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17. TTM TECHNOLOGIES INC.

Nothing like a big acquisition to jump-start your growth.

Santa Ana-based circuit board maker TTM Technologies Inc. doubled its yearly revenue with last year’s $226 million buy of Tyco Printed Circuit Board Inc., a former Tyco International Ltd. unit.

The move pushed TTM up from No. 23 on last year’s list of the fastest-growing public companies to No. 17 this year.

The acquisition also helped TTM grow through a downturn in its industry that took hold in late 2006 and has shown some signs of easing in recent months.

“In the last half of 2006 and the first half of 2007, our industry just slipped slightly downward,” Chief Executive Kent Alder said. “But it wasn’t a real steep slope. The fourth quarter should be a little better than the second and third, but not anything that we can jump up and down about.”

TTM makes circuit boards,internal parts that hold chips and other electronic components,for networking gear, computers, medical devices and aerospace parts. The company is projected to have sales of $675 million this year.

TTM bought the Tyco unit as a way to expand beyond the computer and networking markets, where there’s constant pressure for lower prices.

The deal more than doubled TTM’s sales to aerospace and defense customers,a more stable and profitable source of work,to about a third of revenue.

Customers include Raytheon Corp., Boeing Co. and Northrop Grumman Corp.

“That is still the most healthy aspect of our business,” Alder said. “It offsets some of the commercial work. It levels out that side.”

Networking and computer customers, led by Cisco Systems Inc., still dominate at about 60%.

Alder, a vice president at Tyco’s circuit board unit before joining TTM in 1999, has had to convince Wall Street of the merits of the big buy.

Analysts and investors initially balked at the deal, worrying TTM had bitten off more than it could chew.

The deal did bring losses, restructuring and more debt.

But the company has made progress, which has been reflected on Wall Street. TTM’s shares are up about 18% for the year.

For one, Wall Street likes that the company has been aggressively paying down the debt it took on to finance the Tyco deal.

In the second quarter, TTM paid down $30 million in debt and an additional $11 million in July.

“We are down to about $109 million owed” out of $200 million borrowed, Alder said. “I’d say we made excellent progress. We won’t pay it down at that rate going forward, but we will continue to use cash flow to pay down debt while at the same time invest back into the company.”

Another plus: the smooth integration of the Tyco unit, according to analysts.

“They have done a fantastic job so far,” said Kevin Kessel, an analyst at Bear Stearns & Co. in New York. “There really haven’t been any operational miscues to speak of.”

Folding in the Tyco unit has been a long process, according to Alder.

“Prior to the acquisition, we had laid out as much foundation as we could, so we could hit the road running,” he said. “It was a company-changing event. We moved quickly and I’m really satisfied with the progress and our ability to tackle the basics of running the business.”

Plus, the Tyco buy almost instantly gave a boost to TTM’s sales.

“The deal was accretive within the first quarter,” Kessel said. “It really hasn’t been the Tyco part of the company that has slowed them down.”

TTM’s weak spot: dominant customer Cisco and other networking gear makers, which cut their buying from the company during the spring.

That appears to be turning around, according to Alder and analysts.

TTM has held its own against Asian circuit board makers by focusing on custom boards made in smaller batches, leaving bulk, commodity boards to Chinese and other producers.

The company also is looking to beef up what it calls its “quick turn” business to stay competitive.

TTM gets higher profits on specialized, small runs of circuit boards that it can turn out in less than 10 days, Alder said.

The company’s Santa Ana headquarters does most of the quick turn work.

The next step for Alder, who’s been in the circuit board industry for more than 20 years, is to scout out an Asian circuit board maker to buy.

“The missing component would be a low-cost option,” he said. “We need something that’s complementary to our facilities and that has a high-tech mix to it. We think we can have the ideal company on a global basis and compete very effectively.”

Bear Stearns analyst Kessler calls another TTM acquisition “inevitable.”

“There are not a lot (of companies) left, but I think TTM is clearly a consolidator,” he said.


THE NUMBERS

Three-year growth: 155%

Yearly sales through June 30: $559 million

Yearly profit: $30.4 million

Market value: $516 million

Employees: 4,009, 388 in OC

Company: maker of circuit boards for computers, aerospace

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