Tony Righetti - Investor Relations Tom Edman - President, Chief Executive Officer, Director Todd Schull - Chief Financial Officer, Executive Vice President, Treasurer and Secretary.

David Rold - Needham & Company Matt Sheerin - Stifel Paul Chung - JPMorgan.

Good day, and welcome to TTM Technologies Inc Second Quarter 2015 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Tony Righetti. Please go ahead..

Thank you, operator. Before we get started, I would like to remind everyone that today's call may contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Including statements related to TTM 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 files with the Securities and Exchange Commission.

These forward-looking statements are based on Management's expectations and assumptions as of the day of this presentation. TTM does not undertake any obligation to publicly update or revise any of these statements, whether as the 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 statements 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 as 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 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, Tony. Good afternoon and thank you for joining us for our second quarter 2015 conference call. I will begin with a review of our business, Todd Schull, our CFO will follow with a discussion of our financial performance, review changes to our reporting structure and provide third quarter guidance for the combined company.

We will then open the call to your questions On May 31, 2015, we completed the acquisition of the Viasystems furthering our path toward building the preeminent company and the PCB industry.

The combined company is entering its third month and we are already beginning to see tangible evidence that the capabilities and the scale we now possess are allowing us to add value to our customers with a broader technology portfolio. The integration process is proceeding on track and we are excited about the opportunity in front of us.

Over the past few months, I have met with a number of our critical customers and our new employees both, in North America and Asia. The reaction from both constituencies has been positive.

Our employees are communicating very well with one another, are sharing best practices and our sales force is uncovering new cross-selling opportunities at a rapid pace. We are acting as the one TTM, which had envisioned for our organization and I thank all of our employees for embracing this philosophy.

Our message to employees and customers from day-one of the acquisition has been to remain focused on execution on behalf of our customers. We have been aided in this effort by the fact that overlap is minimum between our customer bases.

This has allowed us to really emphasize our expanded capabilities to our customers and to explore new opportunities with them. As you know, Viasystems and TTM were competitors in the marketplace prior to closing our deal on May 31st. As such, our ability to exchange information and the integration planning process was limited.

Since May 31st, we have been able to step up this effort. The leaders of our organization came together in late June to review integration timelines and plan and they will establish the working teams for each functional area of our integration. The main goal has been to come together as one TTM to better support our customer base.

One aspect of the integration will be to realize the $55 million in annualized synergies, which we have outlined to our shareholders and we have already begun implementing these synergies.

Of the original targeted annualized energy amount, we delivered $6 million in annualized synergies during the second quarter and expect to realize the balance of the $55 million by the end of the second quarter of 2016. You will see this positively impact our P&L over the next year.

Overall, I believe we have made a good start in delivering on the strategic goals of this acquisition, which are to reinforce our position as one of the largest and most diversified global PCB manufacturers with a broad technical skill set and the ability to support our customers' product lifecycles from R&D through production anywhere in the world.

To expand sales in the growing automotive segment by leveraging Viasystems' established position in core automotive applications to introduce TTM's advanced technologies and to combine our complementary businesses to better service our customers and medical industrial instrumentation, networking, communications and aerospace and defense end markets.

Finally, to build the financially accretive combination by combining $55 million in annualized run rate synergies with the already strong cash flow and earnings generation capability of the combined company and to rapidly de-lever our balance sheet.

I will now review the business highlights from the second quarter, which included approximately one month of consolidated results from the acquisition of Viasystems. Net sales in the second quarter were $445.4 million, non-GAAP net income was $14.9 million or $0.17 per diluted share, adjusted EBITDA was $59.7 million or 13.4% of net sales.

Our second quarter results were strong, with revenue in line with expectations and non-GAAP earnings at the high-end of our range. We were also pleased with organic revenue growth of 18% year-over-year for the quarter.

Our results were driven by continued broad-based demand in our cellular phone end market and strong sales across our networking customers. Operationally, yield performance was solid as volumes increased and the product mix remained weighted towards Advanced Technology products.

We remain encouraged by our product prototyping activities and believe we are well-positioned to ramp volume in the back half of the year. During the quarter, our advanced technology work which includes HDI, rigid-flex and substrate, accounted for approximately 48% of our legacy company's revenue. This compares to approximately 34% in Q2 a year ago.

We will continue to leverage our Advanced Technology capability, particularly as we service new customers that the legacy Viasystems organization brings to TTM in the automotive, industrial and networking and communication end markets. In the second quarter, our combined overall capacity utilization in Asia-Pacific was 83%.

Our combined overall capacity utilization in North America was 53%. Now moving on to our end markets, which now include the automotive end market, post acquisition we will be establishing new baselines for each end market and will make an effort to give you comparable period results for the pro forma combined company.

Therefore, today we are providing percentages of total revenue for the current quarter and both, sequential and year-over-year comparisons on a pro forma basis, which assumes that TTM acquired Viasystems on April 1, 2014. Networking and Communications reemerged as our largest end market as sales accounted for 26% of revenue during the quarter.

On a pro forma basis, Q2 sales were 25% of total sales compared to 32% of sales in the year ago period. While we experienced broad-based strength with networking customers, a pause in 4G activity hindered the performance of our telecom customers.

We believe that we are well-positioned for the resumption of 4G activity, particularly in China, which is expected late this year. We expect sales in this end markets to represent 26% of total sales in Q3. The cellular phone end market accounted for 24% of revenue in the second quarter.

On a pro forma basis, Q2 sales were 16% of total sales compared to 6% of sales in the year ago period. PCB demand remained robust from both, our major customer and other Asia-based customers as sales increased 196% year-on-year.

We anticipate that product transitions during Q3 will result in sales moderating to 14% of the total as we begin to ramp production to meet new product demand. The aerospace defense end market represented 15%, of total sales and continued to be a steady performer.

On a pro forma basis, Q2 sales were 13% of total sales compared to 15% of sales in the year ago period. On a dollar basis, revenue was relatively flat. Bookings from numerous programs across Tier 1 and Tier 2 customers were strong and are expected to contribute to improved sales in Q3.

We expect sales in Q3 from this segment to represent about 13% of total sales. The medical industrial instrumentation end market contributed 12% of total sales in the second quarter. On a pro forma basis, Q2 sales were 15% of total sales compared to 16% of sales in the year ago period.

We experienced strength across semiconductor test equipment and medical devices with weakness in the energy sector. We expect sales for this end market to represent approximately 15% of third quarter sales. Sales in the computing storage peripherals end market represented 11% of total sales in the second quarter.

On a pro forma basis, Q2 sales were 11% of total sales, unchanged from the year ago period. In the third quarter, we expect sales in computing to represent approximately 12% of sales as we ramp new products launched in Q2. Automotive end market sales represented 7% of total sales during the second quarter.

On a pro forma basis, Q2 sales were 18% of total sales, unchanged from the year ago period. Solid bookings near the end of the quarter have continued into Q3 and we expect sales to grow sequentially to 19% of total sales.

On to our customers and orders, our top-five customers contributed 40% of total sales in the second quarter of 2015 compared with 47% in the first quarter, reflecting the added diversity the acquisition of Viasystems brings to our combine company.

Our top-five OEM customers during the quarter in alphabetical order were Apple, Bosch, Cisco, Huawei and Juniper. Our largest customer accounted for 22% of sales in the second quarter. On a pro forma basis, our largest customer represented 15% of sales in Q2.

At the end of Q2, our backlog which is subject to cancellations was $403 million compared to $410.9 million in Q1 on a pro forma basis. Book-to-bill for PCBs was 1.01 for three months ending June 30th on a pro forma basis.

In summary, we are pleased with our second-quarter results and are excited about the opportunities created by the capabilities set and footprint of the combined company. I am impressed by the positive response of our 30,000 employees to the acquisition and I am looking forward to working with them to establish TTM as the true leader in our industry.

Now, Todd will review our financial performance for the second quarter..

Thanks, Tom. Good afternoon everyone. For the second quarter net sales were $445.4 million compared to net sales of $297.6 million in the second quarter of 2014 and compared to first quarter net sales of $329.2 million.

The year-over-year increase in revenues was driven by an 18% increase in organic revenue and the one-month contribution of sales from the Viasystems acquisition of approximately $93 million.

GAAP operating loss for the second quarter was $7.1 million compared to GAAP operating income of $3.2 million in the second quarter of 2014 and compared to our operating income in the first quarter of $8.3 million. On a GAAP basis, our net loss for the second quarter of 2015 was $36.6 million or $0.41 per share.

This compares to a GAAP net loss of $3.1 million or $0.04 per share in the second quarter of last year and GAAP net income of $3.4 million or $0.04 per diluted share in the first quarter 2015. Our GAAP results in the second quarter were impacted by approximately $46 million of expenses related to the acquisition of Viasystems.

The remainder of my comments will focus on our non-GAAP financial performance.

Our non-GAAP performance excludes the amortization of intangibles, stock based compensation expense, non-cash interest expense, restructuring impairment and early extinguishment of debt related costs, acquisition related costs, purchase accounting impact and other unusual or infrequent items as well as the associated tax impact on these items.

Additionally, we exclude nonoperational changes in our tax expense such as impact of retroactive changes in the tax law and non-cash discrete items. We present non-GAAP financial information to enable investors to see the company through the eyes of management and to provide better insight into the company's ongoing financial performance.

Gross margin in the second quarter was 15.5% compared to 13% in the second quarter of 2014 and 15.7% in the first quarter.

The year-over-year improvement was due primarily to increased revenue at our advanced technology plants, which resulted in higher utilization levels than in the prior year as well as increased revenue and operational improvements in certain of our plants in North America.

The sequential gross margin decrease was due primarily to the addition of Viasystems, which have lower gross margins than our existing business.

Selling, marketing expense was $12 million in the second quarter or 2.7% of net sales compared to $80.4 million or 2.8% of net sales in the same quarter a year ago and $9.2 million or 2.8% of net sales in the first quarter.

The increase in the amount of sales and marketing expense is due to the exclusion of Viasystems for approximately one month in the second quarter.

Second quarter G&A expense was $27.6 million or 6.2% of net sales compared to $21.2 million or 7.1% of net sales in the same quarter a year ago and $24.2 million or 7.4% of net sales in the previous quarter. The increase in the amount of G&A expenses was due again to the inclusion of Viasystems for approximately one month in the quarter.

The decrease in G&A as a percentage of revenue reflects the leverage gained from the acquisition. Interest expense increased to $9.5 million in the second quarter from $3.1 million in the first quarter due to the financing associated with the acquisition.

We recorded about $600,000 of foreign exchange gain in other income net in the second quarter compared to $500,000 loss in the first quarter. Our effective tax rate in the second quarter was 27%, unchanged from the first quarter. Second quarter non-GAAP net income was $14.9 million or $0.17 per diluted share.

This compares to second quarter 2014 non-GAAP net income of $3.9 million or $0.05 per diluted share and first quarter non-GAAP net income of $10.8 million or $0.13 per diluted share. Adjusted EBITDA for the second quarter was $59.7 million or 13.4% of net sales compared with second quarter 2014 adjusted EBITDA of $32.8 million or 11% of net sales.

In the first quarter of this year, adjusted EBITDA was $42.5 million or 12.9% of net sales. Moving onto our segment performance, our Asia-Pacific segment had revenue in the quarter of approximately $218.7 million. This represents an increase of $51.9 million compared to the same period one year ago and $13.2 million when compared to the first quarter.

Gross margin for Asia-Pacific segment in the second quarter improved to 14.9% compared to 10.6% in the second quarter last year. The significant improvement year-over-year was due to primarily to increased revenue in our technology plants, which resulted in higher utilization levels than in the prior year.

Gross margin declined sequentially by about 100 basis points, due primarily to our annual salary increase. The Asia-Pacific segment second quarter operating income was $14.4 million compared $600,000 in the same quarter last year and $12.8 million in the first quarter.

Our North America segment had revenue in the second quarter of $133.8 million, up $2.2 million when compared to the same quarter last year and up $9.5 million, sequentially. Gross margin for the second quarter was 18.2%. This compares to 16% in Q2 last year and 15.5% in the prior quarter.

The improved gross margin when compared to last year was due to increased revenue and operational improvements in certain of our plants in North America. The North America segment's operating income for the second quarter was $10.7 million compared to $8.6 million in the same quarter last year and $5.6 million in the first quarter.

The operations we acquired on May 31st contributed $93.2 million in revenue in Q2 at a gross margin of 12.8% and generated operating income of $4.1 million. On a pro forma basis, Viasystems' results for the second quarter were revenue of $295 million, with a gross margin of 12.8%. Historically, we have provided our business into geographic segments.

With the acquisition of Viasystems, we are changing how we manage our business and will begin to report our results in two different segments PCB and E-M Solutions electro-mechanical solutions. In conjunction with the segment reporting change, this will be the last quarter that we will provide details broken out by Asia-Pacific in North America.

To facilitate future comparisons, we are also providing you with this quarter's results broken down into these new segments. The PCB segment had sales of $417 million in the second quarter, up from $277.3 million in the second quarter 2014 and $309.8 million in the first quarter.

Gross margin for this segment was 16.1% in the second quarter compared to 13.2% in the same quarter a year ago and 16.2% in the first quarter. The PCB segment's second quarter operating income was $38.7 million compared to $11.9 million in the same quarter last year and $22.2 million in the first quarter of this year.

The E-M Solutions segment had sales of $28.4 million in the second quarter, up from $20.3 million in the second quarter of 2014 and $19.4 million in the first quarter. Gross margin for this segment was 5.9% in the second quarter compared to 11% in the same quarter a year ago and 7.7% in the first quarter.

E-M Solutions' segment second quarter operating income was $400,000 compared to $1.5 million in the same quarter last year and $700,000 in the first quarter of this year.

Corporate SG&A expense not associated with either of these segments was $9.9 million in the second quarter of 2015, $4.1 million in the second quarter of 2014 and $4.4 million in the first quarter of this year.

Cash and cash equivalents including restricted cash at the end of the second quarter totaled $171 million, a decrease of approximately $112 million from the first quarter.

Adjusted cash flow from operations, which excludes non-GAAP adjustments, was $49 million while we incurred capital expenditures in the second quarter of approximate $24 million and use $137 million, primarily to purchase Viasystems net of the cash required.

Net debt was $1.1 billion at the end of the second quarter, an increase of approximately $884 million from end of the first quarter. This increase resulted from the financing activities for the Viasystems' acquisition. In conjunction with the closing of that transaction, we entered into a $950 million Senior Secured Term Loan B credit facility.

We also put in place two $150 million asset-backed lending or ABL facilities, one in the United States of which $80 million was used to acquire Viasystems and one in Hong Kong, both to support the business needs in those regions. In conjunction with this new financing, we paid off the remaining $226 million balance of our Asia term loan.

During the quarter, we also paid off the remaining $32 million of our 2015 convertible debt. Depreciation for the second quarter was $29.8 million. Now, I would like to turn our guidance for the third quarter. The third quarter guidance includes the impact of our acquisition for the full quarter.

We expect revenue to be in the range of $640 million $680 million. As a reference, our third quarter revenue last year was $345 million. On a pro forma basis, Q3 revenue last year was $645 million. We expect non-GAAP earnings to range from $0.14 to $0.20 per diluted share. This is based on a diluted share count of approximately 100 million shares.

This compared to $0.13 per diluted share reported in the third quarter of 2014, which was based on diluted share count of approximately 84 million shares. We expect as G&A expense will be about 9% of revenue in the third quarter. We expect interest expense to total about $16 million and we estimate our effective tax rate to be between 25% and 29%.

Tom mentioned earlier that we implemented about 11% of our targeted synergy actions in the second quarter. We expect to implement an additional approximately 20% to 25% of our synergy target in each of the third and fourth quarters of this year, with the balance to be implemented evenly over the first half of 2016.

The P&L impact of the synergy actions taken in Q2 was about $0.5 million in the second quarter. In the third quarter, we expect it to be about $2 million. Thereafter, the P&L impact each quarter will approximate 25% of the synergies implemented with a one quarter lag.

As part of the process to acquire Viasystems, we are required to fair value the acquired assets and liabilities, often referred to purchase accounting. This process takes time and is not yet complete. However, we have recorded preliminary adjustments to the acquired assets and liabilities.

These adjustments are just preliminary and could change in the future. The P&L impact of these preliminary adjustments is not included in the guidance provided above.

The four major impacts of purchase accounting today are, first, inventory which was marked up by $19 million, approximately $7 million of this increase flow through our P&L in June and was excluded from our non-GAAP results. The remaining $12 million is expected to flow through our P&L in the third quarter.

The second item is property, plant and equipment increased by approximately $89 million. Most of this increase relates to land and buildings. The increased depreciation expense resulting from this adjustment was about $200,000 in June and is estimated to be about $700,000 per quarter going forward.

The third item to be impacted was intangible assets, which increased by approximately $147 million, reflecting primarily the value of customer relationships. This asset will be amortized over several years.

The increased amortization resulting from this was a $2 million hit in Q2 and it is estimated to be approximately $4.3 million of additional amortization Q3. The fourth item finally is goodwill, which increased by $298 million. As this asset is not amortized, there is no future P&L impact forecasted.

In addition to the purchase accounting impacts noted above, we offer the following additional information.

We expect to record during the third quarter amortization of intangibles of about $2 million, stock-based compensation expense of about $2.6 million, non-cash interest expense of approximately $4.7 million and we estimate depreciation expense will be approximately $39 million.

Finally, before we turn to your questions, I would like to mention that we will be presenting at Canaccord Genuity 35th Annual Growth Conference in Boston on Wednesday, August 12. At the Deutsche Bank, 23rd Annual Leveraged Finance Conference in Scottsdale on September 28th through the 30th. That concludes our prepared remarks.

Now, we would like to open the line for questions.

Operator?.

Thank you. [Operator Instructions] The first question comes from David Rold with Needham & Company..

Hi. Good afternoon. Thank you.

Just first on the segment, could you elaborate on what gives you the confidence that the telco spending in China is going to come back? Just given some of the commentary out of the supply chain? Could you remind us where the networking segment as a whole should be when Viasystems [ph] run rate as a percentage of revenue?.

Okay. Sure. Let us start with the last part of that. I think if you look at the overall run rate, we gave you the pro forma forecast.

If you look at the 26% of total sales expected in the third quarter, so that would be the combined company, you can expect that if you think back to the last year which was a very strong telecom environment then the combined company would have been up to about 32% of total sales, obviously, the most significant market for TTM.

In terms of China and telecom, of course, always what I am really relating their comments that we hear from our customers in the area, there has been a, I wound say unanticipated slowdown the environment this year, particularly last quarter and then forecasted into the third quarter.

The anticipation is that bids are going to be let or started to be let again in China in this coming quarter and that would translate into a base station demand in the fourth quarter, so that we would start to see an improvement in the fourth quarter.

With all of these things, there is a macro environment in China that I would say is not favorable right now. How the government reacts to that of course is an open question. There may be even more encouragement for infrastructure spending there or perhaps not.

At this point what I can relate to is what our customers are saying, which is they do expect the fourth quarter to improve..

Okay.

Then on the new segments that you are going to be reporting, could you just give us an update on seasonality I guess by each one I guess in your revenue cadence and kind of how that affects margins?.

Sure. The real segment that we will be looking at is new segment is automotive. If you look at automotive demand in terms of cycles, generally the summer season would be where you would see a little bit of a slowdown and then strength particularly starting to build in the fourth quarter and then into the first quarter.

As you probably understand from my remarks, we are not seeing that this year. We are seeing good solid strength continue into the third quarter, so we actually are not seeing a summer slowdown this year, at least as we see demand for the third quarter..

Okay. Then just lastly, I am wondering if you identified any potential additional cost synergies maybe beyond the second quarter 2016 timeframe and chance to kind of integrate..

Yes. We are absolutely working on that. As you can probably guess, now that the teams are able to fully share information, we have been upgrading and really at this point taking a fresh look at our plans on the integration and on synergies and continuing to update our plans there. For now, our immediate goal in the first year is $55 million.

We believe that there is opportunity beyond that and we certainly will continue to keep you updated..

Okay. Great. Thank you..

[Operator Instructions] The next question comes from Matt Sheerin with Stifel..

Yes. Thanks. Hello everybody. Hi, guys. A few questions, looking at the guidance, it looks like the operating - it implies that operating margins it is going to be down a little bit.

Is that just because of the drag of the gross margin of Via, and the fact that you are really just getting started with the cost synergies?.

I think you are right. Heavy impact is the fact that these cost synergies are just starting. Tom mentioned one of our major objectives. Certainly, we still feel very confident is that the deal is going to be accretive transaction at the end of the first year. In the first quarter, we have got a ramp up into the synergies.

We have got all net interest expense now; we have got the increased shares, so we kind of took the two hits right upfront in full force. We have got to swim our way through that with the synergy exercise, which we are very aggressively focused on here as Tom mentioned already.

You are correct in saying that, we have got a little bit a headwind that we are working through in terms of the dilution of the new business while we are ramping our synergies..

It sounds like you said that 20% to 25% of the synergies that is December quarter, right? Not September? By the end of September, so in other words, we will see that in December and then into March, so that seems to imply that you should be able to - demand being what it is in a stable or growing that you should be able to get kind of a low double-digit, kind of operating margin in the fiscal '16.

Is that fair?.

We have not projected out of the 2016 yet....

I am looking at in terms of high single-digit. Okay, that is fair..

I would like to take the opportunity just to clarify the synergy number, right, We are looking at potentially 25%, we are going to take actions on 20% to 25% of that $55 million, so pick a number, it is 10, 13, 15 something like that.

In the third quarter, that will yield benefits in the fourth quarter, so that is the one quarter lag kind of concept and just remember that if it is a full-year impact of $10 million to $15 million of actions in Q3 you get a quarter of that in Q4 and then another quarter each quarter after that.

As you build and as you think about your models going forward, make sure you kind of layer in those synergies properly. The other point I want to clarify is that we did say that we are looking for 20% to 25% in actions in Q3 and then an additional 20% to 25% of actions in Q4.

If you have add that with 11% we already took, we are somewhere in the 50% to 60% of that $55 million of actions before at the end of the calendar year, so we are not backend loading it from an action standpoint.

Then like Tom mentioned earlier, we are certainly looking to update that number as we get a little bit more into the integration planning process, which is just really just getting underway..

Okay. That is helpful.

I mean, that is coming on from both, COGs and SG&A, right?.

That is correct..

Yes. Okay. Do they fall off sort of evenly or really the [ph] COGs parts take a longer.

In other words, will that be more backend loaded than SG&A?.

At this point I would say it would be relatively equal in terms of the space. We have plans to take action on both that would impact both lines each quarter, so it is not like we are just focusing on SG&A today and deferring on the manufacturing cost structure..

Okay. On the handset business, you talked about, Tom; it moderating because of some product transitions which sounds like it is going to be down, sequentially. Typically you have been up building in advance of Q4 product demand from your customers.

Is that just because of product transition or you are seeing any kind of slowdown whether it would be from your bigger customer or other customers?.

Great question. In terms of this year perhaps you remember last year was an unusually difficult period for our cell phones in Q1 and Q2.

This year has been unusually strong period with new product introductions being highly successful, so we are coming off of a notably a strong Q2 performance in terms of unit production, which of course was excellent for us and we are very we are thrilled with that. Now, as we are going into Q3, we will be transitioning to new products.

While we are not seeing a change in the customers' forecast, what we have there is a little bit of a dip based on the new ramp as we start to ramp yields, so much less of an indication from end markets as this is the fact that we have got to be we are phasing into a new model and therefore are restarting net yield ramp cycle and that carries into Q4 and of course then you will see a gig you should again seasonally expected Q4 will be the peak and then we will see how that carries in the Q1 and Q2 next year..

Okay. Great. Just on the interest expense and the financing, Todd.

Will you be looking to go back and refinance or is that going to be sort of steady-state for now?.

I would look at that as steady-state for now. The contract that we have in place, it is just not feasible to go back out here in the immediate couple of next few months or quarters. Our goal, of course, is to generate cash and pay down that debt.

We have some very minimal amortization payments that we will make, but our goal internally is to generate cash flow and to phase that down a little bit more rapidly than that. As far as refinancing in the near-term, that is not really our on our radar at this point..

Okay. All right. Thanks a lot guys..

Thanks, Matt..

[Operator Instructions] Our next question comes from Paul Coster with JPMorgan..

Hi. This is Paul Chung on for Paul Coster. Thanks for taking my question. Just want to talk on the cross-selling opportunities I know it is early days. Can you confirm any benefit if at all during the quarter from Viasystems, channel partners and can you expand upon which end markets do you see the most potential for personally? Thanks..

Sure. Your first statement is actually correct. It is early for us to really talk to dollars at this point. As you can imagine the sales cycle, in most cases it is the multiple monsters qualification involved that can sometimes take up to half a year or so. It is difficult to talk in terms of numbers as yet.

Ask me again next quarter, but what I can say is there are few areas where we are seeing real opportunities.

One area to highlight is, automotive and there is as we had hoped quite a bit of interest from our customer base and what the legacy TTM brings to the product offering in terms of advanced HDI capability and rigid-flex and those are areas that are growing particularly in infotainment applications in automobiles for the customers, it is a relief to be able to source from the same vendor for your critical, highly reliable boards as for your HDI boards so there has been a positive reaction there to our ability to provide a stronger breadth of offerings.

I would also highlight in the networking telecom area, actually with our E-M Solution business, the legacy TTM at a backplane assembly capability. Viasystems is a much more complete E-M Solutions offering.

We are getting quite a bit of interest from the legacy TTM customer base there and turning to our broader product offering, so those are two areas that I would highlight and I am sure our sales force actually has been turning them up very quickly, so we have been selectively as an organization looking at how we can respond.

The real focus for us is, job number one is to execute on existing customers' existing orders, make sure that we do not drop the ball during this interim period and then ensure that we are delivering on potential revenue upside opportunities..

Great. Thank you. Great quarter..

Thank you..

That does conclude the question-and-session. I will now turn the conference back over to Management for any additional or closing remarks..

Sure. This is Tom Edman. I will just a wrap this up. We are looking forward to seeing many of you in Boston or in Arizona in the next several months and I would just like to emphasize again that we are really thrilled with the Q2 results. We believe we are positioned for a strong third quarter here as the combined organization.

As we continue to focus on our strategic priorities as a company, building on technology leadership, caring our advanced technologies into the new markets that have opened up for us, generating strong cash flow from de-levering that balance sheet and then starting to deliver on synergies.

We are thrilled with where we stand that at this point and look forward to speaking with our investors again in the next few months. Thank you..

Thank you. That does conclude today's conference call. We do thank you for your participation today..