margin it should be around 9%. I mean, going forward do you think it's more of a function of volume or do you have more opportunities to move around your cost?

Well, Nikhil, we’ve been working very diligently since the acquisition on making sure that we realize the synergies that we envisioned when we made the deal. I think we’ve been very successful in accomplishing that. We’ve been very consistent, and I think we’ve done a good job of communicating that. You’re seeing the benefits of that flow through. Certainly there was probably one more incremental piece that we’ll see in the third quarter and that's reflected in our guidance that we’re offering, where we’re now hitting kind of the full run rate benefit in our P&L from the synergies, and that's certainly a big reason for the sequential improvement. And then the other reason on the sequential improvement is we’ve got some increased revenue volume sequentially. A fair amount of that is coming in our electromechanical solutions division which has little different margin profile of course as you know versus our PCB segment. It's about 25%, 75% split in terms of the revenue growth between those segments. And that will affect the profitability, but that factors if you’re looking at volume and the incremental kind of the last incremental step in our synergies it's really driving our improvement. To answer your question, is this sustainable? I think we’ve demonstrated pretty soundly here that it is real and it's not a flash in the pan. I mean, we live in a competitive world, nothing ever stays static and ongoing challenges and marketplace dynamics certainly will play a role in what happened. But we’ve structured or restructured the cost profile of our underlying business now to operate at a pretty high performance level. We’re very focused on operational execution. We’ve got the management infrastructure to support that. We’ve got the focus from our management team and our employees in large that are…

That's helpful. Thank you.

Thank you.

For our next question, we go to Sean Hannan with Needham & Company.

Yes. Thanks for taking my question. Nice work folks on the cost out, the execution, just a nice trend.

Thank you, Sean.

The question I have here is just getting back into the cellular market, a little bit more high level. Can you talk a little bit about where you stand today in terms of your customer diversification. I think that there are some ongoing efforts. I think some of that was alluded to a moment ago, just trying to get a sense of how to think about that over the course of the next 12 months. It seriously has been a, I think a concern among investors as we saw your stock really trading probably more so as derivatives this spring as a concern of you being customer in that space, probably much more sort of in warranty, so just an update would be helpful. Thanks.

Sure, thanks Sean. Yes, so let me talk first, I think and really what Todd just covered on, very effectively I believe is on the cost side of our operating model. In terms of the revenue side, what the acquisition has brought us as a company is tremendous diversity in terms of market exposure. That was a deliberate part of our strategy, and we now have a very well balanced portfolio in terms of what we’re looking at in end-markets and also the breadth of our technology portfolio. So if you look at the end-markets, we’re looking at cell phone being at 10% in the second quarter, sure it's moving up in the third quarter, but we’re looking at about 15% in the third quarter. That's a relatively small portion when you think about the balance of the business being 85%, a lot much of that being in industrial areas and particularly in automotive and networking communications. So, as we’ve built deliberatively we’ve now got a revenue mix that we like, it's in the right growth market. All of these markets that we’re involved in are growing long-term and have very solid projections and underlying factors behind that growth. And then as a company what we’re using the cellular phone side to do is to help drive our advanced technologies. And those of you who are involved in semiconductor industry will appreciate this. What we are seeing is lines and spacing shrinking. The cellular phone industry, smartphone business tends to drive miniaturization. That leads to new technology development. We’re on the forefront of that development with our cellular phone business and we’re taking those same advanced technologies now, taking them into automotive. I talked about the momentum we have with some of our critical high HDI accounts which again those are accounts that are working on miniaturizing their electronics and therefore have a need for this technology particularly in the infotainment and camera applications. And we’re also seeing advanced technologies now move into aerospace and defense. As that area of focus is on miniaturization, we’re seeing it in networking telecom as well. So that end-market and the work we do there really allows us to build a base that we can then move into our other end-markets, and we’re very deliberately building a strategy around increased market share, increased technology share in those business areas as they move into these advanced applications.

Yes. That's very helpful. And then, as you drill down another level deeper, within that, the context of that cellular group, is there -- there is further diversification going on there from a longer term perspective as well. Correct?

Yes, correct Sean. And yes, I mean within -- so within the cellular phone space and of course smartphone area is a dynamic area. But about 25% of our business today is, would be in greater China/Korea. And we have again been very intent on building our presence with those customers. As I mentioned earlier those customers tend to have two product introductions through the course of the year. That allows us to better handle our utilization rates in the front half of the year, helps us to move the utilization rates up in our advanced technology facilities during that period of time, and again that coupled with a longer term strategy to move the advanced technologies into new markets.

That's great. It's great balancing. All right, thanks very much.

Thank you.

[Operator Instructions] And for our next question we go to Paul Coster with J.P. Morgan.

Hi, this is Mark Strouse on for Paul. Thanks for taking our questions. So I just wanted to talk about auto real quick. So we’ve seen some of the auto OEMs report slowing growth. You guys are pointing to pretty strong 3Q, but just wanted to see beyond 3Q how we should think about kind of the cyclical aspects in the auto industry. And really how we should weight that versus your comments earlier about the increasing content per vehicle and the ASP is increasing over time?

Yes, and I think that you just hit on the key point. Of course it's very -- it's a very positive situation when unit volumes grow. We like to see unit volume grow, but the more important factor for TTM is that electronics content growth. And that electronics content growth which then translates for us into opportunities in radar, opportunities in infotainment, opportunities in electric vehicles as that area develops and then general systems opportunities. But really it's that move in terms of electronics content that drives towards miniaturization, the addition of safety systems, automated driving and electrification. These are all trends that drive demand for printed circuit boards and particularly for advanced printed circuit boards. So that's what we follow. And just as an indicator, I think the forecasters are generally looking at 5% to 7% overall growth rate for automotive PCB. We’re intent on growing at a rate higher than that because of our strength on the advanced technology side. We certainly saw that growth last year at about 10%, overall we’re looking at doing that same kind of growth this year and long-term it's our intent and our strategy to continue that trend of growing above where the industry is being forecast.

Perfect. Thank you very much.

Thank you.

[Operator Instructions] And with that ladies and gentlemen, we have no further questions on our roster. Therefore Mr. Edman, I will turn the conference back over to you for any closing remarks.

Thank you. I’d just like to close by summarizing a few of the real critical points. First, we delivered strong results for the second quarter. We beat the high end of our non-GAAP EPS forecast as well as consensus. That was based on our broad based operational execution. Second, our diversification initiative continues to reap benefit as we -- as a rebound in our communications and cellular phone end-markets offset some of the weakness that we saw in automotive and computing in the quarter that diversification strategy is critical for TTM going forward. And third, we’ve continued to pay down debt that is shown by a $30 million payment in June. That will be, we will continue our focus on cash generation going forward. I’d like to thank you; I’d like to thank our employees and our customers as well for all of your continued support. Good bye.

And ladies and gentlemen, this will conclude today's conference. Thank you for your participation. You may now disconnect.