Sanmina's Second Quarter Fiscal 2024 Financial Results

Published

SAN JOSE, Calif., April 29, 2024 /PRNewswire/ -- Sanmina Corporation ("Sanmina" or the "Company") (NASDAQ: SANM), a leading integrated manufacturing solutions company, today reported financial results for the fiscal second quarter ended March 30, 2024 and outlook for its fiscal third quarter ending June 29, 2024.

Second Quarter Fiscal 2024 Financial Highlights

  • Revenue: $1.83 billion
  • GAAP operating margin: 4.1%
  • GAAP diluted EPS: $0.93
  • Non-GAAP(1) operating margin: 5.4%
  • Non-GAAP(1) diluted EPS: $1.30
  • Cash flow from operations: $72 million
  • Ending cash and cash equivalents: $651 million

(1)See Schedule 1 below for more information regarding our use of non-GAAP financial measures. A reconciliation of the non-GAAP financial information contained in this release to their most directly comparable GAAP measures is included in the financial statements furnished with this release.

"Our focused execution and operating discipline yielded financial results in line with our outlook," stated Jure Sola, Chairman and Chief Executive Officer. "During the quarter, we started to see positive movement in some end-markets that have been notably depressed for the last few quarters. While there is still macroeconomic uncertainty, the team continues to demonstrate resilience. We remain optimistic that we will see sequential improvement as we progress through 2024."

Third Quarter Fiscal 2024 Outlook

The following outlook is for the fiscal third quarter ending June 29, 2024. These statements are forward-looking and actual results may differ materially. 

  • Revenue between $1.8 billion to $1.9 billion
  • GAAP diluted earnings per share between $0.95 to $1.05
  • Non-GAAP diluted earnings per share between $1.22 to $1.32

Safe Harbor Statement

The statements above including our financial outlook for the third quarter fiscal 2024 and our expectations for sequential improvement in 2024 generally, constitute forward-looking statements within the meaning of the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. Actual results could differ materially from those projected in these statements as a result of a number of factors, including adverse changes to the key markets we target; significant uncertainties that can cause our future sales and net income to be variable; reliance on a small number of customers for a substantial portion of our sales; risks arising from our international operations; geopolitical uncertainty, including from the war in Ukraine and conflict in the Middle East; and the other risk factors set forth in the Company's annual and quarterly reports filed with the Securities Exchange Commission.

The Company is under no obligation to (and expressly disclaims any such obligation to) update or alter any of the forward-looking statements made in this earnings release, the conference call or the Investor Relations section of our website whether as a result of new information, future events or otherwise, unless otherwise required by law.

Company Conference Call Information

Sanmina will hold a conference call to review its financial results for the second quarter and outlook for the third quarter of fiscal 2024 on Monday, April 29, 2024 at 5:00 p.m. ET (2:00 p.m. PT). The access numbers are: domestic 800-836-8184 and international 646-357-8785. The conference will also be webcast live over the Internet. You can log on to the live webcast at Q2'24 Earnings. Additional information in the form of a slide presentation is available on Sanmina's website at www.sanmina.com. A replay of the conference call will be available for 48-hours. The access numbers are: domestic 888-660-6345 and international 646-517-4150, access code is 35579#.

About Sanmina

Sanmina Corporation, a Fortune 500 company, is a leading integrated manufacturing solutions provider serving the fastest growing segments of the global Electronics Manufacturing Services (EMS) market. Recognized as a technology leader, Sanmina provides end-to-end manufacturing solutions, delivering superior quality and support to Original Equipment Manufacturers (OEMs) primarily in the industrial, medical, defense and aerospace, automotive, communications networks and cloud infrastructure markets. Sanmina has facilities strategically located in key regions throughout the world. More information about the Company is available at www.sanmina.com.

Sanmina ContactPaige MelchingSVP, Investor Communications408-964-3610

Sanmina Corporation

Condensed Consolidated Balance Sheets

(in thousands)

(GAAP)

(Unaudited)

March 30,2024

September 30,2023

ASSETS

Current assets:

Cash and cash equivalents

$          650,858

$          667,570

Accounts receivable, net

1,138,413

1,230,771

Contract assets

449,419

445,757

Inventories

1,383,739

1,477,223

Prepaid expenses and other current assets

75,050

58,249

Total current assets

3,697,479

3,879,570

Property, plant and equipment, net

641,008

632,836

Deferred tax assets

169,533

177,597

Other

178,243

183,965

Total assets

$       4,686,263

$       4,873,968

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$       1,443,002

$       1,612,833

Accrued liabilities

260,086

267,148

Accrued payroll and related benefits

127,168

127,406

Short-term debt, including current portion of long-term debt

17,500

25,945

Total current liabilities

1,847,756

2,033,332

Long-term liabilities:

Long-term debt

303,884

312,327

Other

207,531

209,684

Total long-term liabilities

511,415

522,011

Stockholders' equity

2,327,092

2,318,625

Total liabilities and stockholders' equity

$       4,686,263

$       4,873,968

 

Sanmina Corporation

Condensed Consolidated Statements of Income

(in thousands, except per share amounts)

(GAAP)

(Unaudited)

Three Months Ended

Six Months Ended

March 30,2024

April 1,2023

March 30,2024

April 1,2023

Net sales

$     1,834,595

$     2,320,103

$     3,709,393

$     4,675,911

Cost of sales

1,679,838

2,128,914

3,393,796

4,289,336

Gross profit

154,757

191,189

315,597

386,575

Operating expenses:

Selling, general and administrative

69,199

63,390

133,984

124,120

Research and development

6,323

6,394

12,612

11,993

Restructuring

3,274

804

5,464

1,435

Total operating expenses

78,796

70,588

152,060

137,548

Operating income

75,961

120,601

163,537

249,027

Interest income

3,412

2,539

7,069

5,472

Interest expense

(8,218)

(9,286)

(16,630)

(17,967)

Other income (expense), net

3,276

(2,768)

2,143

(9,480)

Interest and other, net

(1,530)

(9,515)

(7,418)

(21,975)

Income before income taxes

74,431

111,086

156,119

227,052

Provision for income taxes

19,122

25,779

40,446

46,631

Net income before noncontrolling interest

55,309

85,307

115,673

180,421

     Less: Net income attributable to noncontrolling interest

2,824

5,686

6,120

8,786

Net income attributable to common shareholders

$          52,485

$          79,621

$        109,553

$        171,635

Net income attributable to common shareholders per share:

Basic

$               0.94

$               1.37

$               1.95

$               2.96

Diluted

$               0.93

$               1.33

$               1.91

$               2.87

Weighted-average shares used in computing per share amounts:

Basic

55,585

58,269

56,062

57,999

Diluted

56,699

59,819

57,470

59,863

 

Sanmina Corporation

Reconciliation of GAAP to Non-GAAP Measures

(in thousands, except per share amounts)

(Unaudited)

Three Months Ended

March 30,2024

December 30,2023

April 1,2023

GAAP Operating income

$           75,961

$           87,576

$        120,601

GAAP Operating margin

4.1 %

4.7 %

5.2 %

Adjustments:

Stock compensation expense (1)

14,651

12,585

12,534

Amortization of intangible assets

249

Distressed customer charges (2)

4,299

Legal and other (3)

1,350

695

Restructuring

3,274

2,190

804

Non-GAAP Operating income

$           99,535

$         102,351

$        134,883

Non-GAAP Operating margin

5.4 %

5.5 %

5.8 %

GAAP Net income attributable to common shareholders

$           52,485

$           57,068

$          79,621

Adjustments:

Operating income adjustments (see above)

23,574

14,775

14,282

Legal and other (3)

(4,967)

(3,630)

Adjustments for taxes (4)

2,849

3,961

4,844

Non-GAAP Net income attributable to common shareholders

$           73,941

$           75,804

$          95,117

GAAP Net income attributable to common shareholders per share:

Basic

$               0.94

$               1.01

$               1.37

Diluted

$               0.93

$               0.98

$               1.33

Non-GAAP Net income attributable to common shareholders per share:

Basic

$               1.33

$               1.34

$               1.63

Diluted

$               1.30

$               1.30

$               1.59

Weighted-average shares used in computing per share amounts:

Basic

55,585

56,538

58,269

Diluted

56,699

58,240

59,819

(1)

Stock compensation expense

Cost of sales

$             4,416

$             4,050

$            4,025

Selling, general and administrative

9,984

8,340

8,304

Research and development

251

195

205

Total

$           14,651

$           12,585

$          12,534

(2)

Relates to accounts receivable and inventory write-downs (recoveries) associated with distressed customers.

(3)

Represents expenses, charges and recoveries associated with certain legal and other matters.

(4)

GAAP provision for income taxes

$           19,122

$           21,324

$          25,779

Adjustments:

Tax impact of operating income adjustments

2,611

1,951

1,288

Discrete tax items

385

(1,347)

(1,082)

Deferred tax adjustments

(5,845)

(4,565)

(5,050)

Subtotal - adjustments for taxes

(2,849)

(3,961)

(4,844)

Non-GAAP provision for income taxes

$           16,273

$           17,363

$          20,935

 

Q3 FY24 Earnings Per Share Outlook*:

Q3 FY24 EPS Range

Low

High

GAAP diluted earnings per share

$                  0.95

$                  1.05

Stock compensation expense

$                  0.27

$                  0.27

Non-GAAP diluted earnings per share

$                  1.22

$                  1.32

* Due to uncertainty regarding the timing of recognition of restructuring charges, impairment charges and other unusual or infrequent items, if any, that could be incurred during the third quarter of FY24, an estimate of such items is not included in the outlook for Q3 FY24 GAAP EPS.

 

Sanmina Corporation

Condensed Consolidated Cash Flow

(in thousands)

(GAAP)

(Unaudited)

Three Month Periods

Q2'24

Q1'24

Q4'23

Q3'23

Q2'23

GAAP Net income before noncontrolling interest

$      55,309

$      60,364

$      65,355

$      81,737

$      85,307

Depreciation and amortization

30,274

30,726

30,521

29,898

29,282

Other, net

18,634

18,185

21,947

21,174

17,075

Net change in net working capital

(31,900)

16,750

(40,966)

(76,300)

(67,086)

Cash provided by operating activities

72,317

126,025

76,857

56,509

64,578

Purchases of long-term investments

(700)

(600)

(500)

(500)

(700)

Net purchases of property & equipment

(29,611)

(34,216)

(37,803)

(52,167)

(63,458)

Cash used in investing activities

(30,311)

(34,816)

(38,303)

(52,667)

(64,158)

Holdback paid in connection with previous business combination

(8,558)

Net share repurchases

(17,477)

(115,619)

(30,397)

(52,072)

(13,376)

Net borrowing activities

(4,375)

(12,820)

4,070

(4,375)

(4,375)

Cash used for financing activities

(21,852)

(128,439)

(26,327)

(65,005)

(17,751)

Effect of exchange rate changes

(886)

1,250

(1,245)

(452)

220

Net change in cash & cash equivalents

$      19,268

$    (35,980)

$      10,982

$    (61,615)

$    (17,111)

Free cash flow:

Cash provided by operating activities

$      72,317

$    126,025

$      76,857

$      56,509

$      64,578

Net purchases of property & equipment

(29,611)

(34,216)

(37,803)

(52,167)

(63,458)

$      42,706

$      91,809

$      39,054

$        4,342

$        1,120

 

Schedule 1

The statements above and financial information provided in this earnings release include non-GAAP measures of operating income, operating margin, net income and earnings per share. Management excludes from these measures stock-based compensation, restructuring, acquisition and integration expenses, impairment charges, amortization charges and other unusual or infrequent items, as adjusted for taxes, as more fully described below.

Management excludes these items principally because such charges or benefits are not directly related to the Company's ongoing core business operations. We use such non-GAAP measures in order to (1) make more meaningful period-to-period comparisons of the Company's operations, both internally and externally, (2) guide management in assessing the performance of the business, internally allocating resources and making decisions in furtherance of Company's strategic plan, (3) provide investors with a better understanding of how management plans and measures the business and (4) provide investors with a better understanding of our ongoing, core business. The material limitations to management's approach include the fact that the charges, benefits and expenses excluded are nonetheless charges, benefits and expenses required to be recognized under GAAP and, in some cases, consume cash which reduces the Company's liquidity. Management compensates for these limitations primarily by reviewing GAAP results to obtain a complete picture of the Company's performance and by including a reconciliation of non-GAAP results to GAAP results in its earnings releases.

Additional information regarding the economic substance of each exclusion, management's use of the resultant non-GAAP measures, the material limitations of management's approach and management's methods for compensating for such limitations is provided below.

Stock-based Compensation Expense, which consists of non-cash charges for the estimated fair value of equity awards granted to employees and directors, is excluded in order to permit more meaningful period-to-period comparisons of the Company's results since the Company grants different amounts and value of equity awards each quarter. In addition, given the fact that competitors grant different amounts and types of equity awards and may use different valuation assumptions, excluding stock-based compensation permits more accurate comparisons of the Company's core results with those of its competitors.

Restructuring, Acquisition and Integration Expenses, which consist of employee severance, lease termination costs, exit costs, environmental investigation, remediation and related employee costs and other charges primarily related to closing and consolidating manufacturing facilities and those associated with the acquisition and integration of acquired businesses, are excluded because such charges (1) can be driven by the timing of acquisitions and exit activities which are difficult to predict, (2) are not directly related to ongoing business results and (3) generally do not reflect expected future operating expenses. In addition, given the fact that the Company's competitors complete acquisitions and adopt restructuring plans at different times and in different amounts than the Company, excluding these charges or benefits permits more accurate comparisons of the Company's core results with those of its competitors. Items excluded by the Company may be different from those excluded by the Company's competitors and restructuring and integration expenses include both cash and non-cash expenses. Cash expenses reduce the Company's liquidity. Therefore, management also reviews GAAP results including these amounts.

Impairment Charges for Goodwill and Other Assets, which consist of non-cash charges, are excluded because such charges are non-recurring and do not reduce the Company's liquidity. In addition, given the fact that the Company's competitors may record impairment charges at different times, excluding these charges permits more accurate comparisons of the Company's core results with those of its competitors.

Amortization Charges, which consist of non-cash charges impacted by the timing and magnitude of acquisitions of businesses or assets, are also excluded because such charges do not reduce the Company's liquidity. In addition, such charges can be driven by the timing of acquisitions, which is difficult to predict. Excluding these charges permits more accurate comparisons of the Company's core results with those of its competitors because the Company's competitors complete acquisitions at different times and for different amounts than the Company.

Other Unusual or Infrequent Items, such as charges or benefits associated with distressed customers, expenses, charges and recoveries relating to certain legal matters, and gains and losses on sales of assets, are excluded because such items are typically non-recurring, difficult to predict or not directly related to the Company's ongoing or core operations and are therefore not considered by management in assessing the current operating performance of the Company and forecasting earnings trends. However, items excluded by the Company may be different from those excluded by the Company's competitors. In addition, these items include both cash and non-cash expenses. Cash expenses reduce the Company's liquidity. Management compensates for these limitations by reviewing GAAP results including these amounts.

Adjustments for Taxes, which consist of the tax effects of the various adjustments that we exclude from our non-GAAP measures, and adjustments related to deferred tax and discrete tax items. Including these adjustments permits more accurate comparisons of the Company's core results with those of its competitors. We determine the tax adjustments based upon the various applicable effective tax rates. In those jurisdictions in which we do not expect to realize a tax cost or benefit (due to a history of operating losses or other factors), a reduced tax rate is applied.

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