Ttm Technologies Inc (TTMI) Q1 2026 Earnings Call Transcript

Good day, and welcome to the TTM Technologies Q1-2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star-11 on your telephone. You will then hear an automated message advising your hand is raised. To which are your questions, press star-11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Sean Hannan, Vice President of Investor Relations. Please go ahead.

Greetings, everyone. Welcome and thank you for joining us today. I'm Sean Hannan, Vice President of Investor Relations for TPM. With me on the call are Edwin Rocks, our President and Chief Executive Officer, and Dan Bailey, our Executive Vice President and Chief Financial Officer. Before we get started, I'd like to remind everybody that today's call contains forward-looking statements, 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 risk factors we provide in our filings with the Securities and Exchange Commission, which we encourage you to review. These forward-looking statements represent management's expectations and assumptions based on currently available information. GTM does not undertake any obligation to publicly update or revise any of these forward-looking statements whether as a result of new information, future events, or other circumstances except as required by law. 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 reconciliations between GAAP and non-GAAP measures included in the company's earnings release, which is available on the investor relations section of TTM's website at investors.ttm.com. We have also posted on the website an earnings presentation that we will refer to during our call. Here is Edwin.

Thank you, Sean. Good afternoon, everyone, and thank you for joining us for our first quarter 2026 conference call. At TTM Technologies, we are focused on designing and manufacturing complex products and solutions in two strategic directions the first is advanced interconnect which includes highly complex printed circuit boards substrates and advanced packaging the second strategic direction builds on our advanced interconnect technology to design and manufacture sophisticated modules subsystems and systems examples of this include our rf modules thermal and power management systems edge and ai processing products as well as complex subsystems and fully integrated mission systems we believe the future of electronics lies in speed to market high reliability and efficient technology integration the marketing we do business continue to demand highly complex technology solutions in an increasingly compact size and footprint our strategy is to stay at the cutting edge of advanced interconnect technologies through innovation and continue to move up the value chain into complex modules and subsystems that combine sensors actuators RF and photonics we engage early with our customers to ensure alignment on product developments and speed to markets while also enabling optimal management of their complex supply chains from a demand standpoint we are experiencing healthy multi-year tailwinds due to our participation in two key mega-trends currently driving economic growth artificial intelligence and defense we previously previously stated that approximately 80% of our net sales are related to these two mega-trends and that this puts us in a unique position to benefit our investors our ability to seize these organic growth opportunities requires our continuous focus on technological technological innovation, as well as expanding our capacity across our strategic footprint. We are further investing capital and resources to take full advantage of these opportunities today and in the future through our global footprint, which offers our customers manufacturing options across 24 sites located in China, Malaysia, Canada, and the United States. We stand well positioned to support this growth across our end markets, and we are tracking well ahead of our previously communicated plan to grow revenues between 15 to 20 percent per year for the next three years and to double our earnings from 2025 to 2027 which were goals that were reiterated on our february 4th earnings call in our commercial segments we are highly focused on supporting the demand wave of artificial intelligence in the data center and networking end market where customer demand has materially accelerated we are also focused on evolving opportunities in the use of automation and ai in our medical industrial and instrumentation end markets while we remain strategically positioned in automotive where our highly valuable solution designs are positioned to benefit from competitor consolidation and have additional transfer application into other markets. In our aerospace and defense end markets, we continue to excel with our leading position in advanced interconnect products, and we work to expand our product offerings in integrated electronics, including modules, subsystems, and full mission systems. Recently, we were proud to be a participant in the success of Artemis II mission with our microelectronics, PCBs, and assemblies for both the Space Alliance vehicle and the Orion crew capsule. As for this current state of the defense budget, as well as the geopolitical environment considering the conflict in Iran, our solutions are ever present in the categories of advanced radar systems, advanced jamming systems, missiles and decoys, electronic surveillance systems, and satellite and ground-based communication systems. In the commercial aerospace market, we recently won an award from an innovative electric autonomous aerospace company for light passenger travel to provide the sense-in-the-void radar system for their autonomous aircraft. I'll now begin with an overview of our business highlights from the quarter. Then we'll follow up with a summary on our Q1 Fiscal 2026 financial performance and our Q2 and Fiscal 2026 guidance. We will then open the call to your questions. We delivered an excellent first quarter of 2026 and I would like to thank our employees for delivering these results. We achieved sales of 846 million and non-GAAP EPS of 75 cents per diluted share, both above our guidance issued in early February and both all-time quarterly highs. Sales grew 30% year-on-year, reflecting continued demand strength in our data center and networking end market, driven by the requirements of AI, while our medical, industrial, and instrumentation in aerospace and defense end markets also experienced strong growth. The company adjusted EBDA margin was 15.7% in the first quarter of 2026, compared to 15.3% in the prior year, largely reflecting positive mix impacts. Non-cap EPS of $0.75 per diluted share was a 50% improvement year-on-year. The aerospace and defense end market represented 40% of first quarter 2026 sales. Sales in the aerospace and defense market grew 11% year-on-year for the first quarter. The sales growth in defense market continues to be a result of positive tailwinds in defense budgets, our strong strategic program alignment, and key bookings for ongoing programs. During the first quarter of 2026, we saw significant AMD bookings related to the ALTAMS Air Defense Radar, APS-153 Maritime Surveillance Radar, and a transportable radar surveillance system for ballistic missile detection and tracking. In addition, we continue to see an increase in bookings for restricted programs, and we also had first booking that was confirmed to support Golden Dome and the booked will was 1.1 for the quarter which led to a program backlog of 1.6 billion similar to a level a year ago we expect second quarter 2026 from this end market to represent 36% of our total sales while still delivering both year on year and sequential growth sales in the data center and networking and market represented 36 percent of our first quarter 2026 sales this end market experienced 61 percent year-on-year growth in the first quarter above our growth expectation and reflecting continued demand strength from our data center and networking customers building out the ai data centers for the second quarter of 2026 we expect this end market to represent 42 percent of net sales the medical industrial instrumentation end market represented 16 of the first quarter 2026 sales this end market saw year-on-year growth of 61 during the first quarter aided by healthy demand of ai-enabled robotics in medical automated test equipment for ai applications in an instrumentation a notable example win in the quarter was for a major continuous glucose monitoring custom product with our involvement on both the current and next generation, which will feature a materially smaller footprint and more powerful performance. For the second quarter of 2026, we expect medical, industrial, and instrumentation end markets to represent 14% of total sales growing both sequentially and year-on-year. Automotive sales represented 8% of the first quarter of 2026 sales. We continue to be very selective in this market to focus on higher value-add products that carry margin profiles consistent with our financial goals, as we also believe long-term business cycles should migrate back towards advanced capabilities. We are also supporting our Tier 1 automotive customers as they transition some of their more advanced capabilities towards products serving ancillary end markets. We expect the automotive end market to represent about 8% of our total sales in the second quarter of 2026. The overall book-to-bill ratio was 1.41 for the first quarter of 2026, with the commercial reporting segment at 1.65 and the A&D reporting segment at 1.10. At the end of the first quarter of 2026, the 90-day backlog, which is subject to cancellations, was $787 million compared to $517 million a year ago. Now, Dan Bailey will summarize our financial performance for the first quarter. Dan?

Thanks, Edwin, and good afternoon, everyone. I will review our financial results for the first quarter of 2026 that were included in the press release distributed today. Key financial highlights are also summarized in the earnings presentation posted on our For the first quarter, our net sales were $846 million, compared to $649 million in the first quarter of 2025. The 30% year-over-year increase was due to continued strong growth in our data center and networking, medical, industrial, and instrumentation in aerospace and defense end markets, partially offset by a more modest than anticipated decline in our automotive end market. it. Gap-operated income for the first quarter of 2026 was $72.4 million, compared to Gap-operated income for the first quarter of 2025 of $50.3 million. On a Gap basis, net income in the first quarter of 2026 was $50 million, or 47 cents per diluted share. This compares to Gap-net income for the first quarter of 2025 of $32.2 million, or 31 cents per diluted share. The remainder of my comments will focus on our non-GAAP financial performance. Our non-GAAP performance excludes M&A-related costs, restructuring costs, certain non-cash expense items such as amortization of intangibles, impairment of goodwill, stock compensation, gains on the sale of property, unrealized gains or losses on foreign exchange, and other unusual or infrequent items. We present non-GAAP financial information to enable investors to see the company through the eyes of management and to facilitate comparisons with expectations and prior periods. Gross margin in the first quarter of 2026 was 22.3%, an increase of 150 basis points from 20.8% in the first quarter of 2025. The year-on-year increase was due primarily to higher sales volume and favorable product mix, particularly in the data center and networking and aerospace and defense end markets. Selling and marketing expense was $23.7 million in the first quarter, year, or 2.8% of net sales, versus $20.3 million, or 3.1% of net sales a year ago. First quarter general administrative expense was $49.3 million, or 5.8% of net sales, compared to $38.9 million, or 6% of net sales in the same quarter a year ago. Our operating margin for the first quarter of 2026 was 12.8%, a 230 basis point improvement from 10.5% in the same quarter last year. The increase in the period was due both to the improved gross margin as well as operating leverage resulting from selling, general, and administrative expense discipline. Interest expense was $10 million in the first quarter of 2026 compared to $10.9 million in the same quarter last year. Interest income was $2.5 million in the first quarter of 2026 compared to $3 million in the same quarter last year. Realized foreign exchange and other non-operating income and expenses in the first quarter of 2026 totaled a net expense of $6.8 million as compared to net income of $1.5 million in the same quarter last year. The increased expense was driven by the weakening of the U.S. dollar, which resulted in a $7 million foreign exchange loss in the first quarter of 2026 as compared to a $0.9 million gain in the same quarter last year. Our effective tax rate was 14.5% in the first quarter of 2026 resulted in tax expense of $13.6 million. This compares to an effective tax rate of 15% or a tax expense of $9.3 million in the same quarter last year. First quarter 2026 non-GAAP net income was $80.1 million or 75 cents per diluted share. This compares to first quarter 2025 non-GAAP net income of $52.4 million or 50 cents per diluted share. Adjusted EBITDA for the first quarter of 2026 was $132.9 million, or 15.7% of net sales, compared with first quarter 2025 adjusted EBITDA of $99.5 million, or 15.3% of net sales. Cash flow provided by operating activities was $21.7 million in the first quarter of 2026, despite the increased networking capital supporting our continued revenue growth. This compares to cash used in operating activities of $10.7 million in the same quarter last Free cash flow in the first quarter of 2026 was a net usage of $85 million as compared to net usage of $74 million in the first quarter of last year, both periods reflecting increased capital expenditures in support of organic growth opportunities. Now I'll return to our guidance for the second quarter of 2026 and a directional outlook for fiscal 2026. We project net sales for the second quarter of 2026 to be in the range of $930 million to $970 million and non-GAAP earnings to be in the range of $0.82 to $0.88 per diluted In addition, considering the current demand dynamics reflected in our first quarter results and second quarter guidance, we believe that the net sales growth trajectory in the first half of the year should continue in the second half. The second quarter 2026 non-GAAP diluted EPS forecast is based on a diluted share count of approximately 107.5 million shares, which includes the dilutive effect of outstanding stock options and other stock awards. We expect SG&A expense to be about 7.4% of net sales in the second quarter and R&D expenditures to be about 1% of net sales. We expect interest expense of approximately $10.6 million, interest income of approximately $2.5 million, and realized foreign exchange and other non-operating expenses of approximately $6.9 million. We estimate our effective tax rate will be between 13 and 17 percent. Further, we expect to record depreciation of approximately $32.1 million, amortization of intangibles of approximately $9.2 million, stock-based compensation expense of approximately $11.5 million, and non-cast interest expense of approximately $0.5 million. dollars. Finally, I'd like to announce that we will be participating in the Barclays Leverage Finance Conference in Austin, Texas on May 19th and the B. Reilly 2026 Investor Conference in Los Angeles, California on May 20th. In addition, we will host an Investor Day on May 27th at the NASDAQ Exchange in New York City, as announced in our press release last week. That concludes our prepared remarks. Cherie, we'll turn it over to you for questions.

Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, press star 11 again. Due to time restraints, we ask that you please limit yourself to one question and one follow-up question. Please stand by while we compile the Q&A roster. Our first question will come from the line of Stephen Fox with Fox Advisors. Your line is open.

Great. Thank you. Good afternoon, everyone. Two questions, if I could. First of all, I was wondering if you could maybe discuss the current interest you're seeing from your customers in bringing business into the Eau Claire facility as you ramp it. What kind of customers are looking at the facility and maybe how have the discussions progressed versus a year ago? And then I had a follow-up.

Hi, Stephen. Yeah, happy to answer your question. If we think about Eau Claire, I think we're making really, really good progress there. We are identifying, let's say our anchor customers like we did in penang so that's going well uh a core team is identified to uh to see what we're going to do as you remember probably remember it's about 750 thousand square feet and we have basically three modules so we can use them for both our commercial business or our defense business so we're very flexible with that so we're identifying the customers right now we have of course our suppliers agreements in place we have we are dealing with our equipment vendors so that's going well and what I really like in that side as well is that we are going to build an R&D center

which which is not only let's say providing capacity for our customers but also being very close with them on new R&D developers great that's helpful and And as a quick follow-up, can you give us your latest thinking around the impact of higher oil prices on laminate costs and how that flows through your income statement in the coming quarters?

Yeah, Steve. So, hey, it's Sean Hannan here. So, we did have some conversations within the company here and what we're observing within our supply chain and suppliers. We are observing some pressure in the supply chain environment, as is the rest of the industry, and that can relate certainly to lead times and to pricing, but we don't think it's restricting our ability to reach our goals. In terms of a derivative specifically due to oil pricing, that's not something that we're currently observing through our questions.

Great. Thanks very much, and congrats on the great quarter. Thank you, Stephen. Thanks, Stephen.

One moment for our next question. And that will come from the line of Jim Rusciuti with Needham & Co. Your line is open.

Hi, thanks. Good afternoon. I just wanted to focus on the growth you're seeing in the data-centered networking portion of the business. Is there a way for you to give us a sense of how much of that is volume-driven versus price? And when I say price, I guess there are two components to that, right? They're the higher ASPs for the more complex boards and maybe just higher pricing in general. So I'm just wondering if you can maybe drill down a little bit more on that.

Yeah, Jim, I'm happy to do that, and again, good to meet you again. First of all, I think, before we get to the ASP and the volume aspects, let's go back to the visibility first. I think our visibility is still, let's say, for normal order, still within the quarter. As you know, we are doing some larger order for larger players here where we have a visibility of, let's say, a year. And we still have our strategic alliance with these top customers. And these are, let's say, in the multi-year regime. That is, let's say, the whole point with respect to complexity. These boards are getting more and more complex. We spoke in the past about the number of layers. You know, we can go to 80 layers, we get 100 layers, even 140 layers, you know, which is really the sum. And then, of course, we have these asymmetrical panels as well, where we distinct the power from the signals. So that's going very, very well. Because of that complexity, our ASPs are going up, let's say, a factor of four, maybe a factor of eight. But I hate to talk about ASP because it's basically the complexity. It's basically the complexity of what's going on. Then the volume aspect of it. Yes, there is more volume. There are more panels. But also, if you look at volume, if you want to create a more complex panel, you need more cycles in the facility to build that panel. That's also a volume aspect. So if you, let's say bottom line, bottom line, if you look at ASP versus volume, yeah, it's mostly ASP, but it still has a big effect on the facility because complex panels require more cycles in the facility. Hopefully that answers your question.

It does help. And maybe one quick follow-up. I wonder if you can give us an update on how the ramp is going in Penang.

And Dan, maybe if you can give us some sense as to what kind of a headwind it might have represented in the quarter and how you see that unfolding in Q2 in the second half. thank you yeah yeah yeah absolutely I'm I'm very I'm very happy with the the performance of Penang yields let's say are improving a lot if I if I look at these anchor customers and I pick one of them then we are seeing yields let's say in the past we saw yields about 40% last quarter now we are seeing it closer to 70 percent and 80 percent so that's that's going very well um in the past i i would say a year ago uh we we disclosed some of the break-even numbers i can tell you we were getting very close to that number so i would be very surprised let's say if q4 and hopefully earlier yeah we are in a break-even situation for for penang so that's going well um we just we we spoke about the headwinds of 160 basis points bringing that back so let's say in half to 80 basis points had been for the full year we're still on track there and again we hope to do better so again we changed the team I was there myself by the way a few weeks ago it is going very smooth it's a highly automated facility so yeah

I'm very positive Jim about that situation there and then just to clarify When you say anchored customer, is that an anchored customer in the data center networking area? Okay.

But in that facility, we also do a lot of medical industrial instrumentation business. But in this case, I was talking about one of the data center networking players.

Thank you. One moment for our next question. And that will come from the line of William Stein with Truist Securities. Your line is open.

Congrats on the great results and outlook, and thanks for taking my questions. First, I want to ask something about data center networking. Can you help us understand your size in that market relative to the market overall? Because most of this market really is served out of Asia. I think there are many investors here in the U.S. who might not appreciate that you may not be the biggest. And so, it highlights the potential for significant growth. You know, maybe almost you can take whatever you can build to. Can you maybe characterize that? And then the other question I had was about the exposure or concentration in that end market relative to the various GPU or TPU type customers and the other hyperscaler customers, maybe talk about the dispersion of or the customer concentration. Thank you.

Yeah. Thank you, Will. These are really good questions. So first of all, your first question, if you look at the size of the market, that's always a bit difficult to define, correct? It's the spend, let's say, in all these data centers, about 75% of it is still in hardware, which I really like. It's the energy component, and it's basically what we do, it's the interconnect. We are the nervous system, as you know, of all these interconnects, putting all these chips together. The market overall is a bit difficult to define in that sense, but I can tell you, we play in the high end of that market. So everything, what has to do with, let's say, more than 40 layers, and like I said in the previous question, this can go up to 140 layers, high complexity, very small pitch, that's where we play in. If I look at our competition, so thinking about Victory Giant, thinking about Woos, Unimicron, and others, let's say we are in that top four. There is a lot of demand, and we are in that top four. some of the let's say innovations some of the innovations we did let's say I'm talking about M plus M which is for instance the asymmetrical boards where power is on one side of the board and signal on the other side of the board we basically transferred some of that IP to our competition to be able to make sure that we can that we can supply as a whole business so the whole landscape is let's say five six players where we are in the top four that's that's that's about the situation of course we have a pretty unique situation here we are a u.s. player that also means that we are very flexible with with with with our location with respect to what the customer wants there we can if you want the process in China we do that we have five facilities in China we have a facility in Malaysia if you want China plus one but if these customers want to be in the US and we have 16 17 sites in the US supporting this so that's basically what's happening then you're related to your second question rekind GPU TPU XP you whatever you want to be you I can tell you we're agnostic we're agnostic for that particular situation even if it goes to to quantum of processing, QPUs, there is a lot of conventional processing required after quantum. So there is always a need for these boards. These boards for whatever customer are very, very, very similar, and the complexity is very similar. So I'm so happy to say that we are very agnostic for that situation. Hopefully that answers your question, Will.

Thank you.

Thank you. One moment for our next question. That will come from the line of Mike Crawford with B-Riley Securities. Your line is open.

Thank you. Within your aerospace and transport, how much was commercial? How much was space? And where would you expect to see space in the future, especially as compute migrates to LEO, GL, Syslin, or even moon-based space?

Yeah, Mike, that's a very clear question. If you look at the aerospace and defense, and by the way, probably saw in the in the in the in the earnings that we we did move our commercial space business from our commercial school to the aerospace and defense group and we did that for a reason because there is a lot of synergy between these these businesses and it's much much easier to put it in one business so that's what we did if you look at let's say aerospace and defense the breakdown is about 50% of the aerospace and defense business and that can be printed circuit boards can also be up the chain what we call up the chain let's say all kinds of modules or subsystems or systems it's about 50% radar related then we have about let's say 25% communication mostly communication related some guidance systems these type of things below the smaller fraction here's below 10% is munitions that's by the way that's where I expect a lot of website in the in the in the in the coming the coming period and then five percent only five percent currently five percent of our business is space and I agree with you there's a lot of room to maneuver there's a lot of potential especially with our radiation heart designs and all the other other other things we do so space is absolutely an area focus area but currently it's only

five percent of our business okay thank you Edwin and then switching gears I CapEx was high, $107 million Q1. Can you just provide any updated thoughts on where that might fall out this year and next? And that's assuming that you are not only ramping in China and Malaysia and Syracuse, but also you, Claire?

Yeah, Mike, I'll take that question. So, you know, you'll see in our 10Q when it comes out, we disclose the CapEx forecast for the year. was originally about $250 million, $240 million to $260 million. We're increasing that to $300 million to $320 million is the range that we're currently looking at. So we've accelerated some of the capital expenditures that we talked about for Asia as some of the lead times on equipment. We're starting to get indications that those would start stretching out. So we got our orders in early. We were starting to really get some of that equipment in a little bit quicker. We've had to pay deposits for that. So that's why the cash expenditures have been up a little bit higher. But as you can see in our numbers, it's also generated fast revenue for us. So we've accelerated some of that $200 million to $300 million of CapEx that I said we were going to spend in expanding Asia.

Excellent. Thank you.

Thank you. One moment for our next question. And that will come from the line of Ruben Roy with Stiefel. Your line is open.

This is, excuse me, this is Fed saying on for Ruben. Yesterday, you know, one of the major EMS guys reported, and they made mention of challenges in 40-plus layer PCBs and sort of sourcing them. You know, we've already talked about price leverage. Sounds like you have that, Edwin. Correct me if I'm wrong. I think I heard you say 8X on that. We're talking about volumes via the accelerated CapEx ramp, which sounds perhaps tied to the anchor customer. Maybe we look at perhaps the contract structures themselves and the length of contracts. You know, the update into 27 we got earlier this year was healthy and great. And, you know, curious if you're seeing contract structures extend out, as we're seeing with some of these other, you know, rack scale inputs and what that looks like in terms of securitizing supply with you being the supplier over a multi-year period, particularly as you're investing on an accelerated cadence into CapEx.

Yeah, that's a good question. Thank you. Thank you very much for the question. Yeah, if you look at contracts, it works a bit different here. I think it's all with these hyperscalers and data center and networking customers. It's about very tight relations. We have very, very tight relations. that basically means we have a lot of a lot of alignment on roadmaps or future either you think about let's say multi-layers or you think about zero stop which is basically making sure there's no antenna function in these boards uh you can imagine that everything becomes more and more complex so you get you get a lot of antenna functionality in that in that thing which you don't want so zero stop is a new thing there we spoke already about the n plus m where power and the signal is separated there's a lot of let's say material science in our boards which which makes sure that signal integrity becomes at the highest highest point i think that that's that's the key things for these for these customers you need to be the technology leader you cannot be a follower here and then the other thing is of course you need to have the capacity and the flexibility and that's what we provide let's say being in china being in china plus one in our case Malaysia and being in the US and hopefully soon in Europe so that's that's basically where we are and that's basically tied in that relation with the customers the other side is let's say the suppliers they have the same thing we have strategic alliances with all the critical components and yes of course we have contacts in place but if you have to rely on that contact you're just too late yeah it's always a matter of let's say relation and making sure you're very very relevant for that supplier, you're very relevant for your customer. So that would be my answer here.

But by the way, just to add to Edwin's answer, so, and also coming back to part of the question, so to clarify within data center and networking, we don't have just a anchor customer. I think there was a reference to an anchor customer specific to a facility being Penang earlier in the conversation, but we have about 10 very major customers within that segment. Only one is a 10-percenter right now, but we're playing with 10 substantial names.

Okay, that's great. That was actually going to be a follow-up, particularly to Daniel because of your CapEx commentary. I think last quarter, as you mentioned, we're pointing to 250 mil at the midpoint, and this quarter it sounds like 310, and you're still talking about FY27 going up, so you're talking about an incremental 120 or so million relative to at least what was signaled last quarter. So if you can point to any sort of puts and takes on the pace at which you might recognize these ramps, I don't know if you're ready to make those types of disclosures. I understand if you're not. And if you're not, the question on A&D would be, you know, you're pointing to munitions in space. Similar sort of question on contract structure. Are these procurement-based contracts whereby margins are fixed? Are these fixed firm price whereby, you know, there's potential for margin accretion? And I'll stop there.

I guess I'll first address your capital expenditure. So I'm not going to go beyond what I just said about this year, as you mentioned, And so our capital expenditures from this year is going up from, yeah, centered on $250 to now centered on $310. So the range is from $300 to $320. And so that's accelerating a little bit of what we had previously talked about over the next two years. And that's to continue to stay at pace with the demand that we are experiencing from our customers in the data center area. So I'll maybe pass it over to you to answer the other question. Sorry, do you want to repeat that second one without a comment earlier?

Andy, as far as, you know, you're talking to munitions and space, and it sounds like, Edwin, you're saying munitions might be the upside more near-term with space for a longer-tailed upside.

Yeah, absolutely. By the way, we see strong demand in general, I'd say, in our airspace and defense business, and for the obvious reasons, of course. but on the munitions side yeah if you read the newspapers there's there is you know the supply becomes more and more important and we see that we are long lead time items so the basically the primes are any coming to us let's say with respect to hey what can you do additionally for on the munitions side so and that's that's for us it's more of the same and we already do that so that's that's a very, very good thing. So, yeah, that's the answer.

Thank you. I'm showing no further questions in the queue at this time. I would now like to turn the call back over to Mr. Edwin Rocks for any closing remarks.

Yeah, thank you, Sheree. Now I'd like to close by summarizing three key items. First, we are experiencing high healthy growth. We delivered strong sales growth in Q1 of 30% year-on-year, resulting in an all-time high for quarterly revenue driven by increases in our data center and networking medical industrial and instrumentation in aerospace and defense and markets secondly our adjusted EBITDA for the first quarter of 15.7 percent has reflected strong operating performance leading to another all-time high record a quarterly non-GAAP EPS results of 75 cents per deluded share. And third, we continue to generate solid cash flows from operation, which enables us to invest in our projected continued growth while maintaining a healthy net leverage ratio of about one. In closing, I would like to thank all the employees of 3TM, our customers, our suppliers, and our shareholders for your continued support. Thank you very much and goodbye.

This concludes today's program. Thank you all for participating. meeting, you may now disconnect.